Workers at South Korean chip companies received bonuses worth millions of won. The Bank of Korea now worries about inflation. These two events are connected in the minds of central bankers who apparently just discovered that paying people causes them to have money.
The technical setup here is flawless. Employees perform labor. Companies compensate them. Those employees might spend the compensation. Prices could rise. The central bank must now consider doing something about the thing that happens every single time anyone gets paid anywhere.
Chip workers didn't ask for your opinion on their bonuses. They also didn't ask the Bank of Korea to turn their year-end payout into a monetary policy crisis. But here we are. South Korea's finest economists staring at spreadsheets wondering if perhaps the problem is that workers have too much won.
The real concern is upward pressure on inflation. Not actual inflation. Not measured inflation. Pressure. The mere possibility that someone might buy something with their bonus has triggered institutional panic. Imagine getting a performance bonus and immediately reading that a government agency considers your purchasing power a systemic risk.
Retail traders will read this headline and think it means something about semiconductor stocks. It does not. It means the Bank of Korea looked at workers getting paid and decided that was everybody else's problem. You can chart that if you want. Put a Fibonacci retracement on employee compensation. Draw a head and shoulders pattern on the concept of bonuses. None of it will help you predict what happens when people earn money for making chips.
The central bank remains on high alert, which is exactly where central banks stay when workers get bonuses, when they don't get bonuses, and when no one works at all.
Photo by Ciaran O'Brien on Unsplash
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