patrick.net

marcus says

Actually, when inflation occurs, wages must go up.

No this is a fallacy. Inflation occurs when the mone supply increases. Inflation has everything to do with prices rising as a economy as a whole. Sure some products will experience rising prices due to temporary high demand for the product which can be caused by sudden market changes (i.e. shovels prices for the California Gold Rush). But when the everything rises in prices that's due to monetary inflation not the laws of supply and demand. Therefore in this sense wages do not increase, since there is no new demand or rise in productivity in all the products. And that in a summary is why wages have not increased but prices have.

Once again Minimum wage is not the solution to currency debasement, getting rid of currency debasement is the only solution to currency debasement issues.

spydah_hh says

Yes it is true. Remember the days where only the father was needed to work to provide a family of 7?

Yes. But what does that have to do with minimum wage ?

I had a minimum wage job in 1973 as a teenager. It paid $2.25/hr. It was just part time. But I would have had a tough time living on that full time.

Sure, it would have been a little better than $7.25 is now. But not all that much.

According to this http://www.bls.gov/data/inflation_calculator.htm

$2.25 in 1973 had the same buying power as $11.81 now. And the bureau of labor and statistics is thought by many to underestimate inflation.

marcus says

spydah_hh says

Yes it is true. Remember the days where only the father was needed to work to provide a family of 7?

Yes. But what does that have to do with minimum wage ?

I had a minimum wage job in 1973 as a teenager. It paid $2.25/hr. It was just part time. But I would have had a tough time living on that full time.

Sure, it would have been a little better than $7.25 is now. But not all that much.

According to this http://www.bls.gov/data/inflation_calculator.htm

$2.25 in 1973 had the same buying power as $11.81 now. And the bureau of labor and statistics is thought by many to underestimate inflation.

1973 isn't a good time period. Cost of living increased dramatic in the 70s thanks to the removal of the gold standard. If we go back to the 1960 and before that's when standard of living was much better.

Back in 1956 the minimum wage was $1.00 paid in real stable dollars or even in silver. A $1.00 in 1956 is worth $25 today. That's how bad the U.S. government has debased our currency since then.

spydah_hh says

Inflation has nothing to do with prices rising

I see.

I'm reminded of this http://patrick.net/?p=1237705

I'm not interested in that argument. I use the purchasing power definition of inflation. Your definition which presupposes the cause of purchasing power erosion is useless to me, since even if you are correct, it could take a decade for money supply to affect prices, and by then other deflationary forces such as credit market or foreign currency imbalances may have kicked in to offset things.

I'll stick to the real world application level economics and shy away from nebulous theoretical definitions. Besides, for the sake of argument, all that matters is agreement for discussion purposes of what it is we mean by inflation.

marcus says

it could take a decade for money supply to affect prices

Bullshit

marcus says

it could take a decade for money supply to affect prices,

I edited that statement. I meant inflation everything to do with rising prices, not nothing.

marcus says

it could take a decade for money supply to affect prices, and by then other deflationary forces such as credit market or foreign currency imbalances may have kicked in to offset things.

It usually doesn't take decades. But it really depends how much expansion there is.

Here, this is a good commentary and statistical analysis. I'm still reading it. See the graphs which show that the cause and effect relationship between money supply increase and inflation is not by any means a tight as some think (in the short and medium run).

http://economistsview.typepad.com/economistsview/inflation/

marcus says

See the graphs which show that the cause and effect relationship between money supply increase and inflation is not by any means a tight as some think (in the short and medium run).

Like right now for instance because the velocity of money is so low.

That does not mean it does not cause inflation as by definition it does.

spydah_hh says

Back in 1956 the minimum wage was $1.00 paid in real stable dollars or even in silver. A $1.00 in 1956 is worth $25 today. That's how bad the U.S. government has debased our currency since then

Again--what the hell is wrong with you?? When one argues with you guys, it's an argument over facts, not opinions. $1.00 in 1956 is worth $8.56 in 2013.

http://www.usinflationcalculator.com/

spydah_hh says

Cost of living increased dramatic in the 70s thanks to the removal of the gold standard.

Actually it was more due to demographics, but that's neither here nor there.

spydah_hh says

If we go back to the 1960 and before that's when standard of living was much better.

And you say this because? The real reason that time period was preferable to now is because the income and wealth inequality was MUCH better than today.

spydah_hh says

Umm, shouldn't your answer be to stop QE and currency debasement?

A weaker dollar is actually good for the US right now. It would bring jobs back here.

You seem to be under the false impression that real wages would perform better under flat or deflationary time periods. Do you have any evidence that leads you to this conclusion?

I decided i was dumb and didn't understand it so I called the Who's Who of the folks who've been around it and I said, "Why won't everybody go South?" They say, "It'd be disruptive." I said, "For how long?" I finally got them up from 12 to 15 years. And I said, "well, how does it stop being disruptive?" And that is when their jobs come up from a dollar an hour to six dollars an hour, and ours go down to six dollars an hour, and then it's leveled again. But in the meantime, you've wrecked the country with these kinds of deals. We've got to cut it out.

Ross Perot when asked about trade agreements with Mexico. Funny how, we've taken all our good jobs, sent them to Mexico, and replaced them with jobs somewhere around oh....six dollars an hour.

indigenous says

Like right now for instance because the velocity of money is so low.

That does not mean it does not cause inflation as by definition it does.

Yes, but there is plenty of velocity and inflation in certain sectors, such as housing (and healthcare), but for some very odd reason it's called "recovery" instead. Sounds much better anyways! ;)

mell says

indigenous says

Like right now for instance because the velocity of money is so low.

That does not mean it does not cause inflation as by definition it does.

Yes, but there is plenty of velocity and inflation in certain sectors, such as housing (and healthcare), but for some very odd reason it's called "recovery" instead. Sounds much better anyways! ;)

True but not what you would think after printing 6 trillion dollars.

Because the bulk of the money is in excess reserve funds because it is not being lent out. So the credit market is much less than it was.

Jon Stewart did a good editing of the show:
>> http://schiffradio.com/b/The-Daily-Show:-Intellectually-Dishonest-about-the-Intellectually-Disabled/-525361918630098994.html

The first group -- which was edited out -- was the unpaid interns who tend to value work experience and connections more than pay. (In fact, “The Daily Show” staffer who booked me, and who was present during the interview, had been thrilled to start there as an unpaid intern). Since many interns work for free, $2 per hour would be an improvement. Some interns are even willing to pay to work. Since employers are afraid to hire them without pay for fear of violating labor laws or inviting lawsuits, they often hire young people working for college credit. These individuals are forced to pay college tuition to get a job they could have had for free had there been no minimum wage.

tatupu70 says

Again--what the hell is wrong with you?? When one argues with you guys, it's an argument over facts, not opinions. $1.00 in 1956 is worth $8.56 in 2013.

Wow seriously going to use the CPLie? If you want to use the CPI sure a dollar back then is worth $8. But if you were to use GDP per capita $1 back in 1956 compared with 2012 would be almost $20. If you compare it to the overall economy it's over $36.

CPI is not a good indicator of standard of living since it has been changed so many times throughout its history.

Here are some more numbers when compared to 1956:

In 1960
$1 from CPI $1.09
$1 from GDP Per Capita $1.12
$1 from total economic output $1.21

In 1990
$1 from CPI is $4.81
$1 from GDP per capita is $8.93
$1 from total economic output $13.30

2000
$1 from CPI $6.34
$1 from GDP per Capita is $13.60
$1 from total economic output $22.90

2012
$1 from CPI $8.45
$1 from GDP per Capita $19.30
$1 from total economic output $36.10

http://www.measuringworth.com/uscompare/relativevalue.php

Edit: I find it odd that CPI stays relatively low for over 50 years but the other economic indicators tell a much different story.

spydah_hh says

Edit: I find it odd that CPI stays relatively low for over 50 years but the other economic indicators tell a much different story.

It's called productivity.

spydah_hh says

Wow seriously going to use the CPLie?

lol--yes, I prefer to go with actual facts and data. I prefer that over pulling numbers out of one's ass. Seriously--where did you get $25??

tatupu70 says

spydah_hh says

Edit: I find it odd that CPI stays relatively low for over 50 years but the other economic indicators tell a much different story.

It's called productivity.

Yet people's wages and purchasing power have stagnated for the last 30-40 years. If real productivity was increasing then people's wages would have increased as well. But that's not the case at all.

tatupu70 says

spydah_hh says

Wow seriously going to use the CPLie?

lol--yes, I prefer to go with actual facts and data. I prefer that over pulling numbers out of one's ass. Seriously--where did you get $25??

CPI isn't telling the real story it doesn't include things like home sales and energy or even food for the matter. It tends to subcategories food and even homes in a different manner.

So yes the data they present is factual but it doesn't tell the story of higher cost of living since they're not using the right variables in the data.

spydah_hh says

Yet people's wages and purchasing power have stagnated for the last 30-40 years. If real productivity was increasing then people's wages would have increased as well. But that's not the case at all

In aggregate, they have. The problem is that inequality has also grown dramatically so medians don't show it.

spydah_hh says

CPI isn't telling the real story it doesn't include things like home sales and energy or even food for the matter. It tends to subcategories food and even homes in a different manner.

Yes it does. As I've posted on here numerous times--CPI includes housing costs, food costs, and energy costs.

There is also something called core CPI which excludes food and energy because they are more volatile and can skew the numbers. But the straight CPI DOES include everything in the basket of goods.

Like I said--I've spent the past 6 posts correcting all your factual inaccuracies. Which is how most debates go on here anymore.

tatupu70 says

spydah_hh says

Yet people's wages and purchasing power have stagnated for the last 30-40 years. If real productivity was increasing then people's wages would have increased as well. But that's not the case at all

In aggregate, they have. The problem is that inequality has also grown dramatically so medians don't show it.

Honestly, I think most of the productivity comes from the top, so yes there is inequality in that sense. But productivity in the average worker, I am willing to bet is down considering that real not official unemployment is high and also because most people are on some form of social welfare and not working or if they are only part-time.

But the problems with the inequality we're experiencing are the barriers of entry to form a business. There are too many hoops and barriers for one to cross if they were to start a business and try to compete with the big dogs. Since they remain at the top and stay at the top thanks to government policies and bailouts income inequality will always remain. Truth is there is no competition with wall street and that's why the wealth gets concentrated to the top.

spydah_hh says

Honestly, I think most of the productivity comes from the top

lol--I'm sure you do.

spydah_hh says

But productivity in the average worker, I am willing to bet is down considering that real not official unemployment is high and also because most people are on some form of social welfare and not working or if they are only part-time.

So, in your opinion, it's not the lower level workers that are doing more, it's the CEOs? The companies that are doing more with less these days--they are employing fewer CEOs and VPs?? That is really what you think?

marcus says

Actually, when inflation occurs, wages must go up.

that may be but they don't necessarily rise at the same rate. In the mid and late 70's price inflation outstripped wage inflation creating the phenom of stagflation.
The circumstance are similar today with the fed trying to hit its inflation target in deflationary times, while wages are not rising

Schiff inartfully compared the ability of capitalist and socialist economies to provide goods and services by saying-"people don't go hungry in a capitalist economy." They do.

The point is that lack of goods, food and bread lines are more common in socialists countries like the USSR, Cuba and modern day Venezuela that in capitalist ones.

http://www.washingtonpost.com/world/at-markets-chavez-successor-falls-short/2014/01/31/ac85c62a-8518-11e3-a273-6ffd9cf9f4ba_story.html

bgamall4 says

spydah_hh says

Yeah do what Singapore is doing, remove minimum wage. It causes more problems than it creates.

Damn you must be a new world order Zionist. You want total destruction of main street don't you?

Singapore from the little I know is a real mixed bag-it has "free markets", yet is very restrictive in personal freedom with plenty of rules on what you can do and say and it has workfare.

Here is a short article on singapore. Would like to learn more
http://www.mws.org.sg/Dispatcher?action=SocialIssueTopic&id=Sc12ce388725076

smaulgld says

bgamall4 says

spydah_hh says

Yeah do what Singapore is doing, remove minimum wage. It causes more problems than it creates.

Damn you must be a new world order Zionist. You want total destruction of main street don't you?

Singapore from the little I know is a real mixed bag-it has "free markets", yet is very restrictive in personal freedom with plenty of rules on what you can do and say and it has workfare.

Here is a short article on singapore. Would like to learn more

http://www.mws.org.sg/Dispatcher?action=SocialIssueTopic&id=Sc12ce388725076

Singapore looks for market mechanisms to solve any problem involving cost.

smaulgld says

Schiff inartfully compared the ability of capitalist and socialist economies to provide goods and services by saying-"people don't go hungry in a capitalist economy." They do.

USA USA USA!

Guys like Schiff never want to talk about socialist countries which do a GREAT job of feeding their people. Typical. Still trapped in a Cold War paradigm, socialism=Commie=bread lines. They cannot explain Norway, France, Denmark so they just ignore them. Those aren't "real" countries I suppose.

smaulgld says

70's price inflation outstripped wage inflation creating the phenom of stagflation

I thought stagflation was when we have inflation and recession simultaneously.

tatupu70 says

spydah_hh says

Honestly, I think most of the productivity comes from the top

lol--I'm sure you do.

Of course, didn't you know it's capital that does the heavy lifting.

And watching rents go up is especially strenuous.

Vicente says

smaulgld says

Schiff inartfully compared the ability of capitalist and socialist economies to provide goods and services by saying-"people don't go hungry in a capitalist economy." They do.

USA USA USA!

Guys like Schiff never want to talk about socialist countries which do a GREAT job of feeding their people. Typical. Still trapped in a Cold War paradigm, socialism=Commie=bread lines. They cannot explain Norway, France, Denmark so they just ignore them. Those aren't "real" countries I suppose.

The problem is with these definitions, similar to left and right and republican vs democrat. Many of those countries don't have any minimum wage, but their unions and employers usually come to good agreements in most sectors. Rent control has been removed or lifted in a lot of European countries known as "socialistic". Capital gains tax is all over the place but usually less taxed than income (some have no cap. gains tax). If you look at the progressive tax rates, a lot of these "socialist" countries tax less than the US, some have flat taxes. And they don't continuously bai out underwater home owners and bankers, so less socialism there as well. Grouping countries in these terms becomes more and more meaningless.

Vicente says

cannot explain Norway, France, Denmark so they just ignore them

Actually, you should know, Norway has no minimum wage, even though average fast food workers make more over there. Germany also does not have one yet. Even Denmark doesn't have a strict minimum wage. They do have other social programs. But they are not more socialist in every respect.

France does have the highest minimum wage, and we know great French economy has been lately.

gsr says

Norway has no minimum wage

When something like 1/5th of Norwegians are Union members, you don't need it. The American minimum wage is a pathetic shred of labor protection by comparison.

mell says

If you look at the progressive tax rates, a lot of these "socialist" countries tax less than the US, some have flat taxes.

What is your source of information on this?

tatupu70 says

Yes it does. As I've posted on here numerous times--CPI includes housing costs, food costs, and energy costs.

There is also something called core CPI which excludes food and energy because they are more volatile and can skew the numbers. But the straight CPI DOES include everything in the basket of goods.

Like I said--I've spent the past 6 posts correcting all your factual inaccuracies. Which is how most debates go on here anymore.

You were saying?

Over the years, the methodology used to calculate the CPI has also undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI focus as a purposeful manipulation that allows the U.S. government to report a lower CPI.

http://www.investopedia.com/articles/07/consumerpriceindex.asp

http://www.marketoracle.co.uk/Article4018.html

spydah_hh says

You were saying?

I was saying you were wrong. Which you were. CPI includes housing, food, and energy.

You are welcome to join Indigenous in disbelieving all facts and statistics which counter his religious beliefs, but the onus is on you to provide some data showing how/why they are wrong.

bgamall4 says

So, you admit that it isn't the fault of main street but rather speculation and QE that has made commodities so expensive?

Yes most of the problems rely on speculation and QE. However main street is part of the problem too, specifically from public unions, public pensions, minimum wage etc. But if we removed QE and currency debasement we wouldn't need things like minimum wage or even public pensions at the tax payers expense for the matter.

tatupu70 says

spydah_hh says

You were saying?

I was saying you were wrong. Which you were. CPI includes housing, food, and energy.

You are welcome to join Indigenous in disbelieving all facts and statistics which counter his religious beliefs, but the onus is on you to provide some data showing how/why they are wrong.

CPI doesn't include home sales they use rents. That's just one of the things they changed. Geez, you can even look at the BLS CPI FAQ website.

So yeah.. You were saying?

tatupu70 says

spydah_hh says

You were saying?

I was saying you were wrong. Which you were. CPI includes housing, food, and energy.

You are welcome to join Indigenous in disbelieving all facts and statistics which counter his religious beliefs, but the onus is on you to provide some data showing how/why they are wrong.

Personally I like to look at Shadowstats Goverment statistics because they use the pre 1980 method of CPI before when Regan changed it and even before Clinton when he changed it in the 1990s. If oyu use the 1980s chart or 1990s chart (post Regan change) we get a different result of inflation over the years.

http://www.shadowstats.com/alternate_data/inflation-charts