Central bank try keep inflation at 2% by lowering interest that will in turn increase wage inflation. Systematic fault central banks has made is a) Wage inflation prize of goods is globalized in a global economy and cannot be controlled by local central banks. b) robotics, automation and startups are funded partly by loans and thus its deflationary. Ie loaning/investing in automation by loans acts deflationary not inflationary.
Mix of cause and effect. Low inflation by globalization not wage inflation by low interest rate.
That is why we are seeing higher inflation on locally produced goods for example hair dresser, lunch. But not so much inflation on globalized goods like Tv, electronics.
I very much like your analysis. We need to look into more details and the very different nature of things today. We are still viewing inflation as if there is one economy. But there are many different (global) markets resulting in very cheap things (e.g. from abroad - TVs) and expensive things (e.g. locally - Food). We need to add this to our view and also anticipate where these modern factors lead to: Wage stagnation, still high increase in prices for local goods + development of the "cheap goods producing countries". Last factor will also increase the prices of those goods, which could set off this time bomb (and cause the civil war mentioned).
Imbalanced trade is one of the biggest drivers of wage stagnation. Export surplus countries must keep their wages artificially low which forces importing countries to compete by cutting their wages.
I.e. low wages in Germany drag the entire EU's wage level down.
>b) robotics, automation and startups are funded partly by loans and thus its deflationary. Ie loaning/investing in automation by loans acts deflationary not inflationary.
I actually agree but the argument is kind of funny. It would imply that we are far away from any physical constraints and that issuing more liquid credit (money) just accelerates technological progress which makes the original problem worse. I.e. unfair distribution of earning opportunities which leave some people with all the money and others with no money.
Mix of cause and effect. Low inflation by globalization not wage inflation by low interest rate.
That is why we are seeing higher inflation on locally produced goods for example hair dresser, lunch. But not so much inflation on globalized goods like Tv, electronics.