Damus
Lyn Alden profile picture
Lyn Alden
@LynAlden
When money inflates in supply, employers have the benefit of the status quo, and wage earners have the burden of work to negotiate higher nominal wages to keep up.

The effect is subtle in developing countries, a few percentage points per year, but it's always there behind the scenes. People often have to switch jobs to get proper higher wages, and avoid the anchoring bias from their prior employer. This is all because of dilutive fiat money.

The problem becomes more obvious in developing countries.

For example, the IMF tells Egypt to cut its currency in half relative to the dollar, if it wants some loan relief. It does. Now, every Egyptian wage earner has to try to negotiate a raise to regain some portion of their prior wages in terms of global purchasing power. Virtually all of them will not be able to. And then seven years later they do it again.

But when money deflates in supply, and the unit of account therefore appreciates, wage earners gain the benefit of the status quo in negotiations. If their salaries merely remain the same as averages prices go down, they have gained a raise (which makes sense, with greater experience).

The burden of work shifts to the employer, who has to argue that wages should be cut in line with prices.

I think the magnitude of this effect is poorly understood. If it were more understood, I think a subset of labor-oriented political proponents would appreciate hard money a bit more.
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Ronin · 163w
Never thought about it in that perspective, very interesting. .
Josh · 163w
I agree, particularly for large businesses. It does seem different for small businesses though. We have to negotiate for higher prices with our customers. Higher hourly rates to cover overhead as well as increased employee wages. Material cost was spiking so rapidly it was nearly impossible to bid...
Karbon · 163w
I read a theory the other day that it was labour unions that created a inflationist economy. Employers needed to lower wages because of deflation but large labour unions wouldn’t budge. So Keynes and his cronies figured out a way to lower their wages without them knowing .
OgFOMK ArTS · 163w
You are spot on. It hurts is here as well. I'm Fiat mining and my wage is literally 3 more dollars an hour than in 1997.
Nitemarekhawk · 163w
The solution is to take your paychecks in sats and then use those sats on places like bitrefill to buy groceries or coincards.com people just need to get off the fiat system.
Legion XXI · 163w
So in an inflationary environment, employees are *forced* to change jobs often, which leads to poor commitment and loyalty to a company. Thus a fiat system lowers the quality of any company output.
🍊💊⚡️🌽 · 163w
Wow……..you totally open up my eyes to considerations that I would never have made!
Glenn · 163w
Employers also have more regulatory exposure are more willing to play ball with the status quo to keep the lights on.
nobody · 163w
Great post. Resume management will increasingly become key. Stay long enough to manage the resume optics, but leave every 3 years to get a bigger external jump.
Silence · 163w
This explains why people in developing countries have to struggle indefinitely, while more affluent societies are losing pensions and savings. This is the actual emergency that humans should care about.
Tuur Demeestr · 163w
I generally agree, though employers are faced with higher input costs and customers who are also reluctant to pay more for the same service.
Shawn · 163w
It’s even better than that, though: The deflation rate is simply the percent increase in overall value of the world economy given the constant money supply. The more effective employees will have increased their own value at or above the deflation rate, so the employer wouldn’t need to (and s...
Hurvajs Rumcajs · 163w
Yep! That's also the 2% inflation target's job.
Artur · 163w
💯
a source familiar with the matter · 163w
The ideal is commodity money (specie) - which being produced by the same industrial processes as everything else maintains stable value and so nobody has to renegotiate
Sourcenode · 163w
I have often wondered how this will work in practice as the price of goods and services of any business will trend lower continuously. Normalizing wage decreases will be a strange challange, but as you said, that provides more leverage for employees.
Grey · 163w
#[0] 🪬
Reed · 163w
On a bitcoin standard there will be no salary employees. Way more contract work, and it will become the norm to renegotiate regularly with hourly wage earners.
NyamiDev · 163w
You are so good at explaining things. Thank you.
halfnull · 163w
3 years max is the game. keep that resume updated. loyalty to a single employer is dead.
halfnull · 163w
3 years max is the game. keep that resume updated. loyalty to a single employer is dead.
The Bitcoin Psychologist · 162w
Governments lie and steal. Inflation is theft.
Kybe Vox · 162w
Looking forward to reading you book, since your insight are priceless.
Christian · 162w
Oh, I am very much aware of this effect. My kids negotiated a fixed rate of 6000 satoshis for emptying the dishwasher in dec 2022, with renegotiation agreed december 2023. Their labor is freakishly expensive these days!!
Qa123 · 162w
facts
Mark Puddleglum · 162w
Love your reflections, Lyn! Thank you.
Lorenzo Rey · 162w
Employers also suffer pain, higher prices shifts the demand curve downwards thus driving total revenue for employers down. Only cantillionares benefit from inflation
Lorenzo Rey · 162w
Employers also suffer pain, higher prices shifts the demand curve downwards thus driving total revenue for employers down. Only cantillionares benefit from inflation
Tom Samuel · 162w
Earth is a prison planet for humans. Whichever way you try to make a living, you have to suffer.
Antero Törhönen · 162w
Yes, or what if with deflationary money, the whole job market becomes more gig/freelancing-based? Labor unions are a centralized option in any case. Also, workers have more freedom to choose between work and leisure, due to saving in deflationary money. So the solution kind of exists already, all of...