I really believe this is the plan. The FED likes inflation. Prices can’t go down because the economy is too dependent on high prices, right? But you’re way smarter than me so please tell us what would happen if prices for food and housing and energy were to drop substantially. Isn’t this the new normal and wages just have to catch up ?
I really believe this is the plan. The FED likes inflation. Prices can’t go down because the economy is too dependent on high prices, right? But you’re way smarter than me so please tell us what would happen if prices for food and housing and energy were to drop substantially. Isn’t this the new normal and wages just have to catch up ?
That's a question that could fill an entire textbook!
The crucial point is that your cost is someone else's profit.
Dropping prices means your costs go down, and that's good for you. It also means profits are reduced, and that's bad for someone else.
If we wipe out suppliers profits, we quickly run out of suppliers. That's bad for everyone.
Which is why the least disruptive means to restore equilibrium in the marketplace is for wages to rise to match the price rises. The problem is that wages are not rising to match the price rises, and thus real incomes are reduced.
The objective is market equilibrium. The debate is always about how to get there.
I really believe this is the plan. The FED likes inflation. Prices can’t go down because the economy is too dependent on high prices, right? But you’re way smarter than me so please tell us what would happen if prices for food and housing and energy were to drop substantially. Isn’t this the new normal and wages just have to catch up ?
That's a question that could fill an entire textbook!
The crucial point is that your cost is someone else's profit.
Dropping prices means your costs go down, and that's good for you. It also means profits are reduced, and that's bad for someone else.
If we wipe out suppliers profits, we quickly run out of suppliers. That's bad for everyone.
Which is why the least disruptive means to restore equilibrium in the marketplace is for wages to rise to match the price rises. The problem is that wages are not rising to match the price rises, and thus real incomes are reduced.
The objective is market equilibrium. The debate is always about how to get there.