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Comment by nerfhammer | Hacker News Reader

Deflation allows personal buying power to increase holding income constant. Deflation is defined as a decrease in prices. You know what else counts as a price? The price of labor. I.e., wages. Average wages decreases under deflation, just like any other price. Deflation is not a magical money machine that makes us all richer.

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But the real average wage adjusted for inflation has decreased for a long time. Deflation has in fact happened in labor cost. Now it's the time to bring the rest in line. It's unsustainable to have ever increasing asset price but lower labor cost. No one can afford to buy them at the end.

But the real average wage adjusted for inflation has decreased for a long time.

Is this really true? If you blindly apply inflation calculators to wage statistics, you get this result.

But on the other hand, people earning average wages live a much better life (in terms of goods/services consumed) than people in the past. Even the present day poor live what would have been called a "middle class" lifestyle in the 70's.

Something doesn't add up. Can anyone shed light on this?

1.) You're (like most people on this board) are confusing technology gains with monetary phenomenons.

2.) We went from a mainly single-income family in the 70s to dual-income family today. Notice how most household today goes to hell if even one parent is laid off.

Inflation is a rise in price levels relative to currency. I.e., $1 today should be able to buy $1 / inflation factor in the past. However, people buy more today with wages x inflation factor than the previously bought with supposedly a higher level of wages. That shouldn't happen.

No matter how you cut it, that's a problem with the numbers.

Regarding point 2), we also work considerably less than we did in the past. Hours worked per capita have not gone up significantly.

Your premise seems to be that deflation will affect labor cost less than other prices, thus bringing them into "line".

It's pretty obvious that average income has decreased at a greater clip that CPI (see all those people have their income set to 0?) so I don't see how this is a valid premise.

1.) The US wage stagnation/decline for the last 10-15 years has been caused by globalization of labor/emergence of China/India. It is not a recent phenomenon.

2.) If you think government printing money will increase/steady your wage, look no further then the last bailout/printing. The banks/shareholders got all the money. You got lost wages and lost jobs.

On a side note, man, there's alot of sheeples on this board. Do you all like get up early in the morning to go to work and get robbed?

You're getting downmodded because you're expressing views on economics that are so far off that they "aren't even wrong", and doing them in a way that implies you're smarter than everyone else.

Not to mention the use of the word "sheeple".

[edit: just realized I agree with jbooth on something. I don't know if that's ever happened before.]

Yeah, that really doesn't help any argument.

Protip: When everyone else is crazy, re-evaluate the possibility that you're the crazy one :)

I could be crazy :) I am sitting in a coffeeshop relaxing and spending money from my income-generating business, while I watch worker drones go to work with scowls on their face, awaiting to be blamed for failing profits at their company.

Oh and if you think inflation is near 0%, you're not as smart as I thought you were ;)

Please, then tell me why my arguments are wrong. Don't be offended just because you're one of those sheeples that go to work every day that have to withstand long commute and increasing workloads, so that you can be effectively taxed at 70% after inflation.

To start with, noone in the US is taxed at 70%. That's the "wrong" part.

Second, inflation doesn't even come into play with your tax bill, except maybe in a very tiny way in between withholding and tax day. And that inflation figure is currently about zero. So "taxed at X% after inflation" is meaningless. That's the "Not even wrong" part.

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