They're worried about inflation pressure from wage growth. If inflation grows then people want more money from their job to make up for it so their buying power doesn't decrease. Then if jobs raise wages, they raise costs. If costs go up, then purchasing power goes down, and that means people will want higher wages. So on and so forth. It's not that they think all inflation comes from wage growth, it's that they're scared of wage growth contributing to everything else causing inflation. So the plan all along was to stop all this $15+ an hour nonsense that's been taking off during the pandemic. The only reason McDonald's and others raised wages was because they knew they could lower them later. It was never a labor victory. The pretense was always that it was temporary.
I listen to a financial...well it's not a podcast but it's a daily streaming video show about macroeconomics. It's wild to hear them admit all this stuff like it's reasonable. They've been talking about this for months now. It's why I listen, it gives a good perspective into the mind of liberals. They raise questions about wage growth and I'm like "Yea dipshits you can't just keep wages flat or decrease them because that screws over demand. It's Marx 101." They even once brought up Marx but then they just don't ever go further with the criticisms. They treat leftist economics like an obligatory historical thing that you study once in college and then kinda forget about because we've developed a better model by now.
But anyways, yes, they want to control wages because they want to control all sources of inflationary pressure.
No you see productivity and wages were effectively decoupled ages ago so they believe that they don't need to increase wages because demand has risen without it, what they failed to understand is that people made up that gap by going more and more into debt, but I'm sure nothing bad can ever happen when too many people owe too much debt so we can safely ignore that one, also what's the name of the video would be interesting to see.
They're trying to curb demand through QT. Slow demand by letting things be less affordable. Cut off the cheap investment money and debt. Demand drops because people can't afford to spend. Production slows to meet the lower demand (hence all the pushback about slowing down economic growth). They think there will be fewer job vacancies because there is less production happening, and therefore less labor required. This will somehow equate with less unemployment, I guess because the vacant jobs that aren't filled won't exist in the first place. Then wages have to drop because there's no demand that workers have to fill. Workers lose their leverage because there isn't as much of a need for labor. This allows employers to freely lower wages. This is where "recessions are bad for labor" come in. The same amount of people competing for fewer jobs because the economy is slowed down.
It's a little shell game. Workers demand higher wages because they had leverage. There was a huge need for labor that wasn't being filled. Workers got higher wages. That meant the people at the top raised prices so it wouldn't cut into their paycheck. This created some of the inflation. Then the idea is for the government/fed to press pause on the economy so that people get laid off and jobs die. Demand for labor falls. Workers take lower pay because they have to. The people at the top actually take a larger cut than they had before because the actual inflation (which is just people choosing to raise prices for their benefit) isn't going anywhere. Yes, prices will fall some but they will still be higher than before. Inflation goes up to 10% and then falls to 6%, everyone is happy but it's still 6% over what it was before. People at the top keep that 6% while paying workers less.
Yes, the workers can borrow more and more in order to keep up consumption. But like you say, that's going to have to stop at some point. What they're already talking about doing is cutting rates in 2024. This means they're going to speed up the economy again, and stimulate consumption/demand. So it's just this constant tweaking of the levers to keep things copacetic. That will allow enough debt to be paid off and enough incentive for banks to keep loaning. Of course this all works until it doesn't, but who knows when that'll be? We all thought/hoped covid was it but nope. Still going.
Oh so they are even more insane than normal economists? Like right now it's just "Oh let's just make people take on more and more debt which will be fine as long as no one collects on it." worry about it later. Why is their take so insane lol, ignoring that people would literally flee the country en masse why would laying off everyone for a few months be even something you'd consider the amount of productivity lost by having to rehire everyone, retraining everyone would not be worth it at all. Especially when that shit can happen again at a later point.
They're worried about inflation pressure from wage growth. If inflation grows then people want more money from their job to make up for it so their buying power doesn't decrease. Then if jobs raise wages, they raise costs. If costs go up, then purchasing power goes down, and that means people will want higher wages. So on and so forth. It's not that they think all inflation comes from wage growth, it's that they're scared of wage growth contributing to everything else causing inflation. So the plan all along was to stop all this $15+ an hour nonsense that's been taking off during the pandemic. The only reason McDonald's and others raised wages was because they knew they could lower them later. It was never a labor victory. The pretense was always that it was temporary.
I listen to a financial...well it's not a podcast but it's a daily streaming video show about macroeconomics. It's wild to hear them admit all this stuff like it's reasonable. They've been talking about this for months now. It's why I listen, it gives a good perspective into the mind of liberals. They raise questions about wage growth and I'm like "Yea dipshits you can't just keep wages flat or decrease them because that screws over demand. It's Marx 101." They even once brought up Marx but then they just don't ever go further with the criticisms. They treat leftist economics like an obligatory historical thing that you study once in college and then kinda forget about because we've developed a better model by now.
But anyways, yes, they want to control wages because they want to control all sources of inflationary pressure.
No you see productivity and wages were effectively decoupled ages ago so they believe that they don't need to increase wages because demand has risen without it, what they failed to understand is that people made up that gap by going more and more into debt, but I'm sure nothing bad can ever happen when too many people owe too much debt so we can safely ignore that one, also what's the name of the video would be interesting to see.
They're trying to curb demand through QT. Slow demand by letting things be less affordable. Cut off the cheap investment money and debt. Demand drops because people can't afford to spend. Production slows to meet the lower demand (hence all the pushback about slowing down economic growth). They think there will be fewer job vacancies because there is less production happening, and therefore less labor required. This will somehow equate with less unemployment, I guess because the vacant jobs that aren't filled won't exist in the first place. Then wages have to drop because there's no demand that workers have to fill. Workers lose their leverage because there isn't as much of a need for labor. This allows employers to freely lower wages. This is where "recessions are bad for labor" come in. The same amount of people competing for fewer jobs because the economy is slowed down.
It's a little shell game. Workers demand higher wages because they had leverage. There was a huge need for labor that wasn't being filled. Workers got higher wages. That meant the people at the top raised prices so it wouldn't cut into their paycheck. This created some of the inflation. Then the idea is for the government/fed to press pause on the economy so that people get laid off and jobs die. Demand for labor falls. Workers take lower pay because they have to. The people at the top actually take a larger cut than they had before because the actual inflation (which is just people choosing to raise prices for their benefit) isn't going anywhere. Yes, prices will fall some but they will still be higher than before. Inflation goes up to 10% and then falls to 6%, everyone is happy but it's still 6% over what it was before. People at the top keep that 6% while paying workers less.
Yes, the workers can borrow more and more in order to keep up consumption. But like you say, that's going to have to stop at some point. What they're already talking about doing is cutting rates in 2024. This means they're going to speed up the economy again, and stimulate consumption/demand. So it's just this constant tweaking of the levers to keep things copacetic. That will allow enough debt to be paid off and enough incentive for banks to keep loaning. Of course this all works until it doesn't, but who knows when that'll be? We all thought/hoped covid was it but nope. Still going.
Oh so they are even more insane than normal economists? Like right now it's just "Oh let's just make people take on more and more debt which will be fine as long as no one collects on it." worry about it later. Why is their take so insane lol, ignoring that people would literally flee the country en masse why would laying off everyone for a few months be even something you'd consider the amount of productivity lost by having to rehire everyone, retraining everyone would not be worth it at all. Especially when that shit can happen again at a later point.