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This doesn't cause inflation. It just shifts money from everywhere else to the poorer people who remain employed on the new minimum wage. Inflation is caused b
by skylan_q 15y ago
This doesn't cause inflation. It just shifts money from everywhere else to the poorer people who remain employed on the new minimum wage.
Inflation is caused by increasing the monetary base and having that new money circulate through the economy. Both the US Fed and the Chinese central bank have been doing this.
- muraiki 15y agoWhen money printing can be translated into wages (such as raising the minimum wage), then this sets the stage for consumer price inflation. When the CPI goes up, people demand higher wages, etc. This is why in the US we probably* don't need to fear hyperinflation: we're not seeing a translation of Fed printing to wages. *When the Weimar Republic hyperinflated, it was made possible by the fact that large numbers of people were employed by the state, whose wages increased with inflation. I've heard some statistics that place a substantial portion of the US population on government inflation-index income (be it something like social security or something more indirect like Medicare). As to whether it's to a great enough extent to create a Weimar type situation, I don't know.