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Monday, March 18, 2024

Macro N Cheese Podcast - Inflation

I was recently on a podcast with Steven D. Grumbine to discuss inflation. Link:

The podcast description from the webpage is.

“Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

Milton Friedman

This quote by the grandaddy of neoliberal economics is from 1963. Some in the mainstream have been dining out on it ever since.

According to our guest, author and blogger Brian Romanchuk, neoclassical economics relies on mathematical models and fail to capture the complexity of real-world inflation. He highlights the importance of understanding the supply and demand dynamics in setting prices and explains that inflation can be influenced by factors such as supply chain shocks and changes in the labor market.

Brian also points out that it’s not enough to blame inflation on corporate greed; after all, corporations are always driven to maximize profits. He mentions the Cantillon effect, which suggests that the first recipients of newly created money benefit from inflation as prices go up, while the poor and working class bear the brunt of higher prices down the road.

Brian and Steve discuss inflation constraints on fiscal policy. Brian argues that while extreme fiscal policies could lead to inflation, most of the time, fiscal policy is relatively moderate and does not have a significant impact on inflation. They criticize the government for not trying to set prices and argue that the government often follows the private sector’s lead, making things worse.

This is a discussion of some topics around inflation. Although some of the discussion related to the concerns of my book, a lot of it relates to some of the recent political economy controversies with inflation. It was fun, although I am not sure how well suited I am to the podcast format.

Otherwise, I have been plugging away at fixing weak points in my inflation manuscript. Rather than waste reader’s time by rushing out some random comment, you are encouraged to get your dose of Romanchuk (and Grumbine) content via the podcast.

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(c) Brian Romanchuk 2024

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