MB Fund Podcast: Will Wages Grow in 2021-22?

In today’s investment webinar, MB Fund’s Chief Strategist David Llewellyn Smith, Head of Investments Damien Klassen, and Financial Advisor Mark Monteiro discuss if wages will grow in 2021 – 2022
On the agenda today:
  • A decade of stagnation
  • World wages rebounding
  • But structural changes are muddying the water
  • Australia has different issues
  • Investment implications
View the presentation slides

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Mark Monteiro is a Financial Advisor at the MacroBusiness Fund, which is powered by Nucleus Wealth.

 

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Nucleus Wealth Management is a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

 

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Comments

  1. Wages will not go up in Australia because one of the reasons the LNP wants us to “live with the virus” is so they can open up the immigration floodgates again – which suppress wages.

    The end result will be regional workers unable to buy in their local areas because Work From Homers have pushed up prices. The currently empty Sydney/Melbourne apartments will be filled with new immigrants, pushing prices back up to pre pandemic levels and wage suppression will continue.

    Basically the housing ponzi will continue, with the poor getting poorer and the wealth divide increasing.

  2. Jumping jack flash

    No wages because there’s no inflation.

    How can a business providing services pay their workers more if they don’t put their prices up?
    How can a business selling imported goods pay their workers more if they don’t increase margins, ie, put their prices up?
    Immigration? Don’t be silly. Immigrants aren’t paid enough to consume significant amounts of goods and services.
    And it was proved in the period between 2017 and 2019 that relying on business owners’ wage theft to increase overall consumption just doesn’t happen.

    It is an easy thing to see.

    Its not like we sell much of anything overseas which would increase national income and grow the money supply to create inflation capacity to grow wages. Most mining income stays in mining, and there’s only a relative handful of mining workers and supporting businesses, when compared to all the people and businesses in Australia.

    The money supply is instead mostly grown through debt growth and debt spending, and debt growth relies on income growth. It is a classic catch-22, and only a decent amount of stimulus can solve the problem while we’re at 0% interest rates and don’t want to lower lending standards any more.

    There was meant to be inflation kicked off by the [COVID] stimulus, but due to numerous reasons mostly related to the ineptitude of our leaders, we ended up not having much of a stimulus, so we ended up not having much inflation. In fact inflation barely registered.

    • inflation barely registered because money velocity is low. Money supply is only one part of the equation, if you don’t have money velocity, then money supply won’t cause inflation. People are saving, not spending.
      Japan has been trying for 30 years to create inflation.

      • Jumping jack flash

        You’re correct.
        They haven’t done it in the right way yet which is why Australia’s stimulus was a fail and the whole world is deflating due to debt interest. Arguably, the whole world has been trying Japan’s strategy for a decade now and also failing hard, just like they did.

        The right way is to simply helicopter money directly to the people as stimulus for spending, justified by whatever means they can come up with. COVID is the perfect excuse, especially with all those variants now, and especially because we don’t actually produce anything and rely primarily on providing services and reselling imported goods to create income.

        But the important part is not to drop so much money on the people so the people decide to hoard it. We saw this with the early super access. What did people do with a fast 40k? Well they used it either as a platform for future savings for a housing deposit – and time will tell whether this was successful, or used it all as a complete deposit to obtain enough debt to spend on houses. 40K will swing a fair chunk of debt, probably enough for a livable PPOR in a capital city near you.

        This is not helpful though because it basically locks the money away in housing and not many people liquidate their houses to consume. We need consumption spending!

        Any stimulus must trickle in slowly enough for people to decide to spend it rather than save it. A UBI is pretty much the ideal strategy because the people become confident that more money will be paid regularly, and therefore there is no urgency nor psychological barriers to spending the few hundred extra dollars received each month, or whatever the frequency and amplitude is decided.