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Now imagine every employee in your city, regardless of industry, got a 7% inflation raise. This would then push prices up even more. Pushing inflation up even m

by shmatt 5y ago

Now imagine every employee in your city, regardless of industry, got a 7% inflation raise. This would then push prices up even more. Pushing inflation up even more. Pushing even more inflation raises next year. Rinse. Repeat. It's a never ending loop of wage inflation The only way inflation stops, or even deflation starts, is if someone "gives up" on inflation adjustments

brimble 5y ago
This is only true if a 7% increase in wages causes at least a 7% increase in inflation, which it doesn't. The effect you're describing doesn't shoot up forever, but approaches a limit.
- shmatt 5y ago
  It's not just wages. Everything that costs money goes up "because inflation". Thus more inflation next month. This is exactly what we're going through with every month the new YoY becoming higher and higher Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ...
  - brimble 5y ago
    > Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ... Yes. This is exactly the cycle that approaches a limit (all else being equal). Inflation-adjusting wages doesn't make inflation keep going up indefinitely.
bubersson 5y ago
Another option is that the Fed stops printing trillions of new dollars out of thin air.
neekburm 5y ago
Companies are welcome to stop increasing prices, but I'm not going to fall on my sword re salary negotiation to make a tiny contribution to stopping inflation.
silicon2401 5y ago
I don't care about every employer lol. My interest is my raise. If I can continue outpacing inflation, then I continue winning. How do you think rich people stay rich?
rybosworld 5y ago
This is not correct. The underlying causes of inflation are the monetary levers that the government controls. These are money printing and taxes.
fundad 5y ago
Immigration was restricted for the expressed purpose of raising wages. It was a huge campaign promise but people didn't notice the inflation until Jan 20, 2021.
scsilver 5y ago
This math doesn’t check out

by shmatt 5y ago

brimble 5y ago

This is only true if a 7% increase in wages causes at least a 7% increase in inflation, which it doesn't. The effect you're describing doesn't shoot up forever, but approaches a limit.

shmatt 5y ago
It's not just wages. Everything that costs money goes up "because inflation". Thus more inflation next month. This is exactly what we're going through with every month the new YoY becoming higher and higher Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ...
- brimble 5y ago
  > Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ... Yes. This is exactly the cycle that approaches a limit (all else being equal). Inflation-adjusting wages doesn't make inflation keep going up indefinitely.

bubersson 5y ago

Another option is that the Fed stops printing trillions of new dollars out of thin air.

neekburm 5y ago

Companies are welcome to stop increasing prices, but I'm not going to fall on my sword re salary negotiation to make a tiny contribution to stopping inflation.

silicon2401 5y ago

I don't care about every employer lol. My interest is my raise. If I can continue outpacing inflation, then I continue winning. How do you think rich people stay rich?

rybosworld 5y ago

This is not correct. The underlying causes of inflation are the monetary levers that the government controls. These are money printing and taxes.

fundad 5y ago

Immigration was restricted for the expressed purpose of raising wages. It was a huge campaign promise but people didn't notice the inflation until Jan 20, 2021.

scsilver 5y ago

This math doesn’t check out