Supply chains, worker wages and the price of energy has been blamed for the current bout of high inflation. But central bankers around the world are starting to clue in to something consumers have been aware of for a while — corporations just aren’t afraid to raise their prices anymore.
The TL;DR historically is that rises in wages led to more spending which increased demand and caused inflation. That’s an incredible oversimplification obviously, but that’s the meat and potatoes of it. People have more money to spend, companies can charge more, your individual dollars become worth less and less over time.
Nowadays with wages stagnating (even reducing in some situations) and immigration being so prevelant we have a situation of more people having less to spend but overall more money being injected into the economy having a similar inflationary impact.
Don’t misread what I wrote and think I am blaming immigration for the current situation, it is entirely the regulatory bodies who dropped the ball by encouraging immigration with no proper economic plan to handle the consequences.
Nowadays with wages stagnating (even reducing in some situations) and immigration being so prevelant we have a situation of more people having less to spend but overall more money being injected into the economy having a similar inflationary impact.
Which is why raising interest rates is not going to fix things. People don’t have a surplus of wealth so disincentivizing borrowing/spending isn’t going to work.
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The TL;DR historically is that rises in wages led to more spending which increased demand and caused inflation. That’s an incredible oversimplification obviously, but that’s the meat and potatoes of it. People have more money to spend, companies can charge more, your individual dollars become worth less and less over time.
Nowadays with wages stagnating (even reducing in some situations) and immigration being so prevelant we have a situation of more people having less to spend but overall more money being injected into the economy having a similar inflationary impact.
Don’t misread what I wrote and think I am blaming immigration for the current situation, it is entirely the regulatory bodies who dropped the ball by encouraging immigration with no proper economic plan to handle the consequences.
Which is why raising interest rates is not going to fix things. People don’t have a surplus of wealth so disincentivizing borrowing/spending isn’t going to work.