(You cannot underestimate my knowledge in this domain. Perfectly fine to link me "money is a store of value, and can be exchanged for goods and services"-level stuff, as long as it's not about Bitcoin)
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Not so much that it's "kept pace", but that the threat or actuality of outsourcing has kept wages artificially low in developed countries, which keeps a lid on traditional wage-driven inflation mechanisms that featured in the manufacturing-heavy economy of the 50s–70s.
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I'm not an economist, but I've seen it said that the answer is mostly China (and other developing countries, but mostly China).
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More money chasing a scarce resource causes inflation. Most of the extra money has flowed to a relatively small group that was already affluent hence marginal propensity to consume normal goods is low. Compare inflation of sports teams, penthouses, and prime waterfront property.
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I'm sure there are more complex forces playing into it, but I think this is basically the right answer. The money that might have gone into ordinary people's pockets, stimulating demand, pushing up prices, and driving inflation, is instead locked up in unicorns and supertalls.
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I view this as a failure of orthodox economics, but I know we do not share political priors. Here is a pretty solid article from the SF Fed with background. Central banks have (obviously) been trying to figure this out for a while.https://www.frbsf.org/economic-research/publications/economic-letter/2019/july/why-is-inflation-low-globally/ …
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I don't care if we politically disagree if you have an interesting answer.
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I can’t find it now, it I read that inflation doesn’t count things like improvements to medical insurance coverage and car functionality. So cars are not “more expensive”, you just have more features. Except you can’t but a car without airbags or electric windows.
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