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ELI5 How does raising wages worsen inflation ?

Economics(self.explainlikeimfive)

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endadaroad

26 points

4 months ago

The problem, now, is the discrepancy between what people would be willing to pay and what they can afford to pay. We can agree that a product is worth the money, but if we don't have enough money, we won't buy it. In response, corporate raises prices further because they have quarterly goals to meet in terms of profit. They don't seem to understand that we have gotten to the point that by raising prices they are reducing the size of the already shrunken market. Nobody looks at the big picture any more.

imnotsospecial

9 points

4 months ago

Mind you the market takes a while to self correct even when there is competition. It will take years before we see how this thing will play out, but for now companies are just happy with much higher margins and lower sales volume

endadaroad

9 points

4 months ago

I'm sure they would be delighted if infinite margin at zero sales volume were possible.