There's been some worrying about wage inflation happening in odd places like Oklahoma. Let's straighten it out.
Wage inflation is good, asset inflation is bad. Wage inflation benefits workers at the expense of non-workers while asset inflation benefits property owners at the expense of the poor.
Of course, to the Fed, pundits and right-wing economists, who are all shills to the overclasses, it's the reverse. This is why a housing bubble is not considered price inflation, but wage inflation is the work of Satan and must be combatted forthwith. Forsooth!
What's Been Going On
Contrary to popular opinion, any recent price inflation is not a direct function of the asset inflation that's been going on. It's rather a minor side-effect of the means by which it was achieved. Using lots of easy and unregulated credit for asset owners.
Other means of inflating assets exist which would have no effect on overall prices. One is increasing competition for assets, say by moving to a double-income family model which restricts free time and mobility (of commutes) thus artificially narrowing options for workers.
Another is decreasing density which decreases the total number of possible homes within the commuter's habitable area. This is just decreasing supply of homes by squandering very scarce land to build them on. It also contradicts the claims of suburbia advocates who say they are providing affordable homes.
Yet another means of inflating assets is to re-price the assets out of the hands of the locals by, for example, opening up assets to ownership by rich foreigners. Needless to say, sharpening wealth disparities helps this process along.
What Hasn't Been Going On
A final way to cause asset inflation is restrictions on their formation, say if there is a timber or brick shortage for housing. Squandering land would be a special case of this. About the only asset inflation which a sane economy should ever worry about is that caused by resource shortages.
There is a good way of dealing with resource shortages, it's to slow down the economy by scaling back legal working hours. This spreads the pain uniformly instead of concentrating it among borrowers (ie, everyone but the smart rich) as is done by hiking interest rates.
But this is irrelevant because it is the only cause of asset inflation we are NOT seeing, except for land squandering. So basically, all the current causes of asset inflation are the product of an insane society with an insane economic and financial system.
It's Been Going On For Decades
So I hope you see what's been happening. For decades there has been asset inflation without price inflation. Due to the political class being shills to the rich. Recently this asset inflation has been put into overdrive by madmen willing to endure price inflation. What's important to note is that it would take decades of wage inflation to redress the social balance and see a modicum of justice.
Oh yeah, and when someone like Milton Friedman says something astonishingly idiotic like "Inflation is always and everywhere a monetary phenomenon." what he's really saying is that he doesn't give a damn about the allocation of wealth between rich and poor. Which he wouldn't, being a right-wing shill.
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