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Politics : Formerly About Advanced Micro Devices
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To: combjelly who wrote (349883)9/27/2007 10:36:04 PM
From: TimF  Read Replies (1) of 1576158
 
"Slow pay increases didn't cause the depression"

It was a factor.

It was more the opposite. When the money supply was tightened, you had people fired, or companies go out of business, more than you had continued operation with the same employees at lower pay. The stickiness in wages causes a problem when you have tight money, and the wages don't adjust.

An economy requires markets, but paying people more without them actually producing more leads more to inflation (under normal circumstances) or having to fire people or just go out of business and fire everyone (when the money supply is tightened or when in general you can't raise prices to cover the difference).
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