Re(2): RE: Wages and Panic Buttons

Christian Gregory pearl862 at
Thu Aug 5 10:06:46 PDT 1999

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?


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