In 30 years, finance has adjusted to a world of low wage growth

Low wage growth since the 1990s has resulted in chronic low inflation and interest rates. Low interest rates have changed financial behaviours: They have led to an increase in public and private debt ratios; They have led to an increase in corporate debt leverage; They have fuelled the growth of hedge funds, LBOs, etc. A return to high bargaining power among wage earners, leading to faster wage growth and higher inflation and interest rates, would force the above financial behaviours to change. This would be a considerable shock.