The Prelude to Double-Digit Inflation

[RhinoGG]

Quote from CaptainObvious:

Go read the book "Tipping Point" and you'll have an idea of how all this is going to unfold. When it all falls apart it'll be a watershed event.

Or, you could give us a summary. This "watershed event " is something you can share with us all.

 

[GTS]

Quote from ShoeshineBoy:

Corporations and companies in general aren't going to be raising wages. That usually only happens when the company is awash in cash, which isn't the case for a broad swath of the economy. Some employees will get profit sharing but, in general, not raises.

Whatever you say ShoeshineBoy. Its good to know that you speak for all of corporate America.

Its been my experience that most full-time employees do get raises every year, the amount varies but they get a raise nonetheless. I guess I must live in a different world than you.

 

[makloda]

Quote from CaptainObvious:
When it all falls apart it'll be a watershed event.

The only watershed event I foresee is the floods of tears of the gold bugs when they realize their gold stocks are tanking.

 

[achilles28]

Quote from makloda:

Wages increase when the economy is 'overheating' and labor is in high demand by employers. That's when unit labor costs can increase and start feeding on themselves, creating an adverse feedback cycle.

Or when inflation is high and employees demand hikes to compensate.

Was the economy running hot in 1970s stagflation?

Nope.

So why did Nixon impose wage and price controls.

Two sides to that coin.

 

[makloda]

Quote from achilles28:
Was the economy running hot in 1970s stagflation?

Not sure if you're aware of it, but US GDP was expanding rapidly 1970-1973 with unemployment dropping under 5%. Such conditions can spark unit labor costs to increase as labor becomes a rare commodity.

Unlike commodity costs, labor cost increases tend to be 'sticky' and very hard to get out of the system.

 

[ShoeshineBoy]

Quote from makloda:

Wages increase when the economy is 'overheating' and labor is in high demand by employers. That's when unit labor costs can increase and start feeding on themselves, creating an adverse feedback cycle.

'zactly...

 

[KenL]

Quote from achilles28:

After paying Ying Yao 20 cents an hour and transferring patents and trade-secrets to China

achilles28,
Appreciate your contribution to the spirited discussion. But I have to slap you across the mouth to remind you that the use of racial slurs will not be tolerated on my thread.

 

[ShoeshineBoy]

Quote from GTS:

Whatever you say ShoeshineBoy. Its good to know that you speak for all of corporate America.

Its been my experience that most full-time employees do get raises every year, the amount varies but they get a raise nonetheless. I guess I must live in a different world than you.

We'll get our standard 2-3 % just like always. But that's it in general.

This very subject, by the way, was covered on the front page of the Money and Investing section of the WSJ today. The title of article was something like, "Inflation May Not Be As Severe As You Think" and it went into this very subject paralleling, I hate to say, just what I am saying: any increased inflation would probably cool the economy and put the brakes on further inflation,etc.