FT Alphaville has published an enlightening article that helps to explain why wages globally have failed to lift amid tight labour markets and low unemployment.
Author Robert Lucas concludes that capital has already won the class war over labour, which means that inflation will necessarily subside once supply shocks unwind. In turn, the world’s central banks are misguided in aggressively hiking interest rates, given the inflation is not demand-driven:
Paul Volcker became an iconic Federal Reserve chair for his aggressive interest rate increases, which in the classical interpretation tamed inflation and led to the Great Moderation…
