Ep134 [2/2]: Charles Hayden: Inflation and Warren's monopoly price setter

Activist #MMT - podcast

Welcome to episode 134 of Activist #MMT. Today's part two of my two-part conversation with Charles Hayden. In part one, Charles described how he created at least three important milestones in MMT history, and how Warren Mosler played a integral role his journey to understanding and accepting MMT. Today in part two, we discuss some of the many varied realistic views of inflation, and how each of them is connected by the fact that the national government is the monopoly price setter for the entire economy – whether they know it or not. This is one of the unique contributions of Modern Money Theory.

The first realistic view of inflation is how it's not a disease or a symptom, but rather a measurement of some prices going up somewhere in the economy for some reason. It's not possible to know what the problem is without going out into the real world and discovering them for yourself. If you address those real-world problems, then those prices will naturally go down, which will in turn result in a lower measurement of inflation.

This is not unlike how a thermometer measures the temperature of a sick person. The rabid desire to "lower inflation" is not unlike dunking the thermometer into a cup of ice, and ignoring the actual sickness of the actual patient, and doing nothing to help them. This is the idea behind lowering inflation by raising interest rates – if we lock all the starving people out of the kitchen, then we can truthfully say that "everyone who enters this kitchen gets a good meal." These are all examples of how real costs are pushed by those with the most onto those with the least – and subsequently onto the families and communities in which those people exist.

A second realistic view is the class conflict theory of inflation. This is as originated by Marx and adopted by MMT. Inflation is essentially a battle between business owners and their workers, where one side fights to increase their profits, and the other fights to increase their wages. A wage-price spiral can only happen if we allow it to happen. The only way it can stop is if one side is empowered enough to prevent the other from pushing back.

More broadly, this is a centuries-long battle between rich and poor to increase their power over the other. In all the above cases, outside of natural catastrophe, the government must be complicit in order for the inflation to persist. Currently, the government is essentially entirely on the side of the rich, business owners, and capitalists. So, in almost all cases, all real and financial costs are borne by workers and the poor.

The idea that the government is the monopoly price setter, essentially means to me that: We as a collective are in control of our own destiny. The government is us as a collective. We have let it decay into the morass that it currently is. We've let the leash out way too far and now it's going to take a whole lot of effort in order to reign it back in. Regardless, no matter how unlikely or even impossible that task may be, if we are to survive, there is a no alternative.

Outside of natural disaster, everything we do and don't do is a choice. We are choosing to go extinct. We could choose to not do that.

And now, let's get right back to my conversation with Charles Hayden. Enjoy.

Audio chapters

• 6:23 - Inflation- first thoughts
• 7:24 - Inflation is to the real world like a thermometer is to sickness (also, inflation the boogeyman)
• 12:34 - Government is the monopoly price setter. This is behind every other (valid) view of inflation
• 20:10 - Government is dog walker
• 24:07 - Foreign demand for a currency
• 26:40 - The government passively delegates its price setting powers (plus neglect and suppression)
• 38:29 - Inflation affects peoples lives
• 40:54 - Fortunate to learn MMT directly from Warren Mosler
• 42:34 - The language of Warren, versus other academics, versus activists, versus
• 46:08 - Warren's extreme examples as thought experiments
• 47:21 - MMT was all over TV (trying to do to MMT what they did to CRT)
• 49:43 - Dennis Kucinich and my monetary reform article
• 50:54 - Inflation is an area of concern MMT
• 53:33 - The first MMT Activist
• 56:24 - Inflation and the real world, grades and children, temperature and sickness
• 1:01:46 - Raising interest rates (to 100%!)
• 1:04:03 - Street protester (there's power in protest)
• 1:08:30 - MMTers in Texas
• 1:09:45 - Campaigning
• 1:13:18 - Vote blue no matter who
• 1:14:59 - Goodbyes
• 1:18:44 - Duplicate of introduction, with no background music (for those with sensitive ears)