Re:Italy’s austerity-fueled crisis is a warning to the Eurozone
by Udik on Friday April 12, 2019 @07:42PM
(#19650032)
> It will not magically create more wealth or lower the costs of materials
No, but it will lower the cost of labour. If you have low productivity, you need to pay your workers less. If you can't devalue the currency, you have to lower wages. If you lower wages, you create deflation: your money will be more valuable tomorrow than it is today. And so you stop spending and start saving, and consumption falls.
No, but it will lower the cost of labour. If you have low productivity, you need to pay your workers less. If you can't devalue the currency, you have to lower wages. If you lower wages, you create deflation: your money will be more valuable tomorrow than it is today. And so you stop spending and start saving, and consumption falls.