Cool your jets, buddy. This is a place for cool-headed discussion not for hurling insults around.
The inflation the Western world has experienced in the last two years was caused by an external commodity price shock, because of an actual war going on Europe and supply restrictions from Russia, a major exporter of energy commodities; not primarily domestically originating. Energy is more expensive than it used to be, for all of us.
There are two ways to react to that.
The first way is for businesses to put up prices to maintain their profits, and for workers to demand more pay to preserve their buying power. But the higher wages leads businesses to want to put up prices even further, and the higher prices leads workers to demand even higher pay. And so on and so forth - a wage-price spiral. Britain in the 1970s.
The second way is for businesses and workers alike to accept we’re all poorer now as a result of a core thing we all rely on being more expensive than it used to be - for reasons completely outside of the control of domestic politicians in any of our countries - and we can either all be poorer at the current price level or we can have a load of price and wage inflation that leaves us all still poorer but now at a higher price level.
The reality is that what we’ve had in response to the energy price shock was some of the former, but central banks are using monetary policy to try to push us into the latter rather than having endless wage and price inflation in the pursuit of the unattainable.
Your pay is never going to increase to compensate for what was primarily an exogenous energy price shock - and the more that workers and businesses try to make the impossible happen, the worse that inflation would get.
Isn’t the wage-price spiral now considered a myth?
A large part of inflation was central banks doing a “money printer go brrr” in response to covid. There were many predictions that it would cause significant inflation at the time; it just took a minute to see the effects.
businesses and workers alike to accept we’re all poorer now
And the extraordinary leaps of real wealth gains of the 0.1% in that timeframe? We just ignore that?
Cool your jets, buddy. This is a place for cool-headed discussion not for hurling insults around.
The inflation the Western world has experienced in the last two years was caused by an external commodity price shock, because of an actual war going on Europe and supply restrictions from Russia, a major exporter of energy commodities; not primarily domestically originating. Energy is more expensive than it used to be, for all of us.
There are two ways to react to that.
The first way is for businesses to put up prices to maintain their profits, and for workers to demand more pay to preserve their buying power. But the higher wages leads businesses to want to put up prices even further, and the higher prices leads workers to demand even higher pay. And so on and so forth - a wage-price spiral. Britain in the 1970s.
The second way is for businesses and workers alike to accept we’re all poorer now as a result of a core thing we all rely on being more expensive than it used to be - for reasons completely outside of the control of domestic politicians in any of our countries - and we can either all be poorer at the current price level or we can have a load of price and wage inflation that leaves us all still poorer but now at a higher price level.
The reality is that what we’ve had in response to the energy price shock was some of the former, but central banks are using monetary policy to try to push us into the latter rather than having endless wage and price inflation in the pursuit of the unattainable.
Your pay is never going to increase to compensate for what was primarily an exogenous energy price shock - and the more that workers and businesses try to make the impossible happen, the worse that inflation would get.
Isn’t the wage-price spiral now considered a myth?
A large part of inflation was central banks doing a “money printer go brrr” in response to covid. There were many predictions that it would cause significant inflation at the time; it just took a minute to see the effects.
And the extraordinary leaps of real wealth gains of the 0.1% in that timeframe? We just ignore that?