Replies to post #42677 on Economic Collapse

[trkyhntr]

Demand pull combined with cost push, Dan.
The federal reserve pumps money into the system. People have money, and look for something to spend it on. The price can go up, so it does.
The government pushes for higher minimum wages. Wages are part of the cost of producing those goods people want to spend that money on. The cost of producing goods goes up. The price of those goods has to go up.
More money chasing the same goods has only one possible result. That result is inflation. And the only winner in all of this is your government. More higher wages means higher income, which translates into more money in income taxes for your government to spend buying votes. More money in people's hands to buy more stuff translates into more sales tax being paid, which translates into more money for your government to spend buying votes.
It works this way until it doesn't. When the people realize they have been had, they stop voting for those in power and replace them unless the system is rigged so that is not possible.