5 ms·
Inflation control I think is the notable cause of this acceleration. In the past inflation could get out of hand and thus eat accumulated wealth. Note how the p
by Danieru 7y ago
Inflation control I think is the notable cause of this acceleration. In the past inflation could get out of hand and thus eat accumulated wealth. Note how the paper talks about the stagflation of the 1970s and the war periods being times of reversal.
Of course I would not want to see rapid inflation. Yet the numbers suggest that our strong inflation control has been a cause of labour's reduced portion of GDP. Running the QE hot by letting inflation outpace the central banks inflation goal might be a good idea for assisting labour's income mix. A dangerous idea, so I hope some other country tries it first.
- ivalm 7y agoThis is complicated. Debt/bonds do lose value with inflation, but things like commodities/real estate/most stock securities do not (except for via co-occuring recession, which also hits workers through layoffs).
- AnthonyMouse 7y agoOn the other hand, the prices of those things are quite inflated already and it's quite a painful adjustment for their nominal values to decline. If nominal housing costs go down then people end up with underwater mortgages, there is a cascade of defaults, etc. But combine e.g. relaxing zoning rules with a reasonable level of inflation and then nominal housing prices don't have to decline to adjust, they can just stay where they are as nominal wages and other prices catch up to them.