Inflation Comes From Printing Money For The Rich

Brief thoughts on the political science of this country (USA). Leftists are getting it slightly wrong. In Washington, the divide is between the very few progressive Democrats and the rest of the “bipartisan” politicians bought off by corporations. On the ground, however, the divide is between left-liberals and conservatives, not between leftists and liberals.

In general people of all political spectrums are far to the left of most politicians in both parties. Alienation from the Democratic Party comes not from supposed neoliberalism or wokeism, the two most common tropes by the reactionary right. Rather the alienation from the Democrats comes from their commitment to the state as a means to consolidate corporate power. Many conflate this with communism, and in the context of communism being understood as state capitalism historically, people aren’t wrong.

So how does a party like the Republican Party, who is so cruel towards the working class, even stay afloat? How has their extremism not collapsed on itself? If the Republicans governed on their own the country would have no function at all. Both parties know this and both use it to keep power.

But what is so wrong with the Democrats? Are people that stupid? No, no, and no. The elites think they can sneak by buzzwords like inflation when people know there is more going on.

The establishment right wants to blame inflation on poor people. This is preposterous. Anyone who looks at the numbers knows the Biden administration hasn’t provided relief, let alone justice, for the working class. This is how Biden should be opposed. Biden is no FDR. And FDR was no FDR.

The left pundits are equally alienated from the working class. They dismiss inflation, saying that it will hurt the ruling class. The left’s disconnect from the working class continues. This is because, despite their obsession with dunking on the Democrats and apologizing for fascism, there is a subconscious desire to defend the Democrats as the true revolutionary force. We should be able to admit inflation is bad for the poor while providing a proper context.

The framing of neoliberalism continues to be problematic and confusing. Let’s be clear. The attitude of the working class is far different than that of the middle class. The middle class, stuck in sentimentality and anti-revolutionary spirit, remains romantic about the state and claims that neoliberalism is the politics of austerity. However, we would be better off looking at neoliberalism as a crisis in profitability.

Why must everything be privatized? To put it simply this is to make it profitable. Even much of the Build Back Better plan would have been further privatization of the economy to get it up and running again. A compassionate policy such as the child tax credit is not the reason for inflation. Biden could explain this, but he won’t. Is it the left’s job to save Biden from himself? This is not my full intention, but I don’t entirely mind that accusation when hurled at me by the Trumpenleft.

The government has been printing money through quantitative easing since 2008 which I want to examine below. But first, let’s get the inflation question out of the way. The first question is inflation of what. The price of rent has been ballooning for years at a pace very similar to the 6% inflation rate we see now. What about college tuition? What about the fact that wages in general haven’t risen while cost of living has? What about stocks going up while wages stay stagnant? What about the colony shifting towards financial speculation where the rich can make money and away from labor where the poor can make it? What about more money going into stocks while government benefits for the very poor don’t grow? All this hurts the power of the “working family” and could be framed as inflation.

The reason we haven’t seen “inflation” in the stupid way economists measure it is because we have shifted labor overseas and kept consumer prices down because this labor is more exploited. However when a pandemic happens and the supply chain is interrupted such a reduction in prices is going to be less because the advantage of exploitative globalization now also has an extra cost.

Climate change also raises the prices of things because it disrupts the economy. However, this apocalypse of the climate may save capitalism as a system because when a climate is destroyed it becomes a non-capitalist system and can therefore be exploited all over again, assuming there is any meat on the bone. At the very least it creates a new class of migrants to exploit. This is the same reason capitalism still needs war to function.

The thesis of neoliberalism is wrong because the government is spending money, not on the working class, but rather to save capitalism from itself. On its own capitalism makes no sense and would become non-profitable. With these tricks to hide the crisis and push it onto the working class, capitalism lurches on.

Quantitative easing causes inflation in the long term, not the short term, and it can explain our inflation issue today. There isn’t much to like about QE. It is the post-2008 policy the United States has used to buy time and widen inequality. It is essentially printing money for the rich and hoping the rich invest it in the poor. Guess how that one is working out.

Developing countries have also been critical of the United States because they too rely on the currency of the dollar and by buying it up, the United States creates inflation in other countries also. Such criticism isn’t heard and can’t even be reckoned with on a domestic level.

Some commentators wish to distinguish between Quantitive Easing and printing money but this remains murky. If anything QE is worse! From my understanding, there are two steps, not one in QE. Rather than print money directly the government buys from the private market which in turn sells back to the central bank.

The same idea is being applied. If it’s not private, it’s dead weight. This is a different logic than “austerity”, in my opinion at least. Under this logic the debtor, whether it be a colonized country or the millennial, can take on debt, and indeed has to, and this is used to further entrench the inequality. The debt itself is the economic activity. By putting the poor under the pressure cooker the economy is stimulated. Economic activity is compelled and the economy as such is saved.

But this isn’t the whole picture either. Many people struggle to understand how the questions about globalization relate to a country like Nigeria, where the employment rate is a third of the population. Keep in mind that as the United States, this unemployment is surely actually much higher than the official number. The crisis comes not even from the unemployment rate as such, but rather because working for a wage in Nigeria basically gets you nothing, maybe a dollar a day.

So an alternative economy must be formed. Not only terrorism as the West pretends, although this is a huge issue. Rather the only way to really make a living in Nigeria is to own your own means of production. Either by having your own stand to sell goods or by practicing a service that can be bought by others. Working for a wage has such a low return that it’s either become an entrepreneur or perish there. Such may be the future for the West if wages continue in the way they have been of late.

However what role is the United States supposed to play in this whole formula, where the economic crisis is constantly staved off by handouts for the rich? I don’t think the idea is supposed to be that the United States becomes Nigeria. Rather the idea is that the United States continues to control the world through its military and technology, funded by the dollar. But for this to work the dollar cannot undergo inflation, hence the hysteria now.

Of course inflation hurts the working class too, but in certain parts of life, it already was going on. Why the ruling class may not want inflation is because the dollar really has to finance the system of widening inequality. Take the creation of the vaccine for example. It wasn’t Moderna who funded it but rather the American taxpayer. Same for the tech boom. If the dollar really inflates how could one fund the vaccine?

I bring this up not to be anti-vaccine, but rather to point out that the vaccine is only given to countries who can make it profitable and it too has been a tool for widening inequality by keeping the economy running. If it was viewed as a public health tool rather than a profit-making tool then it would have been distributed to more people, not less. Hence the right’s critique of the vaccine as itself a technology to track us is rather a moot point. If you are eligible to get the vaccine you are already useful to the system’s ability to make a profit. Just by being eligible, you have already been tracked in the broadest sense.

The United States consumer class, even on the left, remains fanatically anti-Marxist and is a useful tool, but one we should avoid blaming or fetishizing. As I said above most “ordinary” people remain far to the left of the Democrats but rightly determine that the Democrats are not actually interested in spending money on the working class, but rather like spending money on the rich. To this it remains hard to defend the Democratic Party, and it is easier, and necessary, to point out how the Republicans are the same, but worse, in their use of spending, and they hide behind libertarianism that they have long abandoned.

This is the tricky position the left is in and I don’t think we have caught up quite to the priorities of the ruling class. Indeed much of the left’s singular criticism of the Democratic Party falls on deaf ears because the difference between the parties is not necessarily about saving the middle class, as neither party really have a plan for that. What the Democrats present, in only a very small difference, is a limited safety net for the most vulnerable, not necessarily the middle class. The problem is that much of the left is the middle class and hence rightly sees no difference between the parties.

For the poor there are programs often ignored by the left that do change amongst the parties, especially on the local level. Because the left is so inwardly focused on reviving the middle class rather than achieving socialism they rightly see no difference between the parties. For the poor, this is a confusing position. This does not mean the left isn’t correct and I don’t see anything about the Democratic Party worth reviving. However, it demonstrates another reason why the left, even less than the corporate parties, fails to connect broadly to the people it claims to represent.

I think Counterpunch is open to this critique of the left, which I appreciate. It doesn’t mean that the strategy of abolishing both parties needs to change necessarily but I wonder how and for whom. Abolishing capitalism through direct action of strikes and protest is necessary but a totally apolitical approach to the two-party system leaves most people confused.

What is the goal then if the middle class as we know it doesn’t count? The goal is to keep the economy going and to keep making money. After 2008 we saw the economy crash and the policy of QE is to make sure that doesn’t happen again. As long as consumers can continue to spend crisis is averted. The amount of debt that people and countries go into isn’t necessarily a concern because it takes away their power to resist the system. What is scarier for the capitalists is a reality where (certain) people can’t afford things upfront.

The leftist defense of inflation is that it lowers debts and the idea is that poor people are in debt. However, inflation also raises interest rates and thus people who are actually in trouble won’t be able to catch up. To be fair to the left the reason the ruling class doesn’t want inflation is related to this. The picture is more complicated though. With QE, inflation as such can be avoided through economic growth, in theory. The people who are hurt are those not invested in the stock market, in other words, the non-ruling class. Inflation is avoided but money creation isn’t and so we should question the framing of inflation.

The US has done four big QE dumps recently. (2008, 2010, 2012, 2020). We are seeing the effect of this now. But we were seeing it before in other fields not measured. Property is a key example. Theresa May even admitted this: “Monetary policy – in the form of super-low interest rates and quantitative easing – has helped those on the property ladder at the expense of those who can’t afford to own their own home.”

Molly Scott Cato was also honest about the purpose of QE in an even more revealing way: “Some of these policies may, on the one hand, increase inequality but, on the other hand, if we ask ourselves what the major source of inequality is, the answer would be unemployment. So, to the extent that these policies help – and they are helping on that front – then certainly an accommodative monetary policy is better in the present situation than a restrictive monetary policy.”

This goes into what I said earlier which is that the whole point of QE is to keep the US from becoming Nigeria, in which the high unemployment rate would lead to a crisis for the ruling class. In the third world, such crisis is not only “normal” in political terms but also hard to overcome because of the colonial powers really having the leverage to squash any revolution. What such a crisis would mean in the heart of the world’s Empire itself is another question and one the ruling class clearly doesn’t want to answer.

The compromise the ruling class has struck is that the middle class will be kept up by monetary policy and that finalization of the economy will buy time. That time may be running out. What happens next?

Maybe we do have what is wrongly labeled “socialism” after all. There’s a reason the working class is opposed to it! The fact that the Democrats continue to fight for “taxing the rich” while ignoring the crucial shift in QE policy goes to show that there is a willful misinformation campaign going on, or just plain ignorance of the basic elements of the crisis. We should absolutely tax the rich but not printing money for them would be a good start. Such a sentiment would be universally popular and hence the Democrats will stay away from it, fearing victory even more than they love defeat.

The gambit that the Republicans have is that the American middle class remains so reactionary that such a systemic critique will never be made. The calculation by the Democratic Party is that the working class has nowhere to go. The Republicans are ironically betting on QE, big government, to hold off contradictions. The Democrats in turn rely on the Republicans in order to remain the lesser evil while propping up policies their base does not support.

In summary, the left frames inflation as something that helps the working class and the right frames inflation as something that comes from helping the working class. Both are so wrong it’s unbelievable. Inflation comes from helping the ruling class. The political system relies on the scapegoating of the working class by Republicans and the willful misrepresentation of the working class by the Democrats in order to animate the Republicans. QE is useful for reactionary politics because it does not have an immediate effect. The bad news for the ruling class is that nothing, not even socialism, can be kept off forever.

Nick Pemberton writes and works from Saint Paul, Minnesota. He loves to receive feedback at