Could there be cost pressure that creates not recession but a continuing trend of decline?Note that a "shock" is a one-time event, rather than continuous. Relative price changes can resolve an imbalance created by a shock. But when you have a continuing cost problem, the price changes are endless and we call it "inflation".
It would have to be a long-term, continuing cost pressure, one that even if resolved today returns tomorrow.
Is it grasping at straws to say that there could be [such] a cost problem? Don't prices resolve that problem automatically when money growth is constrained? Isn't that what centuries of experience shows? No...
Prices can only resolve a continuing cost problem by rising: that is, by passing the problem on to the next guy.
Tuesday, February 4, 2020
Snippets: A Cost Problem?
From mine of 3 January:
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