Due to exponential growth, that would become brutal after just a few years, and you'd easily notice a diminishing standard of living as most Americans spend close to all of their paychecks on a monthly basis, without much wiggle room.
I think that's actually what we've been living through in the US for a while now, though not nearly as high 7% and real inflation has technically been limited to a subset of goods and services. Which means that it's low enough that people don't really notice things getting worse and worse, until they're shocked into realization when buying a large ticket item like a new car or a home, and they see just how much purchasing power they've lost compared to even a decade before.
Also, I wish it was as low as 7-10% inflation :( https://www.investopedia.com/articles/economics/08/1970-stag...
Education and healthcare.
Watching bankers and policymakers ignore this, everybody is gambling to try to get into the unproductive game of sitting and waiting central banks to inflate their asset prices and retire as early as possible.
Inevitably, you end up with no workforce and learned helplessness, waiting for the government to step in and guarantee jobs/UBI in exchange for everything else you got.
Houses will build themselves!
Food will magically fill your fridge!
Can we get over the old wives tales?
Scientifically people will work to support biological survival.
What they don’t want is a job for another human who has nothing more than artificial political advantage keeping them from real work.
They don’t want a job that elevates Bezos and Gates to ungodly levels of wealth, while their friends and family struggle to pay rent and buy insulin.
Our current economic reality has nothing to do with willingness to work.
It’s an emotional Ponzi scheme, properly groomed for TV and emotional manipulation: “Chase the dream.”
People will work to survive. They won’t work to help aristocrats who don’t work thrive.
Stop coddling the minority and the majority will snap to.
I live in a country that tried to ignore the problem but then came to the realization that you have to do stimulus checks (though they only sent money to the lower 10-25% tier of society).
I'd guess most countries did stimulus one way or the other; or avoided lockdown and relied less on the global economy (ie: Africa). Countries that will try to ignore it will probably collapse especially that the coronavirus is still on-going.
The Americans (and developed world) re ally did get off easy on this one. Less developed countries and those relying on Tourism did get ravaged.
If input costs like energy go up, which affect virtually every item, then that can lead to higher inflation because the aggregate spending across everything can't drop.
[EDIT] that is, yes, falling spending would have a "cooling" effect, but if costs for, say, productive land, go up fast enough, you can still see inflation in the face of falling spending.
I am going to disagree. The last round of stimulus by Biden the $1.9 trillion was completely unneeded and not smart. It really tipped the inflation scales. It was a political gesture as Biden wanted to appeal to his base early, but economically and financially a very poor decision and what may end up going down as the smoking gun.
Wow, multiple stimulus checks, unemployment benefits and employees still have no bargaining power? What is going to happen to wages once all those people come back to work? Wages are not going to grow...
Okay, this is a clear case of stagflation. Meaning inflation isn't driven by wages, which is generally where a conventional inflation spiral begins. It is driven by the inability to increase production of certain goods, primarily cars and the inability to import goods. Cutting stimulus or raising interest rates won't make this go away because the underlying reason isn't monetary at all. The $50 billion subsidies for semiconductors do make sense in this context (even if they are a net loss from a tax perspective) and they address the problem at its root.