Fear of a 1970s-style wage-price spiral is being used by central banks to stiffen monetary policy - but by slowing economies now they may just exaggerate an overarching long-term ill of falling real incomes.
For decades, policymakers used anxiety about wage growth chasing inflation higher, thereby pushing up prices further in a self-reinforcing loop, as reason to pre-emptively slow economic activity and quickly snuff out periodic pops in inflation. READ MORE