Manufacturing inflation? Interesting factoid.

The article has an interesting perspective on oil prices, modern war, & globalization as well. Worth reading in its entirety.


"...in late 2000, inflation started falling, and in 2002 it reached 1 percent – a postwar low. The decline was accompanied by a massive drop in the ratio of profit to wages, which fell by 55 percent from its 2000 peak. In the wake of these developments, the Federal Reserve Board Chairman, Alan Greenspan, warned of an "unwelcome substantial fall in inflation," and was encouraged by leading financiers to "go for higher inflation."12

(12. Alan Greenspan, "Testimony of Chairman Alan Greenspan Before the Joint Economic Committee," U.S. Congress, May 6, 2003; Bill Dudley and Paul McCulley, "Greenspan Must Go For Higher Inflation," Financial Times, April 23, 2003, pp. 17.)

In January 2003, just before the invasion, we wrote:

'. . . if oil prices continue to rise, inflation will most likely follow, the spectre of deflation will be removed and the large companies could sound a big sigh of relief. For these companies there would also be an icing on the cake. Inflation usually works to redistribute income from labour to capital and from small firms to larger ones. It will therefore make the leading companies better off relatively, if not absolutely.'13

And indeed, Greenspan didn’t have to work too hard. The new wars have done the job for him. The neo-conservatives sent their army to the Middle East, the price of oil soared, and inflation – although hesitant at first – eventually started to follow.

The distributional consequences weren’t lost on investors and workers. While wages remained flat, profits – particularly those earned by dominant capital – surged. As a result, the ratio of profit to wages climbed rapidly – rising 250 percent since 2001 and sending the overall share of profit in GDP to its highest level since data began to be collated in 1929...

All in all, then, the new wars are definitely cheap."


http://www.globalresearch.ca/index.php?context=viewArticle&code=%20NI20061116&articleId=3890