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Month: April 2014

Inflation Isn’t Too High; It’s Too Low

After years of modest price increases, the American public commonly misconstrues inflation.  Today, consumers still cannot wrap their heads around the ideas that inflation is really low and that inflation can be too low.  Over the past year through February, the Consumer Price Index rose only 1.1 percent.  Although consumers enjoy the relatively low prices for goods, low inflation causes three problems for the whole economy.

One problem with low inflation is that it negatively affects wages.  When prices do not generally go up, workers’ wages do not generally go up as well.  Despite the low inflation levels in the United States, hourly and weekly earnings have rose pretty well over the last year.  During this time period, hourly and weekly wages have increased by 4 percent and 3 percent respectively.  However, these rising wages are not sustainable because employers will not keep raising their employees’ wages faster than the price they charge consumers.

China’s New Wager: Pulling Energy From the Ocean

As fossil fuel prices rise and the pollution caused by them grows, the world looks to unlock a source of clean energy.  One potential source is the ocean.  The process to try and to harness the sea to make electricity consists of three principles: “underwater turbines that draw power from the ebb and flow of tides, surface-based floats that rely on wave motion and systems that exploit differences in water temperature”.  Currently, the European Union has led the charge to capture electricity from the ocean.