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Wage suppression + productivity advances lead to a shortage of demand - the nation isn't paying workers enough that they can afford to buy the products, experiences and services those same workers can produce. In a closed system, this would very quickly lead to an economic death spiral as surplus workers are fired leading to even lower demand, ect.

 Germany is avoiding.. well, really, postponing. that problem taking a really insane percentage of the output of German workers, putting it in shipping containers and sending it abroad - not in trade for other goods, because imports are sinful, you know, but essentially to keep people working. just.. because.

The US mechanism of postponement has been to finance the consumption via debt. Instead of paying workers enough to fully mobilize the means of production, the labor force gets a credit line. This results in imports because a lot of said credit is foreign.

by Thomas on Fri Aug 28th, 2015 at 08:22:56 AM EST
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