Inflation Is Not a Natural Disaster
It's presented to you as a quasi-meteorological phenomenon: inflation "arrives," it "strikes," it "persists." As if it fell from the sky. This depoliticization of economic debate is exactly what suits those who profit from it.
Who Wins, Who Loses
Read more: breaking analysis washingtonsThe winners of inflation are never named on the evening news. Read more: breaking analysis romanias They're holders of fixed-rate debt -- in other words, large corporations and governments. Inflation erodes the real value of their debts. Magic.
The losers? You know them. Workers whose incomes follow inflation with an 18-month delay. Retirees whose pensions are indexed on opaque formulas. Tenants facing landlords who index rents in real time.
The Central Banks' Double Discourse
The ECB and the Fed claim to "fight inflation" while having spent 15 years injecting billions into markets via quantitative easing. Free money inflated asset prices -- real estate, stocks, bonds -- creating a wealth bubble for the richest 10%.
When inflation finally hits the real economy, suddenly it's a "problem" that must be "fought." By raising rates, of course, which slows the economy and hits the most vulnerable first.
The Monetary Policy Taboo
There's a truth mainstream economists refuse to admit: monetary policy IS politics. Not technique. Every interest rate decision is a redistributive choice. Lowering rates enriches asset owners. Raising them impoverishes borrowers.
Presenting these decisions as "technical" and "independent" is modern finance's greatest sleight of hand.
The Solution Nobody Proposes
What's needed is a democratic debate about monetary policy. Not delegating it to "independent" technocrats who all come from the same background and all return to the same banks. Central bank independence is a myth -- it's independence from the people, not from the markets.
Frequently Asked Questions
Q: How does inflation affect different groups in the economy?
Inflation benefits holders of fixed-rate debt, such as large corporations and governments, as it erodes the real value of their debts. Conversely, workers, retirees, and tenants often suffer, as their incomes and pensions lag behind inflation, leading to financial strain.
Q: What is the role of central banks in managing inflation?
Central banks like the ECB and the Fed claim to combat inflation while simultaneously injecting billions into markets through quantitative easing. This approach inflates asset prices, benefiting the wealthiest, while raising interest rates to control inflation can negatively impact the most vulnerable in society.
Q: Why is monetary policy considered political?
Monetary policy is seen as political because every interest rate decision has redistributive effects, impacting different economic groups in various ways. Lowering rates tends to enrich asset owners, while raising them can impoverish borrowers, challenging the notion that these decisions are purely technical or independent.