Tag Archives: stagflation
Value Inflation – the Trigger, not the Bullet
The direct addition of value inflation to the rate of price increases is quite small. The larger effect arises from secondary influences, in whose shaping human psychology plays an important part. These influences are triggered by the small value inflation component and its corollary, a slowing of the rate of net throughput increase relative to gross throughput increase. … Read more
Excessive Wages Can Cost Jobs
In the Great Depression, and in the stagflationary predicament of the 1970′s and 80′s which threatens to recur as a result of the US credit crisis and the run-up in the cost of resources and food, the work could have been available to employ everyone if the money had been available to pay them. … Read more
The Idea of Proportionate Flows Applied to Wages – the Stagflation of the 1970′s and 80′s
Misnamed “Keynesian” deficit financing policies applied in more recent years to “recessions” have contributed more and more to inflation and less and less to alleviating unemployment.
These policies have come to exacerbate the very disease, unemployment, they were meant to remedy. … Read more
Ratio Distortion and Consumption
Before and during the Great Depression there was under-consumption due to chronic under-payment of workers – fewer goods and services were being consumed than available workers and plant could structure. But what of the stagflationary situation, when chronic overpayment of workers was the distortion affecting more perfluent economies? … Read more
Full Wage Indexation – Kindergarten Economics
Full Wage Indexation (FWI), indexing wages to the full Consumer Price Index (CPI), that is, increasing money wages at regular intervals by the same proportion as the rate of price increases during those intervals, is intended to maintain living standards by maintaining real wages. … Read more
Aggregate Demand – Components and Internal Ratio
Before going on any further it is necessary to discuss the term aggregate demand.
Aggregate demand is the sum of two components – investment spending and consumer spending. It would be better if these were treated separately as independent channels through which money flows, since the relation between them is by no means constant in the sense that they can be lumped together and boosted or damped down together. … Read more
Fight Unemployment or Inflation First?
Public sector employment and transfer payments are limited by the amount of revenue which can be raised, which in turn is limited by how much the private sector can provide without ceasing to be viable, or how much can be borrowed without creating a “deficit bomb”. … Read more
Real and Money Wages: Living Standards
Real wage and material living standard will be treated as different terms for the same variable.
The real wage, however, is not the same as the money wage. The real wage is the access to goods and services given to a worker in exchange for their labour. … Read more
The Effect of People’s Expectations
The factor of people’s expectations, left out of this discussion so far, would change the outcome somewhat.
The effect of rising expectations would be to stop the “boom” and return to “stagflationary” conditions sooner than if resource depletion alone were the depressing factor. … Read more