2 ms·
> Part of the difficulty in that question is that if everyone makes $100K, the purchasing power of $100K will drift pretty rapidly. The economy is more complic
by js2 7y ago
> Part of the difficulty in that question is that if everyone makes $100K, the purchasing power of $100K will drift pretty rapidly.
The economy is more complicated than that. Debt allows people to continue to purchase beyond their means and obviously there's massive debt in the economy right now. With higher salaries, prices could stay the same but there could be less debt.
- geofft 7y agoSure, but the reality is I have greater access to debt (credit) with a greater salary. I can buy a house in the small town I grew up in, in cash, but instead I'm going to get a mortgage and buy a tiny place in this expensive big city (and participate in this big city's increasingly expensive housing market). I don't think it follows that if you pay everyone more, the appetite for debt goes away. I think you'll just get inflation, and the same amount of debt after adjusting for inflation.