Inflation Explanation

Inflation comes for another pound of flesh

Surplus labor comes not only with mass migration but with Artificial Intelligence (AI). Human “labor and intelligence could be surplus to requirements in the mid-to-near future,” reports New Atlas. Multimodal AIs are “coming full speed for white-collar and creative jobs” as well as (through robotics) blue-collar jobs. [1] Politicians may think their jobs are safe, but recall how, in July 2023, Joe Biden admitted, “I am the AI.” [2]

Temporal (and spatial diffusion) waves in technological innovation does not work, observes author David Harvey. A surplus of capital tends to “rush frantically into the new technologies in a vast speculative wave…” The compounding rate of capital accumulation causes innovation waves such as AI to become faster, more compressed, and more speculative. [3]

A speculative wave appears to be powering the stock market at the moment. Investor Mark Spitznagel says expect further euphoria in the stock market before it tanks. Right now, we are in the late stage of a boom that’s approaching its bust, he said. “I continue to expect a blowoff, and then I expect a crash that will be the worst crash since 1929,” Spitznagel said. “And my simple reasoning for that is that we are witnessing the bursting of the greatest credit bubble in human history, and crashes are direct consequences of the bursting of credit bubbles.” [4]

The U.S. government borrows money via debt auctions. To keep rates at a certain level the “Federal” Reserve intervenes via “member banks” to purchase T-bills that nobody will buy unless higher interest is offered. Then the “Fed” magically creates new money to pay for the T-bills. That in turn increases the money supply, the dollar loses value, and things cost more. Paradoxically, the “Fed” also claims to be fighting inflation.

“US wholesale prices picked up in February in sign that inflation pressures remain elevated,” reports the Associated Press. “The Labor Department said Thursday that its producer price index — which tracks inflation before it reaches consumers — rose 0.6% from January to February, up from a 0.3% rise the previous month.” [5]

An inflation explanation is offered by Professor Peter St Onge in the video hopefully viewable at the top of today’s blog entry. “On an annualized basis the CPI was up 5.4 percent in February”, up from 3.7 percent annualized in January, 2.8 in December, 1.9 in November, and just 0.9 percent annualized in October.

——- Sources ——-
[1] “Post-labor economics: Will capitalism work when the robots take over?”, by Loz Blain. New Atlas, March 8, 2024. https://newatlas.com/technology/post-labor-economics-shapiro/
[2] “‘I am the AI’ – Biden”, Russia Today (RT), July 22, 2023. https://on.rt.com/cfm7
[3] The Enigma of Capital, by David Harvey. Oxford University Press, 2011.
[4] “‘Black Swan’ fund manager Mark Spitznagel expects the stock market to rally further before we hit the ‘worst crash since 1929.'”, by Laila Malden. Business Insider (via Yahoo Finance), March 13, 2024. https://finance.yahoo.com/news/black-swan-fund-manager-mark-160002319.html
[5] “US wholesale prices picked up in February in sign that inflation pressures remain elevated”, by Christopher Rugaber. Associated Press (via Yahoo Finance), March 14, 2024. https://finance.yahoo.com/news/us-wholesale-prices-picked-february-124217277.html