3 ms·
Let’s say your boss gives you a 3% cut instead of a raise because you’re company didn't earn as much money. That’s less money you could spend or invest to incre
by blackflame7000 7y ago
Let’s say your boss gives you a 3% cut instead of a raise because you’re company didn't earn as much money. That’s less money you could spend or invest to increase the value of other companies and you’re decrease in pay makes you skeptical. So many people buy when they feel good which is usually when the market is high, and panic when the recession hits because they over extended and are forced to sell low. If you aren't earning as much money, you aren't going to spend as much money. The relationship is as simple as that.
- randallsquared 7y ago> Let’s say your boss gives you a 3% cut instead of a raise That basically doesn't happen. If 3% of the payroll needs to be cut, ~3% of people are usually laid off, instead. Resistance to lowered numeric wages is why moderate amount of inflation are typically considered a good thing: workers will more often accept less or no increase than they will an actual drop.
- blackflame7000 7y agoPlease don't split hairs on a hypothetical example, it misses the point. You could achieve the same effect with no raise but high inflation. It's irrelevant to the point that the amount someone is earning directly influences how much they are spending.
- rolltiide 7y agoThats not remotely close to being the only scenario or influencing factors of the business cycle