Wage Increases Cause Inflation

The Wall Street Journal informs us that wage increases cause inflation.

In the economic Goldilocks world where a certain amount of inflation is just right, usually considered to be 2% annually by the Federal Reserve, substantially more or less than that is bad, which is the situation at the moment. 

Initially, the blame fell on the Chinese flu pandemic, supply chain issues and Vladimir Putin. Now wage increases are adding to the problem. Oddly, the Biden administration's strategy of enpixelating trillions of dollars to keep the consumer debt cycle spinning doesn't seem to figure into the equation. Without making much of a public explanation for it, the Fed is now embracing "modern monetary theory", the heterodox macroeconomic plan that says the government can't write a bad check.

Be that as it may, we never hear a discouraging word about the increases in common stock prices and the possibility that those increases will lead to inflation as well. Every time a shareholder sells a share for more than he paid for it, he has more money than he started with, involving the same share, just as an employee receiving a larger salary for the same production does. The former is considered a great thing, the latter an economic disaster. 

Another example is residential real estate prices. Homes skyrocket in price on the basis not only of demand but also due to inflation. That's reputedly one of the reasons for owning a home, as a hedge against inflation. The reality is that no structure can be possibly be worth more than what it would cost to erect another of the same materials and design, aside from the cost of the land it's built upon. The dramatically improved productivity of the construction workforce means that buildings should actually cost less than yesterday.