Price Gauge Rises; Wages Stay Tame
April 29th, 2005 by 
InLibrisLibertas
The above is a headline from today’s WSJ.
Prices are going up, driven by asset inflation - but wages aren’t, held down by overseas competition - outsourcing. As a result, according to Paul Kasriel at Northern Trust, households ran a record deficit in 1Q2005. At an annual rate, households spent $322 billion more than they took in. This money was, of course, borrowed from other sectors.
This is stagflation. A recipe for disaster. Last time, it took 18% interest rates to stop it. This time, probably not, it will collapse from debt repudiation.
Be careful out there.
Posted in Inflation & The Dollar, Paul Kasriel | 