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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (87011)	9/28/2008 4:06:53 PM
From: stockfiend	Read Replies (1) \| Respond to of 116555

I doubt wage inflation as well but I think social unrest will lead to more stimulus packages that in the aggregate will be as inflationary as wage inflation.

To: SouthFloridaGuy who wrote (87011)	9/28/2008 5:02:58 PM
From: THE ANT	Read Replies (2) \| Respond to of 116555

I think we will monetize part of the debt and if this happens the dollar will fall.Increasing costs will likely be met with increased wage demands.I will bet the Federal govt gives salary increases to at least keep up with inflation.The govt wants to keep up the value of our houses.It can only do this via special new tax rules that make investing in houses more attractive or inflating us into our houses(via rising wages)In the long run the only factor that determins the value of the average house is average income(in the short run interest rates and herd mentality matter)Wages need not keep up with real inflation,they only need to rise towards housing.As long as wages dont keep up with inflation we will have a slow decline in living standards vs the rest of the world.If the govt doesnt allow wage inflation we can not keep up the value of housing as relative to income housing is still likely 10-15% overvalued and that doesnt even assume we have excess housing in the US.I think the govt could not inflate until the commodity bubble burst.Now even with inflation commodities other than gold will likely not go up any faster than devaluation of the dollar.Some could even drop despite dollar devaluation (depends on amount of world economy slowing and amount of continued speculative premium in the individual commodity)Wage inflation will allow housing to complete its needed continued fall against ones pocket book.