Inflation is bad for those who profit from your mortgage debt and student loans

Janine Jackson: One New York Times big title read, “Inflation warning signs are flashing red, posing a challenge for Washington.” A suite Times room stressed the problem and the solution: “The White House says its plans will slow inflation. The big question is when?

This framing is taken up and sketched out everywhere in the corporate media. “Inflation is coming for your next cup of coffee”, said CNN. “The wrath of inflation hits home” was United States todaysection. And then – surprise, surprise – CNBC To “Inflation worries 88% of Americans. “

That’s right, there is a mixture of, for example, The New York Times “” By chronicler Paul KrugmanHistory says don’t panic about inflation.But anyone can see that, judging by the sheer focus and attention, “serious and intelligent people” organize their thinking around “inflation” more than many other economic indicators.

In the recent words from our guest, whenever the corporate media is moving in droves like this, it’s a good idea to slow down and consider what’s really going on and why. Jon Schwarz writes for He is now joining us by phone. Welcome back to CounterSpin, Jon Schwarz.

Jon Schwarz: I’m so happy to be here, especially to talk about this in particular. Because it’s a problem where you realize that there isn’t a single room where all the people come together and decide what’s going to be in American media, but it really does seem like there is. have.

Yes exactly. Exactly. We hear the media complaining about how we used to talk about the water cooler and agree to everything. And we know that is not true. And yet you must recognize the power of the media to make it seem like we are all in the same conversation. And so the phenomenon here is really the corporate media alarm bells, and the worldview that reflects it. But let me ask you, first, what’s out there. What reality do these titles refer to?

The reality is that inflation rose from last October to last October by 6.2%, I believe, on a measure that includes food and fuel. And so it tends to go to extremes more than the standard measure, which excludes them. But just to be fair, because food and fuel are important to people, the number to think about is rightfully 6.2%. So it’s been over a year. And it happened that inflation rose from September to October by 0.9%, which means that if something cost $ 10 in September, it now costs $ 10.09.

So is it simple understanding? Because if I read the headlines, I read that the costs of the things I want to buy are going up in a way that is really going to affect my life. And it seems that the increase in inflation is more significant in terms of the impact on the price of my coffee or the impact on something else that I buy as an individual. But there are other things that inflation means that really may be more at work behind the alarm here.

That’s right. It’s funny. The Washington Post had not one but two above the fold of stories about inflation this week on a particular day. A speaking how terrible inflation was, and one about how it destroyed Biden’s agenda. And they also had a graphic covering, I don’t know, the last 10 or 15 years, that alone was explaining that their story was not what they were telling you. This was a chart showing that real wages have fallen slightly over the past year when inflation is factored in, meaning inflation was 6.2% over the past year. . The wages of ordinary people increased by 5.8%, so the purchasing power fell a bit.

But the graph itself showed that the erosion of people’s purchasing power, diminishing in real terms when inflation is factored in, had occurred a lot over the past 10 years. And it wasn’t a huge front-page emergency at the time. Like, what was the difference?

The difference was this, is that there was no high rate of inflation for this to happen in the past, during the Obama administration, and I think even for a little bit of the administration. Trump. And the difference is now that is happening with higher rates of inflation, and higher rates of inflation are affecting people with tons of money in a way that is never described in the media. business, to my knowledge. I’ve literally never seen this.

And the story is, household debt in the United States is roughly $ 14.5 trillion. So that’s a very large number. That’s about 75% of the size of the entire US economy. And when there’s inflation, most of that debt is fixed rate debt like mortgages, student loans, things like that. And inflation erodes the value of that debt, because it is set in nominal terms. For example, it remains at $ 15.5 trillion, regardless of the level of inflation.


And so 6.2% inflation, that amounts to a transfer of wealth from creditors to debtors of about $ 850 billion. So almost a trillion dollars. That’s a lot of money. It does not work precisely because different people have different levels of debt. It is not totally a transfer of $ 850 billion from the rich to the poor. But it is a significant sum. And you might have noticed that people who have a lot of money don’t like to lose it. And that’s really the root of this inflation crisis.

That’s it, plus the fact that there is a very tight labor market right now, which means there is low unemployment, and workers have a lot more power than they have. usually have them. And the standard treatment for an economy with high levels of inflation is to raise interest rates, slow down the economy, which throws people out of work. And that’s the point, that they don’t like a booming economy. They don’t like low inflation rates, unlike creditors in general. And what they would like to see is a slower economy, with lower inflation rates and higher unemployment rates. So it’s those two things – their goal of slowing the economy, increasing unemployment, and eroding the value of the debt they hold.

You talk about differential impacts, both of inflation and the proposed responses to inflation, and differentiating that impact is exactly what elite media typically don’t do. They talk about us and them in a way that aims to bring down other people in the us who really don’t belong there.

And so The New York Times‘Neil Irwin has a explanation it’s kind of a room where it’s like, you don’t need to know the details, here’s just the nuts and bolts of this problem you hear about. And it’s called “Who’s to blame for the price hike?” And that’s already reducing upward price inflation in an unqualified way, as you just said. But all the same, in this simple say, let’s break it down, “Who’s to blame for the price hike?” “, one of the The New York Times‘acceptable answers are “all of us”.

Ha! Exactly.

And the reason is that we – and I quote – “we have shifted our spending towards things rather than services”. This is one of the reasons. And then, too, “and many of us have chosen to stop working, or to work less.” It is The New York Times, the official newspaper, trying to talk to people and say to them: The prices are going up. Here’s why. And their reason is you messed up, you know? You were wrong during the pandemic. You started buying the wrong things and you made some bad job choices.

I mean, we’re talking about this as an economic problem. But it is obviously a media problem, a media problem as well.

Yes, it is a question of class. This is one of the issues where media class bias really shows up in its most powerful form. It is absolutely unmistakable.

Yeah, I don’t know what I wanted you to say in response to that New York Times article, except that these kinds of headlines and stories are not all lamentations. They are also calls to action.

The call to action is to get back to work.

Exactly. And in terms of actions which are responses of various entities to deal with this abstract sounding “inflation”, well, some of these responses are going to affect people in their day to day life as well, so it’s important to unzip what media is thinking, or telling us, it’s the right thing to do here.

Yes, there is one other class-based aspect that the media should cover, and it isn’t. People have generally and correctly said that we have to take into account, in particular, the elderly who have a fixed income. But the reality that, again, a lot of people don’t really understand this is that Social Security is not a fixed income benefit. Social Security is adjusted for inflation, and so for people worried about being able to pay their bills, inflation means that Social Security benefits will be increased by almost 6% in January. So it will be a welcome help for people in this situation.

But, again, that’s not something people say: Hey, listen, don’t panic because your benefits are going up. People don’t hear this, because most of the time it’s not covered.

Finally, looking ahead to what people are going to hear, including about themselves: before starting, I saw a Yahoo Money big title: “Americans feel bad about their finances, even though they are doing well. I mean, I don’t know. Isn’t that gas lighting? As we look forward to the headlines that we’re going to see on inflation, what are some questions you would like people to keep in mind as they read and hear this media coverage?

Yes, so just keep the class bias of the media in mind. As I said, this is particularly evident now. They are by no means telling both sides of the inflation story.

And keep that in mind, too, a year from now, when they’ll have completely forgotten about this problem, because inflation will almost certainly subside, and will be 2 or 3% instead.


We spoke with Jon Schwarz. You can find his work on Thank you very much Jon Schwarz for being with us this week on CounterSpin.

Thank you very much for having me.

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