3 ms·

There is only one real question here: why is that 1916-1980 Fed stimulus would tend to raise wages, whereas since 2000 Fed stimulus has no effect on wages but i

There is only one real question here: why is that 1916-1980 Fed stimulus would tend to raise wages, whereas since 2000 Fed stimulus has no effect on wages but instead becomes asset inflation? The Fed increased the money supply last year. A lot. So asset prices are going up. That much is straightforward. But in another era the same stimulus would have manifested less as asset inflation and more as an increase in wages. The only important question is why that has changed. As we saw in 2019, even very low unemployment no longer leads to rapidly rising wages. What is holding wages down?

dragonwriter 6y ago
> There is only one real question here: why is that 1916-1980 Fed stimulus would tend to raise wages, whereas since 2000 Fed stimulus has no effect on wages but instead becomes asset inflation? Because recent Fed monetary policy occurs in a different fiscal policy environment, and fiscal policy has a lot more impact on distribution of returns than monetary policy. > What is holding wages down? 4 decades of fiscal (both tax and benefit) policy starting with Republicans and then joined by Clintonian Third Way Democrats which has focussed on taking support away from the poor and working class and concentrating gains in the narrow, major investor class in the notional hope that those at the bottom will get trickled-down-upon by the wealthy (a hope which has been realized more in the form of golden showers than showers of gold.)
Sammi 6y ago
Lyn Alden does a deep dive into money printing and inflation and describes the difference between the money printing in the past and what is going on now: https://www.lynalden.com/economic-japanification/ https://www.lynalden.com/economic-japanification/