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To: Helios who wrote (43590)	8/3/1999 6:37:00 PM
From: Black-Scholes	Read Replies (2) \| Respond to of 50808

The FED might watch wages, but inflation is ONLY manifested in higher prices. Rising wages only raise the EXPECTATION of inflation - it does not confirm it. If one thinks that higher wages leads to higher inflation with certainty then that person is just invoking the Phillips curve. An economy can produce higher wages without correspondingly higher prices if, and only if, there is a corresponding productivity increase - that dynamic is ultimately how wealth is created in an economy. Higher productivity allows more goods and services to be purchased by the same RELATIVE wage. What were talking about here is THE current raging debate in economic academia.