Infra: Causes, answers and the real NAIRU numbers in the debt driven economy collapse
Solving inflation in this current situation where there are a number of opposed/conflicting boundary conditions: External price rise of energy and its geopolitics, broken chains of supply with price rise due to pandemic, financial futures /derivative/options/short speculation on commodities, and the question of /demand /supply.
Mostly all the Govts , to solve this, and WD will take the case of a famous pupil/slave of the current ordoliberal schwabian hausfrau economics, Slovenia, unable to resist or dumb enough to be blackmailed by anybody who has 5 minutes of time, use only one option, tax people.
The purchase power and the shortage of goods on sale and thus the price rise in the situation of people saving while govts make huge debts as the offset , see MMT.
If the net spending of the people increases and so their purchase power, while the offer of goods i slacking, lacking, hehe, the govt and in this SLO case, not surprisingly, the whole left right opposition of ordoliberalism lackeys including the current govt which,authoritarian but populist enough to understand the role of taxation and by lowering taxes trying to win votes, leads to always the same solution, regardless of the complexity of issues: Rise taxes and so cool down the inflation.
ANY govt in the debt driven economy collapse has these options to solve the demand/supply imbalance:
Rise taxes and so take away excess people saving.
Make more goods by making the supply side expanding and thus lower the prices. Certainly in free market economy of real competition, which is another problem.
This second case – make more goods- has a geopolitical problem, everything is made in China, so more goods means more national currency deficit to pay the Chinese Goods. The currency stability, adding the energy price hike (dollar denominated), gets complicated. The answer, but it is a long term one, is start making goods at home. In the indebted Slovenia situation, which, by the way, is good but not so good for the neoliberal schwabian hous wife mantra, with the fiscal compact of the Eurozone looming again, investing for re shoring the production is a dream with even higher production costs and thus new inflation attached, , and the politics , forget it. Let the lion sleep and let the slaves or prisoners or Uyguri do it instead.Dombrovskis said that few days ago, no ban on prison made goods or similar, he said it is counter productive and they … are what you see…
The taxing of the people income is the only way the masters use to operate the business as usual.
SO for Witchdoctor came as a surprise when the populist govt of Slovenia proposed a rise of the income tax free bracket from 3.500 a year to 7.000 Euros in the next three years. But the so called left started to shout about, you know, THE DEBT! Especially the “left” party, which is a sign that they are all into the ordoliberal mud. Yanis Varufakis should know, when he visited Slovenia and you can go and see the video on youtube and his stalinist counterpart, being a stalinist or whatever is what Slavoj Zizek calls himself, but the fact is that he is a spitting entert(r)ainer.The Slavoj did not want the public to make questions, but he was nudging all time a guy, calling him Luka, the “Left” party chief, which was mumbling something about Yanis dealing with the Eutroika, when Yanis was a Greek Finance minister.Yanis did not look happy at all while this was going on.
That Luka Mesec has learned a lesson of Troika was clear when he opposed even with a referendum to back the plan of the populist govt to raise the no tax income zone from the lousy 3.500 euros a year to 7.000, while the neighbor Austria is, for years now, over 10.000 of no tax income bracket for the persons, Italy is 7.500 or more, etc..
LUKA claimed that this no tax income zone would help also the rich.
Yes, but he forgot that the Income tax ladder brackets could be adjusted, when income is more than 7.000 euros while leaving the no tax zone stay tax free and even rising this amount, if he wins next time, which is, hahhaha.
In fact the Slovenian left has interiorized the Troika, EU maastricht rules, fiscal compact and they are the best pupil of the EU oligarchy. To prevent that the rich get richer, which is anyway simple for them, since ,the rich have outshored most of their money, the left is instead taxing the broad tax base, which is the low and lower middle salaries and the same goes with the self employed and SME firms. As we know, the low and medium incomes are the real money from where taxes can be collected in big numbers, not the 5 rich. So, any excuse to be and stay a diligent member of the Eurozone, debt and fiscal compact rules included.The rhetoric about the rich is a smokescreen. The “left” never proposed closing the stock market or stopping issuing debt based State bonds, but they concentrate on such populist bollocks as is the , for WD, urgent rise of no tax income bracket.
By the way, the income steps of % of tax brackets can be made in a smooth logarithmic way, so there are no jumps from one income tax bracket to the other, when a person for a lousy 100 euros more income a year falls in a much higher income tax bracket! LUKA, read some … stuff, life is not over yet.
While Slovenia has a 4%, very low unemployment,no Nairu of concern, the left and the opposition have the idea that people do not need more money or savings, but the opposite,they have to be taxed more..
On the other hand, the debt bearing, not issuing his own currency Slovenia is in the hands of the ECB kabal,so, the whole pupil/slave politics is exogenous, somebody, like Dombrovskis, is whispering some tune into their ears, but we know nothing about that.
But, there , in this situation there is a third way of doing it:
DIVERT/shift THE EXCESS saving of the people into the green energy projects, or into storage agriculture and water public facilities. The climate crash is no joke and Witchdoctor is banging on storage, look at the posts.
If one wants to cool the demand for the consumer junk coming from China, give people a chance to invest in green energy community plants, or public cereal storage or any public new and green project.
BUT, one has to give people some dividend for that.
ONe is, every participant has cheaper energy in his % of the stake.In anything, having cheaper bread even in wheat storage public silos. Or whatever, the water bill..
Next, give people waiver of VAT if they invest in this tech. Next, since the Govt has withdrawn in this way the excess saving from the goods market and by this is lowering inflation, the State should pay the extra dividend in the amount of yearly inflation on the investment amount as a bonus for such investment. We all know inflation is tax and it is being,at the end of the chain, collected by the GOVT. GOVT, by draining the excess savings from the market, has a moral duty to thank the people and give them the inflation bonus amount, until there is inflation around.
A sort of interest on saving/investment.
So the internal inflation push by too much demand is solving twofold, by draining pressure on supply side of the consumer junk spending ,and by building the green energy capacities and so lowering the exogenous price hike of the Fossil Oligarchy!
Slovenia has a huge personal saving accumulated waiting in the bank and losing value, so…
This proposal is valid only for personal people excess saving, and not for Private companies.Point, and you know why, because it is the pressure of persons, people, which hike the price in the case of low supply and it is not coming from companies.Companies should only make more goods.
Same proposal could be made for the social cooperative housing as a participative people dividend carrying program. Next, the empty flats should be taxed, the rented not. This way, the housing overbuilding for speculative reasons , keeping flats empty as the asset,is fought. The opposite of what the SLO opposition is doing.
BUT, hm, alas, the opposition even proposed that Slovenia has to make, as soon as possible, the budget surplus, which means they have to collect more taxes than they spend. In the middle of pandemics, when hospitals barley cope!They consciously plan the next austerity and, that being not enough in this boundary conditions, a huge recession and job losses overall.
Pure ordoliberal charlatan junk and a robbery.They , or have never read any text on economics,forget MMT or Keynes or Stephanie Kelton or .. or they exactly know for whom they work and this whom is outside Slovenia.Sitting on some cloud of financial sucking machine.
But, Yanis should know who is inviting him, hopefully.
THE NAIRU
It is the famous natural unemployment rate and certainly, as all charlatan economics, it is bollocks, but, it is not. In the debt driven economy system with rising automation and the Artificial Intelligence , etc, the Nairu is definitely real.It is the inner law of capital reproduction. Witchdcotor counts that, it is intrinsically 40%. The natural unemployment rate of the developed west is 40% and it will be in a few decades 70%.
AND sorry, there is no job MMT State guarantee in sight, the rulers keep strict on the charlatan economy book and they have their personal wealth reasons in doing so.
OK, the real NAIRU will be when the Oligarchy is getting rid of the slaves, and prisoners working for free in the other parts of the world, that is, as soon as they become too costly.
The other factor keeping the real 40% NAIRU rate down is the bullshit yobs David Graeber wrote about,which count as a smokescreen for the Oligarchy to hide the crude facts and to have the vast plunge protection teams- workers,finance, media, law ,order, to prevent any assault at the income of the Oligarchy. Shielding income of the Oligarchy is a costly business and,once again, read Jeffrey Winters book “Oligarchy” on that purpose. They have to employ armies to shield.
The Capital Machine is getting ready to need nobody for its reproduction, that is its inner logic, The only obstacle for doing it, is, to whom to sell if too many have no income?
The last sentence is preparing WD to enter the new paradigm:
Morphing of the Capitalism, from the theology economics, which WD has written a lot here, you know, calvinist and similar religious concepts morphed or hijacked or having a new parasitic life as a capitalist economy, to the new, forming,and winning,
Morphing Capitalism; from Theology to Idolatric Onanism
It will take some time. From Witchdoctor essays written here , from Marx -goods as fetish, Walter Benjamin, Luigino Bruni, from Nietzsche to Silvio Berlusconi (who else) to….
And this is not a joke. Or, we live in a joke.
WD
Happy trails,
https://www.witchdoctor.space/2021/12/19/money-creation-inflation-and-the-whole-house-of-cards/
https://www.witchdoctor.space/2020/08/28/exit-from-the-debt-driven-economy-crash-4th-course-the-dessert/