Historical average, yes. I REALLY doubt that's the case recently though.
Actually, yes. Wages have been growing in the neighborhood of 2.5-2.8% (depending on what metric you use), which has been (barely) keeping pace with inflation.
How's that working for graphics cards right now?
Be careful of short-term trends, especially from unforeseen events (Pandemic).
The long-term result is the same: companies are increasing production capabilities in order to meet demand. By this time next year the market will more or less be back in equilibrium again.
Exactly. With less people being able to buy apples, you can't increase production to decrease the price.
Except in my scenario that doesn't happen. Growing apples isn't raw resource based (you can grow more trees) so there isn't a production bottleneck. If demand increases, you can simply grow more to meet the demand and restore balance to the markets.
Seriously, you whole argument boils down to "Capitalism doesn't work".
If wage growth truly tracked inflation, we could currently live with one person in the household working and living easily, rather than two people working their asses off just to come by.
Don't confuse inflation with cost of living. All wages tracking inflation does is keep you where you are on the economic ladder.
Personally? I've long railed against US economic policy, since it's been *** backwards for 50 years now. I've long held that workers are massively underpaid, and that the accumulation of larger and larger percentages of the countries wealth into just a few entities will eventually be unsustainable (as consumer spending will no longer be able to keep the economy going; basically a supply-demand inversion). Regardless, that's a much longer discussion that goes beyond the bounds of your apples example.
You're not looking very hard then.
Predicted 2.3% for the year and only 2.5% for Q1 2021, still less the average wage growth and tiny to 6.3% GDP growth. Bears some watching it it rises much above 3% for more then a quarter, but nothing to be concerned about.
Inflation is a byproduct of an increase in the money supply. The economic activity is a secondary effect on inflation, not a primary one. If the money supply was by default deflationary, inflation could not happen.
You got it backwards. It isn't just the availability of money; money that isn't being spent doesn't contribute to either economic activity or inflation. [Granted, most people spend pretty much everything they make, making the difference by and large moot.]
I'd recommend reading some basic Keynes.
And it's good that you touch on this. Because we have greatly increased the money supply last year, but, economic activity was pretty much stagnant due to the lockdowns. What happens when the economy gets going...?
So far, 2.5% inflation against 6.3% GDP. So right now, my economic model is winning over yours.
Alright. What was the why of the great recession...?
A combination of an overheated housing market (driven at that point mainly by investors trading properties between themselves to hide the fact that prices were artificially high) combined with multiple industries (finance and auto for the most part, but there were others) who were overexposed to that market.
When the bubble burst, the money supply (loans) that was keeping the economy going vanished, leading to a loss of economic activity (recession). Recovery package stopped the bleeding, but wasn't enough to get the economy to the point where increases in consumer spending by itself could drive a V shaped recovery, leading to the long drawn out recovery we actually got. [Hence why Democrats would rather go big on spending this time around]
Wrote a paper outlining how/why the market would burst for my economic professor back in 2004, and predicted an early 2007 bursting of the bubble (off by half a year); ***** gave me a C, claiming my analysis was "unrealistic".