Inflation, hypocrisy and manipulation

Whatsapp
Facebook
Twitter
Instagram
Telegram

By PLINIO DE ARRUDA SAMPAIO JR.*

The “market” took advantage of the specter of inflation to push for an increase in interest rates and reinforce the chorus for the continuity of the fiscal austerity regime

Far from representing any real concern with the economic situation of the working class, the hysteria of the bourgeoisie in relation to a supposed threat of uncontrolled inflation is hypocritical, malicious and totally misplaced. It is a political-ideological initiative to manipulate public debate. The immediate objective is to block any objective discussion on the true causes of inflation and on the priorities that should govern economic policy in the 2022 elections.

While the rise in prices was restricted to the goods that make up the cost of living, seriously compromising the purchasing power of families, the priests of monetary stability remained quiet, even with an average price variation of the basic food basket in twelve months systematically above the threshold of 20% since September 2020, in the main capitals of the country. However, the expectation that the IPCA - a strategic indicator for readjusting the value of financial wealth - was enough to move from the 4% level to 8% in 2021, for there to be a generalized outcry in defense of greater rigor in monetary policy and Supervisor.

The increase in the current general level of prices is a temporary phenomenon and not a spiraling process of acceleration, as implied by the economic debate in the mainstream media. In 2022, inflation should return to the level of 2020. Indeed, the expectation of the “market” is that the IPCA for next year will be 4%, against an expectation of 3,5% at the beginning of the year – an insignificant increase, which does not justify the fuss against the risk of uncontrolled inflation.

Faced with pressure from large holders of wealth, the Central Bank immediately modified monetary policy. The expectation is that the economy's basic interest rate – the Selic –, which a few months ago was projected at around 4%, will reach above 8% by the end of the year.

The “market” also took advantage of the specter of inflation to reinforce the chorus for the continuity of the fiscal austerity regime. The pressure of the national plutocracy, reverberated in prose and verse by the Pharisees who set themselves up as guardians of the currency, is for the Spending Ceiling that strangles public policies to be maintained at any cost.

However, monetary and fiscal tightening are measures that only interest big capital and, particularly, public debt creditors. By acting on the effects of the problem – the inhibition of inflation by containing aggregate demand –, the orthodox prescription reinforces the structural tendency towards economic stagnation, ruling out any possibility of a recovery in the labor market.

The inflationary pressure that affects the Brazilian economy stems from circumstantial conditions and economic policy decisions. None of these determinants is related to “excesses” of expenditures derived from an expansionist monetary and fiscal policy (implicit diagnosis in the recipes of those who ask for greater monetary and fiscal tightening).

The increase in the general price level is, above all, a worldwide phenomenon that gained momentum from the second half of 2020. It is a movement basically associated with the significant rise in the price of commodities in the international market (which has been cooling down since May 2021) and the appearance of bottlenecks in production chains resulting from the effects of the pandemic (a problem that tends to lose momentum with the progress of immunization on a global scale).

The exogenous shocks on the general price level were amplified by the disastrous economic policy of Paulo Guedes (which only benefits speculators). Among the internal factors that boosted inflationary pressures, the following stand out: the strong devaluation of the Real against the dollar; the shortage of domestic supply of a series of important agricultural products in the population's consumption basket (such as rice and meat); and the shock of administered prices, especially petroleum-derived fuels and electricity.

The potentiation of inflationary pressures is, therefore, a direct result of economic policy choices, such as: the ineptitude of the exchange rate policy, which allowed a strong and unjustified speculative devaluation of the Real against the dollar (even with an absolutely calm balance of payments situation ); the absence of a regulatory stock policy to avoid shortages in the domestic supply of agricultural products; the subordination of Petrobras' pricing policy to the imperatives of the New York Stock Exchange; and the disastrous policy of managing the energy crisis, which allowed the reservoirs of the main hydroelectric plants to run out. Interestingly, the “market” hasn't uttered a peep about such matters.

With the GDP stagnant for seven years, the prostrated labor market, tight wages, social inequality on the rise, poverty growing on the rise, with more than half of the population in a situation of food insecurity, and public spending strangled by the law of the Spending Ceiling, the bourgeoisie takes advantage of a conjunctural increase in the general level of prices to reinforce the mantra of monetary stability as the supreme value that overrides everything.

The consented opposition's silence in relation to the sacralization of monetary stability and the refusal to consider the repeal of the Spending Ceiling as a national urgency barely disguise their absolute complicity with the Real Plan and its disastrous implications for the people's living conditions. For the situation of the working class to improve, the economic debate agenda must be turned upside down. The absolute priority of Brazilians must be a vaccine in the arm, food on the plate, emergency fight against poverty, decent employment for all workers, wage increases, reinforcement of the State's public spending capacity and the conquest of food and economic sovereignty. Only popular intervention has the power to unblock the debate on the direction of economic policy and open new horizons for Brazilian society.

* Plinio de Arruda Sampaio Jr. He is a retired professor at Unicamp's Institute of Economics and editor of the website Contrapoder. Author, among other books, of Between nation and barbarism – dilemmas of dependent capitalism (Voices).

 

See this link for all articles

10 MOST READ IN THE LAST 7 DAYS

______________
  • About artificial ignoranceEugenio Bucci 15/06/2024 By EUGÊNIO BUCCI: Today, ignorance is not an uninhabited house, devoid of ideas, but a building full of disjointed nonsense, a goo of heavy density that occupies every space
  • Franz Kafka, libertarian spiritFranz Kafka, libertarian spirit 13/06/2024 By MICHAEL LÖWY: Notes on the occasion of the centenary of the death of the Czech writer
  • The society of dead historyclassroom similar to the one in usp history 16/06/2024 By ANTONIO SIMPLICIO DE ALMEIDA NETO: The subject of history was inserted into a generic area called Applied Human and Social Sciences and, finally, disappeared into the curricular drain
  • Impasses and solutions for the political momentjose dirceu 12/06/2024 By JOSÉ DIRCEU: The development program must be the basis of a political commitment from the democratic front
  • Strengthen PROIFESclassroom 54mf 15/06/2024 By GIL VICENTE REIS DE FIGUEIREDO: The attempt to cancel PROIFES and, at the same time, turn a blind eye to the errors of ANDES management is a disservice to the construction of a new representation scenario
  • Introduction to “Capital” by Karl Marxred triangular culture 02/06/2024 By ELEUTÉRIO FS PRADO: Commentary on the book by Michael Heinrich
  • Hélio Pellegrino, 100 years oldHelio Pellegrino 14/06/2024 By FERNANDA CANAVÊZ & FERNANDA PACHECO-FERREIRA: In the vast elaboration of the psychoanalyst and writer, there is still an aspect little explored: the class struggle in psychoanalysis
  • Volodymyr Zelensky's trapstar wars 15/06/2024 By HUGO DIONÍSIO: Whether Zelensky gets his glass full – the US entry into the war – or his glass half full – Europe’s entry into the war – either solution is devastating for our lives
  • The strike at federal Universities and Institutescorridor glazing 01/06/2024 By ROBERTO LEHER: The government disconnects from its effective social base by removing those who fought against Jair Bolsonaro from the political table
  • PEC-65: independence or patrimonialism in the Central Bank?Campos Neto Trojan Horse 17/06/2024 By PEDRO PAULO ZAHLUTH BASTOS: What Roberto Campos Neto proposes is the constitutional amendment of free lunch for the future elite of the Central Bank

AUTHORS

TOPICS

NEW PUBLICATIONS