Inflation?

[Illegalitarian]

Admittedly, inflation is something I know little about. Why does is it an issue that right-libertarians go nuts over while those on the left hardly ever discuss it? What are its real causes? Libertarians of course say that it's the fault of "the fed", too much spending, too much money, etc, but considering the fact that inflation is a general raise of prices in a country, and the bourgeois control the markets and thus the fluctuation of prices, this seems like an over-simplification.

ancaps are also quick to blame what they believe to be socialism for inflation in places like Venezuela, but we can see that hyperinflation is also awful in neoliberal hubs like Central America and parts of Africa. Why is this?

[Creative Destruction]

A lot of different things cause inflation, including simple supply and demand. When demand outstrips the ability to produce at demand levels, then you get an increase in prices. This will usually happen with just a few commodities, though, instead of having a general effect on the economy. Huge wage increases also cause inflation, with capitalists trying to compensate for lost profit due to higher wages and increasing prices. Another reason is when the private sector and government increase purchases. Again, when you have two large social sectors like that, it pushes up demand, and if supply can't keep up, then inflation happens.

When hyperinflation happens, it typically means that an economy has shit productive capacity and things just aren't getting to the market to meet demand adequately. This is agitated when, in response to inflation, the government just ends up expanding the cash supply, which does exactly shit. In the case of "socialist" countries, an increase in government spending, plus increased wage floors in a rapid manner, will cause inflation to spiral out of control. Inflation can also, obviously, happen when private interests hoard commodities and refuse to sell them when the government has mandated things like price ceilings. This is about what happened in Venezuela, or is what is suspected to have happened, anyway.

The left hardly discusses it because it doesn't really matter. It's evidence, rather, that when you try to shoehorn "socialism" into a capitalist economy, that it doesn't work. That's why these calls for immediately higher wages in the US, as a minimum program (such as the SAlt campaigns), are misguided as they buy into the bullshit about if workers had more money, they would spend more and "stimulate" the economy (which is true in an extremely limited sense.) The analysis needs to be about transcending capitalism. Not focusing on getting the working class a "bigger piece of the pie" in capitalism. We live in an economic system where that happening, it will end up punishing the working class in some way. Shit will always roll down hill.

Interestingly, where it concerns an overprinting of money, which is basically at the core of libertarian anxieties about inflation, Marx predated them in Capital:


If the paper money exceed its proper limit, which is the amount in gold coins of the like denomination that can actually be current, it would, apart from the danger of falling into general disrepute, represent only that quantity of gold, which, in accordance with the laws of the circulation of commodities, is required, and is alone capable of being represented by paper. If the quantity of paper money issued be double what it ought to be, then, as a matter of fact, £1 would be the money-name not of 1/4 of an ounce, but of 1/8 of an ounce of gold. The effect would be the same as if an alteration had taken place in the function of gold as a standard of prices. Those values that were previously expressed by the price of £1 would now be expressed by the price of £2.

https://www.marxists.org/archive/marx/works/1867-c1/ch03.htm

[tuwix]

Inflation is a reaction of market on lack of sufficient number of commodities to its demand. It's one of two possible reactions. The other one is an increase of production.

So inflation isn't always something very bad. Controllable inflation can create economic growth. Uncaps deny any inflation and this would lead to economic stagnation according to economic research both followers of monetarism and Keynesian economics.

And increased demand is usually created by central bank like FED. And socialism has nothing to do with inflation. Socialism is only about socializing the means of production. Inflation is a kind of state intervention into economy not to collapse a capitalism. An ancap policy not to intervene in economy would kill a capitalism very quickly. But it's even theoretically impossible because a controller of economy will always intervene due to simple greed.

[John Nada]

Fiat currency is used everywhere now. Supply and demand aren't like gold(ie discover more and inflation). It's regulated by a central bank. The commercial banks own "stock" in the Fed. It cannot be sold. They have an account with the Fed, it's their bank. There's a reserve limit set on how much can/must be saved by the bank. Accounts up to a certain amount are insured.

The Fed sets an interest rate to try to encourage or discourage spending. By raising the interest rate, the banks will make more money keeping it in there account. In turn, they raise the interest rate paid to accounts and interest rates on debt. This is supposed to encourages saving, lower prices. By lowering the interest rate, they won't make as much or even lose money just by saving it. This lowers the interest due on loans, but also the interest paid to accounts. This is supposed to encourage spending, because the banks must loan money and account holders will make more by spending.

Another thing the Fed does is sell bonds. A bond is basically loaning the Fed money. In turn, the Fed pays interest on it, with their money. This is done at an auction, and some types can be sold on the open market. Selling bonds puts money into the Fed's reserve, taking it out of circulation. Buying bonds put more money into circulation. This is supposed to effect the money supply.

It's important to note that all other countries have some kind of fiscal policies too, which effects other ones. Some often owe money to another country, share a common currency, hold another currency as a reserve, trade it and export their money to another country. Individuals and corporations can to an extent participate.
ancaps are also quick to blame what they believe to be socialism for inflation in places like Venezuela, but we can see that hyperinflation is also awful in neoliberal hubs like Central America and parts of Africa. Why is this?If "socialism" is imperialist capitalism in their "what's a word?" universe, then yeah.

It's not because Venezuela is enacting moderate social democrat reforms, it's that they're too moderate. This is letting the bourgeoisie wage economic warfare.

They have one of the world's largest oil reserves. Even if prices are low now, a long-term investment would still make them money. How is it that McDonald's can't sell fried potatoes(in South America where they originate) or Clorox can't sell water zapped with electricity(in an OPEC nation), among other things?

Venezuela nationalized a billion dollar fertilizer plant from the Koch brothers. Their business specializes in the heavy crude that they have. They're weird Randoids, who have the chance to LARP Atlas Shrugged. A type of economic warfare used to an extent in Chile under Allende. And if it sounds like a conspiracy: https://en.wikipedia.org/wiki/Black_Wednesday This is in the UK, a very powerful country. Just a few phone calls.

[Prof. Oblivion]

Another thing the Fed does is sell bonds. A bond is basically loaning the Fed money. In turn, the Fed pays interest on it, with their money. This is done at an auction, and some types can be sold on the open market. Selling bonds puts money into the Fed's reserve, taking it out of circulation. Buying bonds put more money into circulation. This is supposed to effect the money supply.


The Fed doesn't issue bonds, the US government does. The Fed typically buys a portion of these, and can buy or sell US bonds through open market operations. Also it's important to note that the US bonds are effectively money, and that selling bonds doesn't really "take money out of circulation".

[Illegalitarian]

Oh, absolutely. What's being done with foreign and domestic businesses in Venezuela is the same "make the economy scream" practice undertaken in Chile in the 70's, only it doesn't have to be quite so orchestrated by the west, because the businesses themselves are given enough leeway to do whatever they want with their products, in practice.


That's why these weird kind-of-sort-of Keynesian radical social democratic half-measures are confusing. If you're going to try and bend the will of capital to the state, then nationalize the entire economy, rather than nationalizing this and that industry, throwing up a fixed price for the rest and allowing the bourgeois just enough room to hold out their products from the market.


And like you said, Venezuela has a vast amount of oil wealth. All they would have to do is diversify production through state-owned enterprises and they wouldn't face anywhere near the economic issues, or be opened to anywhere near the economic manipulation.

[cyu]

Why does is it an issue that right-libertarians go nuts over while those on the left hardly ever discuss it?


Rich people have money. Poor people don't have money. Rich people are afraid of losing what they have, so they obsess all day about scenarios in which they might lose what they have and how to prevent it.