Letter #235: The Lie Of The "Inflationary Wage Cycle"
Read now to learn how higher wages are a much smaller component of overall inflation than the media would like you to believe.
Dear Readers,
A lot of news in the United States recently has centered around large labor unions who have been working to achieve increased wages and improved working conditions for their members. Auto workers, actors, writers, and more are jockeying with the companies who employ them, while their entire industries sometimes hang in the balance as negotiations proceed for months on end.
This is not an uncommon occurrence, with the unions renegotiating labor contracts every few years as the prior iterations expire. Nor is it limited to labor unions — employees in all industries and at all job levels are hoping, usually at least annually, to see some sort of increase in their compensation.
In the current inflationary environment, it’s also not uncommon to see such requests by employees vilified by many in the media and academia, as if the employees themselves, and their requests to be more “fairly” compensated, are the source of the inflation. This is to be expected — when inflation is rising, never ending finger-pointing ensues, with everyone trying to find someone or some group to blame.
The media and academia like to focus on price inflation above all else, so they reason that, when employee wages increase, employees have more money to buy goods and services, driving demand and eventually higher prices. With higher prices presumably comes a need for employee wages to rise even further, leading to a cycle of ever-increasing price inflation.
They’re not entirely wrong. After all, when increased demand isn’t matched with increased supply, prices go up. But their thinking miscategorizes employee wages as a driving source of inflation, rather than as a natural consequence of the inflation that already exists thanks to government money printing.
That’s right. Rather than blame employees who are asking for higher wages as a result, in most cases, of their increasing experience and productivity, we should point the finger at the governments worldwide who rob us daily by printing money from nothing.
There is no such thing as free money. When governments print money, whether literally or via endless varieties of financial gymnastics, they are simply reassigning wealth in the form of purchasing power from their citizens to themselves. That ability inevitably leads to immense demand from the government for goods and services that does far more to drive price inflation than anything that results from increased employee wages. Ironically, state-sponsored price inflation drives employees to demand even higher wages than they otherwise would, simply in order to keep their heads above water.
A vicious cycle indeed, with a much more malevolent source than what the media and academia would have us believe.
A Logical Cure
The same people who want us to believe that employees who ask for better wages are to blame for inflation also want us to believe that inflation will be cured if employees just stop asking. As long as government money printing continues without end though, all employees will be left with if they stop asking for commensurate raises is increasing levels of poverty.
It’s not sufficient though for us to simply hope that governments will stop robbing us blind. Thousands of years of human history have shown us that money printing will continue for as long as it’s possible to print money. Therein lies the cure: eliminate any and all ability to print money.
“Easier said than done” a lot of people are probably tempted to say. But the reality is that it’s actually quite easy — the way out already exists. Bitcoin was created fifteen years ago and has seen absolutely zero true supply inflation in all that time. So the only real barrier between us and ending money printing is simply our willingness as a global society to migrate to the best monetary system that’s ever been created.
Better days are within our reach.
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