Friday, March 7, 2014

Jonathan hilights the wage deflation issue.

Big picture long term change from AEI above RPI to AEI below RPI

I have been saying for several years that the game changer would be soon and then, from 2008, I have been saying we are seeing the game changing. This is yet more evidence that whatever those above the age of 50 or so experienced for ‘ever’ from the 70s through to the 2000s is over and – ever so gradually – reversing. Whatever the baby boomers experienced is NOT what their kids are experiencing or will experience. I think this chart is so crucial to the potentially ‘moving-into-a-depression’ thesis.

Posted by khards @ 07:45 PM (2243 views)
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5 thoughts on “Jonathan hilights the wage deflation issue.

  • This is the new norm, a low growth, high debt economy with low wages and low interest rates.

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  • Bang on the nail, being one year short of 50 I couldn’t agree more with what Jonathan states, great graph too, pity its sooo small. Can make out events I remember like 1976-77 (anarchy in the UK) and 1985-89 (yuppies, XR3i’s and ‘Money for nothing and your kicks for free’) feeling skint from 1992-1997, the rest we all know.

    Interestingly ‘Black Monday’ doesn’t even cause a ripple in 1987 but then may have been the trigger for the increase in RPI 18 months later.

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  • Great insight comparing japan…..there are differences but the similarities are startling
    One of the other problems is after the credit bubble.burst Japanese were excluded from.credit
    So they had to save for things they didn’t need…after they saved enough they found they had
    Survived without said item…it was cheaper..and it felt good to have cash saved

    This created a deflation spiral…a mind set that prices always fall

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  • Re excluded from credit above….perhaps that’s why payday loans are legal and authorised

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  • To coin: to invent (a new word or phrase).

    “Turning Japanese” from 2010 Pimco article: http://www.pimco.co.uk/EN/Insights/Pages/TurningJapaneseTheRiskofUSDeflation.aspx – I’m sure someone else coined it earlier.

    Mr Davies’ attempt to hijack the Pimco phrase on twitter drowned out by holiday makers & sushi commentary: https://twitter.com/search?q=%23TurningJapanese&src=hash

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