Renewing Growth and Slowing Inflation

For the past two years I have used this space to discuss inflation, one of our continuing long-term social and economic problems. Two years ago I tried to distinguish between the effects of inflation and the real gains that investors receive in a growing economy. Last year, I discussed the timing of inflationary gains and losses and pointed out that large wage increases for unionized workers usually come near the end of a period of rising inflation. Now that workers and management are signing contracts calling for relatively large wage increases, it is useful to stress again that the wage increases are not the start of a new round of inflation but one of the late stages of the inflation that started in 1965.