The Red Review

Capitalist Zombies and the Inflationary Crisis

• Socialist Action • Season 2 • Episode 6

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All the people who work on The Red Review live and work on stolen Indigenous lands across Turtle Island. There can be no reconciliation without restitution, which includes Land Back, RCMP off Indigenous land, and seizing the assets of the major resource corporations and returning them to the commons.

In this episode of The Red Review, brought to you by Socialist Action, Emily and Daniel tackle the current inflationary crisis. With inflation at 40-year highs and the Bank of Canada hiking interest rates, what do workers need to know in order to organize and fight back? Featuring today's headlines, macroeconomics 101, and  a Marxist critique of neoliberal monetary policy.

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Emily Steers  
Hello everybody. Welcome once again to The Red Review. My name is Emily steers, I use she/her pronouns, and I am coming to you from the unceded territory of the Anishinaabe, Haudenosaunee, and Neutral Peoples known also known as Guelph, Ontario. 

Daniel Tarade  
Hey comrades, it's Daniel here. I use he/him pronouns, and I'm coming to you from Tkaronto, the traditional territory of the Haudenosaunee, Anishnabeg, the Chippewa, the Mississaugas of the Credit, and the Huron-Wendat. All people in Socialist Action, and this is a Socialist Action podcast, and all people that work on this podcast, live and work on stolen Indigenous land. So we echo the call of land back, and we declare that there can be no reconciliation without restitution. And that includes seizing the assets of the major resource corporations and returning them to the commons.

Emily Steers  
Here here! So today, Comrades, we are going to be discussing inflation. Now, this is something everyone in the world has been hearing a whole heck of a lot about in the last few months. And as we get deeper and deeper into what is increasingly looking like, really, really difficult economic times ahead, I think it's really important for us to have a really clear, succinct and nuanced understanding of what exactly inflation is. We have a wonderful comrade here on the editorial team, who has been doing so much research and compiling an amazing, amazing document about, What is the nature of inflation, how does it work, and what do we as Marxists, as people on the left, what do we need to understand about inflation, its root causes, how it works, and how the material suffering that it causes, how can we effectively discuss it and resist it. So we hope that this podcast will be as illuminating for you to listen to as it has been for us to record. I know I've certainly learned a lot from doing this research and from Bobby's guidance, and it's going to be a really, really interesting show. So I hope you enjoy.

Daniel Tarade  
But before we get into the political economy, and the Marxist analysis of what inflation is as a phenomenon, let's catch up on the Canadian state and the material conditions here today. What is the actual inflationary crisis like right now? But before we get to right now, let's just look at the overall trajectory. In April, the inflation rate was 6.8%. In May, it was 7.7%, which itself was a 40-year high, going back all the way to the 80s. And anything beyond 2%, you're starting to look at inflation as a crisis, something that the Bank of Canada does not have under control because they set a target for inflation of 2%. There's a quote here from Jimmy Jean, chief economist at Desjardins Group, "it's clear now that central banks have been losing sleep over inflation. With this report, they'll need to renew their sleeping pill prescriptions," which I find really interesting way for Jimmy Jean to describe this. But when you look at the coverage on inflation, it's always from the perspective of how the financiers and the bankers are feeling about it. You get very few articles that really delve in on how it's impacting the actual worker because this is seen as macroeconomic. Workers are just cogs in the machine. We're not people that need money.

Emily Steers  
And there's some interesting perspectives here as well like this BlogTO article from July 16. All of our news and sources are going to be linked in the show notes. An article from BlogTO, the headline reading, “People are furious with Canadian grocery stores for profiting off inflation," and quote, "numbers analyzed by the news outlet show that profit margins have been increasing for Loblaws companies and Empire Company Ltd., owner of Sobeys, and Metro Inc.,  so the higher prices facing customers are not simply a result of increased costs on the grocery stores end but also they are increasing their profit margins in the process." So with a lack of competition in the industries oligopoly, many residents don't have other options for where to buy food without supporting the big three who collectively own as well as Loblaws and Sobeys; Dominion, Farm Boy, FreshCo, Food Basics, IGA, Real Canadian Superstore, Shoppers Drug Mart, T&T, Zehrs, et cetera, et cetera. 

Daniel Tarade  
Yeah, they own No Frills as well. 

Emily Steers  
Yeah, No Frills is Loblaws as well, anywhere that you can scan your PC optimum card.

Daniel Tarade  
And so while the economists are always worrying about how the Canadian banks are doing, we're instead going to intersperse this with how the workers are doing and what workers need to do. But that was in May. May was, you know, a nearly 40-year high and then June, for which we have the most recent data, — The inflation numbers for July have not been released yet — it hit 8.1%, the highest since January of 1983. Gasoline prices were up 54.6% year-over-year and 6.2% month-to-month in June, which is contributing to most of the inflation, which is according to Stats Canada. But other prices are also jumping. Food prices were up 8.8% year-over-year, the same jump as the month before. Prices for services, which includes dining out at restaurants, rent, and traveler accommodations were up 5.2%. Setting aside gas and food prices, inflation was still 5.3%. So this is a very broad inflationary crisis.

Emily Steers  
While in editing, the inflation numbers from July, 2022 have actually dropped. At 7.6% year-over-year, the rate of inflation has slowed a tad from the peak of 8.1% that we saw in June.

Daniel Tarade  
If you're renting something, if you're eating something, if you're buying a car, if you're filling up your car with gas, everything is costing more and more.

Emily Steers  
And of course now that everything costs more of course many people are being a little more pragmatic with how they're spending their money. The CBC article from July 29 says "Sales of everything except food are slowing as inflation is biting into consumer spending." So Loblaw companies' sales growth is softening as inflation continues to grip the economy and shape consumer shopping habits. while the country's largest grocery and pharmacy chain sees a little bit of softening with you know Joe Fresh and everything and what it calls general merchandise, or non-food sales, everything is notably down. However, pharmacy same-store sales have increased 5.6% and pharmacy and healthcare services have increased 6.1%. And interestingly, the Loblaw chief financial officer Richard Dufresne said right now, cough and cold sales, so sales of items related to cough and cold treatment, he says it's like we're in the middle of winter. What an interesting little, little tidbit.

Daniel Tarade  
I wonder what that could be.

Emily Steers  
I wonder what that could possibly possibly be related to. Gosh, who knows. Sorry, we'll try and keep the sarcasm to a minimum. But we're gonna have to restrain ourselves real hard.

Daniel Tarade  
Because when it comes to people like this, this was the chief financial officer of Loblaws. Again, they're capitalists, they're fundamentally seeing the capitalist system as following a set of rules and logic. And to them, this is just great. Yep, sales are up. It's wonderful. You know, it can't be because the world is falling apart, can't be because of pandemics and stuff like that. No, this is just great for us —

Emily Steers  
It's good sales! 

Daniel Tarade  
— which is why they're now expanding into walk-in clinics that are staffed exclusively by pharmacists. And this is a new trend that we're seeing, especially emerging in Ontario, where pharmacists are going to be able to do more of the work that doctors used to do but in a decidedly for-profit way rather than being rolled out through our single payer medical care system.

Emily Steers  
Yeah. And as I say, we'll have links to all of that in the show notes. So the interesting thing about all of this inflation business is it's happening in a time with record-low unemployment. We haven't seen unemployment numbers this low for a very long time, which is hilarious. When you hear people saying nobody wants to work. It's like well, clearly they just want to work for anyone but you. But there are also cutting back jobs as well. An Al Jazeera article says "Canada’s economy unexpectedly lost jobs for the second month in a row in July after a year-long boom, but analysts predicted that this would not stop the Bank of Canada from raising interest rates to fight inflation." On Friday — this article was put out on August 5 — Statistics Canada reported that 30,600 positions were shed while unemployment rate stayed at a record low 4.9%. “Derek Holt, vice president of capital markets economics at Scotiabank, he said the July figures were disappointing but predicted Canada's central bank is going to keep raising the rates of interest. “I think they know full well that fighting inflation is going to break a few things, and one of them will be slowing job market momentum.” The average hourly wage of permanent employees, a figure that the Bank of Canada watches closely, rose by 5.4% in July 2021, down from June's 5.6% year-on-year increase but sharply higher than the 2.4% registered at the start time of the year.

I love this quote from Derrick Holt. That raise in wage, 5.4% of permanent employees, the quote is, “That’s going to concern the Bank of Canada much more than the job count as evidence of tight markets amid difficulty getting workers.” So again, the Bank of Canada is very concerned that workers are being paid more because their concern is that if wages go up then the prices of everything again go up you know, so the workers just need to tighten their belts if we're gonna get inflation under control, which seems to suggest just let this happen to you. And there will be another economist we talk about later, who more explicitly put that out as advice to workers. If things are getting expensive, tighten your belt. That's the only way we can do this. Because you're getting a higher wage, it's just going to make things worse for everybody, when they really mean to say it will make things worse for us. 

Yeah, it's such a slimy little victim blaming way of describing the situation. Like inflation has been happening amid stagnant wages. Cost of living increases and wages have been two entirely different trajectories for decades now. I think we can safely say that wages seem to have very little bearing on how much money the capitalists want to stuff their pockets with.

Daniel Tarade  
But we'll get to that. We'll get to the political economy, but that was indicating interest rates are going up in response to inflation, or rather as a proposed remedy to inflation. So what is interest rate right now? Well, the year we started at 0.25%, which is incredibly low. That meant the Bank of Canada would be lending out money to corporations for basically free with basically no interest, just free money for all these capitalists then to be able to invest that money and get more returns from the market while having to pay the Bank of Canada very little in return. That has since been hiked to 2.5%, which is a massive hike and it's been hiking, you know, 1% at a time, and it's gonna keep going higher. That's what they've said, that they're gonna have to keep raising interest rates until this inflationary cycle is over. “Bank of Canada Governor Tiff Macklem has warned business leaders not to excessively raise wages in response to inflation, hoping to avoid a wage-price spiral that sees inflation become entrenched for the long term.” So again, you have the person running the Bank of Canada saying it's okay to keep rising prices so you can make more profit just don't you dare give in to the workers and pay them more. That's your job is to keep the workers under control.

Emily Steers  
And it's just insane. There's an August 6 article from Toronto Star that's looking at how so many Canadians, especially low-income Canadians, are being so hard hit by inflation and how long lasting the effects are likely to be. You know, people giving financial advice will say like, a little more care when you're buying your weekly groceries, keep an eye out for sales and promotions, be a little flexible in your meal planning. But most Canadians are not only adjusting to inflation at the grocery store, but in many other ways; driving less to save on gas, pushing back or canceling renovations, staying home instead of flying off for a expensive vacation abroad. But for low-income Canadians, you know, there's not much to trim at all. Many are making difficult decisions that could land them in high-interest debt, deplete any savings they have, and see them go hungry. The vast majority of people right now are most worried about the costs of food and rent. Like far and away, the biggest concern right now is food, but gas and housing are not far behind. More than a quarter of Canadians are being forced to cut back on essentials such as food or utilities just to make ends meet according to an Ipsos survey on behalf of the insolvency firm MNP in June. Women and those aged 35 to 54 were most likely to say they were cutting back on both essential and non-essential items and services. Meanwhile, many people are turning to savings or going into debt to just get by, noting that credit card balances have begun to rise from their pandemic historic lows. Lower-income workers, young adults, people with disabilities, households with kids, and racialized groups are more likely to be borrowing extra money to stay afloat, says Statistics Canada. And while the Bank of Canada is raising interest rates in an unprecedented clip, it does not have power over gas prices or food, and so for many Canadians, absolutely nothing is changing in terms of the expenses they're dealing with.

Daniel Tarade  
And interest rates going up just means more costs for the average Canadian. If you have a mortgage, if you have a car loan — 

Emily Steers  
If you have debt. Yeah, so all it does is make things more expensive for you while doing absolutely nothing about the costs that are biting into your savings in the first place. If you have savings to begin with that is. The MNP survey found that almost half of Canadians are cutting back on non-essentials like traveling, dining out, entertainment, and many are looking to save by cutting down on gas and seeking out cheaper versions of everyday purchases. Yet in June, Canadians were still spending more per transaction at bars, restaurants, and fast food places than they did pre-pandemic. This is of course, likely due to inflation.

Daniel Tarade  
That's been interesting to see because the amount that Canadians are spending is generally the same, but they're getting less for it. So when people are saying they're cutting back, they're cutting back meaning they're not trying to spend more than they used to before but with inflation it just means that your grocery bags are that much lighter, but still spending the exact same amount. 

Emily Steers  
So the Bank of Canada's answer to inflation has been to raise its key interest rate in an effort to cool down the housing market and create a better balance for Canadian households. But in the short term, this just means another cost to consumers. Those rising rates are affecting almost two-thirds of those surveyed by MNP and half of respondents said if rates keep rising, they will be in financial trouble. MNP president Grant Bazian thinks insolvencies and bankruptcies will go up in 2022 as a result of rising unaffordability.

Daniel Tarade  
And so that's an article that really bucked the trend in terms of the coverage, really trying to highlight that all this noise we're hearing from the bankers, it really does not connect with what people are experiencing when they're going to the grocery store, when they're going to the gas pumps, when they're paying off their loans. For us, it's just an impossible situation. More and more stones are being loaded up on our chests, and it's getting harder to breathe. There was another Toronto Star opinion article on August 7, “Inflation means more food insecurity for Canada's post-secondary students.” 53% of young Canadians aged 15 to 29 reported being very concerned about their ability to afford housing or rent. This concern hints at the sacrifices students must make due to the cost of living. They have to sacrifice making rent or buying food. And as many as 40% of Canadian post-secondary students are food insecure. Like as in right now, 40% of Canadian post-secondary students are food insecure, meaning they do not have reliable access to enough affordable and nutritious food. So the situation is already bad. We know that as inflation continues, it's just gonna keep getting worse. Which brings us to the last article that I want to talk about. This was in my email because I'm a U of T alum. One of our economists is talking about what soaring inflation means and how Canadians can cope. 

Emily Steers  
Oh boy, strap in! 

Daniel Tarade  
The University of Toronto economist Peter Dungan, he highlights some of the concerns. For example, one of them being Ottawa-based Shopify, they just cut 1000 jobs, which is 10% of its workforce. This is what happens when interest rates go up. Because if you're a company and you have a bunch of debt that you need to pay off, well, that means your costs are also going up because the higher interest rate, so you're trying to cut costs, and you're cutting those costs by firing people. But this is really where, you know, he's trying to talk about what's you know, getting on with inflation. If we have a recession, it will be from a state in which the economy actually is in a very good shape in terms of low unemployment and a high level of output, says Dungun. By the way, he points out a recession can be minus 0.1%. growth, it can be minus 5%. And there's a huge difference between the two. So he's talking about the concern when interest rates go up, that's going to trigger a recession because you already see, you have corporations laying off workers because they're trying to cut their own costs because of the uncertain economic situation. He continues to say, how much damage has to occur to the economy to get it back to 2%? That's a more open question. If in effect, there's no more supply shocks and the Bank of Canada's and other central banks rate heights cool demand, then we may be able to get to that low inflation rate in two or three years with relatively modest losses in employment and GDP. Basically, we're trying to get to this target inflation rate of 2%. And, you know, if the economy cooperates with us, then maybe just two, three more years of inflation.

If there's no more supply shocks, because what could possibly cause those.

He goes into it. On the other hand, if shocks to the supply side of the economy keep coming at us, we're in different territory. Then you really need to push on the demand side to weaken inflation. So Peter here highlights that there are two things that can contribute to inflation, either you have poor supply, due to supply-side shocks, talking about the war in Ukraine, talking about climate change, talking about the pandemic, that's one thing that can lead to inflation just because you have less stuff to buy. And that means everybody's driving up the prices. But if you can't fix that, then the only way to fix inflationary prices is to fix demand, which is a very, very slimy way of saying we need to get a bunch of people really poor, so they can't buy things anymore. And that way, there's less demand and inflation is fixed. The big question in the backs of central bankers minds, is high inflation getting into people's expectations of the future and their wage and price bargaining. Once that happens, then you're in the nasty world of the late 70s and 80s. Those decades required a huge recession to literally bleed the inflation out of the system, and nobody wants to go there. So this is a thinly-veiled threat to the workers that if you think inflation is going to be bad for you, which we've already established, it's obviously bad right now for people already, and if you take that concern for your own livelihood into the bargaining table and demand higher wages, then that's going to lead to a huge recession, and quote, "Nobody wants to go there." Again, the bankers don't want to go there. So Peter continues, today, so far as we can tell, people expect inflation to be high for a year or two. But the expectation for the longer term doesn't seem to be moving yet. People still trust that this is temporary. If that changes, then it's a new world, or maybe I should say, old world — nice turn of phrase, Peter — we're back to the 70s and 80s again, and it would take higher levels of unemployment and more significant recessions to get inflation down and convince people to drop their expectations. 

Emily Steers  
Oh, God.

Daniel Tarade  
Meaning again, accept lower wages, accept that you're not going to have the same quality of life as you used to have.

Emily Steers  
Accept that you're not going to have the same access to things that you've been used to. 

Daniel Tarade  
Just accept that you might not gets three square meals a day, says Peter, economist at U of T.

Emily Steers  
And I'm sure he would deny that. And of course, obviously, there are a lot of things that we can cut down on, like hmmm, do we need to take as many international vacations. I was just reading an article about people, you know, cycling through expensive home renovations at a really fast clip. There's obviously a lot of ways in which our hyper-consumerist system can maybe cut back a little, but we know that that's not what they're talking about because then when people do cut back on those things, everyone freaks out, that it's like, oh, no, people aren't consuming as much. It's a disaster. 

Daniel Tarade  
Well, yeah, that becomes a recession, which is like the thing they want to avoid the most. Continuing, Peter says, largely the job falls on the central bank. It uses higher interest rates to slow down particular parts of economic activity, like housing and purchasing cars and things like that. That's your first line of defense. If it wanted to help, a federal or provincial government could also raise taxes or cut spending, but it's very politically difficult to do that. And it's not clear at this point that it's necessary. It's not that serious a problem. Some provincial governments are actually throwing money at people. I don't mind that if it's going to people who are more affected by inflation, including those living on fixed income, low-income people, and others who are suffering, but you don't want across the board tax cuts or spending programs to boost the economy. The economy is boosted already, the unemployment rate is at historical lows. We don't need boosting. If anything we need to unboost, which is an interesting word, we need unboost. And here's where the mask comes off a little bit more because this is him responding to the question of what would you say to Canadians who are struggling to cope. You know, what would you say to the Canadian that's struggling. And the first line is, that pain has to be recognized, it's a cost that has to be borne. The world is not making wheat available for us to buy burger buns and then to move the burger buns around between restaurants as generously as it was before. I love that, "as generously," like the capitalist system, in its generosity, was just giving us burger buns. What that means is you'll have to review your budget, review what's important to you, and make changes to move away from the expensive things and towards the less expensive things, realize that the budget is tighter than it was before. There's really no way around it. That's how he ends this article that literally has the tagline of how Canadians can cope. And it's essentially, suck it up. 

Emily Steers  
Well, and it's very interesting. So this is targeted at a really particular demographic. This is very much targeting people who are comfortably financially well-off, who didn't lose their jobs during the pandemic, or if they did, it was very, very short term. This is for people who can afford international vacations and home renovations and expensive meals out, telling them to tighten their belts, great. But we know that those are not the people who are going to be the most affected by this. And the people who are most concerned and most hard hit by the financial situation we're in now are not people who can tighten their belts. So it's just like, oh, you know how to deal with inflation, summarizing it by saying, you know, kind of suck it up, buttercup and do your best. Well, what if you're already living out of the food bank? Like what if you're already living off of charitable donation? What if you're already struggling to feed your family? What if you are already barely making enough to put enough gas in your car to even get to work in the first place? This is not an article and monetary policy is not being designed with the needs of the most vulnerable people in mind.

Daniel Tarade  
So before we get into the political economy, then if you're like me, and you've mostly plugged up your ears whenever someone started explaining how the economy works, because you're like, it's fake, I don't want to know. Well, to understand this, unfortunately, there's a few terms we're gonna have to use. And so I went on a very useful resource called Investopedia. And here's some definitions for you really quickly, just so you can follow along bit easier. So mostly, when people are talking about how to respond to economic crises, there's two types of policies; monetary and fiscal policy. Monetary policy is what the central bank does, like the Bank of Canada. And that is essentially limited to things like increasing the supply of money, printing off money, or things like quantitative easing, where they're using their money to buy assets from corporations, or raising the interest rates, which we've already seen them do. So that's basically what they're limited to. We saw some of the articles earlier alluding to the fact that the banks can't control prices of goods. That's fiscal policy. Fiscal policy determines the way in which the central government earns money through taxation and how it spends money. And it would also apply then to laws that it can pass regarding wages and prices. Price control, wage control, all of that would fall under fiscal policy. What is the central bank, you might ask? Because I don't get any ads on my TV about signing up for the Bank of Canada. That's because this is a special bank that we're not allowed to use. It's a financial institution that has very privileged control over the production and distribution of money and credit for a nation. So central banks are basically a legal monopoly. They're the only institution, only bank that's allowed to do something like print money. And although some central banks are nationalized, most are not government agencies and so are often touted as politically independent, which means everybody can just point like, oh, they did something that no one likes. No one can do anything about it. And so quantitative easing is the other form of monetary policy that we'll be talking about quite a bit. So interest rates hikes are a bit easier to understand I think — they're loaning out money, how much do you have to pay them every month on that principle. Quantitative easing is instead when something like the Bank of Canada purchases securities from the open market, from other banks, private banks, to reduce interest rates and to increase the money supply. And this is basically reducing interest rates on commercial loans that we could access. 

Emily Steers  
Things like a car loan or a mortgage. 

Daniel Tarade  
Yeah. So something like quantitative easing could be used. I like to think of it as a bribe from the Bank of Canada to all these commercial banks saying don't raise interest rates so much. We'll give you all the money you want. Just don't destroy the whole economic system just because you can. And sometimes they destroy it anyways because they can. Quantitative easing replaces bonds in the banking system with cash. So commercial banks like TD and RBC and Scotia Bank and whatnot, they obviously have a bunch of investments, and they own a bunch of bonds and stocks. Quantitative easing is basically the Bank of Canada buying it from them so that now the banks have more liquid assets, they have more cash on hand, so they can make more loans and buy other things. So it's meant to stimulate the economy by essentially giving all these commercial banks a bunch of money. So anyways, that's all you need to know to understand the political economy of inflation. 

Emily Steers  
I mean— 

Daniel Tarade  
No, that's it, Emily. That's all they need.

Emily Steers  
Well, with that all being said, so that's the story from the headlines. That's the story from the capital markets. So what does it all mean for us? And what do we need to understand? Let's get into it. Inflation is going to be shaping economics and politics in the years to come. There are competing theories about the cause. Liberals and some leftist talk about profit taking by monopolies and corporations. Conservatives talk about an imaginary wage-price spiral where increasing wages leads to increasing price. And the central bank talks about expectation. It is however, a polycrisis. This is multiple crises acting together. Well, let's get into those. 

Daniel Tarade  
Not to be confused with a polycule. 

Emily Steers  
So much better. So the first one is the asynchronous demand and supply. The initial sudden rise in prices came because consumers can switch their spending in minutes. From home renovations during lockdown and then to travel when things opened up. Services and entertainment when the lock downs lifted and then another lockdown and then another reopening. And as an arts worker, boy, did I ever feel that keenly. Large companies, which dominate the global economy, cannot react that quickly to an instantaneous change in demand when factories have been closed and employees laid off. This factor would have been transitory. So an example currently causing a lot of concern is the airline industry. The amount of turmoil in the airline industry over the past two years is unlike anything we've ever seen in travel. The 9/11 attacks caused a 7% drop in overall travel, but in 2020, travel was down 70%. Seven zero. Airlines were worried about surviving, and this meant massive staff layoffs, shedding pilots, selling airplanes, retiring aircraft, and now as we're seeing travel is rebounding, and we're paying the price. Delta Airlines shed 30% of their employees, almost 30,000 people cut from their staff. American Airlines laid off 30% of their staff through buyouts, early retirement etc. And they assumed that this was going to be a six-year recovery period, not an 18-month recovery period. And so then travel demand started rebounding much quicker than anticipated. The airlines were caught completely flat footed. It takes a year to train a pilot and Boeing doesn't have enough 787s or 737s sitting in a warehouse waiting for airlines to just come pick them up. There is a multi-year long delay in the manufacturing process plagued with supply chain disruptions, just like so many other parts of the economy right now. Housing is also implicated in this current inflation crisis, but prices for commodified housing assets has been rising for decades and with multiple causes. The recent interest rate hikes have led to decreased sales and falling prices for housing but have simultaneously caused an increase in rental prices as so many are now squeezed out of purchasing a home, and people who did make those initial housing investments are now scared that they are not going to be able to pay for the mortgage and so are squeezing more money out of their tenants. If there is a recession or an end to the acute inflation, interest rates will drop and house prices in all the major urban areas that we're used to hearing about will be on the rise once again. There is no market-based route to affordable housing. Affordable housing can only be done with government investment and public ownership,

Daniel Tarade  
Also known as fiscal policy. But again, that's not what the central bank can do. The market is is always going to treat houses as assets, as commodities—

Emily Steers  
And not as an essential human need. 

Daniel Tarade  
There's really no way for workers and oppressed people to win in this situation. Either the prices keep going higher because interest rates are low and a bunch of capitalists can buy all the houses because they have all the capital to do so and then exploit the fact that we need housing to charge whatever they want. And then as soon as interest rates go up, and housing prices start cooling because all of this housing purchases started to slow down, well, we still can't afford it because our mortgage then would be more expensive because the interest rates. Either we're paying a high upfront principal cost or we're gonna have a mortgage with a higher interest rate. Either way, it's just completely unaffordable for the vast majority of especially young workers. Another contribution to the inflationary crisis right now is food security. This is often blamed on the Ukraine war, but the price rises started years ago. And this is because of the global drought affecting crops since 2019. And it seems to be intensifying this summer with heat waves in Europe, the North American Midwest, 50 degree temperatures in Pakistan and India, which are grain-producing countries, and also the drought that we see in the Middle East, Africa, and the Far East, including China and Japan, not to mention the Arctic and Antarctic. If it seems like I mentioned basically everything on the planet, well, there you go. Our food, plants and animals, they prosper within defined temperature ranges. And we're currently at about one degree of global warming above pre-industrial averages with a clearly observable effect on soil degradation and erosion, reduced crop yields and crop failures. animals dying from heat or flood, and drying streams, rivers, and lakes. Food prices in our climate-afflicted, globalized industrial food system are not likely to go down ever again.

Emily Steers  
Yeah, which is a really scary thought, like the prices we are seeing at the grocery store — It's a bit like that thing, this is the most expensive I've ever seen, and it's the cheapest it'll be for the rest of your life.

Daniel Tarade  
Which makes sense then that 60% of Canadians, especially lower-income Canadians, their biggest concern with inflation is food.

Emily Steers  
And rightly so. The third part of this polycrisis is of course supply chains and labor, which we talked about a little bit earlier. The free trade global production system is built on a very complex and fragile chain of production and distribution. A failure of any part of the chain to produce on a just-in-time schedule cascades down that chain. A really great example of this actually was very early on in the Covid crisis before the lockdowns worldwide when the pandemic was still mostly contained within China, is that the factories in China, the YYK factory, produces the vast majority of zippers in the world. And clothing companies the world over suddenly were completely unable to finish manufacturing their jeans and their jackets and whatever else has zippers, because literally they had no zippers because the factories in China had been shut down. And so suddenly, that was causing a massive pileup of jeans in Bangladesh that just had no zippers. 

Daniel Tarade  
What an efficient system.

Emily Steers  
What an efficient system, you know, when there's 70%, or something of the world zippers being manufactured in one factory, what could possibly go wrong?

Daniel Tarade  
I've never heard of this zipper factory fire. Can't happen. 

Emily Steers  
So factories and transport hubs, of course have been closed for Covid-19 at completely random times. There's chaos on the oceans. Obviously, we all had a good time laughing at the Ever Given in the Suez Canal a couple of years ago. But that's just one tiny example of the kind of chaos that can happen in global shipping routes. And with the current geopolitical tension, there is much talk of 'friendshoring,' so only dealing with friendly countries. While this is unlikely to happen, but if it did, it would definitely mean an increase in prices. But in the medium term, supply chain disruptions are likely to lessen which will remove a major source of inflation, maybe by about 60%. But the risks we are facing, and it is a big risk, is that the supply chain issues may eventually ease but it may not be soon enough for the Bank of Canada to stop the interest rate hikes. In the developed world, there is a shortage of labor, again multiple reasons. There's reduced immigration because of the pandemic, and baby boomers, who are currently 1/3 of the workforce, at least 5 million Canadians are going to retire by the end of this decade. Many workers are retiring early due to the pandemic or age and low-wage workers are using their time off to look for better jobs or going back to school. Workers are not able or not willing to return to work while the pandemic lasts, and childcare responsibilities have been mounted on mostly women to the point where there has been a "she-session" of women leaving the labor force because of the additional childcare costs that have been mounted on them during the pandemic. Labor is also a weak link in the supply chains. So a shortage of truckers, a shortage in the low-wage service worker industry. Statistics Canada says the number of job vacancies at the beginning of April hit just over 1 million, up more than 40% compared to a year earlier, as the tight labor market helps push up wages and fuels all of these inflation concerns. Brexit Britain and the US with racist immigration policies are even worse, because it is so much more difficult to hire workers from outside of their borders. Well, you know, there's a small highlight to that in that, oh, no, you can't exploit workers. You can't exploit as many low-wage migrant workers as you used to be able to. But in an economic system that relies on exploited labor, a sudden lack of available exploitable labor is going to send shockwaves through that economic system. Is that a bad thing? Debatable.

Daniel Tarade  
I mean, the whole system's going to collapse. But ultimately, we knew this was gonna happen. It's just an irrational, unsustainable system, because it's based in the vast majority of people toiling in absolute misery so that some people can have yachts floating around in the pools on their bigger yachts. There's a stat there that I just want to highlight again. So job vacancies at the beginning of April hit just over 1 million. Yet we already covered earlier that the unemployment rate in Canada is like virtually record lows. 

Emily Steers  
Yes. 

Daniel Tarade  
So there's a huge kind of talk about Yeah, no one wants to work anymore. And it's like, no, the vast majority of people that are looking for work, that are working age, are able to work are employed. The vast majority of them are, but again, you created a system that is so stretched, so based on just continual extraction and production and consumption— 

Emily Steers  
Exploitation. 

Daniel Tarade  
And as soon as some people start retiring slightly earlier, as soon as you know, slightly fewer people are coming from the Global South, and maybe in the States, you know, a million people dying of Covid has something to do with the fact that you have a bunch of job openings available now. Who knew that a bunch of people dying due to preventable illness would come back to bite them? But that's the tyranny of the quarter, that you know, you need to have the profits as high as possible quarter to quarter. We see that with airline industry, they decided to lay off a bunch of people so that their quarterly numbers would look better. And that meant, you know, a year and a half later that it bit them in the butt, and yet, they still got away it by mostly by passing off all the cost to us. Four, energy. Energy prices are a big driver of inflation. They've been rising rapidly from the period when it was selling for $0 a few years ago. Remember that, when barrels of oil were $0, or even negative dollars. They would just pay someone to take the oil. 

Emily Steers  
I remember when gas was 60 cents a litre. 

Daniel Tarade  
So again, prices of gas and other fuels have been increasing. Again, it's blamed on Russia, which is a significant producer. But the problems go deeper than just Russia. When prices collapsed during the pandemic again, $0 per barrel of oil, can't get lower than that, and with renewed commitments to reduce fossil fuel use, investment and even basic maintenance of our current fossil fuel infrastructure went down. The very high price tar sands saw major oil companies investors withdraw from the tar sands. The expensive and debt-leveraged shale, oil, and gas companies went bankrupt. Refineries closed and another major refinery was damaged by an ever-powerful hurricane, which I wonder if that's related to fossil fuels, who knows, someone should look into that. The energy companies are making windfall profits due to the prices. They are gouging to an extent, of course, but without any new investments, and none of the major fossil fuel companies are rushing to invest with a recession looming and the possibility of climate action, oil and gas prices will be high for a while. At this point, part of it is supply side. And meanwhile, the high prices of oil completely ripples through the entirety of the supply chain, and especially energy-intensive food systems. For example, industrial fertilizer is produced with natural gas. So you have increasing oil prices, because the pandemic everything was being shut down, a bunch of corporations think they're not gonna make as much money off it, shutting down, and yet we haven't transitioned yet to renewables, so we're all still completely beholden to the fossil fuel companies who are then able to charge us whatever they want. Because what are we going to do, not use fuel anymore? It's a completely exploitative, extractive, parasitic system.

Emily Steers  
And we've also got monopoly pricing. Canada has hit an all time high in corporate profits between October and December last year — $139 billion in pre-tax profits to be exact, according to Stats Can. And the party is still going. In between January and March 2022, corporations made 138 billion in pre-tax profits. So this means corporations are avoiding being squeezed by the high-input costs, like gasoline, by passing all of these costs and then some onto consumers. Grocery stores booked $7.3 billion in pre-tax profit in 2021, and that's more than double what they were clearing the year before the pandemic. 

Daniel Tarade  
Good for Galen Weston, Jr. Good for him. 

Emily Steers  
What an enterprising soul. 

Daniel Tarade  
Well, the innovation, you know, I'm pretty sure he invented sliced bread. Or at least there's something with Galen Weston and bread. Just look up "Galen Weston fixes bread," and you'll see. I'm pretty sure he sliced it.

Emily Steers  
Remember when we said we were gonna try to keep the sarcasm to a minimum. I think we have failed, and we're just all aboard the sarcasm train. Here we go. 

Daniel Tarade  
Choo choo. The last thing that we're identifying as contributing in this polycrisis is the foreign exchange of currency. This is de facto the importing or exporting of inflation, depending on how you look at it. And this comes down to the US dollar. The US Dollar as a world currency allows the US to export inflation to other countries. The US Dollar with its large and liquid financial pools is rising in value due to its safe haven status. Since almost all major commodities and most debt is priced in US dollars, the prices of commodities and debt rises for every country outside of the US as the US dollar increases. 

Emily Steers  
To quote the French Minister of Finance Valéry Giscard d'Estaing, "the exorbitant privilege" of the US dollar is one of the main pillars of American imperialism, and it is worth paying attention to. The US government has not paid for a war or for its trade budget and the current account deficits since the Vietnam War. It costs only a few cents for the Bureau of Engraving and Printing to produce $100 bill, but other countries have to pony up $100 worth of actual goods in order to obtain one.

Daniel Tarade  
Those are the factors we're identifying as contributing to this inflationary crisis. What doesn't contribute to inflation are workers wages. Wage gains are lagging behind inflation, clearly not driving it. For example, the data from Canada, wages are growing at about 4% a year in Canada. And by comparison, inflation is at latest tally 8.1%. The strong unions and the cost-of-living-agreements, where wages in certain unions used to go up automatically indexed to inflation, all of that long gone. Now, the increased militancy and union organizing that we're starting to see now comes as a reaction to existing inflation. So the Bank of Canada and all these economists, they get the cause and effect wrong. And this is something that Karl Marx gets right. The material conditions are driving workers to actually take risks in collective bargaining and in strikes to make sure that they don't fall behind because we already see how precarious the situation is. So it's not workers wages that are driving inflation, inflation was going to happen regardless of wages going up. Wages going up is how workers are going to make sure that they don't literally die. 

Emily Steers  
Yeah, like we're making sure we don't get left behind.

Daniel Tarade  
Exactly. Another thing that's not driving inflation is the supports and the fiscal policy of pandemic supports. For example, things like CEBR. Monetarists, people that think that the Bank of Canada should be the sole thing that arranges our economy, says that the government spending during the pandemic and increase money supply is what's driving this inflation. And they've been saying this since 2008 and after the quantitative easing, yet, inflation didn't even show up after the quantitative easing after the 2008 financial crisis. Monetarism is a zombie that just won't die. In fact, even since 2008, all efforts are trying to get inflation up to the 2% target. So it's very clear that fiscal policy of supports, direct supports for people, isn't driving inflation. In fact, other countries like those in Europe didn't provide any direct income support, and yet their inflation is higher than Canada's. And now this is worth pointing out because this is one of the main arguments of Poilievre and other reactionaries. Canada's quantitative easing didn't cause inflation. And in fact, a lot of the quantitative easing programs run by the Bank of Canada essentially consists of central banks going out and buying government bonds on the open market from commercial banks. We already talked about this. They're buying bonds from commercial banks so that those commercial banks instead of having some sort of asset, they now have just cash. The central banks though in Canada pay for this using a special type of central bank money known as reserves or settlement balances, which just makes me think that the Bank of Canada has essentially Monopoly money of different colors for different purposes. These reserves can't be used by commercial banks, though, to make loans directly to consumers or businesses. We can't get any of this money. They can only be used to settle obligations between banks, because banks owe each other money. And as a result, their ability to drive inflation is severely limited. But what this quantitative easing does is keep commercial interest rates abnormally low because it means that there's more liquidity in the commercial banks because they settled their obligations to each other. If they're not owing another bank money, that means that frees up something that they can then lend out to businesses and consumers. Again, in capitalism, you die one way or another if you're a worker. You get exploited one way or another. Even though the interest rates were low, which is again, good if you have a car loan, if you have a mortgage, it primed the housing frenzy because again, all the bigger fish in the pond also have access to these low interest rates, which means that they were out bidding us and they were hoarding it all so they can rent it back to us and that primed the housing frenzy. And since safe government bonds are prized by the big equity and pension funds, and they were now scarce because the Central Bank of Canada bought it from them, they instead started investing in riskier assets. And this makes me think if there's a connection between this and things like crypto and NFTs. Now, if they can't sit on bonds, they're like, well, we got all this money. Let's just buy some pictures of monkeys. Maybe that's a good idea.

Oh, God, no, genuinely though, one of my great fears is that some pension fund managers gonna be like, you know, what's a good idea. And of course, you know, Poilievre running for conservative leader, you know, wants to make Canada the crypto capital of the world. And he also, you know, threatened to fire the manager of the Bank of Canada. So, of course, we've covered this a little bit in the articles we were talking about. But you know, we've got the neoliberal response to inflation, which is higher interest rates and increasing unemployment. So layoffs. Most inflation causes are external. It's supply reduction, it's a push in demand, and the central bank cannot do anything about that. But it can reduce demand to the limited supply by creating unemployment via higher interest rates and triggering layoffs. Marx's point is that capitalism thrives on high unemployment, because it means there's always a labor reserve of desperate people willing and ready to work for less. As Robert Reich, the former US Secretary of Labor recently said, The problem isn't inflation so much that wages haven't kept pace with profits. Higher wages and increased government spending does not necessarily have to lead to inflation. That is just what those over focused on their profit margins want you to think.

And that's literally the point. If you're going to take one thing from this podcast, I think this is the point. When workers get paid more, for example, or when the government spends more taxes on public supports, and they, as a result, raise taxes on corporations, that does not need to then be justification for harming workers and oppressed people. It doesn't need to be. It could just mean that the corporations make less profit. It could be as simple as that. You can just take every person who is working minimum wage in the service industry and double their wages, and you can pass a law that says corporations need to pay for those increased wages by taking it from their profit, and you can do it and all it would mean is that the billionaires don't get to buy quite as many islands. You know, maybe they have to fly commercial instead of taking a private jet, you know, and that's okay. Because the alternative is that you get a bunch of workers who don't get paid a living wage, which if it's not a living wage, then it's essentially a dying wage. They're just dying in slow motion as they slowly get starved and crushed to death. It could totally be okay for the things that workers get to come at the expense of the other class, because that's how they see this whole situation. It's a class war. We read some of the words right from the economists who are like begging, don't raise wages, because that will make it worse. And when they say that they don't mean worse for us, because obviously, how are higher wages for us gonna be worse? No, it means it's gonna be worse for the capitalists. 

Emily Steers  
So here are some of the contradictions of a low interest rate. The exceedingly low interest rates that we've taken for granted during this great moderation, which is the period of decreased economic volatility in the United States from the 80s until 2007 — and then guess how that ended — and especially since the 2008 liquidity crisis, these are symptoms of the fragility of the capitalist system. During the decades of Great Moderation, the billions of workers drawn into the global capitalist system from Russia and China have put a cap on wages in the developed world, and China as the cheap labor workshop of the entire world has kept prices down. So those two developments were anti-inflationary in and of themselves. The central banks didn't have to do much. But current geopolitics has now basically eliminated those deflationary factors and could cause even more inflation because of increasing conflicts and tensions between Russia and China.

Daniel Tarade  
So think about what that means. It's anti-inflationary. Think of, you know, the emergence of Dollarama and other bargain stores like that. 

Emily Steers  
The Made-in-China effect 

Daniel Tarade  
Exactly. Even though workers wages have been stagnating, we've been able, to an extent pivot to just cheaper products made by people that are super exploited. And these are people in manufacturing in China, Russia, Indonesia, Bangladesh, I don't need to list all the countries, those are the jobs that used to be here. They were outsourced there. And so we lost better paying jobs here which kept our wages down and then it was replaced with then just cheaper goods being imported back from the same places that our jobs were exported to. Meaning okay, we have worst jobs here, but we can at least buy it from the people that got paid even less to make this shittier product somewhere else.

Emily Steers  
And of course, we see that spiraling into the crisis of repairability. You know, things are made to last very short-term and then break and have to be replaced with a brand new product rather than being repaired. Yeah, during the 2008 crisis, the interest rates were cut drastically. And as we said before, quantitative easing, which was a completely experimental measure, was introduced. So it massively expanded liquidity, ramped up financial asset prices, e.g. the stock market and housing.

Daniel Tarade  
Literally. Because there's a bunch of cash being given to these commercial banks, they mostly just use it to then speculate on the stock market and to invest in property which because. why not. 

Emily Steers  
So since 2008, the capitalist system has kind of limped along with a low GDP and productivity growth, which has made it hard for central banks to raise interest rates to a more normal level. So with rates as low as 0.25 and negative when inflation was factored in, there wasn't a lot of room for interest rate cuts, which is one of the standard responses to recession. So now with the sudden interest rate hikes, this is going to impact a lot of these financial assets. So the stock market is mostly irrelevant, apart from the fact that anyone with a pension is going to be pretty impacted — so you know, most people — it's also going to restrict housing sales, price inflation, which is a good thing, but given that housing is 10% of our GDP, which is larger than energy at 5% — sorry, Alberta — the contradiction is that it will be a serious economic hit and raising the prospect of recession by cooling down the housing market, which is just there's no winning. It's already massively increased rental costs, that people are priced out of purchasing housing, and it will increase the cost of governments to service their debts and citizens paying off heavy personal debt, both restricting consumption demand in the economy from consumers and a budget squeeze for governments, which paves the way for more cuts to public services. 

Daniel Tarade  
Austerity. 

Emily Steers  
Austerity. Yeah, Britain has been doing it for like 15 years now. How's that going?

Daniel Tarade  
Quantitative Easing kept interest rates low. And right now central banks are planning on letting loose about 4 trillion off their books as the terms expire. The last time the Fed tried some tightening in 2017, it ended up having to abandon it after September 2019 when the plumbing of the financial system gummed up and overnight, borrowing costs skyrocketed. This is known as 'The Taper Tantrum.' This time though, no one, not even the Fed itself really knows how it will work.

Emily Steers  
The worry then was not much about inflation, but deflation, which was worse. With falling prices, there's no incentive to buy anything today as it will be cheaper tomorrow. But of course, that falling demand hits businesses and employment. You've stuck with us for an hour. You're amazing. We love you. Let's get into the meat and potatoes of the political economy.

Daniel Tarade  
Many economists seem to view inflation as a purely technocratic problem. That's why they don't talk about workers and people. They talk about things like expectations and growth and interest rates. It's just numbers. And most central bankers would like to believe again, that it's just a purely technocratic problem. In fact, the roots of sustained inflation mainly stem from political economy problems. Capitalism's neoliberal variant crushed unions and cheapened labor costs at the same time crushing demand. Outsourcing and all the very fragile supply chains crushed manufacturing in North America and substituted it with financial scams and a low-wage service sector. Workers, unable to raise wages, survived on debt and low-interest rates. Basically, no one was getting ahead. But as long as you had a low-interest rate, you're not going to default on your loan and get kicked out of your house. You're never going to pay off your house, you're never going to pay off your student debt, but at least you're not going to be in the streets. But this whole financialized, monopolistic, capitalist system suffered endless crisis from the 80s onwards ending in the near collapse of the economy in the 2007-2008 crash. Neoliberal policies should have died then, but like a zombie, it rose from the dead. And instead of rethinking economic policies, they just kicked the can down the road with massive quantitative easing, which caused even lower interest rates. With fiscal policy, again, government spending and policy things like wage and price controls, ruled out from the neoliberal playbook, the only policy the central banks have is the really crude Sledgehammer of raising interest rates. The contradiction again, is that the whole financialized economy depends on low interest rates and massive liquidity. Higher interest rates could do a lot of damage to housing speculation, to the stock market, to zombie companies like Uber that make no profit, and other financialized gambling games. Again, crypto and NFTs. For decades, inflation was dampened by the entrance of 10s of millions of workers to the global labor pool from Russia and China. And although wages were suppressed, so were the costs with all these cheap commodities coming from China. With Cold War 2.0. right now being pushed by the west, these two important factors could be eliminated and the cost of living would rise. Again, imagine what the grocery bill would look like if everything was actually grown in Canada. That might be great for sustainability and environmental long-term prospects, but in terms of the immediate impacts of workers and oppressed people today, well, again, you see what the cost of organic local produce is.

Emily Steers  
Well, and that's a really interesting point to when we're looking at the situation right now in Sri Lanka, which we really need to talk about. And we'll likely do a podcast about in the future, because their inflation rate right now is over 50%. And there are a lot of factors in that economic catastrophe that's happening there right now. But one of the really interesting things is how a few years ago, the government decided we're going to pivot to all organic. All organic farming and a significant portion of Sri Lanka's economy is agriculturally based. As an environmentalist, I have to say there is a reason that people use massive amounts of pesticides and inorganic fertilizers and all of that kind of stuff. And it's because they work. They are absolutely devastating for the local natural environment. Absolutely. We need to phase them out. But that's the thing. We can't just cut them off because when you do not use pesticides and artificial fertilizers, you see massive loss in crop yields. 

Daniel Tarade  
Supply goes down. 

Emily Steers  
And so that's part of the economic crisis in Sri Lanka is just massive shortages of food because of poorly managed agricultural policy. To round out this episode of The Red Review, we are going to be going through an article by the economist Adam Tooze on a recent report released by the Bank of International Settlements, aka the BIS, aka the granddaddy of monetary institutions. From its own about page, Our mission is to support Central Bank's pursuit of monetary and financial stability through international cooperation and to act as a bank for central banks. The Bank for International Settlements, aka the BIS has also just come out with its latest annual economic report. Like the World Bank, BIS economists start by remarking about the roller coaster we've been on since 2020. In 2021, global GDP is estimated to have grown by 6.3% in real terms, its fastest rate in almost 50 years. But now the World Bank has pointed out in its economic prospects a few weeks ago, we are experiencing the sharpest slowdown in growth in 80 years. Not the lowest growth by any means, but certainly the sharpest steepest downshift in growth prospects. We are on the steep part of the roller coaster and we're all screaming together. So together these two simple quantitative statements convey a little bit of the drama of the current moment. So again, what's driving this? The BIS has the data. Global data on retail and leisure activity, an astonishing number to just have at our fingertips, slowed really dramatically over the winter of 2021-22 as Omicron hit. Of course, then came the Putin war in Ukraine. And it is tempting to attribute our entire malaise to this really awful act of aggression, but the data just doesn't support that idea. The war has depressed GDP growth expectations, and this is associated to some degree with a share of country's trade going to Russia. But the association just isn't as strong and the effect is not as large as a lot of people think. So far at least as far as the world economy is concerned, Russia's war in Ukraine is secondary to some other disruptive shocks. The pessimism about future growth is less the war rather than the sudden surge of inflation and reaction of the central banks to that surge, again, partly related to the war, mostly related to climate change, and the supply chain chaos of Covid-19. So in the second half of 2021, in the months following the BIS annual economic report, inflation rose rapidly initially driven by energy and other commodities and now has broadened out so that now spring of 2022, in most advanced economies, where inflation is normally pretty sluggish, 40% of goods counted in the inflation indices were experiencing inflation over 5%. So obviously, it is true that the war in Ukraine has delivered a massive shock to commodity markets. And this feeds through inflation, of course, because both Russia and Ukraine have massive, massive contributions to global energy and also global food, like Ukraine is known as the breadbasket of Europe. But how large is the effect of the war on inflation. So as BIS comments, estimates of the effect of commodity prices increase across a broad panel of countries indicates that a 30% increase in oil prices compared with a 10% rise in agricultural prices, roughly in line with what we've seen since the start of this year, this has historically only been associated with a 1% increase in inflation in the following year. 1% is a little bit different than the massive inflation we've been seeing.

Daniel Tarade  
So war is stoking inflation, but so far, at least it's not the main driver. Furthermore, though inflation is widespread, it's not actually impacting every country in the world. China and Japan, which dominate the East Asian economic region have seen very modest inflation. And in fact, by April of 2022, China was only at about 2% and Japan was somewhere around 2.5-3%, which is actually generally what countries are trying to achieve. So they're doing just fine so far. As the BIS remarks, the combination of inflationary and recessionary forces that we are currently facing along with financial stability risks is quote "historically unprecedented." It is worth saying that when the BIS says this, it is not merely an impressionistic remark intended to convey the drama of the moment or an overused journalistic cliche. It is a precise statement based on the comparison of the current conjuncture with all relevant data in its database stretching back to 1945. It's all the more attention grabbing for that. To repeat, in the last 18 months, we have seen the fastest global growth in 50 years followed by the most rapid slowdown, creating what is in the BIS's view, a global economic configuration unprecedented in history. Literally, never been seen before. Specifically, we have never seen such a combination of already rapid inflation and rapidly slowing growth with elevated financial vulnerabilities, notably high indebtedness against a backdrop of surging house prices. As the BIS spells out, prior to the mid 1980s, recessions were generally preceded by high inflation and the associated monetary tightening while the financial system was largely repressed. Since then, Covid aside, recessions have typically followed financial cycle peaks with inflation remaining subdued during expansions and hence calling for relatively little monetary policy tightening. As the BIS goes on to remark, the absence of historic parallels makes for a highly uncertain outlook, which I think we need to be honest with you as well. Where this is going exactly is going to be incredibly hard to say. But the Marxist framework of this lets us know that it's a class struggle through and through, and how this turns out is going to depend quite a bit in fact, on how we organize as a class.

Emily Steers  
So the upshot of the BIS policy analysis is even more illustrative. Clearly, BIS thinks that halting the current inflationary surge is associated with risks that ramify in a lot of different directions from loss of exports to China to food riots. To have any hope of managing such a multiplicity of risks, you need a policy toolkit that's really multifaceted. Central banks can raise interest rates, but they should also be using macroprudential tools. — what a great phrase — to manage risks in the financial system. Fiscal policy has a really important role to play. But above all this, the BIS, which has a distinctly Austrian flavour in its analysis, wants policymakers to refocus on so called supply-side policies to boost economic growth. What does that mean? Well, shockingly, (not) the BIS favors the kind of neoliberal measures that promote competition in markets and reduce impediments to international trade. The former pertains to the political economy, the latter to geopolitics, but still in the midst of managing the most rapid bout of inflation since the 1980s, BIS thinks it is relevant, along with worrying about food riots in low-income countries, for policymakers to focus on ensuring timely and efficient energy transition. Why is that? How does the energy transition connect to the current inflation problem and the proper stance of macroeconomic policy? Simulations suggest that orderly transition that features a timely increase in green energy investment could impose relatively small near-term costs and deliver persistent long-term gains measured in terms of economic output. By contrast, a disorderly shift to green energy with the adoption of clean-energy technology lags and carbon energy sources are just shut down rapidly, would involve significant costs to everyone in both the long and short run. Ultimately, supply side factors determine the basic trade offs between prices and outputs. And this macroeconomic stabilization politics, monetary or fiscal, it can only do so much. The supply side is, well everything — the entire structure of production, the distribution of commodities, human bodies, natural resources, the flow of energy. This networks across biopolitical, geopolitical, and geoeconomic terms in which this polycrisis is playing out. This is interconnected. It is resonating. It is complex, punctuated by violent spasms of crisis, which we are currently experiencing. What I think is really, really interesting about this is basically what we're saying is like there needs to be a planned economy. There needs to be regulation of the way the economy functions in a much more hands on manner. And there needs to be meaningful fiscal policy that has finer tools than just this blunt sledgehammer of raising interest rates. There needs to be some flexibility in the way we respond to financial crises. Because right now, the financial system we have, this thing that's been built, this neoliberal system that is entirely reliant on interest rate hikes and quantitative easing and just you know, moving the piles of money around and hoping they get bigger, is very, very clearly not suitable for adapting to crises. We've seen this with Covid. We're seeing it with climate change. We're seeing it with the war in Ukraine. You know, there's all of these massive, massive payouts, and never in my life have I heard stronger arguments for a planned economy, for democratic control over the way the economy functions. You even have international monetary organizations arguing for fine tuned, fine control, fiscal management.

Daniel Tarade  
A democratic, centrally-planned economy. To break that down, what it would look like is one in which every single person has a direct democratic say in production and consumption. Rather than making these decisions based on profit, based on you know, what's gonna give you the quickest return as quick as possible, instead, when it's all of us, we already see what our polls say. We care first and foremost food, water, shelter. And then beyond that, you start looking into things like art, culture, free time. And these are all things that if we came together, and we did the work, and like, how much food do we need to grow so that everybody has enough nutritious food? How do we grow it locally and sustainably so that our environments are clean, and they're stable, and they're not at risk of just collapsing every year? 

Emily Steers  
Exactly. 

Daniel Tarade  
How can we make sure that every person has shelter? And we would ultimately find out, okay, we have millions of people in this province, in this city that are capable of work. Here are the tasks that we need to fill. And there you go, that's the basis for the economy. What sources of labor do you have? What sources of natural resources do you have? And what do you need?

Emily Steers  
Exactly, this is what we mean by the phrase, From each according to their ability, to each according to their need. We often say you know, vote, it's your most powerful political tool, which, you know, we're not going to get into a debate about the merits of electoralism right now, because that's another conversation. But it is worth discussing the ways in which we have political power, because right now, we have power through mass mobilization, which is obviously something we are massively in favor for, and that's through wildcat actions, through social uprisings, through unions, we have the power of electoralism, and we have the voting with the dollar. As they say, you know, we get to decide how we spend our money. And that's what influences policy. And thus the people who have the most money to spend have the most power over how resources are allocated and how money is spent. This is the argument we're making is that the people with the money are not making good decisions. And we need to be able to contribute to the important critical decision making that is happening that has been happening for decades, that is shaping the world we live in, in every single imaginable way. And we have no control over that, aside from how we spend our money, the little of it we have and there needs to be more of a voice, we need to have more of a voice and in a planned economy, in a democratically-organized free expression economic model. That is how we will transition to something more equitable. That is how we will transition to a financial system that actually benefits people. I find it fascinating that they are calling for the immediate adoption and intentional transition to green energy, because they're saying it's going to happen one way or another, better to do it in a controlled way.

Daniel Tarade  
Where you can all still make money off it.

Emily Steers  
I mean, yes, but you know, in a way that isn't going to cause massive disruptions.

Daniel Tarade  
They're like begging with the capitalists, like don't just destroy everything, just because again, you can and because it means your quarterly profits will be higher. 

Emily Steers  
We're already seeing this play out in Europe. And again, this is a whole other thing that we don't necessarily have time to talk about today. But Germany, who has been deeply reliant on Russian energy for a very long time. Russia is basically playing keep away with German energy. And so the German people are the ones who are going to be suffering from this geopolitical mess. And all across the EU, people are being told everyone, everyone needs to cut down on energy consumption by 15% before next March, which again, it's passing off decisions to consumers, to the people and saying you need to suffer because of the decisions that we are making. Rather than a controlled easing, we're switching over to renewable energy so that we can be less reliant on Russian energy, so that we can be less reliant on fossil fuels and all of the political ramifications that come with that, people are simply being told to heat your house less, don't use your air conditioner as much, turn off your lights. We don't know how that's going to play out, particularly over the winter. One way or another, if Germany doesn't get oil, it's not going to be able to keep the generators running. So it's going to happen one way or another.

Daniel Tarade  
And so that's the distributional conflict. That's what already we're seeing the warnings even from the highest of these institutions of finance. The inflationary crisis is going to significantly worsen the material conditions for workers and oppressed people. In the current capitalist system, like you already mentioned, Emily, we have no say aside from the very meager wages that we collect, whatever meager savings we may have, and again, quite a few people don't even have that, and what we do have, it doesn't even approach the capital owned by the capitalists, the people that actually own the factories, the people that actually own the buildings, the people that are able to purchase your labor from you, because they have that much more capital than you such that you're essentially their wage slave. And so we're never going to be able to get out of this mess using the rules of the neoliberal system. Their rules are written for them.

Emily Steers  
The more we've talked about this, the more I've read about this, going through this whole document, as I say, I have never heard a stronger argument for a planned economy and for a total overhaul of the entire global economic system.

Daniel Tarade  
And the only way we're gonna get there, then the only advantage that the class of working people has then is that this whole system, even if we have no democratic inputs, the whole system runs on us, our blood, our sweat, our tears, our bodies.

Emily Steers  
There is no economy without labor. The economy is our labor. 

Daniel Tarade  
And so there's a saying in Marxist politics, you need theory, and you need practice. So we discussed some of the theory today. We learned a bit more about the political economy, we know that regardless of how this turns out, that it's gonna be bad for us. We can't exactly predict which way it's gonna go. But we know it's bad, and it's gonna get worse. And so where the practice comes in, again, related to theory, there's only one way through this — as workers and oppressed people coming together, realizing that we have everything to gain and everything to lose as a class in opposition to the capitalists. And we have a vision then of what we're going to struggle for. The tools are going to be strikes, general strikes, direct action and the vision, the rallying cry is for democratic, centrally-planned economy, where all of us gets a say, and our dignity is protected and assumed, and it becomes the central focus of the economy rather than profit.

Emily Steers  
Amen, amen. Amen. And in the meantime, comrades help each other out. Stay strong. Mutual Aid is a good practice, and we are here to support each other because we know no one else will. Solidarity comrades as always. So you can check out all of these resources. We will have everything linked in the description. And if you have any questions, you can reach out to us on our Discord channel or touch base with us on Ko-Fi. If you've learned a few things today, and I know I have, please consider supporting us. You can make a one time or monthly donations and everything really, really helps. So thank you so much. I'm tired.