Activist labour unions may check deflationary tendencies
WHAT connection could there be between the advent of Jeremy Corbyn as prospective leader of Britain's Labour Party and the ever-spreading deflationary influences that appear to be afflicting the global economy nowadays, or with financial phenomena such as rising bond yields?
The link is not a direct one and yet Mr Corbyn's advocacy of restoring more power to labour unions in Britain may have a wider economic relevance than many people realise. Wittingly or otherwise, he may have identified a key cause of low growth and deflation.
Delationary tendencies persist despite the fact that unprecedented amounts of financial liquidity (money, in short) have been created by the world's leading central banks in the past few years - a development which, in theory, ought to have driven inflation up sharply.
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