The Federal Reserve increased the supply of money in the economy by 5 times. The wages of workers must rise by 5 times the current rate in order to end the worker shortage. This would not require an real wages raise of the same magnitude or an increase in consumption by 5 times, as prices could rise to a new level as well. If wages do not rise by 5 times the current rate, then worker activity must fall to 20% of the current rate, an 80% decrease. Upwards pressure on wages and downwards pressure on productivity will lead to shortages of goods and labor. Labor union activity will meet with resistance from employers and the state, making contractual raises nearly impossible. This will lead to direct confrontations between the workers and the employers, as well as between consumers and the state as they demand political solutions to end the shortages.
Inflation resulting from higher wages would not threaten the economy, since raising interest rates could control inflation. Besides raising interest rates, other options exist, such as restricting imports using environmental and labor regulations. Raising the interest rate lowers the money supply, reducing the amount of transactions while raising their average value, but limiting imports or production through regulation reduces the goods supply, also reducing the amount of transactions while increasing their average value.
In the Soviet Union, a black market developed as a result of protectionist measures used to prevent the importation of products from abroad that sold at lower prices. This black market corrupted the state, but provided the only means by which economic forces could operate. The same black market will develop and corrupt the state in the United States, allowing wage increases in some instances in the range of five or more times the current rate. At the same time, employers will employ a black market to coerce work from the workers at 20% of what they should have while shortages lead to higher prices. This will lead to violence against worker organization, for which the workers must prepare with an organized defense of their committees and other official groups.
Furthermore, shortages such as those holding back distribution of imported goods at the ports will soon lead to theft and the distribution of stolen goods as a means of relieving the backlog. This theft will only increase in frequency, and along with the theft, protection rackets. The theft and sale of property reduces the price, since the markup on manufactured goods will always remain higher than the markup on stolen goods, a markup from the original cost of near zero. This means that no matter how much supply gets held back, prices will remain low as shortages mount. For this reason, the Federal Reserve still cannot reload its weapon, i.e. raise interest.
A new mafia will rise on this theft and protection threatening the viability of a capitalist state. Their arguments will naturally revolve around the accusation against the capitalist class that they themselves are the mafia. They hold back production and distribution, spending on themselves when the money should go towards providing for the people, including contractual obligations. The back and forth between the “revolutionary” or low-price mob and the “conservative” or price-gouging, hoarding mob will explode into great battles once the stolen or hoarded good at issue becomes labor. However, a criminal response, even if rooted in sympathy for the plight of the poor will not settle affairs in favor of the workers. Only the legitimate act of an armed insurrection in defense of a new government will insure the victory of the working class and a rational economic order.


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