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> Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too I'm not in a place to fetch any sources righ
by jonasdegendt 4y ago
> Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too
I'm not in a place to fetch any sources right now, but hasn't it been proven that wage growth has not been keeping up with increases in money supply, or inflation over the last couple of decades? Particularly for manual labor or service jobs.
You seem to assume that one would automatically track the other, but the increased supply in money isn't going to consumers directly. Not to mention that even if it would "trickle down" at some point, your wage increase lags in perspective to inflation and you'd always be getting hit with a reduction in purchasing power for some period of time.
- chalst 4y agoDuring the Bretton Woods era, the quasi-gold-standard that reigned until Nixon floated the dollar, hourly wage rates and productivity in the US were pretty closely correlated. In the years after, which saw a huge realignment in finance, the 70s oil crisis, and a general weakening of labour power, this relationship broke down, with an almost complete severance of the relationship. Cf. http://cloudfront.mediamatters.org/static/uploader/image/2015/07/09/epi_productivity_wages.png http://cloudfront.mediamatters.org/static/uploader/image/201...
- whimsicalism 4y agoWage growth has been keeping up with inflation, you are maybe thinking of productivity?