Let’s set off a wage price spiral

Spud tells us that inflation is merely a one off adjustment. It isn’t a wage price spiral at all. Hmm, OK. So, therefore:

The truth is we cannot afford to not give inflation matching pay rises.

So, Spud’s solution to our not having a wage price spiral is to set one off?

Do think this through. So, we’ve a one off adjustment in global prices – Spud’s insistence – and what does that mean? That we’re all worse off in that one off adjustment sense, right? We’re poorer because those prices have changed. What we consume is now different relative to the price of what we produce. And if we demand that we all be made whole from that adjustment then we will indeed set off the spiral.

And will those inflation-matching pay rises then force prices up? The answer is no, because the increased profit margins out of which they can be paid already exist

Unconvincing really……largely because the people making the higher profits might well not be the people with staff looking for a pay rise. Uncle Vova is making lovely money out of high energy prices but he tends not to pay the wages at Sainsburys…..

12 thoughts on “Let’s set off a wage price spiral”

  1. You missed this Tim:

    to permanently shift economic benefit from those on wages to those charging the new higher prices within the economy. Both are happening, but the latter is almost certainly significantly more marked than the former.

    Because we have proven time and again his total ignorance on a staggering range of topics, I’m minded to give him the benefit of the doubt in that he’s unaware of the historical parallels of his arguments but they have an awfully similar feel to those being pursued in the 1930s in Germany and Italy… Yeats’ ‘rough beast’ might be born in an end of terrace in Ely…

  2. Doesn’t this rather riff off of the crypto currency debate? Spud really does seem to think money is something tangible rather than a reflection of the supply of goods & services. He really does seem to think if you create money the goods & services it will purchase somehow magically come into existence.

  3. He really does seem to think if you create money the goods & services it will purchase somehow magically come into existence.

    I can’t best Dennis’ overall comment but when you have no experience of the real world this is an all too common problem. A close relative who gives me Murphy’s books as presents has the same delusion. Both staunch MMT advocates. Sadly the chickens are not so much coming home to roost as marauding through every room in the house. Those that think inflation won’t persist might find themselves in ‘chicken shit’ fairly soon as the Great Reset kicks in.

  4. So inflation matching pay rises aren’t inflationary.
    Didn’t the potato recently post a chart where we can expect two years of deflation.
    So let’s have deflation matching pay cuts ‘cos it won’t be deflationary.
    Coolz

  5. I do wonder if it’s an accountant thing, VP. They start thinking the numbers mean something in their selves. Money’s a measure of relative values. The effort expended in your labour against the utility of what you’re buying with your pay packet, for instance. You can’t walk around with a box full of minutes.

  6. Dennis, CPA to the Gods

    I do wonder if it’s an accountant thing, VP. They start thinking the numbers mean something in their selves.

    You wonder correctly. Common affliction amongst accountants, even competent ones (which Murphy ain’t).

  7. bis/ Dennis

    You wonder correctly. Common affliction amongst accountants, even competent ones (which Murphy ain’t).

    In fairness if I had had my twin brother (if I had one) take the accountancy exams for me because I was too stupid to pass them then I wouldn’t be much cop either!

    An old Operations Director said that a ‘good Finance Director should be seldom seen and almost never heard’ – sound advice – hard to gainsay either of your points. Spot on the money

  8. The increased profit margins of Gazprom or those of insolvency Practitioners? Firms are going bust by the bucket-load with a rise of over 10% so far this year; banks have made larger provisions for bad debts because too many of their business customers have neither large profit margins to absorb the increase in input and labour costs nor the scope to raise prices sufficiently to do so.
    NO the employers cannot afford to pay the amount that the union leaders indulging in a display of machismo are demanding. The few companies seeing rising profits all (or almost all) haveno or few unionised employees.

  9. The other thing that’s happening in UK plc which nobody seems to be talking much about is the renewed determination to outsource everything possible to India, regardless of how wise that’s turning out to be from a customer satisfaction or quality pov (not very, but Indians are cheap, so it *looks* like you’ve successfully cut cost, for a little while at least).

    (NB this seems to be the main impetus for self-harming IR35 rules, the Rishi coup is about trying to shift as much of the losses from 14 years of funny money onto working proles and other irrelevant losers who don’t even have their own paid lobbyists in Westminster, while maximizing profitable opportunities for our terminally shit CBI class, particularly the Crapitas and Barratt Homes type donors who always seem to find sympathetic ears in Whitehall)

    So BT gave in to the unions a few days ago, but I wouldn’t be celebrating or expecting a long and happy working relationship with BT if I was one of their unionised employees. Contra all the marketing bollocks about being caring and right on and investing in The Futcha, the pointy headed bosses in London would happily sell your children to the experiments if it raised the price of a latte.

    It’s a shite state of affairs, Tommy, but that’s why the wee Jewish man with the hare lip tried to educate us about money.

  10. Why do you lot ignore indexation?

    《 if you create money the goods & services it will purchase somehow magically come into existence.》

    Does OPEC care if the dollars they receive to un-throttle production were newly printed?

    In a world of massive overproduction, does it take a particularly stubborn mind to see inflation as a scarcity indicator and not simply a power play?

Leave a Reply

Your email address will not be published. Required fields are marked *