Re(2): RE: Wages and Panic Buttons

[Christian Gregory]

Isn't there also something to inflation as one form of asset devaluation
that is actually (structurally) necessary for growth and profit? This would
seem to work due to the "stickiness" of wages compared to other prices--in
other words, the time lag between a jump in commodity prices and a jump in
wages is enough to produce extra wealth for capital owners, but not so big
as to stifle demand. As Max said, this would be a different kind of
inflation than that produced by oil shocks, which yielded galloping
inflation in the U.S. But this kind of inflation also only "works" (i.e. can
be correlated with growth, etc.) when productivity is nominally tied to
wages--ie during a period like the "golden age." The problem in the present
would seem to be that wages aren't really tied to productivity--even
nominally, for political reasons, among others.  In addition to that, the
current low inflation rate in the U.S. in part due to cheap imports/relative
strength of the dollar. As the yen gets stronger (as it did last week),
would we not expect this to end?

Christian