Should wages increase with inflation? This has become a significant issue given that inflation has been runing high (in the US at 8.3% y/y and in Australia at 5.1% y/y).

Anthony Albanese - Australia's opposition leader - has proposed that wages should increase 5.1% with inflation. But, is he correct? Or could tying wages to inflation trigger a wage-price spiral, thereby exacerbating inflation, devaluing the local currency, and worsening the cost of living?

I discuss that here. I highlight that linking wages to inflation will likely cause a wage-price spiral and force central banks (i.e., the Fed or RBA) to increase interest rates more aggressively. This ultimately would harm peoples' standard of living. I also discuss some consdierations and strategies for people who are suffering the impact of higher inflation.

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Time stamps
* 0:00 Introduction
* 2:07 Inflation-Wage proposals
* 4:43 Issues with linking wages to inflation: Wage-price spirals
* 9:59 What can people do about the cost of living then?
* 12:30 concluding thoughts

#Inflation #Wages


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