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Not really. It just means that a plumber makes 1e-30 of the new money in a given economy (some small amount, point is, it is relative to the money supply). If he gets a raise (not one individually, obviously) that needs to be canceled out with the new money increasing. The problem being if you get into a circle raise -> more new money -> goto 1 it may be hard to slow it down. In reality nobody wants money. They want houses, food, education, children, ... each of those also represent a relatively constant fraction of the money supply of an economy. So you can only get a raise by actually doing more work, or in the case of the government jobs, having more hostages/threats (if you fire me X will happen, X being somewhere between a fight over who replaces you, to new elections, to I guess revolution in some extreme cases). This is not very visible because plumber wages DO change, for example with the number of plumbers available. House prices do change, for example with migration. But wages do not change, in real terms, because of inflation. A raise is a necessity, merely for you to maintain whatever position you have in society. It is not nice, in that it improves your position in society. A house, ownership, maybe stocks and of course innovation improves your position. Raises and inflation are a smokescreen. I use the term "new money" because "parked money" does not matter. Only money that was involved in some transaction in the recent past actually matters. We can argue about what measure is the best for this, and economists constantly do that, but other than that it's not simply total money, it is not necessary to have an answer for this point. |