(Note: This title is borrowed from Karl Marx, who wrote a brilliant piece of this same title. Likewise for much of the content. I don’t think old Karl would mind. As the postal worker told the poet in the film “Il Postino”: “Poems don’t belong to those who write them; they belong to those who need them.” The same is true for ideas in general.)

Many mainstream economists are predicting that if the economy picks up, there will be increased inflation. In fact, the signs are already present. For instance, the World Food Price index from March-December, 2009 shows prices up by 23%. Corn prices from September – January were up 24% and Oil per barrel from September – January was up 20%. Overall, in the US, the Consumer Price Index (CPI) is now at 2% (i.e. a 2% inflation rate) vs. -2% in the middle of last year. (It should be noted that these figures underestimate inflation by about 3%. In the 1990s, under Bill Clinton, they changed the way the CPI is figured, resulting in reducing it by about this amount. The figures for this can be seen at www.shadowstats.com.)

Inevitably, if inflation develops, a hue and cry will develop about pay raises causing inflation. When an employer has to pay increased wages, the argument goes, he or she compensates for this by raising prices. What could be more logical?

Read more: http://dailycensored.com/2010/01/28/wages-prices-and-profits/