Seemingly out of nowhere for many people, prices for the basic necessities of life are skyrocketing. The United States today is verging on the greatest inflation since the Civil War. So-called experts portray inflation like “an Act of God.” In reality, inflation is a policy. It is another policy of extractive financialized capitalism to divert society’s wealth from the poor to a class of billionaires.
The chairman of the U.S. Federal Reserve, Jerome Powell, said his goal is “to get wages down.” Powell claims that U.S. workers are making too much money: “Employers are having difficulties filling job openings and wages are rising at the fastest pace in many years.”
In fact, since COVID hit, working people have backed away from low-paying jobs, which force them to work just for childcare or to pay student loans. Meanwhile, many working people have been replaced by the new technology in production. Rather than raise wages, inflation is used to force people to go back to work.
In fact, inflation is a burden that monopoly corporations impose on working people, a hidden tax to increase corporate private profits. Powell makes the deliberately deceptive argument that prices of commodities are based on the costs of raw materials and labor. He fails to identify corporate profits as part of rising prices. Corporations are deliberately increasing prices to make more profit because the law allows this. One reason for this is that government has broadly de-regulated the economy to give capitalists more freedom to extort private profit.
Corporate profiteering is the major contributor to the inflation problem. Corporations had record profits in 2021. Nearly 100 of these corporations did report profits in 2021 that are 50 percent above profit margins from 2019. Petroleum corporations spiked their prices through the ceiling, even though these companies got $230 billion in government subsidies in 2022. Furthermore, ConocoPhillips, Chevron, and ExxonMobil pay negative income tax; they got $1.95 billion back in domestic taxes between 2015 and 2022. The Ukraine War drove up petroleum prices. These companies could have kept prices low by increasing production, but they didn’t.
Proctor & Gamble and Kimberly Clark control the market for diapers. In the spring, they announced that they would start charging more for everything from diapers to toilet paper, citing “rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods.” By September, their profit margin increased 24.7 percent! Diapers, like food and oil, are produced by a few monopolies that control the market and can charge whatever they like.
Since the 2008 housing crash, the United States has created some $30 trillion that has been directed into the financial market to bail out banks by inflating the price of housing. The so-called experts never referred to this unheard-of creation of new money as inflation. This policy, however, inflated housing by turning it from a human right into a financial asset to extract ever more rent from the 99 percent. The price of stocks, bonds and housing were directly increased.
Funny thing! All the fearmongering about inflation that never mentions the soaring salaries of corporate executives? Nor that medicine, health insurance and housing prices that have been skyrocketing for years? Record corporate profits are likewise ignored.
Biden and the corporate Democrats tell us that inflation is a result of Russia’s invasion of the Ukraine. But inflation increased dramatically before the war. And it was the United States, not Russia, that forced Ukraine to mine its ports, which cut off its massive grain exports to the world for several months.
The government’s response to inflation is to raise interest rates, which makes the dollar more attractive for the billions of dollars that are invested in money markets every day. As capital flows out of Europe and the world and into the United States, these countries are forced to raise their own interest rates to stop the flow. The result is that the United States is deliberately exporting inflation around the world, which makes the global proletariat pay more to capitalism for the basic necessities of life.
One source of constant inflationary pressure is that the United States has about 750 military bases around the world. The United States incurs massive foreign debt and accepts dollar out-flow that these bases require. The United States manipulates inflation to pay for wars and its global political maneuvering, all in the name of defending U.S. business interests. Here the inflation as a policy is quite clear. The Pentagon spends $2 billion a day, yet no money can be found to fix the water system of Jackson, Mississippi, which would cost about $1 billion! That’s only 1/730ths of the military budget!
Inflation is in essence a “hidden tax” on America that extracts wealth from households and transfers it to the financial system. Government’s role is critical here. In a real economic democracy, government could easily use its powers to guarantee the distribution of the necessities of life to people without any cost at all. We all saw how when COVID hit, schools were immediately turned into free food outlets. Government can abolish all forms of corporate financial extraction, but it will not do so unless we force it to.
