4 ms·
That seems more likely, but can just as easily lead to an inflationary spiral. Prices go up because of supply shocks, companies raise wages, people are able to
by ethbr0 4y ago
That seems more likely, but can just as easily lead to an inflationary spiral.
Prices go up because of supply shocks, companies raise wages, people are able to afford higher prices, prices increase further to increase (or maintain previous) profits, expectations set in, cycle continues with wage increases.
That's the entire point of central banks boosting rates to crush inflation / slow economic expansion. It hurts, but as least it's a shorter hurt.
- foogazi 4y ago> Prices go up because of supply shocks, companies raise wages, Why would companies raise wages ? More likely: Prices go up because of supply shocks, demand slows down because of price increase, supply normalizes
- ethbr0 4y agoBecause it's a competitive labor market with low unemployment.