There is more to monetary inflation than simply money devaluation: https://news.ycombinator.com/item?id=27476789
> In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago.
Having the same purchasing power means that wages have indeed kept up with inflation. If they didn't, it wouldn't be the same purchasing power, it would be diminished purchasing power.
What's also missing from this analysis is that CPI doesn't adequately incorporate important things like that the quality-adjusted price of housing has massively increased at much faster than the general rate of inflation.
Isn't that a simplistic point of view that assumed the U.S. is either a closed system or the rest of the world as progressed at the same rate we have?
There's more global competition now, both for customers and for jobs. That wages have stayed inline with inflation in spite of the fact that America has shifted quite a bit to a services economy and those services have competition from other countries (the classic example is India), may actually point to the monetary policy preventing what would be a much worse problem, and for nothing to do with inflation.
It's easy to pick one metric and paint a picture that supports a story. It's much harder to account for many important factors, which is also why it's not done as frequently.
Anyone's theory that one specific thing is the result of many major worldwide changes is going to have an uphill battle with me. The time frame we're talking about includes the popularization of the internet, increased globalization, the recent aftermath of the civil rights movement, an over 100% increase of global population compared to a ~60% increase in United States population, and mode than halving the number of people in the world that live in extreme poverty.
Every single one of those would have massive effects on the economy, production and wages of the United States. I'm not sure how anyone could credibly make claims about how monetary policy in the U.S. was the reason for effect over the last 50 years without accounting for these and other things. It's easy to point at two things that seem to correlate over time. It's much harder to prove causation.
That absolutely might have an effect on wages in the US. However, its unlikely that real GDP would be unaffected while real wages stagnate in such a case.
> I'm not sure how anyone could credibly make claims
Lots of things happen in the world all the time in every decade. The internet isn't any more novel than electricity was or the industrial revolution was. Yes there are a lot of confounding variables that make it difficult to make empiracle conclusions. But the largest market manipulators (central banks and governments) do play a substantial role in macroeconomics, and its completely fair IMO to conjecture around the effects of those things using logic and theory.
Wage increases can be part of the driver for general inflation, but they definitely tend to (unequally, though) be produced by it. However, when they aren't pushing inflation, they tend to be at a overall level less than inflation (when one cobsiders the effects of inflation alone, which is hard, because its never the only real factor), and (absent pushes like minimum wage increases) may entirely not occur in some segments.
To me, that's the real thing I think it missing from a lot of the discussions going on here. There are so many things that go into these as inputs, and over this time period, so many large global changes. It's hard for me to take some of the claimed causal relationships at face value without even lip service to some of those other things (globalization, increase in population but unevenly, social upheavals, etc).
> and (absent pushes like minimum wage increases) may entirely not occur in some segments.
Yeah, I don't expect it to be simple. In fact, the assumption that it's not simple is why I'm having trouble accepting some of the direct claims presented as they have been so far (which is without much analysis of additional factors).
Devaluing the debt definitely helps, but I think you noted before that that wealth is largely inaccessible.
No, we have stagflation right now. Stagflation is generally the type of inflation where production cannot follow demand. This is generally caused by supply shocks and sometimes by legislation that prevents people from working. The semiconductor shortage is causing a lack of new cars and thereby an increase in used car prices is an example of stagflation because prices go up but nobody is employed in the process to produce more cars.
However, this stagflation is unlikely to last because those car CEOs sure as hell don't want their company to go bankrupt. They'll pay more for preferential access to semiconductors and make their JIT manufacturing more resilient.
Today average wage is $25.60/hr
But that's only part of the story - while wages haven't gone down over the last 50 years, the economy has increased, and normal people haven't benefited from that increase unless they've been able to pump their money into things like stocks. That means those who had wealth and no debt back in 1970 are doing great (put $1k in the Down Jones in 1970, reinvest the dividends, and instead of an inflation linked $7k, you'd have a whopping $260k today)
This means that boomers (the ones with most of the wealth and control) are very rich, but Gen-X and especially millennials are massively lagging behind where previous generations were.
Except that the U.S. isn't cut off from the world economy, and over a billion people have moved out of extreme poverty. How much of the difference in what we expect buying power should be compared to what it is is on account of globalization and sharing some of that wealth with other countries? It seems a bit suspect to assume monetary policy is the only or the majority of the reason for these observations without considering things such as that.