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Inflation must be transitory unless it moves into wages. If prices increase 5-6% per year without similar wage increases demand drops naturally and prices fall
by nabla9 5y ago
Inflation must be transitory unless it moves into wages.
If prices increase 5-6% per year without similar wage increases demand drops naturally and prices fall.
- MattGaiser 5y agoWages are surging too.
- notch656a 5y agoWhy? A great proportion of physical goods we buy are overseas, only loosely linked to the cost of labor in the US. Prices increasing 5-6% may decrease demand in the US but on a global stage we only consume something like 25% of world GDP; prices aren't going to fall in the same way they would if the whole world's wages fell equally. 5-6% increase in price could just mean less is produced, or the US commands weaker exchange on the world market. In that case it would be real inflation as appears to the consumer.
- nabla9 5y agoOverseas prices do not increase continuously. They reach some level and stop growing.