Many households also have reason to miss higher inflation. Historically, higher prices have led to higher wages, allowing borrowers to repay fixed debts like mortgage loans more easily.
Inflation also helps workers find jobs, according. to an influential 1996 paper by the economist George Akerlof and two co-authors. Rising prices allows companies to increase profit margins quietly, by not raising wages, which in turn makes it profitable for companies to hire additional workers. Lower rates of inflation have the opposite effect, making it harder to find work.
Talk about perverse economics. Inflation stimulates higher wages, except when it doesn’t because companies refuse to pay higher wages in order to pad their profit margins.
That said, all of a sudden the “let’s inflate” meme seems to be everywhere, especially with the impending appointment of Janet Yellen to head the Fed.
Hey. Anybody know what per capita take home pay, adjusted for inflation, has been doing for the past fifty years?
Everybody laughed at me when I warned that the ruling class, faced with a choice between deflationary depression and hyperinflation would choose to inflate, but the joke may not seem quite as funny these days.
Of course, government knows best, so don’t worry, be happy.