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0 pointsMilnerRoute4y ago0 comments

The other thing I never hear discussed is that this round of inflation isn't expected to be permanent, or even particularly long-lasting. So a wage increase in January which is (temporarily) eaten up by January's inflation means....an actual wage increase in May which then goes on for years and years.

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bhouser4y ago

I think you're making a mathematical error here.

If inflation goes to zero, that does not mean prices have fallen to where they were before. It merely means prices stop increasing further.

So a temporary bout of inflation equal in magnitude to a one-time but persistent wage increase, _do_ cancel out.

MilnerRouteOP4y ago

Maybe I should swap in the word "price increases" for inflation.

Gas prices are high now, but nobody expects them to stay at this level indefinitely. (And nobody expects the price of gas to stop increasing without then also dropping back down.) Supply-chain related price increases aren't permanent, and go in the other direction when the supply chain improves.

And the larger point is it's a positive development if workers really are able to renegotiate their compensation -- and that isn't entirely negated by slightly higher prices in January.

CuriouslyC4y ago

Except that producers aren't going to lower prices, because the "expectation" is that other producers won't for any non-commodity good (consolidation is GREAT for the consumer), so we're stuck with it in a lot of cases.

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