Cont.....
But is that the fault of the individuals or the system Government has created? Then the parameters are set by the designers then the issue isn't the market itself. For example... Corporate Welfare is not a natural economic phenomenon but it exists because of Government.
Now there is an assumption we can sink our teeth into.
Government is just like Anti-Lock brakes...On paper, it would seem to be the answer to most of our problems. In practice, human behavior distorts our best intentions and we're left right here debating why things are the way they are....
Oh.. you make a fatal mistake here. Real wages (adjusted for inflation), you are using nominal terms.
Real vs Nominal Wages. Real wages have fallen.
It's not fatal, but I agree, that wasn't the point I was making, so fair enough, but why? That's what we are in disagreement about.
But that's the point... that monetary inflation WILL EFFECT what people want.
How so?
Buying apples at the Apple Blossom Festival will go up.
The price of apples isn't based on the rate of inflation, it's based on demand and I don't think that people demand more or less apples based on inflation, but a persons desire and ability to obtain what they want.
Inflation occurs will occur even if productivity rises, falls or stays steady.
Ok now I'm confused, monetary inflation or price inflation?
Price inflation, as I said, is driven by demand. The ability for a business to raise prices is based on competition and as we know human behavior.
In town there is a Lowes and Home Depot right across from each other. If home depot gets it's supply of 2x4's from a different supplier than Lowes, if home depots stock runs short, can they raise prices? If they do, will I pay more or go to Lowes?
The answer, as I'm sure we would agree is extremely complicated.
I might like Home Depot better
I might not want to get in my car because it's raining out
There could be quality differences between the two.
However, all other things being equal neither business can raise prices if the other does not. We know things aren't equal, so all we can do is study behavior and make assumptions based on what has been experience in the past. The trick in my mind, is incorporating new information. That is, assumptions are based on what we have experienced and observed. The problem comes (IMO) when new variables are entered into the equation but aren't accounted for.
It was proven during the late 1970s and the stagflation period. Also you should know this as well with creating gaming economies. If in a game you double the payout of doing a quest, you've introduced more money into the economy void of increased productivity.
So I'm not sure what you think was proven, I'll need more specifics...
As far as game economies, I could talk about them until your eyes glaze over, however I'd just say that, while there are many factors that are the same between real and game economies, there are many that are not.
The most important is that in the real world, governments create money and tightly control the incentives for borrowing via interest rates.
In most game economies, players, not developers are in control of money creation (faucets). Developers are given the task of removing money via sinks. There are good reasons for this, but too many to list here.
The government has a faucet (deficit spending) and a sink (taxes) both of which it can control. Additionally the Fed has policy tools at its disposal.
Having said all of that, I think what your saying has merit, if at least in part, in that, it's one thing to describe how the economy works, it's another thing to take that knowledge and apply it prescriptively.