“A man must always live by his work, and his wages must at least be sufficient to maintain him.”
Adam Smith
“The issue isn’t just jobs. Even slaves had jobs. The issue is wages.”
Jim Hightower
Some analysts are confusing higher wages with monetary stimulus. Nothing could be further from the truth, at least in the real world of today.
Monetary stimulus is what the Federal Reserve does, that is, increasing the money supply by expanding the monetary base. It is a non-organic growth of money.
I think it is a well-noted and oft-remarked upon feature that the monetary stimulus that the Fed is providing is being given directly and almost exclusive to the Banks, in order to shore up their damaged balance sheets and provide them an artificial stream of profits.
And of that stimulus, the bulk of it seems to be finding its way into financial speculation and a new bubble in paper assets, and the acquisition of more companies to build even greater monopolies.
Wage increases, that are not merely a secondary effect of a general monetary inflation, are indeed not useful, except that the workers at least keep pace with the rate of price inflation. But I don’t think that this is what anyone is recommending who talks about higher wages. The Fed is not an actor on that stage.
The currently imbalanced and distorted financial system is taking the lion’s share of all new growth, and continues to do so as it has been doing for the past twenty years. This cannot last.
When consumers purchase things, they must either use cash or credit. And to obtain the cash they can work more hours, or have more family members working. To obtain more credit, they can mortgage their house, and increase their debts.Â
We have seen the explosion of a consumer credit bubble in housing debt, facilitated and engineered by historic levels of financial fraud by the very Banks who are now taking their subsidies of monetary stimulus from the Fed. It happened almost six years ago, but the economy remains in ‘the new noe-feudal normal.’
