Anything that prevents profits from falling late in the expansion period prevents inflation from returning
At the end of expansion periods in the past, wages accelerated and profits fell as a result. Companies reacted to the fall in their profits by raising their selling prices. The rise in inflation then led to an increase in interest rates, driving up interest payments on corporate debt, which amplified the fall in profits and the need to increase prices. Today’s dynamics is completely different.
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Natixis
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