Biden's inflation danger: Some economists sound alarm over stimulus plans

[David Horn]

(02-17-2021, 12:20 PM)Bob Butler 54 Wrote:

(02-17-2021, 11:21 AM)David Horn Wrote:

(02-16-2021, 08:27 PM)random3 Wrote: Biden's inflation danger: Some economists sound alarm over stimulus plans

So I've heard, but then again, where's the inflation from all the prior spending?

I vaguely remember that coming off the gold standard made it easy to fight inflation.  This was done in Nixon's time.  It made it possible to have stagflation.  It brought back periodic economic hard times as happened with 'it's the economy stupid' and the 'Great Recession'.  Macro economics just fundamentally changed at that point.  Just as war changed with nukes, proxy war and insurgent war becoming common, economic lessons learned from the Industrial Age have to be verified now that forces that don't apply now are changed.

Even the pros are baffled by the lack of inflation pressure.  Since the pros are all over the place on this, I'll give my own take.  What do I have to lose.

Wages and salaries ceased to track productivity gains in the early '70s, so, after 50 years of subpar increases, the labor cost of goods and services is far cheaper than it should be.  On the other side of that, the inadequately compensated labor can't absorb the goods and services for lack of income.  That inherent slack (too little demand for the the potential supply) has left us with sluggish growth and little innovation.  If the minimum wage rises substantially, and the rest of the wage and salaries follow suit, we may finally see some inflation and higher interest rates. 

Of course, I can be just as far off base as anyone -- further, since this is not my area of expertise.