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German leaders have been confronted with the opposing forces of a strong economy and a work force that has seen its real wages, adjusted for inflation, decline over the past decade.
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As inflation declined, real rates rose sharply.
Instead, inflation declined by an average of just 0.2percentt points.
Indeed, inflation declined by about the same fraction of the initial inflation rate across episodes.
In the same month, inflation declined slightly in Germany (to 1.3%) and in the Netherlands (to 2%).
And that will be a drag on the economy, leading to further inflation declines.
Wages, adjusted for inflation, declined and the average number of hours in the work week fell.
The more inflation declined in a decade from inflation in the previous decade, the better the stock market did.
Overall, median household income adjusted for inflation declined by 2.3 percent in 2010 from the previous year, to $49,445.
In March, inflation declined to 1.7% in France, 1.1% in the Netherlands (its lowest since 1989) and to 0.7% in Denmark.
The Fed then induced a major recession, and over the next 12 years core inflation declined steadily.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com