Janine Jackson: New York Times headline read, “Inflation Warning Signs Flash Red, Posing Challenge for Washington.” A subsequent Times piece underscored the problem and the solution: “The White House Says Its Plans Will Slow Inflation. The Big Question Is When?”
This framing is repeated and adumbrated in corporate media. “Inflation Is Coming for Your Cup of Coffee Next,” says CNN. “Inflation’s Wrath Hits Home” was USA Today’s rubric. And then—surprise, surprise — CNBC has “Inflation Has 88% of Americans Worried.”
True, there’s an admixture of, for example, The New York Times columnist Paul Krugman’s “History Says Don’t Panic About Inflation.” But anyone can see that, judging by sheer focus and attention, “serious, smart people” organize their thinking around “inflation” more than many another economic indicator.
The recent words of our guest, whenever the corporate media moves en masse like this, it’s a good idea to slow down and consider what’s actually happening and why. Jon Schwarz writes for TheIntercept.com. He is now available by phone. Welcome back CounterSpin, Jon Schwarz.
Jon Schwarz: I’m so happy to be here, especially to talk about this in particular. This is because you realize that there is no single room where all the people can come together and decide what the US media should be. But it does seem like there is.
Yeah, exactly. Exactly. Media often complain about how we used talk around the water cooler, and agree on everything. And we know that’s not true. And yet, you have to acknowledge the power of media of making it seem as though we’re all in one conversation. The phenomenon is corporate media alarm and the worldview that it represents. But let me ask you, first, about what “there” there is there. What reality are these headlines referring to?
Inflation rose by 6.2% between last October and this October, according to one measure, which includes fuel and food. This measure excludes food and fuel, so it tends to go further than the standard. However, it is fair to say that 6.2% is the right number to consider, since fuel and food are vital for people. So that’s over a year. It also happened that inflation increased by 0.9% from September to October, which means that if something was $10 in September it now costs $10.
Is this the only understanding? Because if I’m reading headlines, I’m reading about costs of things that I want to buy going up in a way that’s really going to affect my life. And it seems as though the increase in inflation is most meaningful in terms of how much it’s going to affect the price of my coffee, or how much it’s going to affect something else that I as an individual are buying. But there’s other things that inflation means that are really maybe more at work behind the alarm here.
That’s right. It’s funny. The Washington Post Two stories were published about inflation this week, one on a particular day. One talking about how terrible inflation was, and one about how it destroyed Biden’s agenda. They also had a chart covering, I don’t know, the last 10 or 15 years, that by itself explained that their story was not what they were telling you. It was a chart that showed real wages declining slightly over the last 12 months when inflation is included. In other words, inflation was 6.2% last year. Regular people saw their wages rise by 5.8%. This means that the purchasing power was slightly lower.
But the chart itself showed that people’s purchasing power being eroded, going down in real terms when inflation was taken into account, had happened a lot over the past 10 years. And it wasn’t a gigantic, front-page emergency then. What was the difference?
There were no high rates of inflation during the Obama administration. I think it was even a little during the Trump administration. It is happening now with higher inflation rates, and it affects people with tons of wealth in a way I have never seen in corporate media. This is something I haven’t seen before.
The story is that the US household debt is approximately $14.5 trillion. So that’s a very big number. It’s about 75% of the size of the entire US economy. Inflation can lead to a large amount of fixed-rate debt, such as student loans, mortgages, and student loans. And the inflation erodes the value of that debt, because it’s set in nominal terms. It doesn’t matter how high inflation is, it will always be $15.5 trillion.
So 6.2% inflation equals an approximately $850 billion transfer of wealth from creditors and debtors. So almost a trillion dollars. This is a lot of money. It doesn’t work out precisely, as different people have different levels of debt. It’s not totally a transfer of $850 billion from the rich to the poor. It is a significant sum. You may have noticed that people who have a lot of money don’t like losing it. And that’s really at the root of this inflation freak-out.
It’s that plus the fact that there’s a very tight labor market right now, meaning that there’s low unemployment, and workers have much more power than they generally do. An economy with high levels is inflation, the standard treatment would be to raise interest rates and slow the economy, which would throw people out work. That is their goal. They do not like a booming market. They don’t like low inflation. Creditors do not like it. They would prefer a slower economy with lower inflation and higher unemployment. So it’s these two things — their goal to slow the economy, raise unemployment, and the eroding value of the debt that they hold.
You’re talking about differential impacts, both of inflation and of proposed responses to inflation, and differentiating that impact is exactly what elite media don’t generally do. They talk about us and them in a way that is meant to collapse other folks into the us that really don’t belong there.
So it goes. The New York Times’ Neil Irwin has an explainer that’s a kind of piece where it’s like, you don’t need to know the details, just here’s the nuts and bolts of this issue that you’re hearing about. And it’s called, “Who’s to Blame for Rising Prices?” And this is already collapsing inflation to rising prices in ways that are unnuanced, as you’ve just discussed. But still, in this let’s-make-it-simple, let’s-break-it-down, “Who’s to Blame for Rising Prices?,” one of The New York Times’ acceptable answers is “all of us.”
And the reason is we — I’m quoting — ”we shifted our spending toward stuff, rather than services.” That’s one of the reasons. And then, also, “and many of us elected to stop working, or work less.” This is The New York TimesThe paper of record, trying talk to people and say that prices are rising. Here’s why. Their reason is that you messed it up, you know. You made mistakes during the pandemic. You bought the wrong products and made poor choices about your employment.
We talk about it as an economic problem. But it’s obviously a media, a corporate media issue as well.
Yeah, it’s a class issue. It’s one of the issues where the class bias of the media really shows up in its most powerful form. It’s absolutely unmistakable.
Yeah, I don’t know what I wanted you to say in response to that New York Times article, except that these kinds of headlines and stories, they’re not just lamentations. They’re also calls for action.
Get back to work is the call to action.
Exactly. And in terms of actions that are responses from various entities about dealing with this abstract-sounding “inflation,” well, some of those responses are going to also affect people in their day-to-day lives, so it’s meaningful to unpack what media think, or are telling us is the right thing to do here.
There is another aspect to this that is class-based, which the media should not be covering. Many people have stated that it is important to consider elderly people on fixed incomes. But the reality that, again, many people don’t actually understand this, is that Social Security is not a fixed-income benefit. Social Security is inflation-adjusted. This means that people who are anxious about not being able pay their bills will see their Social Security benefits rise by 6% almost in January. People in such a situation will find it a welcome aid.
But, again, not something that people are saying: Hey listen, don’t panic, because your benefits are going up. People don’t hear that, because that is not being covered for the most part.
Finally, I am going to look forward to what people will hear, including about ourselves. Yahoo Money headline: “Americans Are Feeling Lousy About Their Finances, Even Though They’re Doing Fine.” I mean, I don’t know. Isn’t that gaslighting? Just looking forward to the headlines we’re going to be seeing about inflation, what are some questions you would have folks just keep in mind as they read and hear that media coverage?
Yes, but keep in mind the class biases of the media. It is very evident now, as I have said. They don’t tell the whole inflation story.
Keep in mind that inflation will almost certainly dissipate within a year and be less than 2 or 3 percent.
We’ve been speaking with Jon Schwarz. His work can be found on TheIntercept.com. Jon Schwarz, thank-you so much for joining us this week CounterSpin.
Thank you so much.