With the inflation I have lived through pretty much everything has risen in price equal to the devaluation of the dollar EXCEPT one thing that comes to mind; wages. They did increase enough to trick into thinking you were getting ahead but it was always outstripped by inflation.
Now if it worked out as the value of the currency increased, the price of commodities should fall in proportion to the value of currency increase in value. Now lets say by some miracle we were able to stick it to the man and wages lagged, instead of getting deeper into debt we should be able to ease out of it.
Wages not keeping pace with artificial inflation is the primary factor that spawned labor unions and attempts at wage value fixing controls via collective bargaining (and collective denial of individual rights to directly compete with them as part of legislation or bargaining contracts).
With the inflation you have lived through, employers could avoid cutting wages directly by giving raises which were smaller than the rate of inflation or by giving no raise at all. If you accepted a wage freeze or a small raise, you were accepting a reduction in your real wages.
Yes, and with a sound currency in a growing economy, the opposite would be true. With individual entrepreneurs, who are both employer and employee, a price cut is a wage cut, but ONLY nominally - not in terms of value for value. Firms, on the other hand, would be at natural disadvantage, having to deal with "sticky wages" (cost of goods), which are only indirectly connected to prices, as one more cost of goods. That reverses the inflationary predicament for labor, shifting it onto firms, as it puts
individual wage earners in the leading edge driver seat.
However, once again, in a free market, there should be no "employee rights", or expectation of full employment, any more than there is an expectation that someone's goods will be fully purchased. Labor is a competing commodity, like any other. If deflation causes the value of someone's wages to increase while the nominal value remains the same, it may well be that the value of that laborer's services are worthy of that increase, so no reduction is asked for. If, however, the value of a
particular laborer's services does not increase, there should be no expectation of an effective increase in value of employment at the same nominal wage. In other words, the wages should not be sticky in the first place. For sticky wages to happen, some aggregate thinking fool has to be involved at the state level, adopting the fallacy of the necessity for "full employment", and enforcing an individual's ability to remain employed, even when his/her services become too expensive. There is nothing collective about any of that, because only some labor is fungible (i.e., any body will do).
As Ludwig von Mises stated, "money is the most marketable commodity", which opens up the strongest argument for competing currencies, as it defies the rule "he who owns (OR controls)
the gold makes the rules", and expands that to who "he who owns the most marketable commodities that are used as money" makes the rules.
Many "unsound money" proponents argue for a mild inflation of 2-3% per year - completely ignoring that they are invoking exponential math, and unsustainable expansion based on percentages - not to mention the idiocy, the lunacy, of placing an expansion prediction/expectation on the entire economy. But the biggest irony of all is that gold is naturally "inflated", not exponentially, but with practically linear growth since 1970.
Indeed, gold production itself has been distorted, since it relies on the value of artificially manipulated, market distorting instruments for its production.
Annual mining production of gold is equal to the inflation rate of gold, which averages between 1% and 2% of the total amount of above ground gold prior to that year's production. Gold doesn't lose value annually, only because the inflation rate of gold keeps remarkable pace with both the real world population growth and real world long term economic growth.
There's your "issuer" of real money, and if that form of money IS NOT DEPENDENT on a goof-stupid artificial supply of counterfeit debt money, it will continue to be mined, continue to be "issued" into the economy, like any other commodity that is "issued" (produced).
In an ideal economy, one that is growing from productivity, a single metal (gold) should no more wield singular power as a monetized commodity than fiat currency or any other monetized commodity. And gold would not - COULD NOT - be controlled, or wield such power, nor could ANY of it deflate catastrophically, if we got out of thinking in terms of only a singular type of money (i.e., SINGLE gold vs. SINGLE fiat currency).
It is the one-to-many relationship (one commodity to all other goods and services) that is potentially, catastrophically, destructive to an economy. Goods and services are a many-to-many relationship, with money as a commodity medium for exchange. The more commodities used for this medium of exchange, the more channels there are for clearing market prices - hence, greater stability from more checks and balances, and less overall risk to catastrophic anything-at-all.
The biggest fear of deflation comes from "the money supply" (SINGULAR) drying up. And it's a valid fear, one that would not be possible if we had never thought in terms of a singular source of money in the first place.
