I’ve come to the conclusion, with the help of Marxist economics and economists, that inflation is caused by price increases. Prices increase because, as you say, the rate of profit tends to fall. If raw material costs don’t fall, and if it becomes difficult to reduce labour costs, the only remaining way to increase profit is to increase prices.

Western countries in general have handled inflation by pretending it isn’t happening (biased calculations of the rate of inflation), having a constant supply of cheap resources, goods, and labour from colonized nations, and by making debt cheap within the empire so people and companies can still buy things even when purchasing power and prices diverge.

It’s all about to come crashing down and we’re all here to see it.

Ghost of Faso
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Inflation is the devaluing of workers labour in favour of the global banks.

The west handled it well because they where able to exploit the labour of third world countries to peg up there own ecomonies due to colonialism, but in recent times China in particular have been undercutting the wests monopoly (gained through violence) on these manufacturing trade relationships and actually offering them more reasonable terms that arent enforced with bombs and boots on the ground like NATO does it.

I think thats why inflation is starting to get out of control in the west, the global banking system is starting to achknowledge that it is no longer the dominanent politcal force globally and is adjusting.

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It should be said there are like 1001 reasons why the west is going down the shitter right now as well, stagnat liberalism comes to mind.

In the financial capitalism of the 21st century, inflation is an integral tool to the functioning of economies. Money, in modern (bourgeois) economy theory, is created by banks. Banks loan money to people which, because of interest, create more money than existed before. Inflation is therefore used as a mechanism to control how much money banks rent – if inflation is high, people will not borrow. If it’s low, people will borrow more. States generally keep inflation at around 2%, if they can, to create controlled money growth.

I’m not sure if this is the answer you’re looking for but that’s about all I know lol.

if inflation is high, people will not borrow

You mean interest rate?

I believe I did. Central banks decide on interest rates and adjust it to control inflation - - more money being created fast means higher inflation. Higher interest rates means less money borrowed.

I posted this article in another thread, but in short (as I’m on mobile) it’s related to one of the biggest contradictions of capitalism: the crisis of overproduction.

(Before reading this, keep in mind that I am an idiot amateur)

Inflation is just an average rise in prices. Sometimes it’s caused by actual problems (e.g. supply chain issues, although large capitalists typically account for this). Often, it’s just because capitalists decide that they want more profits and think that they can get away with raising prices.

In the case of Russian oil and gas, capitalists’ profit would likely decrease if they didn’t increase the prices, but I have no doubt that the price increases are far greater than what is “justified” (from the standpoint of maintaining the same amount of profit).

There’s plenty of fuckery going on with energy prices – e.g. to my understanding, in Europe, they’re setting prices for all energy based on the most expensive method of “generating” energy used (meaning that cheap solar energy is sold for the same amount of money as energy gathered from expensive fossil fuels).

There’s plenty of fuckery going on with energy prices – e.g. to my understanding, in Europe, they’re setting prices for all energy based on the most expensive method of “generating” energy used (meaning that cheap solar energy is sold for the same amount of money as energy gathered from expensive fossil fuels).

I heard this explained a bit by Yanis Varoukis! It’s expected to be replicated all over Europe if it hasn’t already. That’s the genius of capitalist ingenuity. Create a problem, pretend to solve said problem, and hey, you’re a “hard worker” and deserve your yachts…

The Kaffe
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How was west in general handling inflation so well up until now?

It wasn’t, look at the prices of assets over the last 60 years (real estate, stocks, etc.). Inflation on the prices of consumer goods has been kept somewhat low due to offshoring, however, the inflation of asset prices has exploded. There’s a reason why EconomicsTM conflates “Inflation” with the Consumer Price Index. It hides that wealth is being concentrated and assets are becoming more and more unreachable for the average person. Income and CPI inflation are kept stable with each other to keep consumption consistent.

Soviet Snake
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Inflation means you have debt, debt means you have spending, that the IMF fucked you or that the US has imposed sanctions/embargo. No inflation means the State isn’t spending any money therefore you have neoliberal policies, inflation is used by the libs as an umbrella term for anything bad and therefore make recessive policies seem reasonable when in reality what you need to escape hyperinflation is spending, not the contrary. The West has “escaped” reasonably hiperinflation (compared to Venezuela, Argentina, etc) because the profot from cheap labour or resources from the countries the exploit, nevertheless the 2008 crisis is an example of them not being able to handle their own economy, and even today we see the dollar at its worst since maybe the '70s.

I think the overall direction should be deflationary due to overproduction and low investment demand from falling rate of profit.

If they had resolved international disputes diplomatically then low inflation of consoomer goods would have continued.

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