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Sunday, January 30

Media and Numbers - Worker Salaries Losing to Inflation

This line is absolutely innane and stupid. Inflation devalues debt repayment in real terms. It's called the Fisher rule - real interest = Nominal interest - inflation rate. Increasing the inflation rate makes lenders worse off and borrowers better off.

"NEW YORK (Reuters) - U.S. worker salaries are growing much more slowly than inflation, raising concerns about consumers' ability to repay loans and credit cards bills at a time when borrowing is near all-time highs."

Granted, the arguement is concerning the lack of cash flow people are experiencing in the USA. The Grand Wizard Greenspan has steadily been ratcheting up the interest rates, but Mortgage rates have been inching downward. People are assuming more debt just as the Central Bank is shrinking the money supply - the money used to repay that debt. It's almost as if the Fed is trying to force a crisis.

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