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Zimbler:
re: "If the minimum wage goes up slowly, the minimum wage
folks will have more dollars in their pockets to
spend"
What you've just described is 100% countered by the fact that if the minimum wage goes slowly up, business owners have fewer dollars in their pockets to spend. Moreover, if customers behave like drug addicts and continue to buy regardless of how much a product's price rises, then they will buy less of other things and cause those prices to fall.
Prices are set by supply and demand. Not just the supply and demand for products, but also the supply and demand for money. Suppose EVERY business in the world raised its prices by 20 percent. That would suggest inflation, right? Actually not, because with everything costing more and no change in the amount of money, consumers would have to buy fewer items. The demand for everything would fall and the prices would revert back to where they were. There ends up being ZERO inflation.
Inflation results when there is more money, and when there is less product. When Cabbage Patch Kids became a craze and their prices went through the roof, that was not an example of inflation. That was only an example of demand increasing for one product, and it was offset by decreased demand for other items.
Savings plays a role too, but I'm not going to discuss it because it complicates matters ... but changes nothing. Inflation results when there is more money or less product SYSTEM WIDE.
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months |
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