Ask Prof Wolff: Inflation's Risks

A patron of Economic Update asks: "If there is a relationship between inflation and the capacity of a country to absorb newly printed money, how do international markets affect inflation since dollars are used around the world and some of the new money would make it to the world in general? Is the dollar less prone to inflation because dollars are used around the world? If so, is there a measure of inflation resistance for different currencies to get an idea where the dollar stands vs other currencies?"
This is Professor Richard Wolff's video response.
Submit your own question to be considered for a video response by Prof. Wolff on Patreon: / community .
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Learn more about Prof Wolff's new book, "The Sickness is the System: When Capitalism Fails to Save Us from Pandemics or Itself," available now at www.democracyatwork.info/books
“A magnificent source of hope and insight.” Yanis Varoufakis, Greek economist, academic, philosopher, politician, author of Talking to my daughter about the economy.
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[@meowwwww6350]

He's addictive to listen

[@brennanwn]

I know right

[@juliahenriques210]

Such a simple and effective explanation. Thanks, professor.

[@peterstafford4426]

He is a rotten human being.

[@aaronanderson4894]

I like the Ice Cream cone example. Lol Richard D. Wolff is so clear with his words it's hard to believe anyone could misunderstand him.

[@suzegiljer3206]

This is how a great professors do it.Top example

[@MisanthropicAndOutOfCoffee8380]

Dr. Richard Wolff for U.S. Senate New York!

[@sovietbot6708]

You can't be a senator if you're socialist.

[@sovietbot6708]

@John Spöner a revolution isn't possible. 99.99999% of Americans are anti socialist. We would lose the day we begin.

[@sovietbot6708]

@John Spöner if you want to attempt a revolution, go ahead, but don't come crying to me when it fails!

[@blakereid5785]

@John Spöner lol, how about a little empathy for someone who is reasonably(though counterproductively) pessimistic about significant progress in the US.

[@dragonwest5844]

@@sovietbot6708 So you're saying the US has only 33 socialists?

[@richardgeddes630]

Thank you! I never thought about the stock market rising as inflation. It's always framed as "return on investment" or some other positive cliché.

[@freepalestine2434]

Fundamentally, it's about managing risk to get the highest possible reward, but it's no secret that inflation, as measured by the Consumer Price Index, has a huge affect on the markets. One quick example: when interest rates rise, stock prices rise and bond prices fall. When interest rates decline, the opposite happens.

[@chuckwilliams6261]

@@freepalestine2434 Prof Wolff is describing a stock bubble as a result of demand pull, not a knock on effect of consumer markets.

[@Akinph]

Simple, loud and clear.......!!!

[@robertmackenzie892]

That's Prof. Wolff and, I perceive, many "New York Professors".

[@romanyarkov8426]

Хаха привет!

[@jc6226]

Few examples of prices rising: nitrile gloves cost 15$/100 a year ago. they are now 26-30$. Rubbermaid storage bins used to be 13$, and now rubbermaid sells them for 40$. Turkey has risen 20%, from 10-12$/lb. A loaf of good bread is 6$. Gas went from 2$ a gallon for multiple years to over 3$ per gallon. Wages have stagnated for 50 years and an increased federal minimum wage should have been the top priority of the administration right alongside pandemic relief. We are about to see more steep increases in the price of common consumer goods, and the administration has failed us greatly by not pushing a min wage increase. There will be some drastic consequences of that failure.

[@OPTHolisticServices]

Thanks professor ❤️

[@uberpea03]

thanks Prof

[@adamsorell4851]

DR Wolff and Chris Hedges my favorite speakers

[@matthewcondie4052]

another great video from the professor

[@wermcfamily]

Wow. Great 10 minute lecture. I wanted 20 more minutes at least.

[@ZeitgeisterOm]

Richard Wolff we would really like you to run for Senate on the green ticket

[@dddpvt]

Prof TOO SMART to get into politics

[@ZeitgeisterOm]

@@dddpvt he already is into politics in other ways when you talk about Marxism socialism that's pretty political stuff.

[@dddpvt]

Talk about inflation! Lumber is ridiculously high at the moment.

[@danieljones26]

Is the source of lumber becoming exhausted?

[@mbcNOOFS]

@@danieljones26 Yes, because neo-liberals in the US have shut down domestic lumber production. It is cheaper to buy lumber from Canada and Russia than it is to produce it, so they fire their workers, destroy their communities, and get rich from importing lumber in the process.

[@drakekoefoed1642]

it's all the homeless people making shacks.

[@whatshisname2497]

Inflation is a boogeyman imo. It is used to create fear of government spending and social programs even when we're in deflationary periods. In the meantime inflation can be countered with low risk investment. Also, why not pass a law for wages to scale with inflation?

[@paulschumacher1263]

Good points.

[@kyledrums]

The fact ppl cry about inflation in the 70's still (a totally different world) should be the indicator it's a boogeyman.

[@freepalestine2434]

Inflation is a real concern for working class investors. If you have a safe portfolio of bonds and low-risk stock, and suddenly inflation outpaces your return rate, you start losing money. Minimum wage should definitely be inflation-adjusted though.

[@walden6272]

It's not a boogeyman for the average worker, it's a harsh reality. Gas, food, and rent has gone up significantly. The Federal Reserve wants you to believe there is no inflation problem, so they can justify keeping interest rate at near zero and non-stop money printing. Inflation is real and it will be even worst this time next year. However, all that money printing is benefiting the rich and their stocks while the people has only gotten peanuts. So should the Government stop spending due to inflation risk? No, the Government should fund their infrastructure spending and provide Medicare for All by finally taxing the rich and their assets like FDR did. And start a federal jobs program to put people back to work. Remember inflation will never stop but you can slow it down to normal levels by not relying on printing money but relying of taxation to circulate money from the top 10% of bottom 80% of the population. When money doesn't move around we have a huge gap in income inequality and a poor economy. This country needs a New Deal 2.0 and FDR's taxation system again.

[@danieljones26]

"Also, why not pass a law for wages to scale with inflation?" An interesting idea, this. Though some kind of limitation to this should be included. Say a "reset" when the inflation and wages reach a certain high point.

[@gittefeingeist9720]

I am in love with the smart Cadovius sheves behind the professor. Smart design of the 50s and 60s

[@ParcelOfRogue]

Keynsianism does not work in Germany, as they are major export earners and far from a neat closed economy

[@Donxster]

"The Deficit Myth" by Stephanie Kelton

[@peterjol]

The cycle of life:..inflation...need more money..fight for more money ....win more money....inflation....need more money ....fight for more money .....win more money ...inflation....repeat for life ...never getting anywhere but actually thinking we keep on 'winning'.

[@richardwong2950]

Many goods and services in the UK have gone up by 10% or more this year over last year. These are basic goods and services that ordinary citizens use, so it is really a blow to their dwindling household budgets. In some industries that I know suppliers keep sending out letters to their customers about their impending price increases, as they can no longer maintain last year's prices. Ever since the UK has formally left the EU the trade barriers and cost of trading have gone up, resulting in lower sales. Some small UK suppliers have given up trading with their EU customers altogether. Some others have set up subsidiary companies in the EU to bypass the bureaucracy. Leaving the UK was seen to be a good idea by some but the consequence, at least in the short term, is clear, hurting both parties (52% voted for leaving the EU and 48% for staying in the EU during the 2016 referendum). It is reasonable to suggest that when we are united we become stronger, and vice versa. Returning to the point of inflation, I don't know how the UK National Statistics has calculated its figures. It has consistently reported very low inflation for a long time, but that's not what people experience in real life. Foods are definitely more expensive than before. Whilst people have different ideological differences we should appreciate it that China has kept inflation worldwide lower than it would have been for many year because of their efficient mass production. Any decoupling with China will hurt people all over the world financially.

[@PhilBradshaw90]

Am I right in thinking that the UK doesn't include housing costs in its inflation figures? House prices have risen 7% over the last year on average, but nobody in mainstream media or politics is talking about this as a problem.

[@richardwong2950]

@@PhilBradshaw90 I have just looked up the UK government statistics that says that inflation at the end of March 2021 was only 1%. Price rises in purchasing houses are not included, but house running costs are included. Anyway, I don't believe those figures. For a start, local council tax has risen by 9% (for local police, social welfare, rubbish collection, road maintenance etc). Utilities (gas and electricity) have gone up by 10%, which have been widely publicised, as the government allowed those companies to increase prices up to a certain amount.

[@danieljones26]

Inflation seems to give validity to smuggling.

[@beezusHrist]

Imagine being an ex-video game streamer thinking you could educate this man on economics and economic systems 🤫🤣🤣🤣🤣🤣 *Destiny* is a 🤡

[@againstorthodoxy4212]

"Inflation occurs when sellers raise prices; they can do this profitably when the forces of competition are weakened by the differentiation of products, real and factitious, misleading advertising, obfuscating sales gimmicks and package deals, mergers and takeovers, and the increasing importance of ancillary services, trade secrets, patents, copyrights, economies of scale, overheads, and start-up costs. Inflation can and does occur in the midst of underutilized resources, and it need not occur even if we were to consume our capital by failure to maintain and replace it, consuming more than we produce." - William Vickrey

[@julieannmyers8714]

Have you done a video explaining the difference between MMT and Keynesianism?

[@danieljones26]

What's "MMT"?

[@RussCR5187]

I'm not yet convinced that Prof Wolff is well enough versed in MMT. I would see if you can find a video by Randall Wray that addresses this question. Or perhaps Stephanie Kelton or Australian William Mitchell's blog.

[@julieannmyers8714]

@@RussCR5187 thank you

[@julieannmyers8714]

@@danieljones26 Modern Monetary Theory

[@PhoenixIgnisChannel]

@@RussCR5187 He has a video on MMT, just use the search function on the channel. He responds to "What is the Marxist take on Modern Monetary Theory?"

[@mauibill7233]

I think there may be a 3rd and even a 4th cause of inflation. I've seen prices artificially inflated, for example, in real estate in my local area, and other things like wages inflated to keep up with that. It's a vicious cycle. Also, there could be pressures exerted from other country's currencies that negatively affect inflation and we've seen that numerous times in the global south.

[@abeautifuldayful]

He talked about housing and rents, though. If prices rise "artificially," I think it only appears that way until you find the hidden demand for the houses and apartments in the minds of those owners and realtors who think the economy will improve enough to bring in the buyers and renters.

[@iFreeThink]

I didn't know people liked keying cars.

[@skapunkoialternativeliving6522]

That's just like housing for homeless people keep saying they need to make housing for the homeless... what's in a capitalistic Society is not profitable to make cheap housing for homeless people which is why they don't make them..

[@danieljones26]

More than profit has to be considered.

[@Ratplague707]

Inflation is occurring in houses, stocks, crypto, and other financial assets, but not in wages. The top 50% of the US has a lot of extra money because they can WFH and save, but the bottom 50% isn't so lucky. This isn't scientific but I think for half of the US, maybe less, things are actually pretty great but for the other half they suck.

[@spanky7277]

I'm waiting for the Money to Trickle Down . Since Reagan was In Office . I don't See it Yet . The Only thing is I see Inflation and Poverty .

[@saintpatrick6681]

supply doesn't seem to be driving up the wages, isn't that weird how labor shortage is completely ignored.

[@saintpatrick6681]

seems corporations are good at pushing prices up and wages down.

[@jgalt308]

A currency constantly devalued by inflation, encourages debt, since it can be supposedly be paid off with cheaper currency...printing money guarantees that...printing fiat money makes it happen faster. ( and there is no point in saving a currency that is guaranteed to lose value. ) This is clearly a function of the "rentier" (feudal) system which has expanded to the F.I.RE sector which now dominates the US economy...and which is not engaged in "production". Supply, demand and diminishing returns...add fiat and continued growth...and the system fails...because it is impossible for any "individual" to exercise any "real control" in preparing for any unexpected change in circumstance...or to even have any expectation of any sort of "stability"...in the short term, let alone the long term.

[@charles3840]

Wait, what is money over-availability? For instance, Germany printing so much that a loaf of bread is sold for a wheelbarrow of bills? Is that inflation? Hyperinflation? Something else?

[@drakekoefoed1642]

it's hyperinflation. done to get out of reparations in the treaty of Versailles, it is said

[@stevenhe198911]

I think Marx should add one prediction: human 's conflicts just change characters , it can appear in different forms through different ages in human society.And industralization just transfer the conflicts but never solve it ~it's strange rarely the fundamental cause are been looking at

[@EndOfAssembly]

If he went by his nickname, his passport would read.... Wolf, Dick Jokes aside, we love you professor. Another great video, we really need a socialist voice in American right now. Shit's gettin' real in the economy

[@joshuahd1719]

The rise of China is posting a Challenge to US power now. That also plays a factor

[@drakekoefoed1642]

if i could put some of my pennies in yuan i would. this empire's gonna fall

[@JesterEric]

The crunch will come when China stops accepting the money the West is printing as payment. A digital Yuan backed by gold would become the world currency for international trade

[@john-lenin]

7:00 Come on - you completely ignore MMT. If government money fuels stagnant parts of the economy there won’t be any inflation

[@robertdornan8611]

Problem it isn't, what would happen is either the gov't would tax the rich, to claw back the asset bubble created by the Fed in the stock market, which is spilling out into the real economy (real estate). Or the fed would reduce the money supply by not buying debt. Neither is happening. So as MMT states when you have to much money you have inflation.

[@davesthinktank]

The trickle-up economy has ensured that trillions upon trillions of dollars have been taken out of circulation, and instead sit in billionaire bank accounts. I expect our economic systems have found ways to compensate for this. However, if we were to "tax the rich", taking significant amounts of this money and putting it back into circulation, would this cause significant inflation?

[@PoliticalEconomy101]

MMT says theres no inflation until full employment

[@uhohhotdog]

No, it doesn’t say that at all. When supply cannot meet demand there is inflation. MMT covers this. You can spend so long as the supply exists. Labor is just one type of supply.

[@justice_was_taken]

@Rich H MMT is not exempt from exploiting the poor by capitalizing on peoples fundamental needs.

[@renardleblanc5556]

So, demand pull is like a whale showing up to poker night, who can afford to raise, raise, raise, and win every hand. Cost push would be like going to a casino, and there's too many whales crowding too few tables, so nobody else can afford the ante, anywhere. Or, something like that. I think. :)

[@LuciFeric137]

Kids get ready for some 70s style inflation or worse.

[@walden6272]

What's the 70s style inflation look like? Not familiar with that time period.

[@uhohhotdog]

Not likely. That was due to the oil shortage which affects every part of our life due to our dependence on gas powered vehicles. Especially back then.

[@CameronsCookingChannel]

@@uhohhotdog I don't know, what about the current chip shortage? We are already seeing inflation due to that today. Car prices are soaring, many new computer parts are rarely in stock, etc. Go on Ebay and look for a graphics card. Used market is hot and the new market more than double MSRP.

[@uhohhotdog]

@@CameronsCookingChannel chip shortage isn’t going to cause that level of inflation across the board.

[@Dwamak]

[@JesterEric]

Inflation is not a general rise in prices. It is a term used to describe the government increasing the money supply. Inflation is always created by governments under a state controlled fiat money system

[@rje4699]

No, the consensus is that *sustained* inflation is caused by increasing money supply. Inflation itself is simply a general rise in prices, which may have other causes that are not directly attributable to monetary policy decisions . Monetary inflation is the term you're speaking of.

[@JesterEric]

Inflation is always and everywhere a monetary phenomenon in the long run. A general rise in prices is just one symptom of an inflation that has already happened

[@rje4699]

@@JesterEric No, not all inflation is sustained, that which is, is better termed as monetary inflation since the consensus is it's caused by an increase in money supply. Inflation may be due to other factors, a perfect example is commodity price fluctuations over the past year, it's not clear if these prices are reflective of increased money supply, supply chain shocks, speculation and yield chasing in derivatives markets and so on. Over time, we will know. This is why there is a distinction between price inflation and monetary inflation.

[@brennanwn]

This is gonna happen and not gonna be pretty

[@kyledrums]

I dunno. Sounds good and all but does this guy even have a Twitch stream???

[@Gigika313]

😐

[@freepalestine2434]

He's an decent economist, but we all know that the real economics go down on Twitch. lmfao

[@isaiahsleepyperez6233]

Pogchamp socialism

[@tankie9997]

Please make a video on the practical implementation of Communism. I hear this critique a lot that Communism is all theory with no substance, can you please make a video we can use as an explainer for how Communism actually works in practise? For example, 'we must empower the workers' is fairly nebulous, it could mean anything, what we need is 'workers form unions, unions elect leaders, and those leaders become key figures in the communist party and thus set party policy'.

[@danieljones26]

Fair enough request. I would also be interested in this in-depth look at "Communism". "How it works in practice." How it HAS worked in practice AND "How it SHOULD work in practice. It has been tried, in various ways, throughout History...with various results.

[@tankie9997]

@@danieljones26 Yes. The stumbling block for people to understanding communism is the vast amount of material, much of it purely theoretical and academic. I think it would help to have a very pragmatic explanation of Communism and/or socialism. It would also help because without a wide understanding of Communism it's too easy for the right to pretend it's about oppressive dictatorship and genocide, or forcing straight white males to get gay married or however they characterize the left.

[@drakekoefoed1642]

howie hawkins does some talks on practical socialism. it would be harder to understand marx, xi or lenin. howie talks slowly and deliberately. you could listen to esha podcast sundays with lenin.

[@tankie9997]

@@drakekoefoed1642 Ok great, I'll check that out. There's been a couple of times people have asked me in good faith how to learn more, and I don't want to recommend the Communist Manifesto because to be completely honest it could leave someone more confused than when they started.

[@tankie9997]

@Rich H Imo you shouldn't call yourself that unless you are specifically a Third Positionist. If you don't ascribe to that ideology or set of ideologies then call yourself unaffiliated or independent instead, because Third Position is rightly or wrongly associated with the far right. I would agree with that characterisation because Third Position use racial politics, and imo all identity politics put a movement on the right, as opposed to egalitarianism on the left. And the same goes for the 'woke' anti-white racist shit too, I don't believe racial politics are necessarily progressive or leftist just because a racial group has a legitimate grievance. In fact I'd argue they are divisive and reactionary, marx said something like that in the 1800's that racial politics were a distraction to class struggle. And it's so true, you see broke white rednecks and broke black people willing to fight to the death over republican and democrat when those parties are only there to serve their corporate customers.

[@texas77563]

Every time i see this dude i know some bullshit is about to get said. He did give a pretty accurate descrition. Inflation is is from printing new money into the economy and having way more money volume in circulation than goods. Raising minimum wage raises the price for everything and is a push inflation. So investors can make products in mexico and ship them across the boarder and sell them in californias inflated economy and make more profit than they would in alabama. So raising minimum wage is more profit for the oligarchy. I hate wolfe hes always trying to sell some bs

[@buttercuptaylor7135]

As demonstrated by Nancy Pelosi and her HUGE freezer.

[@son-of-the-republic3723]

So money printing has nothing to do with increasing prices ? This guy is a professor ?

[@ohhah1255]

Money printing is apart of it, when you are printing 40% of all money to ever exist, then you are devaluing the purchasing power of the money but also that this money is literally inflating the stock market which is over 200% overvalued atm. (those who did not need the stimulus check per say in terms of economic well being)

[@Redactedlllllllllllll]

God, that username is CRINGE AF

[@cageybee7221]

i mean he literally said that is exactly what it is doing but ok be a dumbass i guess

[@whatshisname2497]

@@ohhah1255 stop spamming bullshit dude. That 40% figure was pulled out of someone's ass and you're spreading it like a boomer on Facebook.

[@ohhah1255]

@@whatshisname2497 LOL WHAT, are you an idiot, this is literally reported by the FED, fred.stlouisfed.org/series/M2

[@justice_was_taken]

Disturbing amount of ass kissing for total bunk monetary theories in the comments

[@clarestucki5151]

This guy with three degrees in Economics is trying to explain 'inflation', and he is ignorant of the true definition of the term itself. The actual definition of 'inflation' is "An unwarranted increase in the supply of money, leading to an increase in price levels." He's correct in pointing out that the timing and the magnitude of the price increases vary according to the so-called 'velocity of money', but his 'ice cream cone example' has no connection whatsoever to currency inflation, but is rather a simplistic example of the workings of the infamous 'law of supply and demand'.

[@luddity]

He was talking about price inflation, which he defined upfront. More money chasing fewer goods and services.

[@augaugust4299]

How can a so-called 'professor of economics' fail to mention that government money printing devalues the currency and makes everything more expensive and is a primary cause of inflation. Maybe its because this is what Richard and his ilk have been arguing for years; hand out unlimited benefits, now the problems are seen first hand, which would invariably entail unlimited money printing, and he cant bring himself to admit he's wrong. Embarrassing.