INFLATION CAUSED BY GOVERNMENTS
 


Inflation is caused by governments spending more than they are getting and having to print money.
Governments waste billions on projects so that the activities they waste money on become scarcer and prices must be pushed up for safe hospital beds and school places.

Increases in wages are a reflection of demand and supply and the inevitable attempt to keep housing affordability within the average historical range. It is utterly dishonest for the Prime Minister and Chancellor, following 10 years of 300% asset price inflation in property to tell nurses, teachers, police and any large group of workers that a 6% or 8% or 10% increase will cause inflation. A wage increase will of course change the investment outlook within the industry or sector that they belong to. It is this that frightens the government: the "lets switch investment" thoughts in the minds of boards of directors as labour becomes more expensive. These bosses will prefer capital investment in equipment and technology and substitute this for labour. Even worse for the government, wage increases move jobs abroad.

It seems strange that opposition politicians, especially Conservative, failed to crucify Labour Chancellors on this point. It is an indictment of Conservative politicians and their economic advisers that they do not have credible economic alternatives in place holding down wages. Even the IMF is calling for a UK-wide restraint.
InflationInflation

 

 

 

 

 

 

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