Thanks- have not dropped by the Agonist for a while-- will visit more often. Good piece--yours and his. Capitalism searches out the darkest corners of human potential, and mainlines them.
I think that macro and meso inflations together combine as "fiscal" (government driven) inflation, whereas "micro" inflation may be characterised as a "monetary" (private banking sector driven) inflation.
I suspect that in a deficit-based economy at least hyperinflation may everywhere and always be a fiscal phenomenon.
Monetary inflation on the other hand, always leads to asset price bubbles, but I would be interested in recent examples of where these have led to hyper inflation - it seems to me that people borrowing against inflated assets is the sign of a deficiency of money, not a surfeit of it (Anglo Disease again). "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Also, in the U.S., the tax system is imbalanced against wages and earnings, in favor of unearned income, such as capital gains. Newberrry wrote in the comment that meso-inflation can be used to hold down inflation, and I think this U.S. tax imbalance is an example - it holds down the wage side of classic cost-push inflation.
What also struck me is that Newberry wrote:
The root of meso-inflation is an imbalance of incentives. At a certain point this imbalance becomes so pervasive that it makes monetary policy useless.
What is particularly worrisome to me is that as we have slashed interest rates 225 basis points, consumer loans -- mortgages and revolving credit -- have actually moved higher.
Its the maintenance of slack labor markets that is the key to suppressing nominal wage increases ... no matter what the impetus to push for recouping lost wages, in the context of the extraordinarily slack labor markets that the US has been experiencing ... U6 unemployment above 8% at what was supposed to be the "peak" of the business cycle! ... there's little for workers as a group to do but to take it on the chin. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
