tags:: #poverty #inflation #AI
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Foreword: This is an experiment in using AI tools to write an article. In some ways, it's not unlike pasting together main notes from a zettelkasten (and the uneven flow that results). How should text written with AI assistance be acknowledged in such an article? With footnotes to the source? Comments in the text? Rewrite it slightly and claim as one's own?
(I wrote:) Price inflation is sinister, pernicious and insidious.[1] It takes from the poorest of people and gives to the richest. It is inherently destabilizing of society and sometimes of governments. It stealthily devalues what most people have, while demanding more just to sustain life.
(Then, I opened the Text Generator AI Plugin in Obsidian, and asked it to write:)
Write essay about the insidiousness of price inflation in U.S. economy.
AI
Price inflation is a phenomenon that has become a pervasive part of the U.S. economy. It is a gradual and insidious process that erodes the purchasing power of consumers, reduces economic growth, and undermines the stability of financial markets. In this essay, we will examine the insidious nature of price inflation in the U.S. economy and its far-reaching consequences.
Price inflation is defined as the increase in prices of goods and services over time. This increase in prices can be caused by various factors such as an increase in demand, supply shortages, or changes in government policies. However, regardless of its cause, price inflation has a profound impact on the economy.
One of the most significant consequences of price inflation is that it reduces consumers' purchasing power.
(I added:) What is the effect on the poor?
AI
The effect of price inflation on the poor is significant. As prices rise, it becomes increasingly difficult for low-income individuals and families to afford basic necessities such as food, housing, and healthcare. This can lead to a decline in their standard of living and an increase in poverty.
Inflation can also have a disproportionate impact on certain groups within the population. For example, those who live on fixed incomes such as retirees or disabled individuals may struggle to keep up with rising costs. Similarly, those who work in low-wage jobs may find that their wages do not keep pace with inflation and they are unable to afford basic needs.
Additionally, inflation can also lead to income inequality. Those who hold assets such as stocks or real estate may see their wealth increase as prices rise, while those without such assets may struggle to keep up with inflation. This can further exacerbate the gap between the rich and poor.
Another insidious aspect of price inflation is that it can lead to a decline in economic growth. As prices rise, consumers may cut back on spending, which can reduce demand for goods and services. This can lead to a decrease in production and employment, which can further weaken economic growth.
Inflation also undermines the stability of financial markets. When inflation is high, investors may demand higher returns on their investments to compensate for the loss of purchasing power caused by rising prices. This can lead to higher interest rates and reduced investment, which can further slow economic growth.
In conclusion, price inflation is a pervasive and insidious phenomenon that has far-reaching consequences for the U.S. economy. It reduces consumers' purchasing power, increases poverty and income inequality, undermines economic growth, and destabilizes financial markets. While policymakers can take steps to control inflation through monetary and fiscal policies, it is important for individuals to also be aware of the impact of rising prices on their own financial well-being. By understanding the insidious nature of price inflation, consumers can make informed decisions about their spending and investments to mitigate its negative effects.
(Then I asked Notion AI to write about inflation:)
Inflation is a complex economic phenomenon that can have a significant impact on individuals, businesses, and governments. It occurs when the general price level of goods and services in an economy increases over time, resulting in a decrease in purchasing power and a rise in the cost of living.
There are several factors that can contribute to inflation, including an increase in the money supply, a rise in demand for goods and services, and a decrease in the supply of goods and services. Inflation can also be caused by external factors, such as changes in global commodity prices, exchange rates, and trade policies.
Whatever its cause, inflation can have serious consequences for individuals, particularly those on fixed incomes or with limited financial resources. It can erode savings, reduce purchasing power, and create economic instability. Inflation can also lead to social unrest and political turmoil, particularly in countries where the government is unable to control the money supply or maintain fiscal discipline.
To protect against inflation, individuals can invest in assets that tend to hold their value during inflationary periods, such as real estate, commodities, and stocks. Businesses can adjust their pricing strategies and production methods to account for rising costs. Governments can implement policies to control the money supply and promote stable prices.
However, it is important to note that inflation is not always a bad thing. In fact, a moderate level of inflation can be beneficial for an economy by encouraging spending and investment. The key is to strike a balance between inflation and economic stability.
That being said, some countries experience hyperinflation, which is a rapid and extreme increase in prices. Hyperinflation can be devastating for individuals and businesses, as it can wipe out savings and lead to a breakdown of the economy.
To prevent hyperinflation, governments need to implement sound monetary policies, such as controlling the money supply and maintaining fiscal discipline. They also need to promote a stable political environment that encourages investment and economic growth.
In summary, inflation can have both positive and negative effects on an economy, depending on its level and duration. To mitigate its harmful effects, individuals, businesses, and governments need to take proactive steps to manage inflation and promote economic stability. This includes implementing sound monetary and fiscal policies, investing in assets that hold their value, and promoting a stable political environment that encourages investment and economic growth.
(Then I used Readwise Reader Ghostreader to summarize several articles on inflation:)
Inflation is a major global issue that has been rising since 2020, especially in food and energy. According to the International Monetary Fund (IMF), the average global inflation rate has risen from 3.8% in 2019 to 9.1% in October 2022. Right-wing commentators claim that large government spending is the primary driver of inflation, but it is better to have this than a major global deflation and depression. Inflation can be controlled by the actions of national governments, through a combination of less stringent inflation-control policies. The Federal Reserve has responded to rising inflation with interest rate hikes in order to protect the wealth of the wealthy, although this has resulted in working-class people getting the short end of the stick.[2]
Paul Donovan, the chief economist of UBS Global Wealth Management, argued in an op-ed that inflation in the United States is caused by corporate profits rather than wages, and criticized the Federal Reserve for using interest rate hikes as a primary tool to combat inflation. Donovan argued that companies have taken advantage of circumstances to increase profit margins, resulting in inflationary price increases. He suggested that policy should have more routes to lower inflation if it is caused by profits, such as taxing windfall profits instead of increasing interest rates. His opinion was echoed by progressive advocates and economists, who argued that corporate profiteering is the reason for high inflation.[3]
This text argues that the current economic crisis is not caused by inflation, but instead by corporate greed. It further argues that the GOP's proposed solutions to inflation would make the situation worse, as they involve providing tax breaks to billionaires and cutting benefits for the elderly and the poor. The text suggests that the only way to address inflation is to take on corporate greed and pass a windfall profits tax to lower the costs of healthcare, prescription drugs, gas and groceries.[4]
The text discusses inflation, a continuing rise in the general price level that affects the purchasing power of a currency. It has a long history, including in ancient Egypt and Rome, and there have been several inflationary episodes in US history. Recent inflation in June 2022 has caused prices to go up significantly, and the outlook is uncertain. Some experts believe prices will level out by 2023, while others think inflation is here to stay. The goal is to stabilize the inflation rate at 1.5-2%.[5]
Many US corporations reported record profits over the past year, leading some politicians and economists to accuse them of "greedflation" – raising prices to boost profits. The Federal Reserve has also acknowledged this, with Vice Chair Lael Brainard noting retailers' profit margins have risen more than average hourly wages. Executives from many companies have indicated that customers are already starting to pull back due to inflation, and if it continues, profits could fall, potentially leading to layoffs. It remains uncertain how much of a role corporate greed has played in inflation, but as inflation slows down, it looks like corporate profits are set to take a hit.[6]
The Federal Reserve Bank of Minneapolis recently hosted a conference exploring the different pressures inflation puts on workers and families in the United States depending on their income, location, and spending habits. Three presentations discussed at the conference examined the price volatility faced by Black and White households, cost of living inequality beyond the Great Recession, and differences in rent growth by income between 1985 and 2019. The findings suggest that Black households face higher prices and less certainty in prices than White households, and that low income households have been disproportionately affected by inflation and the Great Recession. Future research is needed to explore the impact of rising inflation on consumption inequality and economic mobility.[7]
The Federal Reserve raised interest rates three-quarters of a point, signaling that they expect inflation to ease. The stock market initially reacted positively to the news, but fell when Chairman Jerome Powell said rates would likely have to rise higher than expected. Core inflation is rising, but it is still lower than it was in June, and the public is worrying about inflation more than the Federal Reserve. Wages are rising a little faster than inflation, and Republicans worry more about inflation than Democrats. Midterm voters are more concerned with inflation than other issues, but despite this, inflation is actually getting better.[8]
The US consumer price index has risen 6.2% from a year ago, the highest annual inflation rate since 1990, prompting Republicans to criticize Biden and Democratic lawmakers. The underlying problem causing inflation is not the inflation itself, but the lack of competition in the economy due to the consolidation of the American economy in the hands of a few corporate giants. Companies are raising prices and making record profits due to their unchecked power. Biden administration officials are trying to unclog supply bottlenecks, but the only real solution is the aggressive use of antitrust law.[9]
The report released by the U.S. House Committee on Oversight and Reform highlighted how certain corporations are using the cover of inflation to excessively raise prices, resulting in record profits and profit margins at the expense of consumers. Analysis of financial information from a sampling of the largest corporations in several industries showed massive increases in profits and profit margins between 2019 and 2021, and studies by the Economic Policy Institute and Roosevelt Institute demonstrate that profits contributed more to price growth in the U.S. than at any other point since 1979. Rep. Raja Krishnamoorthi, the subcommittee chair, called the practice "unacceptable" and highlighted the Inflation Reduction Act, which Democrats passed this summer, as well as a potential windfall profits tax bill. The analysis comes days before the U.S. midterm elections and on the heels of the Federal Reserve announcing another interest rate hike.[10]
The Federal Reserve's (Fed) aggressive raising of interest rates has been met with criticism from economic observers, who see it as an unnecessary step that could lead to an unnecessary recession. The main inflation drivers of the past year (Putin's war in Ukraine, China's lockdown, and post-COVID demand exceeding supply) are not able to be addressed by the Fed, which is instead relying on an outdated Phillips Curve to reduce inflation. This could lead to reduced wages and unemployment for many Americans. Robert Reich, Claudia Sahm, and other economic observers have argued that a recession is not necessary and that the Fed should pause its rate-raising cycle. The future of the economy is at stake and the Fed must consider new ways to create a low-inflation, high-employment economy.[11]
Many people are concerned that government spending due to the coronavirus pandemic could lead to inflation, but economists argue that it is unlikely. The lack of inflation since the Great Recession has allowed for policymakers to experiment with stimulus measures. The Federal Reserve is paying attention to inflation, but inflation has not been an issue for the last 25 years, and the current rescue package is too small for it to become an issue. Despite this, some are still concerned about inflation and are using it as an excuse to argue against government spending. Ultimately, economists argue that the primary concern should be to support a roaring economy and help those who have been sidelined by the pandemic.[12]
The expanded child tax credit, which provided up to $300 per child under 6 and up to $250 per child under 18, was discontinued in December 2021 after Democratic Sen. Joe Manchin opposed it, citing potential misuse of the credit. As a result, child poverty rates have risen significantly, leaving families struggling with food insecurity and insufficiency. Data from the U.S. Census Bureau shows the expanded child tax credit had a dramatic impact in reducing child poverty, particularly among Black, Latinx and Native American children. Advocates are now pushing for the restoration of the tax credit, with 58 members of Congress signing a letter to congressional leaders urging them to extend the credit and the earned income tax credit before the end of the year.[13]
The Fed’s Response to Rising Inflation Protects the Wealthy at Workers’ Expense↩︎
Top Economist at Major Global Bank Says Corporate Profits Are Fueling Inflation↩︎
Our economic crisis isn’t inflation, it’s corporate greed and the GOP will only make that worse↩︎
The window is closing on corporate 'greedflation.' It's another sign that inflation is cooling off↩︎
The impact of different inflationary pressures due to income inequality and racial disparities in the United States today - Equitable Growth↩︎
Ordinary Americans Are Freaked Out About Inflation. The Federal Reserve Not So Much↩︎
House Analysis Confirms Corporations Use 'Cover of Inflation to Raise Prices Excessively'↩︎
Column: A panicky Federal Reserve is driving us into an unnecessary recession↩︎
With no child tax credit and inflation on the rise, families are slipping back into poverty↩︎