This “inflation” is different

New Stiglitz just dropped.

Cory Doctorow
10 min readDec 14, 2022

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Here’s the inflation story you’re expected to believe (advance warning: this story is entirely false): America gave the poors too much money during the lockdown and now the economy is awash in free money, which made those poors so rich that now they’re refusing to work, which means the economy isn’t making anything anymore. With all that extra money and all those missing workers, prices are skyrocketing.

To hear ghouls like Lawrence Summers tell it, there is only one answer to this. We have to immiserate the poors: jack up interest rates, kick off a recession, destroy millions of jobs, until the poors are stripped of their underserved fortunes, and, humbled, they return to their labors:

https://pluralistic.net/2021/11/20/quiet-part-out-loud/#profiteering

As noted: this is bullshit. Countries all over the world experienced inflation during and after the lockdowns, irrespective of whether they handed out relief money to keep people from starving to death while their workplaces were shuttered. America has slightly higher inflation than some other OECD countries, but the causes have nothing to do with overly generous relief packages.

“The Causes of and Responses to Today’s Inflation,” a Roosevelt Institute paper by Nobel-winning economist Joseph Stiglitz and macroeconomist Regmi Ira, debunks this false inflation narrative, revealing it as a sham aimed at destroying workers’ lives, offering a far more plausible explanation for inflation:

https://rooseveltinstitute.org/wp-content/uploads/2022/12/RI_CausesofandResponsestoTodaysInflation_Report_202212.pdf

More than that, though, the authors show how sharp interest rate hikes actually harm the economy, deepening the recession and increasing inflation. They compare monetary policy inflation remedies to medieval bloodletting, where “doctors” did “more of the same when their therapy failed until the patient either had a miraculous recovery (for which the bloodletters took credit) or died (which was more likely).”

Let’s start with the case against bloodletting. Inflation hawks warn us of the wage price spiral, which is when inflation goes up and powerful workers bargain for higher wages, which drives up costs, and…

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Cory Doctorow

Writer, blogger, activist. Blog: https://pluralistic.net; Mailing list: https://pluralistic.net/plura-list; Mastodon: @pluralistic@mamot.fr