The Insanity of Pushing Inflation Higher When Wages Can’t Rise

09.06.17 –  The Insanity of Pushing Inflation Higher When Wages Can’t Rise

  • In an economy in which wages for 95% of households are stagnant for structural reasons, pushing inflation higher is destabilizing.
    Most households are losing ground as their inflation-adjusted (i.e. real) incomes stagnate or decline.The official policy goal of the Federal Reserve and other central banks is to generate 3% inflation annually.
     Put another way: the central banks want to lower the purchasing power of their currencies by 33% every decade.


  • In other words, those with fixed incomes that don’t keep pace with inflation will have lost a third of their income after a decade of central bank-engineered inflation.
  • There is a core structural problem with engineering 3% annual inflation. Those whose income doesn’t keep pace are gradually impoverished, while those who can notch gains above 3% gradually garner the lion’s share of the national income and wealth.

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