Myth and Reality in the Great Inflation Debate: Supply Shocks and Wealth Effects in a Multipolar World Economy

Tilting at Windmills: Bernanke and Blanchard’s Obsession with the Wage-Price Spiral

“…As the inflation rate has since begun a hesitant decline, the time has come to look back at and reflect on what has happened during these challenging years and draw policy lessons from the havoc and destruction created by the COVID19 crisis, the disruption of global supply chains, Russia's war on Ukraine, and the increasingly belligerent multipolar geopolitical reality in which national security concerns trump economic concerns in determining cross-border investment, technology and trade relations. Ferguson and Storm (2023) provide one early critical and comprehensive assessment of the myths and realities of the recent (unexpected) burst of U.S. inflation.…”

“…poor (inflation) forecasting track record does not inspire much confidence in its ability to undertake effective forward-looking monetary policy (Storm 2023a). However, in its preference for datadetermined policy making, the Federal Reserve is clear, at least, that standard macro models are of little use in the current macroeconomic environment that is particularly fluid economically and politically at domestic and global levels (Ferguson and Storm 2023).…”

“…Bernanke and Blanchard assume a worker wage bargaining power that evidently does not exist in the U.S. It appears as if they are oblivious of the overwhelming body of empirical evidence that shows that worker power in the U.S. has all but vanished (Storm 2021;Ferguson and Storm 2023). The 'ivory-tower' argument does not apply, because close colleagues of Bernanke and Blanchard have written in no unclear words about the long-term decline in worker power in the U.S.:…”

The Return of Debt Crisis in Developing Countries: Shifting or Maintaining Dominant Development Paradigms?

“…(2023) and the OECD (2023). In contrast to the 1970s, when real wages in core OECD countries such as the US or the UK were rising and profit shares were being squeezed, real wages have now been falling, as the bargaining power of labour is at an all‐time low (Ferguson and Storm, 2023; Stansbury and Summers, 2020; Storm, 2021). Empirical evidence provided by Storm (2022) shows that nominal wage growth in many developing countries, including Argentina, Brazil, Mexico, South Africa and Turkey, has not been keeping up with consumer price inflation during 2019–22 and, hence, real wages are stagnating or declining.…”

“…Empirical evidence provided by Storm (2022) shows that nominal wage growth in many developing countries, including Argentina, Brazil, Mexico, South Africa and Turkey, has not been keeping up with consumer price inflation during 2019–22 and, hence, real wages are stagnating or declining. If one of the core functions of neoliberalism has been to undermine the power of labour and to subordinate it to the needs of capital (Ferguson and Storm, 2023; Harvey, 2011), the current resurgence of inflation, which might yet be transitory, would not appear to be fundamentally challenging neoliberalism.…”