Inflation

[Value Hunter]

well mainstream media ( and official government outlets ) create information bubbles , and only the sharpest of pins puncture those bubbles

i would argue about the 'so good for so long ' i have seen the erosion and corrosion over the last four decades , the great Australian brain drain for example , or the unabated perfusion of red tape , but i cannot in all conscience blame one faction or another the major factions have all made their contributions

but what we might now see are the undeniable consequences of all the trends , and why would the workers agree to tighten their belts when the 'fat cats ' delight in getting fatter ( please note most ' fat cats ' are not the business owners ) , seen management grab all the glory and performance bonuses , and engineer further 'belt-tightening ' to earn some more performance bonuses .. and if they do a really good job they are recruited at a nice premium to an even bigger corporation

it isn't only the watermelons that take a light year if you surrender a millimeter

We are in the decline/decadence phase of western civilization so its only natural that the system is getting weighed down by increasingly more parasites and rent seeking until it eventually becomes unsustainable and collapses.

 

[divs4ever]

If you are trying to hint at the concept of a wage price spiral its a myth that has long ago been debunked by sensible economists and by empirical data. Its a bogeyman pushed by business interests to give them political cover for keeping wages depressed.

wage-price , or more accurately price-wage spirals have happened in the past and that might happen again in the near future

in my years of working , wage rises tended to lag price rises by six months to more than a year but then the wage costs trigger extra price rises as business adjust to extra costs

 

[divs4ever]

We are in the decline/decadence phase of western civilization so its only natural that the system is getting weighed down by increasingly more parasites and rent seeking until it eventually becomes unsustainable and collapses.

yes that is what i am seeing , but others will tell you everything is fine and robust

 

[Dona Ferentes]

everything's fine and robust

 

[sptrawler]

That is the fault of businesses for being short sighted and for punishing people doing the right thing. If you do not use your sick leave when you eventually leave a company it all dissapears. If company's had a policy to pay out all unused sick leave at the termination of an employees employment with the company far fewer people would use it.

Some companies pay out a percentage, which IMO is a win/win.

 

[Value Collector]

The good way of resolving inflation is to stop printing money and also to increase supply of goods (cut taxes and regulation so investment and supply can go up) to bring down prices. The bad way (which we are currently doing) is to destroy demand and send the economy into a recession.

Yes, slowing down the creation of money will slow monetary inflation, but does not help inflation that is caused by physical restrictions to the supply of goods.

eg, if bad weather knocks out half of the Avocardo farms, the price of avo’s is going up, the price of Avo’s also goes up if the oil tankers are slowed.

at that point, you just have to tighten your belt and let the prices trigger corrections, eg consumers wasting less, and the producers producing more.

 

[Value Collector]

If you are trying to hint at the concept of a wage price spiral its a myth that has long ago been debunked by sensible economists and by empirical data. Its a bogeyman pushed by business interests to give them political cover for keeping wages depressed.

Picture 3 people on a life raft, each day we pay them $1 each and offer them 3 apples for purchase, the apples sell for $1 each and everyone gets an apple.

Now, if the supply chain of the apples falters and only 1 apple gets delivered each day, it’s going to sell for $3 and be divided among the 3 people.

raising their daily wages to $3 each won’t suddenly allow them to by an apple each, it will just raise the price of that apple to $9.

—————————

this is what happens when there is physical shortages and supply chain Interruptions, simply raising wages doesn’t increase the amount of goods available.

 

[Value Collector]

Some companies pay out a percentage, which IMO is a win/win.

They should pay out maternity leave to couples that didn’t end up having kids too .

Sick leave was meant to one of those things that’s there if you need it, unfortunately the Aussie attitude has become that it’s a resource to be used as you wish.

in a perfect world sick leave would be unlimited, and only used when you are genuinely sick. However a certain number of people will always take advantage of things and ruin it for everyone.

I have a family member on my in-laws side that basically counts sick days as holidays, and looks forward to seeing them pop up in her file just like holidays. They can tell you at any moment how many sick days they have left, and how many holiday days left etc etc.

 

[Smurf1976]

in my years of working , wage rises tended to lag price rises by six months to more than a year but then the wage costs trigger extra price rises as business adjust to extra costs

In the past I've worked under arrangements where a rigid pay structure applied and where a 5 year agreement underpins it.

Now one detail of that 5 year agreement, which is binding on all parties, is.....

CPI indexation.

So the agreement sets a base rate which applies for the first 12 months, then on the nominated date for years 2, 3, 4 and 5 all rates are simply adjusted as per CPI from ABS data.

There's the positive feedback loop for a wage-price spiral.

For those who've never worked under such an arrangement, it's basically a list of Levels and as an individual employee you never negotiate on actual $ amounts only what level. If you're promoted you don't get more $ directly, you get a higher Level.

Quite a lot of big businesses have some form of that approach and it's pretty much universal in the public service.

 

[sptrawler]

in a perfect world sick leave would be unlimited, and only used when you are genuinely sick. However a certain number of people will always take advantage of things and ruin it for everyone.

Which is exactly why I said what I said, currently the system is abused, if the company paid out a percentage of what wasn't taken the abuse does reduce.
Unfortunately not all people have the same morals and principles, that's life.

 

[TimeISmoney]

Picture 3 people on a life raft, each day we pay them $1 each and offer them 3 apples for purchase, the apples sell for $1 each and everyone gets an apple.

Now, if the supply chain of the apples falters and only 1 apple gets delivered each day, it’s going to sell for $3 and be divided among the 3 people.

raising their daily wages to $3 each won’t suddenly allow them to by an apple each, it will just raise the price of that apple to $9.

—————————

this is what happens when there is physical shortages and supply chain Interruptions, simply raising wages doesn’t increase the amount of goods available.

I've tried to explain this to people for years, but wage growth is more complex than what most people understand. You only have to look at the govt first homeowner grants to see that builders added the price onto new homes.

Wage growth works like a pyramid scheme to a point in first world countries with discretionary income, say you were to increase the labour cost to pick wheat, then that raises the end price of bread, and all the people who consume bread complain and go on strike and ask for a pay rise.

The people who cart the wheat to the markets get paid more, and the people who supply the fertiliser get paid more, the people that bake the bread get paid more, and the people who stack the shelves with the bread get paid more. The end price of bread goes up exponentially otherwise there is no point in making it in capitalist countries.

Printing excess money to a point is the root of all evil. What does the govt teach Australian kids about saving accounts or investing money? Have a look at minor tax rates for savings accounts.

 

[Smurf1976]

Printing excess money to a point is the root of all evil. What does the govt teach Australian kids about saving accounts or investing money? Have a look at minor tax rates for savings accounts.

It says rather a lot that from a young age children are given a firm message that savings = bad, debt = what responsible adults do.

A cynic would think the intent was to keep people working until they drop.

 

[Value Collector]

It says rather a lot that from a young age children are given a firm message that savings = bad, debt = what responsible adults do.

A cynic would think the intent was to keep people working until they drop.

Almost all kids are constantly asked what job they want when the grow up, and are actively taught the concept of working for money, which is great.

but, very few have the other side of capitalism explain eg saving and investing capital back into the system.

 

[Value Hunter]

Yes, slowing down the creation of money will slow monetary inflation, but does not help inflation that is caused by physical restrictions to the supply of goods.

eg, if bad weather knocks out half of the Avocardo farms, the price of avo’s is going up, the price of Avo’s also goes up if the oil tankers are slowed.

at that point, you just have to tighten your belt and let the prices trigger corrections, eg consumers wasting less, and the producers producing more.

Yes that has already been established. You literally ignored half of what I wrote. I said you need to stop monetary inflation while simultaneously also on increasing the supply of good through tax cuts and regulation cuts. Go back and read what I wrote.

 

[Value Collector]

Yes that has already been established. You literally ignored half of what I wrote. I said you need to stop monetary inflation while simultaneously also on increasing the supply of good through tax cuts and regulation cuts. Go back and read what I wrote.

But that was my point, didn’t you see where I listed the 2 causes of inflation ?

my point is that just raising wages will not fix cost of living increases if the cause is the supply chain.

Also, you can’t just fix the supply chain without having prices rise, the prices rising is actually the mechanism that passes information through the system.

consumers demanding higher wages is literally them refusing to do their part to fix the problem.

 

[Value Hunter]

I've tried to explain this to people for years, but wage growth is more complex than what most people understand. You only have to look at the govt first homeowner grants to see that builders added the price onto new homes.

Wage growth works like a pyramid scheme to a point in first world countries with discretionary income, say you were to increase the labour cost to pick wheat, then that raises the end price of bread, and all the people who consume bread complain and go on strike and ask for a pay rise.

The people who cart the wheat to the markets get paid more, and the people who supply the fertiliser get paid more, the people that bake the bread get paid more, and the people who stack the shelves with the bread get paid more. The end price of bread goes up exponentially otherwise there is no point in making it in capitalist countries.

Printing excess money to a point is the root of all evil. What does the govt teach Australian kids about saving accounts or investing money? Have a look at minor tax rates for savings accounts.

The reason that wage price spiral has been debunked is that

A) wage rise tend to lag inflation by at least twelve months. The empirical data bears this out. Most people get annual pay increases and many enterprise agreements are for multi year periods (often at least 3 years) with a fixed percentage increase (e.g. 3%) rather than being benchmarked to CPI

B) in a high inflation environment most wgaes increase at rate that is lower than the inflation rate. So how can it be leading inflation higher if it’s less than inflation?

Suppressing wages is not the solution to inflation. You need to curb money supply growth while simultaneously increasing supply of goods and services. Also debt funded govenrment spenidng (I.e deficits) are inflationary and need to be cut

 

[Value Hunter]

But that was my point, didn’t you see where I listed the 2 causes of inflation ?

my point is that just raising wages will not fix cost of living increases if the cause is the supply chain.

Also, you can’t just fix the supply chain without having prices rise, the prices rising is actually the mechanism that passes information through the system.

consumers demanding higher wages is literally them refusing to do their part to fix the problem.

In terms of consumers demanding higher wages it comes down to the question of how do you spread the pain/burden of inflation through society fairly? Should businesses swallow the cost increase and shrink the profit margins (by not passing cost increases onto consumers)? Should workers forego pay rises? Should landlords forego increasing their rents? Should the government forego the increase taxes from bracket creep and land price inflation By increasing the tax thresholds?

I would suggest that consumers/wage earners are already doing more than their fair share by getting pay increases below the rate of inflation, meanwhile there is ample evidence to show that business are using inflation as cover to increase prices more than necessary and bolster their profits. I can delve more into that if necessary.

 

[mullokintyre]

In terms of consumers demanding higher wages it comes down to the question of how do you spread the pain/burden of inflation through society fairly? Should businesses swallow the cost increase and shrink the profit margins (by not passing cost increases onto consumers)? Should workers forego pay rises? Should landlords forego increasing their rents? Should the government forego the increase taxes from bracket creep and land price inflation By increasing the tax thresholds?

I would suggest that consumers/wage earners are already doing more than their fair share by getting pay increases below the rate of inflation, meanwhile there is ample evidence to show that business are using inflation as cover to increase prices more than necessary and bolster their profits. I can delve more into that if necessary.

Whether the consumers get more in their pay packets, or businesses hide their increased profits under the banner of inflation, the government are going to end up with more in their coffers via PAYE and company tax.

Mick

 

[divs4ever]

Suppressing wages is not the solution to inflation. You need to curb money supply growth while simultaneously increasing supply of goods and services. Also debt funded govenrment spenidng (I.e deficits) are inflationary and need to be cut

from my observations , suppressing wages , increases crime and civil unrest ( at best that is covertly hostile staff at worst well there are riots happening already )

cutting money printing plus better productivity per employee is the holy grail , but that often leads to staff reductions

sorry but i do not see a smooth ride out of this , opportunities for some , yes , but i think most will face discomfort whether they thrive through this on not

 

[JohnDe]

I would suggest that consumers/wage earners are already doing more than their fair share by getting pay increases below the rate of inflation, meanwhile there is ample evidence to show that business are using inflation as cover to increase prices more than necessary and bolster their profits. I can delve more into that if necessary.

Sorry, but that sounds like the typical socialist lack of understanding. Grouping all employers and businesses together, and saying that all workers have done their share.

There are many reasons for high inflation, some of it has to do with consumer FOMO, buying houses at ever increasing prices, going out to eat and paying whatever, going on holidays and out spending previous years, smoking, drinking, owning multiple vehicles, a pool, running an A/C for extended periods, a boat, and so on.

We all have choices.