Ken Fisher: Inflation vs. Wage Growth
Ken Fisher explains that inflation outpacing wage growth follows a predictable historical pattern where central bank money creation drives inflation, wages initially lag behind, and then catch up over time before the cycle repeats. He argues this dynamic has persisted indefinitely and will continue in the future.
Summary
Ken Fisher addresses the current concern about inflation outpacing wage growth and provides a framework for understanding this phenomenon. He begins by clarifying that sustained inflation—not short-term monthly fluctuations—results from money supply growth exceeding the production of goods and services. Fisher identifies central banks and their money creation processes as the fundamental driver of inflation.
Fisher then describes a recurring historical pattern that he argues has been consistent over time: when central banks create an upsurge in inflation, wages initially lag behind the inflation rate. However, with a time lag, wages eventually catch up fully to the inflation level. Once wages have caught up, the cycle remains stable until the next inflationary surge occurs, at which point the pattern repeats—inflation rises, wages lag, and then wages catch up again. Fisher concludes by asserting that this cyclical dynamic has existed historically and will continue to exist going forward, suggesting investors should view current inflation-wage dynamics as part of an established, predictable pattern rather than an unprecedented concern.
Key Insights
- Fisher argues that sustained inflation results specifically from money supply growth exceeding the production of goods and services, not from temporary monthly variations
- Fisher identifies central bank money creation processes as the root cause of inflation
- Fisher claims wages have consistently lagged behind inflation when inflation surges, followed by full wage catchup before the next inflationary cycle
- Fisher asserts this wage-lag-then-catchup pattern has persisted indefinitely throughout history
- Fisher predicts the current inflation-wage dynamics will continue to follow this historical cyclical pattern in the future
Topics
Transcript
[0:00] Inflation is outpacing wage growth for the first time in years. Will this affect investors in their portfolios now? Let me just take you through this. Pick up in inflation comes from a a sustained pick up in inflation. I don't mean a month bipping numbers. I mean an ongoing increase in inflation comes from an increase in the quantity of money growing faster than the production of goods and services. Sometimes that goes on for a little while, sometimes goes on for a long while, but it's the creation of money [0:31] through the central banks and the process by which central banks create money that creates inflation. Wages have always lagged inflation. Then inflation slows down, wages…
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