Is MMT Real? #4: J.W. Mason
RABBITHOLE
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What Is the Wage Price Spira?
The wage price spiral is this positive feedback between wages and prices. In a setting where workers have a lot of bargaining power they can try to protect themselves from price increases by ensuring that their wages rise in line with the cost of living. This was a very mainstream idea again you still find this in plenty of textbooks. Paul Volcker who was the chair of the Fed under Carter and then under Reagan brought the high inflation of the 70s back down, says David Frum.
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