ASSRJ-15196 Camera Ready.pdf

Page 1 of 19

Advances in Social Sciences Research Journal – Vol. 10, No. 7

Publication Date: July 25, 2023

DOI:10.14738/assrj.107.15196

Cossiga, G. A. (2023). Sustainability and Inflation: A Bi-front Malaise. Advances in Social Sciences Research Journal, 10(7). 457-475.

Services for Science and Education – United Kingdom

Sustainability and Inflation: A Bi-front Malaise

Giovanni Antonio Cossiga

Collegio sindaci Policlinico Umberto 1

Università Sapienza, Roma

ABSTRACT

The singular presence together of inflation and deflation is only apparently

improper because we must always distinguish on the subject of inflation, about

which phenomenon we are talking. In general, we can say that the two phenomena

- called classics - cannot share. With an important distinction. If inflation or

deflation is - as already said "classical" - that is, it affects the economic system due

to errors made by governments in managing the economy. In this case, inflation has

its own characteristics: that is, it is subject to constant acceleration and its race

continues until monetary policy intervenes with the rise in the interest rate.

Different the case of inflation from international prices, due to the increase in the

cost of energy and rare earths, as well as cereals, etc. Well in this case, the subjection

of daily prices is linked to the evolution to which they are subject due to speculation

and to the selfishness of producers. In the case of international price inflation, the

decision of central banks to raise the cost of borrowing has a marginal effect on cost

inflation. However, it has a strong indirect effect because the rising cost of credit

puts lead into the pockets of speculators. With the result of containing the

speculative thrust to the advantage of domestic prices which are slowing down. We

are in a period of creeping deflation and tensions on the stock markets and capital

assets front, two phenomena that have direct repercussions on daily spending and

aggravate the difference between the rich and classes close to poverty. It is

therefore essential to mitigate the social tensions that accumulate that the issue of

international price controls, starting with wheat and energy, are addressed at the

G7 and G20 level for a policy of moderation on these prices. On the topic of the

recurring pressure of stock market values and of equity assets, in search of the

reasons for the unjustified rise, we point out the hypothesis that this for the moment

moody rise in values has the possibility that it could be a sort of hypothetical

foretelling of human society when we have achieved full neutrality with nature. At

the time, a sharp acceleration in development could change our economics of

scarcity.

Keynotes: classic inflation and deflation, correlation. improper coexistence two

phenomenon, neutrality

INTRODUCTION

After all, it is a phenomenon that follows the fate of humanity, but the ancient wisdom is

revealed in these words:

Page 2 of 19

458

Advances in Social Sciences Research Journal (ASSRJ) Vol. 10, Issue 7, July-2023

Services for Science and Education – United Kingdom

“The security of our city is shaken by the malice and baseness of a few, who attack and plunder

the community. Because of them, speculation on the exchange of currencies has penetrated the

market and prevents us from ensuring the supply of what is necessary for life.”

Far from being worn out by time, these expressions can be invoked to confirm that today the

same dangers, moreover inflated, make our daily affairs even more tumultuous. As you can see,

inflation or the increase in daily prices was attributed at the time to the antisocial behavior of

citizens or non-citizens who speculate on the exchange rate and prevent the normal supply of

goods and therefore creating a constraint that indicates a speculative increase in prices.

There is no doubt that inflation is a phenomenon that repeats itself over time and creates

growing concern among the popular social classes. It is important to interpret - also in the light

of these past episodes - the engine that drives inflation, i.e., the engines that put the recurring

and hitherto unbeaten instrument of price and market alteration into operation. The complex

issue is left to the care of the Central Banks which are entrusted with the stability of the

currency. Yet already in the distant antiquity of the Greek colonies of Anatolia a significant

difference was underlined between the reasons that relaunch inflation, in the hypothesis that

at the time the motus of inflation was started by the "malice and meanness" of a few pushed by

the selfishness of easy money who speculated on exchange prices. I would say that this dead

hand of a few to the detriment of many is perhaps still today the main reason that fuels the

expectation of a price increase and puts less fortunate families in difficulty.

The theme, therefore, is to better define the reasons behind the price push and then decide how

to repress or stem the recent price anomaly. Therefore, once we have understood and

established that the price variation is not a phenomenon that has a single engine or reason, the

question we could ask ourselves is whether it is appropriate to leave, whatever the pressure (it

is the cause) that modifies the prices and leave this task to a single institution, without assessing

whether or not it has the technical resources and powers to intervene effectively.

We are certainly not here to criticize the monetary authority, because we must say right now

that they may lack the powers to oppose the selfishness of the few who scrape together a lot of

money at the expense of the community which suffers from price tensions and the lower value

of the currency. Well, one can remain indifferent to this antisocial subject who sometimes subtly

modifies, other times with great force, the transfer of wealth and income from poor to rich.

Leaving that way, a part of the collective, even accustomed to a frugal life, can find themselves

on the edge of poverty and exclusion.

Well, in the face of this special evil of the unequal distribution of wealth, it seems evident that

the monetary authority does not seem to have the powers to "put salt on the wings of

speculators". But let us go calmly to closely examine the problem that so torments us. First

consideration, a clear distinction must be made between inflation, which is the product of the

speculative game, and which is an unjust and antisocial instrument that alters the value of the

currency, and what we can consider real inflation, which does not depend on the abuse of

speculation but from the mistakes that have been made in economic policy by governments. For

1 Parte finale di un decreto del municipio di Mylasa (Μύλασα), in Caria, città ad ovest dell’Anatolia, datato al 209

d.C., rivelando la preoccupazione che la borsa nera dei cambi mettesse in crisi le finanze cittadine

Page 3 of 19

459

Cossiga, G. A. (2023). Sustainability and Inflation: A Bi-front Malaise. Advances in Social Sciences Research Journal, 10(7). 457-475.

URL: http://dx.doi.org/10.14738/assrj.107.15196

a paradoxical alteration of the reasons that feed the phenomena in question, the inflation that

arises from repeated errors of governments in the management of the economy can be

controlled - efficiently - by the central banks through the usual mechanism of intervention on

the cost of money. On the other hand, it is different if we assume that the increase in prices

derives from the trend in international prices (and the relative speculative charge), with

reference also to the controversy of politicians on the interest rate increases decided by the

European Central Bank, which is also pursuing the American Fed on the rate hike model. Well,

in this case the issue concerns the pressure of international prices, in particular of energy, which

are on the increase although supply is ample, and demand is slowly decreasing.

Now, part of the reasons, it is quite clear that the increase in interest rates by central banks to

counter the rise in prices of primary products (energy and others), seems to have only a

secondary effect for the containment of domestic prices 'internal. The price increase in a

community is driven by the runaway movement of international primary prices, which are

gradually unloading at the national level. In this case, the rising cost of borrowing can stem the

pressure on prices, unfortunately at the cost of a recession due to higher borrowing costs. All

the more if the central banks move in harmony, so that the decrease in global demand indirectly

induces the partial remission of international costs. With the feeble result that the increase in

internal prices is not controlled at all but only reduced the quantities consumed. In short, the

interest rate hike strategy has a weak and indirect hold on the event that causes house prices

to rise. In other words, it is difficult to believe that, with the increase in the cost of money, it is

possible to prosecute and curb the upward trend in domestic prices, which instead respond to

the initiative with further domestic increases due to higher financial charges for army credit.

We are certainly not here to criticize the monetary authority, because we must say right now

that there is a lack of powers to counter the selfishness of those few who raise a lot of money at

the expense of the community due to price tensions and the lower value of currencies. Well, one

can remain indifferent in the face of antisocial subjects who subtly alter, sometimes with great

force, the transfer of wealth and income from the poor to the rich, leaving a part of the

community, even if accustomed to a frugal life, on the verge of poverty and of exclusion.