Do Wage Rises Cause Inflation ?
AS workers in Scotland and the rest of the developed economies face significantly rising inflation for the first time in nearly a decade we are hearing the usual cry in such situations from the our governments. Alex Salmond was the latest last week to join the chorus of “pay rises will cause inflation”. But workers as ever are purely reacting to inflation by asking for more pay to protect their already declining standard of living which for many is simply the ability to provide a heated roof over their head and food for them and their families. Inflation is a permanent feature of post-second world war modern capitalism after 1945. Its creators are the central banks – essentially the governments’ banks Âand the governments themselves. They created and continue to create credit and the regulatory environment to be able to easily sell this credit. This credit is in the form of hire purchase agreements, loans, credit cards, mortgages and re-mortgages and secured loans on property. This rea
