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With things going up and up, but not checks. What is the purpose of inflating the market? And yes i did do some reading and cost-push is the cause of over pricing?
Why is it hard to keep the prices in check while increasing wages?
Cost-push inflation is due to wage increases that cause businesses to raise prices to cover higher labor costs, which leads to demand for still higher wages (the wage-price spiral)
Some inflation is a sign of a healthy, growing economy pushing the demand curve to the right. Deflation, while it seems like it's great for savers, is a sign of stagnation and a harbinger of a contracting economy. This is why the Fed has, for decades, had a stated goal of retaining managed inflation.
Some inflation is a sign of a healthy, growing economy pushing the demand curve to the right. Deflation, while it seems like it's great for savers, is a sign of stagnation and a harbinger of a contracting economy. This is why the Fed has, for decades, had a stated goal of retaining managed inflation.
The US has had several periods of monetary deflation coupled with a high rate of economic growth. In all cases, it was caused by rapid productivity growth coupled with a stable currency. Adoption of steam technology resulted in steady economic growth coupled with falling prices for 1815-1865. Deflation was interrupted by the Civil War, then resumed. From 1873-1879, prices fell 3% a year, coupled with 7% GNP growth. Mechanization of agriculture and assembly line factories continued the deflationary trend. When the Federal Reserve was created in 1913, prices were still lower than they had been in 1800. Over the subsequent century, the dollar lost 96% of its value.
The massive boost in productivity from computerization should have resulted in rapidly rising wages and steadily falling prices. Thanks to inflationary public policy, that did not happen, to everyone's detriment except the bankers.
IMO we will continue to 'suffer' ongoing low grade inflation like any other successful nation. It is hard to do business when your prices, profits and your workers wages will be lower next year.
The key is standard of living, not comparing 17 cent gas of days of old with $2+ today.
Inflation is a penalty to those (mostly retirees) who live on fixed income. The govt uses bogus numbers to measure the cost of living for Social Security. Then they borrow money and with inflation it is worth less when they pay it back.
So what needs to change to keep it from getting out of hand. Just stop printing money that we dont have? or can business just learn to deal with lower profit margins and sell things little bit cheaper then they actually cost? I see the problem were we demand higher wages to offset the increase in products, but its like beating a dead horse. Again the spiral wage issue as reported.
So what needs to change to keep it from getting out of hand. Just stop printing money that we dont have? or can business just learn to deal with lower profit margins and sell things little bit cheaper then they actually cost? I see the problem were we demand higher wages to offset the increase in products, but its like beating a dead horse. Again the spiral wage issue as reported.
You can't have it all. We need higher middle class wages and that is inflationary. Bringing more industry home and cutting out imports will raise prices and is inflationary.
You can't have it all. We need higher middle class wages and that is inflationary. Bringing more industry home and cutting out imports will raise prices and is inflationary.
You don't need higher wages if you have falling prices.
You don't need higher wages if you have falling prices.
There would need to be consistent falling of prices in most necessities of life all across the country and over time.
The only way to be consistent would be through the currency, and that is not going to happen.
"The modern currency float has its problems. There is no magical monetary cure, monetary policy is a policy area almost uniquely crowded with trade-offs and lesser evils.
If you want a classical gold standard, you get chronic deflation punctuated by depressions, as the U.S. did between 1873 and 1934.
If you want a regime of managed currencies tethered to gold, you get regulations and controls, as the U.S. got from 1934 through 1971.
If you let the currency float, you get chronic inflation punctuated by bubbles, the American lot since 1971.
System 1 is incompatible with democracy, because voters won’t accept the pain inherent in a gold standard.
System 2 is incompatible with the free market economics I favor.
That leaves me with System 3 as the worst option except for all the others."
David Frum
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