Jeffrey Fisher wrote: > So, not being an economist and all, I wonder if this is the sort of thing > that would be part of a cycle leading to deflation? Doesn't it sync with > Lou's other recent post of an article on the potential for deflation?
yes, the fact that businesses are hiring so few workers encourages (money) wages to fall, which is what gives deflation its oomph, a downward wage-price spiral encouraging deflationary expectations. Next come falls in demand as people delay spending (expecting lower prices later on) and as their debts weigh more heavily against income. Waves of bankruptcies are next, encouraging further spending cuts. Of course, it's not inevitable. A hotter war would prevent it. -- Jim Devine "All science would be superfluous if the form of appearance of things directly coincided with their essence." -- KM _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
