patrick.net

max, sorry, but your assertions are just too opaque.

The wage-price spiral of the 1970s was a great reset of the economy that divided pre-Boomer haves from Boomer have-nots, as asset prices rose while the debt that was used to acquire these assets remained uninflated.

The situation has calmed down since then but the buying power of a 1985 dollar has fallen to 50c today.

we have strong inflation here

My thesis is that without wage inflation there can be no net price inflation. This is because there is a whole line of rentiers taking money out of middle America's pockets, and their economic rents are entirely proportional to middle America's disposable income less necessities.

A gallon of gas could easily go to $10 in a few years, but I believe our economy will simply reconfigure itself to accept this new reality, with much of the adjustment coming out of rents and land values of the periphery.

Producer prices rise when producers refuse to lose money on producing and simply withhold creation of new goods and services. Owners of existing real estate can't stop their production, the rental unit has done been built already and the costs of making their "income property" economically available (ie rented) is minimal. This is why I believe the real estate segment of the market lacks pricing power and will get smushed should price inflation occur in energy, food, government taxes, or even health costs.

With 20% underemployment and China still working for $200/mo in wages, India working for $500/mo, I simply fail to see the bargaining position of current wage earners.

This is deflation, very similar to what Japan experienced in the 90s. Once you lose full employment, it's a race to the bottom.