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Your réponse (and dnautic's much longer response) are both based on an unsupported assumption: that employers in a zero inflation environment wouldn't trim wage
by hbags 13y ago
Your réponse (and dnautic's much longer response) are both based on an unsupported assumption: that employers in a zero inflation environment wouldn't trim wages.
The change in inflation would impart no change to the balance of power, so there's zero reason to believe that employers would become more generous in the alternate condition.
We already see employers trimming employee wages even today. It would simply be more common in a zero-interest environment.
- nickff 13y agoKeynesian stimulus is often justified by 'wage stickiness', which is a theory that nominal wages are very slow and unlikely to adjust down; the stimulus causes inflation and devalues real wages, by increasing the money supply.[1] Please note that this is not my belief, but it is supported by some empirical evidence, and is widely held in some circles. [1] http://en.wikipedia.org/wiki/Keynesian_economics#Wages_and_spending http://en.wikipedia.org/wiki/Keynesian_economics#Wages_and_s...