Quote:
Originally Posted by Chrysalis
Which brings to my current point, your situation is different, I cannot see someone today should they choose to buy a house suddenly getting high wage inflation, todays business world is very different, mainly in that there is now conditions that will restrict wage inflation that are here for the long term.
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During my life there were many periods when detrimental conditions looked as though they were here to stay but they never were nor will be. Conditions may take a decade or more to change but at some point they must because wealth cannot change hands.
Wage inflation which is actually pegged to progressively lower workers living standards will last only as long as workers are able to tolerate the pain. It was pain back in the 70's\80's which led to wage inflation and very few were not fed up to the back teeth with the annual grind of pain on top of pain. It takes as long as it takes and it hasn't really started to bite yet but people will get fed up and become irrational. In the UK the public mood changes slowly but snaps with surprising spontaneity when a trigger appears as with Thatcher and the Poll Tax.
I see many of the large employers are reporting bumper profits. I bet the workers in those companies are wondering how much their wage restraint is contributing?. The combination of falling living standards by the workers with wealth transference to share holders plus a government that is set on being unpopular are the seeds of a massive catch up wage inflation sometime in the future.
The BoE having got projections wrong for this year reckons it will all be OK on the inflation front within two years. They are terrified to move interest rates for fear that it will drive house buyers into re-possession and that is another wage trigger of epic proportions.
It is just a matter of time before something gives and it is governed by pain. As somebody stated some time ago, "we can talk the talk but can we walk the walk"