Feeling Underpaid? This Is What Wage Inflation Around The World Looks Like

Tyler Durden's picture

Eight years of unconventional monetary policy, NIRP, ZIRP, QE, and asset bubbles as far as the eye can see, but where is that all important product of successful monetary policy - at least in a conventional Keynesian sense, where a steady increase in the cost of living and the loss of purchasing power is defined as success - namely inflation?

For the answer we go to Deutsche Bank's "Inflation Sensation" global inflation monitor. According to DB "it includes more than 150 time series covering consumer prices, producer prices, inflation surveys and wages across the G10. It uses PCA analysis to provide a global snapshot of where different countries stand on inflation."

Here is DB's finding verbally:

At a global level, our monitor remains a “sea of blue”. Little progress has been made in generating inflation in recent months. The most notable downward price pressures are in the Euro-area, Switzerland, New Zealand and Australia.

And in graphic terms, here is the full G-10

the U.S.

Euro Area





Or as Deutsche puts it: "a sea of blue."

* * *

But why? Why this grand failure to achieve the central bankers' only goal? One simple reason: they have been unable to create wage inflation: without rising wages there is no pickup in end demand, and instead what central banks create are bubbles after asset bubbles.

Per Deutsche: "Wage developments are striking across the G10. While there are tentative signs of producer and consumer price disinflation bottoming in some countries, wage growth remains particularly weak."

That a mild way of putting it, because one look at global wage inflation, or the lack thereof, and it all becomes immediately clear.

Presenting Exhibit 1, and only:


And that is why central banks have failed. However, nearly a decade later, they continue to mask their inability to boost wages and living standards for everyone, but making the life of the 1% better than ever, and where they have certainly succeeded, is to reflate the S&P500 back to within a few percentage points of its all time high.

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HedgeAccordingly's picture

Wow. Well. The strong dollar is not as beneficial as many 'us citizens' would think. Home values outside of major cities are stagnant and wages of course are too as goods price(s) continue to rise. Luxembourg actually has higher wage inflation.


Dindu Nuffin's picture

I loves me some chart porn.  TY Durdens!

MFL8240's picture

Except if you look at the money being made by the banking cartel!

Cognitive Dissonance's picture

Let's see. Inflation is steadily eating away my decreasing wages. No wonder I feel raped and pillaged.

Orc from Mordor's picture

And it's only the beginning, mate. When nobody buys your junk paper any longer, you'll have to get paid as you deserve. You can visit a couple of Chinese factories to see what it looks like, trying to get used to it in advance.

DownWithYogaPants's picture

A "free market" would set the price we "deserve".

But we're not going to see that so please talk with more accurate wording.

Orc from Mordor's picture

There has never been and will never be a "free market" in human history. It's a senseless notion invented by your factory of pseudoeconomic bullshit.

general ambivalent's picture

I'm thinking of asking my boss for an ounce of gold for every four hours of work. Seems about the right price.

Infield_Fly's picture
Infield_Fly (not verified) Cognitive Dissonance Mar 18, 2016 6:37 PM

sore muppet hole

Aussie Battler's picture

Governments choosing to inflate away their debts, that means your savings as well.

Theonewhoknows's picture
Theonewhoknows (not verified) Mar 18, 2016 6:36 PM

Inflation? With statistics so much in the gutter http://independenttrader.org/lies-damned-lies-and-statistics.html we should be bracing for another 2008 http://independenttrader.org/are-we-waiting-for-another-2008.html.

NOTaREALmerican's picture

Inflation sensation.   Interesting graphs.     It's too bad economics is a religion and defended like one.   Oh well,  maybe they can go and ask the Oracle at Delphi what the correct interest rate should be.

RopeADope's picture

When I was a freshman in HS in California I had a part-time summer job earning $4.25 an hour (which was the minimum wage at the time) The equivalent rate in California today is $13.75 BEFORE adjusting for the increase in California cost of living due to CB bubblenomics. The minimum wage in California is still only $10...

During college in California I was making about $20 an hour in the mid 90s. The equivalent today would be ~$65/hour (as a college student).

Yes, the Bernankes and Greenspans of the world are shoving a giant blue and white dick up your asshole every day.

deflator's picture

"But why? Why this grand failure to achieve the central bankers' only goal? One simple reason: they have been unable to create wage inflation:" 


 Creating wage deflation is the goal that has been scored with every government policies implementation. Immigration policy, women in the workplace, affirmative action, minimum wage laws, Obamacare, etc. all put downward pressure on wages.

 The central bankers only goal is to maintain the status quo of ever growing government. 

 Wage inflation is the enemy of fiat currency regimes.

GreatUncle's picture

With wage deflation ... we need to force down the cost of government to lower levels. The point is they are still growing expecting to take more from people with less.

rahtidmon's picture
rahtidmon (not verified) Mar 18, 2016 7:05 PM

There is no feel to it, we are going headlong into stagflation!

deflator's picture

 Policy makers would be extremely happy with stagflation in the overall economy as long as they can maintain inflation in the shell economy of government, finance, real estate, insurance and healthcare.

 Government policy makers paychecks do not come from joe sixpacks or from some mythical voting booth tally--their paychecks come from government.  "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

rahtidmon's picture
rahtidmon (not verified) deflator Mar 18, 2016 7:53 PM

ummm, you do realize that staglfation means hyperinflation AND wage stagnation right?

If we get to the hyper-part, look out below.

I Write Code's picture

OMG.  There are about nineteen independent things going on, and this "analysis" just lumps them all together.  I thought only the Fed was that stupid.

Wage "inflation" does not exist unless the wages FOR A GIVEN JOB are rising.  Only secondarily does an overall average of all wages tell you anything useful at all, far too much "ceteris paribus".  In today's market BOTH of these factors are falling.  The wage for a given job J keeps falling.  And even worse, job J keeps getting eliminated and people are forced to take job K at an even lower wage.  The common factor these have is that the labor market itself is broken due to globalization (to make a long story short), ... oh yeah, and a US government that doesn't care squat about its own citizens, except for the few banksters and vulture capitalists who pocket a commission for selling off seed corn and turning a blind eye and lying like rugs over the body politic.

GreatUncle's picture

labor market itself is broken due to globalization

Yep, in the global economy you cannot get away with trying to overcharge for a tonne of copper it is set by the global markets. If you want globalisation we also need a globalised value for labor. You can also kick in all the costs associated with labor such as housing, energy, food etc.

Now what should have happened with free trade an equalisation of all costs everywhere but that would have sunk the western economy so what we have now is corporate bodies exploiting this. A corporation would never have been able to exploit a globalised labor market and now they will never let it go it maintains any profits they have.

monad's picture

Would be nice if these numbers weren't burnt.

moonmac's picture

The Fed says higher prices will magically lead to higher wages. Just give it another 10 years.

JamaicaJim's picture

Is it just me, OR ARE THOSE "HEAT MAPS" the most FUCKED UP pieces of shit going..........?

I think so.

hooligan2009's picture

same as it ever was, transfer of profits from people to banks, via central banks socializing the bank losses from nice fat unearned salaries, bonuses, corruption and the rigging of market prices.

the Fed, along with other central banks, is engaged in racketeering and operates as a cartel that sucks money out of people's pockets.

rather like the orderlies that wheel patients in and out of experimental operating theatres, I doubt central banks even know that this is what they are doing - so, their ignorance manifests itself as "whatever it takes" to preserve their own jobs.