EDITOR NOTE: This goes back to an earlier curation we published this month. Why is the Fed shooting for 2% inflation, and not zero inflation, or 1% or 3%? The answer is wage growth, something that Janet Yellen argued two decades ago at the Fed. It doesn’t matter that wage growth of around 2% gets canceled out by inflation, most Americans are happy to see the change. It came off almost as a joke, but the Fed, particularly Alan Greenspan, liked the concept. So, there you have it. Back to the present day, wage gains among the lower-income classes make the Biden administration look like the “good guys,” and many liberal-leaning Americans are likely to support his $4 trillion economic agenda. That’s all getting cancelled out by the surging prices of everyday goods. But it doesn’t matter to many, because more money in the form of nominal income looks like more money. There’s a difference between money and wealth. There’s a difference between money and capital. There’s a difference between a dollar and its value. And finally, there’s a difference between those who can distinguish fiat money from sound money. Trust us on this: you’ll want to be on the side that understands wealth, capital, value, and sound money.
Americans are enjoying outsized pay boosts this year from desperate employers, but the raises are failing to keep pace with surging prices for everyday goods.
U.S. wages likely posted a third strong monthly gain to fuel a 3.6% increase in June from a year earlier, according to economists’ forecasts ahead of the Labor Department’s jobs report due Friday. Companies including FedEx Corp. and Olive Garden owner Darden Restaurants Inc. are raising wages to attract staff.
At the same time, prices for everything from milk to car rentals and gasoline are rising at a rapid clip, eating into those income gains. The Federal Reserve’s preferred consumer-price gauge rose 3.9% in the 12 months through May, the fastest since 2008.
The parallel surges are shaping the debate over President Joe Biden’s proposed $4 trillion economic agenda. The hearty wage gains, particularly for the lowest-paid workers, are a boon to the administration, which argues price pressures will dissipate by next year and more spending over time won’t stoke inflation.
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