The Federal Reserve, of all places,
is finally confirming what we as progressives have already known.
High wages for workers did not translate to the inflation that
the country is currently experiencing, not even close.
So this analysis was done specifically by the Federal Reserve Bank of San Francisco.
And here's what we know based on the analysis.
So a measure of wages favored among economists and
policymakers explains only about 0.1% of the three percentage
point increase in consumer price inflation, excluding food and energy.
San Francisco Fed economist Adam Shapiro said in an article published Tuesday
on the bank's website.
So let me really emphasize that again, okay?
Rising wages only accounted for 0.1% of one percentage
point of the 3% inflation that the country experienced.
So negligible, to say the least.
In fact, recent evidence shows that wage growth tends to follow
inflation as well as expectations of future inflation, Shapiro wrote.
So in other words, when we experience inflation,
some employers tend to raise wages a little bit so
their workers can cope with the fact that inflation is
impacting their ability to live their livelihoods, right?
So it follows inflation.
The wages increasing follows inflation.
That never gets talked about.
So I'm glad that Shapiro mentioned that in his analysis.
Now, what's really driving inflation?
We talk about it on the show quite a bit.
But in case you missed our coverage on that, here's a reminder.
>> Some economists say that the reason could be that some companies are taking
advantage of an opportunity to increase their profits.
While supply chain disruptions caused by the Pandemic and
the invasion of Ukraine by Russia have pushed costs higher in recent years.
Studies have found that several companies have raised prices far above those cost
increases.
And this is especially true for goods and services.
>> There's something intentional happening here, explain that.
>> Hi, yeah, well, you referred to the increase in costs.
I mean, all of us know that this has happened, right?
So you're inclined to be a bit more forgiving when you see
the price of something that you regularly buy going up,
you assume that a competing item has probably gone up too.
And the businesses that are competing with each other are kind of
able to securely assume that their rivals are gonna be raising prices.
So there's an opportunity there to test the limit, to see how far they can go.
And some have found that they can go beyond the initial cost increase.
That in this period when things are very uncertain,
consumers can't be sure that they're being taken advantage of.
They can't be sure that there's an alternative that hasn't gone up
in price and they've managed to push up their profits.
And that in turn pushes up inflation.
>> So in other words, as you just heard from a Wall Street Journal reporter,
companies took advantage of the inflation narrative that was regurgitated.
And repeated in corporate media over and
over again to increase their prices, to maximize corporate profits.
So this idea that they had no choice, that running their businesses
had become far too costly, and they had to raise prices as a result, that was all BS.
What they saw was an opportunity to piggyback off of this narrative and
raise their prices while making it appear as though I mean,
they weren't doing it to maximize profits.
They were doing it because they had no choice.
And since that was the talking point that was repeated over and over again in
the corporate media, most Americans didn't really know what was going on.
In fact, what most Americans heard was nonsense from people like Larry Summers
who claimed that the inflation was specifically due to things like and
I agreed with him on this point the Federal Reserve and its monetary and
fiscal policy.
Okay, I agreed with him on that.
But he also really liked to emphasize government stimulus associated
with COVID relief bills, if you don't remember.
Here's the reminder.
>> I don't think the $2,000 checks make much sense.
We have stimulus already much more than filling out the hole.
And given that lots of the hole is from the fact not that people don't want
to spend.
But that they can't spend because they can't take a flight or
they can't go to a restaurant.
I don't necessarily think that the priority should be
on promoting consumer spending beyond where we are now.
So I'm not even sure that I'm so enthusiastic about the $600 checks,
and I think taking them to $2,000 would actually be a pretty serious mistake.
And I have to say that when you see the two extremes agreeing,
you can almost be certain that something crazy is in the air.
And so when I see a coalition of Josh Hawley, Bernie Sanders,
and Donald Trump getting behind an idea, I think that's time to run for cover.
>> I got to say, I definitely see something crazy.
And the crazy thing I see is Larry Summers purporting that $600 stimulus checks or
$2,000 stimulus checks will translate to the inflation
that we're currently experiencing right now.
How laughable and ridiculous is that?
But since Larry Summers is a Democrat, Republicans loved what he said there.
And you know what they did?
They used him as cover for the austerity that they had been pushing for.
I mean, even a Democrat wants austerity.
Even a Democrat thinks that we've provided too much financial relief to ordinary
Americans.
Here's what that looked like.
>> Larry Summers he pointed this week to the $1.9 trillion American rescue plan
that was passed earlier this year in March.
He said that's a major reason behind the rising inflation,
something he called at the time,
quote, the least responsible macroeconomic policy we've had in the last 40 years.
Is it possible that Americans are suffering now from high prices because
the Biden administration overstimulated the economy with all of this money going
into the economy.
>> The inflation thing is so real that everybody acknowledges it, now.
>> Of course, it's not just Republicans.
I mean, Larry Summers has worried about it openly, and
Joe Manchin worries about it quite rightly.
And the problem Joe Biden has is that it's going to
affect the passage of build back betters.
>> They've already created a lot of harm this year with the previous $2 trillion
package they passed earlier this year without a single Republican vote.
It created raging inflation, which Larry Summers, the last honest Democrat in town,
admitted was going to happen, predicted was going to happen.
So the best way to sum up the impact of this package,
if the Democrats pass it and of course it'll be all by themselves is they
double down on all of the mistakes they've already made this year.
>> Yeah, well, I thought you put it well.
And Larry Summers deserves a lot of credit.
>> So I would like to, in this moment, dispel the notion that there's any
fundamental difference between corporate Democrats and
corporate Republicans when it comes to these types of economic issues.
The idea, whoa, even a Democrat like Larry Summers?
No, not even a Democrat.
You guys are the same and you know it.
And the audacity of Republican members of Congress.
Any member of Congress speaking out against a tiny,
tiny bit of financial relief for ordinary Americans as they very
likely engage in insider trading in their positions of power is
just unbelievable, pathetic and should be called out.
Again should be called out, in the very least by the media, by actual journalists.
But we have a deficit in journalism in this country as well.
And what's so frustrating is that part of the theater that we have to consume
every single day in the press is this idea that corporate Democrats.
And corporate Republicans, individuals who are bribed by the very same money
interests, are somehow fundamentally different on economic issues.
They're not, they're the same.
They want austerity for you and all sorts of goodies for themselves and
their corporate buddies, period.