‘They Do Not Tell Both Sides of the Inflation Story’

Janine Jackson interviewed Jon Schwarz about inflation fears for the November 19, 2021, episode of CounterSpin. This is a lightly edited transcript.

Janine Jackson: A New York Times headline read, “Inflation Warning Signs Flash Red, Posing Challenge for Washington.” A subsequent Times piece underscored the problem and the solution: “The White House Says Its Plans Will Slow Inflation. The Big Question Is When?”

That framing is echoed and adumbrated everywhere in corporate media. “Inflation Is Coming for Your Cup of Coffee Next,” says CNN. “Inflation’s Wrath Hits Home” was USA Today’s rubric. And then—surprise, surprise—CNBC has “Inflation Has 88% of Americans Worried.”

True, there’s an admixture of, for example, the New York Times columnist Paul Krugman’s “History Says Don’t Panic About Inflation.” But anyone can see that, judging by sheer focus and attention, “serious, smart people” organize their thinking around “inflation” more than many another economic indicator.

Intercept: Inflation Is Good for You

Intercept (11/10/21)

In the recent words of our guest, whenever the corporate media moves en masse like this, it’s a good idea to slow down and consider what’s actually happening and why. Jon Schwarz writes for TheIntercept.com. He joins us now by phone. Welcome back to CounterSpin, Jon Schwarz.

Jon Schwarz: I’m so happy to be here, especially to talk about this in particular. Because this is one issue where you realize that there is no one room where all the people get together and decide what is going to be in the US media, but it really does seem like there is.

JJ: Yeah, exactly. Exactly. We hear media complain about how we used to all talk around the water cooler and agree on everything. And we know that’s not true. And yet, you have to acknowledge the power of media of making it seem as though we’re all in one conversation. And so the phenomenon really here is corporate media alarm, and the worldview that that reflects. But let me ask you, first, about what “there” there is there. What reality is it that these headlines are referring to?

JS: The reality is that inflation went up from last October to this past October by 6.2%, I believe it was, according to one measure that includes food and fuel.  And so that tends to go to extremes more than the standard measure, which excludes them. But just to be fair, because food and fuel are important for people, the number to think about is legitimately 6.2%. So that’s over a year. And it happened that inflation went up from September to October by 0.9%, meaning that if something cost $10 in September, it now cost $10.09.

JJ: So is that the bare understanding? Because if I’m reading headlines, I’m reading about costs of things that I want to buy going up in a way that’s really going to affect my life. And it seems as though the increase in inflation is most meaningful in terms of how much it’s going to affect the price of my coffee, or how much it’s going to affect something else that I as an individual are buying. But there’s other things that inflation means that are really maybe more at work behind the alarm here.

Washington Post: Wages are up, but inflation cancels out any gains

Washington Post (11/10/21)

JS: That’s right. It’s funny. The Washington Post had not one but two above the fold stories about inflation this week on one particular day. One talking about how terrible inflation was, and one about how it destroyed Biden’s agenda. And they also had a chart covering, I don’t know, the last 10 or 15 years, that by itself explained that their story was not what they were telling you. It was a chart showing real wages going down a little bit over the last year when inflation is taken into account, meaning that inflation was 6.2% over the last year. Wages for regular people went up by 5.8%, so the purchasing power went down a bit.

But the chart itself showed that people’s purchasing power being eroded, going down in real terms when inflation was taken into account, had happened a lot over the past 10 years. And it wasn’t a gigantic, front-page emergency then. Like, what was the difference?

The difference was this, was that there were not high rates of inflation making that happen in the past, during the Obama administration, and I think even during a little bit of the Trump administration. And the difference is that now it is happening with higher rates of inflation, and higher rates of inflation affect people with tons of money in a way that is never described in the corporate media, to my knowledge. I literally have never seen this.

And the story there is that household debt in the United States is about $14.5 trillion. So that’s a very big number. It’s about 75% of the size of the entire US economy. And when there is inflation, most of that debt is a fixed rate debt like mortgages, student loans, things like that. And the inflation erodes the value of that debt, because it’s set in nominal terms. Like, it stays at $15.5 trillion, no matter what level of inflation there is.

JJ: Right.

Jon Schwarz

Jon Schwarz: “People with a lot of money do not like to lose it. And that’s really at the root of this inflation freak-out.”

JS: And so 6.2% inflation, that works out to a transfer of wealth from creditors to debtors of about $850 billion. So almost a trillion dollars. That is a lot of money. It doesn’t work out precisely, as different people have different levels of debt. It’s not totally a transfer of $850 billion from the rich to the poor. But it is a significant amount. And you may have noticed people with a lot of money do not like to lose it. And that’s really at the root of this inflation freak-out.

It’s that plus the fact that there’s a very tight labor market right now, meaning that there’s low unemployment, and workers have much more power than they generally do. And the standard treatment for an economy with high levels of inflation is to increase interest rates, slow the economy, which throws people out of work. And that is the goal, that they do not like a booming economy. They do not like low levels of inflation, creditors in general do not. And what they would like to see is a slower economy, with lower rates of inflation and higher rates of unemployment. So it’s these two things—their goal to slow the economy, raise unemployment, and the eroding value of the debt that they hold.

JJ: You’re talking about differential impacts, both of inflation and of proposed responses to inflation, and differentiating that impact is exactly what elite media don’t generally do. They talk about us and them in a way that is meant to collapse other folks into the us that really don’t belong there.

New York Times: Who's to Blame for Rising Prices?

New York Times (11/16/21)

And so the New York Times’ Neil Irwin has an explainer that’s a kind of piece where it’s like, you don’t need to know the details, just here’s the nuts and bolts of this issue that you’re hearing about. And it’s called, “Who’s to Blame for Rising Prices?” And this is already collapsing inflation to rising prices in ways that are unnuanced, as you’ve just discussed. But still, in this let’s-make-it-simple, let’s-break-it-down, “Who’s to Blame for Rising Prices?,” one of the New York Times’ acceptable answers is “all of us.”

JS: Ha! Exactly.

JJ: And the reason is we—I’m quoting—”we shifted our spending toward stuff, rather than services.” That’s one of the reasons. And then, also, “and many of us elected to stop working, or work less.” This is the New York Times, the paper of record, trying to talk to people and say: Prices are going up. Here’s why. And their reason is, you messed up, you know? You messed up during the pandemic. You started buying the wrong things, and you made wrong choices about employment.

I mean, we talk about this as an economic issue. But it’s obviously a media, a corporate media issue as well.

JS: Yeah, it’s a class issue. It’s one of the issues where the class bias of the media really shows up in its most powerful form. It’s absolutely unmistakable.

JJ: Yeah, I don’t know what I wanted you to say in response to that New York Times article, except that these kinds of headlines and stories, they’re not just lamentations. They’re also calls for action.

JS: The call for action is to get back to work.

JJ: Exactly. And in terms of actions that are responses from various entities about dealing with this abstract-sounding “inflation,” well, some of those responses are going to also affect people in their day-to-day lives, so it’s meaningful to unpack what media think, or are telling us is the right thing to do here.

JS: Yeah, there is another class-based aspect of this that the media should be covering, and are not. People have generally and rightfully said that you do have to take into account, especially, elderly people who are living on a fixed income. But the reality that, again, many people don’t actually understand this, is that Social Security is not a fixed-income benefit. Social Security is inflation-adjusted, and so people who are anxious about being able to pay their bills, inflation means that Social Security benefits will be raised by 6%, almost, in January. So that is going to be a welcome help for people in that situation.

But, again, not something that people are saying: Hey listen, don’t panic, because your benefits are going up. People don’t hear that, because that is not being covered for the most part.

JJ: Just finally, looking forward in terms of what folks are going to be hearing, including about themselves: Before we got on, I saw a Yahoo Money headline: “Americans Are Feeling Lousy About Their Finances, Even Though They’re Doing Fine.” I mean, I don’t know. Isn’t that gaslighting? Just looking forward to the headlines we’re going to be seeing about inflation, what are some questions you would have folks just keep in mind as they read and hear that media coverage?

JS: Yeah, so just keep in mind the class bias of the media. As I say, it is particularly apparent now. They do not tell both sides of the inflation story by any means.

And also keep this in mind a year from now, when they are going to have completely forgotten about this issue, because inflation almost certainly will dissipate, and will be more like 2 or 3%.

JJ: Absolutely.

We’ve been speaking with Jon Schwarz. You can find his work on TheIntercept.com. Thank you so much Jon Schwarz, for joining us this week on CounterSpin.

JS: Thank you very much for having me.