Krugman is a great supporter of the opinion that the rate of price inflation in the U.S. will be low in the near future. In this post he asks fundamental questions related to the real driving force behind inflation:
First, do you see any sign that workers are about to (or are even able to) demand higher wages to compensate for the higher prices of gas and food?
Second, do you any sign that employers are getting ready to make more generous wage offers?
Third, have you heard anything about companies feeling that they have room to raise prices by substantially more than the rise in their raw material costs?
The mainstream economics fails to derive any quantitative model of inflation explaining the conditions of big changes. This is real reason for the current discussion on the future of inflation in the U.S. Experts do not understand when workers, employers and companies are ready to raise wages and prices. We answered this quastion 6 years ago. It will take another decade to convince specialists and general public.
Why economists do not trust accurate quantitative prediction? The answer is obvious - economics is not a science; and economics profession is kind a sect.
First, do you see any sign that workers are about to (or are even able to) demand higher wages to compensate for the higher prices of gas and food?
Second, do you any sign that employers are getting ready to make more generous wage offers?
Third, have you heard anything about companies feeling that they have room to raise prices by substantially more than the rise in their raw material costs?
The mainstream economics fails to derive any quantitative model of inflation explaining the conditions of big changes. This is real reason for the current discussion on the future of inflation in the U.S. Experts do not understand when workers, employers and companies are ready to raise wages and prices. We answered this quastion 6 years ago. It will take another decade to convince specialists and general public.
Why economists do not trust accurate quantitative prediction? The answer is obvious - economics is not a science; and economics profession is kind a sect.
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