It took the Fed's Powell, not a bleeding heart liberal, to state the obvious: "The Fed's New Message: The Economy Can Get a Lot Better for Workers".
... American workers were due for some catch-up growth in their compensation — after years in which their pay fell as a share of the economy.
Boy howdy! Once again, the sources of inflation
1 - cost push
2 - wage push
3 - demand pull
With wages retrenching for years, how can the highly paid pundits not admit that without a growing wallet in the lower classes, there won't be measurable inflation (by the long held definition of CPI, of course) from wage push? There can't be of course; inflation by definition requires an excess of moolah chasing (a shortage of?) output. OTOH, we've seen ample evidence that there's been significant demand pull inflation in assets. That's why long term inflation, measured by rising bond prices (the inverse of the interest rate) is rampant. All those highly paid CxOs put the TARP and QEs moolah into Treasuries, M&A, and dividends. Not to mention the flickering rate inversion over the last year or so.
"I think that's really the underlying problem. We're getting reasonable wage growth, but we missed all of those years beginning at the beginning of the century."
In other words: events drive the data, not the other way around. At the macro-analysis level, anyway. Having lost badly with the Dot Bomb around 2000, the moneyed class went looking for high-return at low-risk, which, of course, doesn't really exist, and created the mulligatawny stew of ARM and CDO and CDS. Knowing how to game out the events following from the creating, and sowing, of these instruments isn't in the data. It's in the New York Times and Wall Street Journal. If anywhere. One can, to a limited extent, make a gross prediction if one has money flows data. House prices couldn't keep skyrocketing forever, and neither can share prices.
Where's the next witch's brew?
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