Minimum wage. Should it be $15?

[oldtimer]

 

Whatever you get, buy the extended warranty.  None of them last like they used to.  We bought a Maytag washer dryer set a few years ago and have had zero problems...

 

The problem with todays appliances is that they are only as good as their circuit boards.  Which are probably all made in the same place.  I just found out today I need two dishwashers.  One is a couple of years old.  The other lasted 31 years.  This is Jeff's happy world of globalization.

 

I bought a washer today. After asking around I learned of a guy that actually builds them locally by himself. An entrepreneur of sorts. He touts his machine as an appliance of the future, an item that will be in every working persons home in the near future. A machine that will compete head-to-head with anything imported from other countries. There are no electronics involved which will improve reliability and negate the extra cost of extended warranties. I included a picture so that y'all can see you're future.

 

 

 

If anyone is interested in obtaining one of these futuristic devices just let me know. The guy has no contact information, he lives off the grid in a van down by the river.

 

Well you do live in Alabama...

[Fjd]

 

Shown in this graph from the Credit Suisse report you can see that 10% and 20% of the world's poorest are in North America and Europe.  Note that this is not income and Credit Suisse is defining poor as lacking in "wealth" taking into account the assets and liabilities like cash and debt.  The report estimates that half of the world has a net worth less than $3,210 and a significant portion of the U.S. and Europe do not even make the cut because their net worth is negative.

 

Not mentioned is whether the data also counts government benefits and safety nets in determining what it means to be "poor."  I bet if those things are considered, then North America and Europe would constitute tiny, tiny slivers on the left side of that chart. 

 

 

 

I'm not sure if you can accumulate a "net asset" position for the wealth metric shown in this study through the benefits and safety nets. 

 

The 2015 study has only been out a month and I haven't had time to digest it yet; however, it indicates that $68,800 USD (accumulated net assets) is required to be a member of the top 10% of global wealth holders; and $759,900 USD to belong to the top 1%. 

 

The bottom half of adults collectively own less than 1% of the total wealth (accumulated net assets) and the richest decile holds 87.7% of the assets; and the top percentile alone accounts for half of total household wealth.

 

I suspect this topic may not interest you that much; however, if you want to read the entire survey it can be downloaded from this link.

 

https://www.credit-suisse.com/us/en/about-us/research/research-institute/publications.html

 

 

Here is an interesting view from the report of the average wealth per adult by country and the median (point where half adults above & half adults below) wealth per adult by country.  While the U.S. makes the top ten in average wealth per adult (fourth richest), the U.S. does NOT make the top ten in median wealth per adult.

 

 

 

 

 

 

Edited November 12, 2015 by Fjd

[oldtimer]

Inflation comes from a bigger supply of money in circulation. Money that is not here, or that sits idle and remains idle, ought not to be considered as contributing to inflation.

 

You are close to the concept of velocity in Friedman's equation.  I think it has stood the test of time.

Edited November 12, 2015 by oldtimer

[oldtimer]

You suggested that adding more money does not cause inflation. This is wrong. Just as adding more debt causes inflation, so does adding more money

 

Beating a dead horse, Jeff it is more than just the money supply.  Wiki up Milton Friedman's equation on inflation. 

[Mallette]

Oh, the poverty! But look at their big cars, big TV's and big smokers out back. Oh, the poverty!

 

Some clarification is in order.  Are you saying the poor in your area have all these things? 

 

Dave

[Jim Naseum]

Inflation comes from a bigger supply of money in circulation.

 

That is the single most misunderstood concept in lay economics. In the current world economy based on debt, that is a simply a false statement. In fact, without constantly pumping MORE money into the system it would collapse in short order. 

 

The reason people think "more money = inflation" is that they are thinking of the OLD HARD MONEY systems. Where a dollar was backed by some gold or silver. YES, in that system, the more dollars you put in against the same amount of gold in some vault, the more inflation you have. We went off the gold standard in the 30s and the new money system is a debt-based, not gold based, system.

 

In the debt system, commodities are constantly increasing - more corn, more cars more TVs and more clothes. The way these increases happen is through BORROWING. Companies borrow to add capacity. When they BORROW, that debt is "new money." A banker simply types "$100,000,000" into the ledger of the company and types "$100,000,000" into their asset ledger, and voila! they now have one hundred million new dollars to build a new factory. That $100M is all brand new money into the system, and please notice it came in as a "debt" that the company owes to the bank. That's business in the year 2015. Borrowing creates money which is used to create growth in commodities which is used to fuel profits which is used to......wait for it now.....PAY OFF DEBT! The $100M is paid off with $110M to account for interest, and now the next round of borrowing will start with $110M. Clearly, the "amount of money" in the system keeps on growing to account for the amount of commodities. If both keep growing, there is no measured inflation. You could almost say that instead of backing the money with gold, the money is backed by the commodities it produces. 

 

Inflation in this kind of debt system is not about the amount of money, but rather the price of commodities. When all commodities rise, it means that production has SLOWED DOWN and therefore the commodity becomes more precious and the price rises. When this happens across the board, you have inflation in a debt based economy.

 

Here's a simple view of that growth in money. The central banks like to manage to about about 3% per year of actual inflation, which they have deemed to be healthy. 

BUT, if we had a chart of all the commodities produced by that money, it would have the exact same shape. Money=Debt=Commodities. 

 

The management of all of this worldwide is done by central banks. Every developed nation runs on the same debt system and central bankers control the money and the interest rates for governments and banks to borrow. Everyone is borrowing constantly, because everyone wants GROWTH to be as fast as humanly possible. If every company, had to save up the money before expanding, the growth would be extremely low, and therefore profits would be extremely small. Once debt-based money became possible, profits could be grown massively in a very short time by constant borrowing. You can easily increase profits by 20X per annum by aggressive borrowing. Hmmm? I wonder if any business guys will do that?

[Jim Naseum]

http://www.cnbc.com/squawk-on-the-street/

I would bet that if the participants in this thread watched 'Squawk' for three months, and then came back to this discussion, there would be only miniscule divergence of opinion from one end of the scale to the other. It would be over minor details.

Our primary disagreement is about the basic principles of macroeconomics in the 21st century. For example, myths like, "higher wages cause inflation." Or, "debt is bad." Every single component of macroeconomics is on parade every morning. Right on our very own TV! No master's degree required!

Sent from my SM-T330NU using Tapatalk

[Travis In Austin]

QUESTION FOR ALL:

Who has turned down a raise telling the boss, "No thanks, boss! It's bad for the economy!"

Sent from my SM-T330NU using Tapatalk

I don't think anyone on here has, but I believe I remember reading somewhere that JFK turned down his presidential salary.

[Paducah Home Theater]

QUESTION FOR ALL:

Who has turned down a raise telling the boss, "No thanks, boss! It's bad for the economy!"

Google "Dan Price, Gravity Payments".

Dude largely turned down his 1 million salary so he could make all his workers have $70,000 minimum wage salaries, pretty much doubled everybody's pay overnight while drastically cutting CEO pay. His actions are a wet dream for you and another guy or two here. Unfortunately this led to a sad state of affairs for his company.

 

Edited November 12, 2015 by MetropolisLakeOutfitters

[prerich]

 

Those that are paid a low enough wage then turn to government programs to help with the rest.  It is already a wash.  The question becomes why should some businesses who employ mainly low paid workers get subsidized by all tax payers when other businesses are not.

 

I am not stuck on a number such as 15 and am not stuck on overnight.  Don't confuse me for someone who is.

Please explain how you think somebody supporting a family could make less than $15 an hour, and be off all forms of government assistance, and still have a higher standard of living. Unless they have major benefits on top of that as well as a working spouse or second job, that's not going to happen.

Regardless of anythign else, the average premium for a family of four in the private sector is around $17,500 right now I believe. At that rate, even if you did make $15 an hour, if you're limited to 32 hours a week, you'd clear $7,500 all year. Even without taxes, you're literally bringing home $4.50 an hour. That's $144 a week. If you go to the doctor at all even without anything major, your deductible can wipe out 1/3 to 1/2 of what's left.

Even if you did make a full $15 an hour, if you're limited to 32 hours and no benefits, apparently somehow you're going to pay rent, provide clothes, transportation, feed four people, and everything else, for like 5 grand a year. And that's with us literally more than doubling the minimum wage and given the workers everything they are asking for.

There is not going to be any hand wringing from our government where workers are suddenly self sufficient after an increase. Not going to happen, and even if it did, workers would be much worse off. You can't both make them self sufficient and increase their standard of living at this amount of pay.

 

In '97, I was right there - I was making $5.75 an hour, a wife and 4 children, working 40hr's a week.  The company was intentionally underpaying me because we are a right to work state (company moved from Michigan a union state at that time).  All the people in the front office came from Michigan - and were making much more than me.  The accountant told me one day that they would never pay me what I'm worth.  I didn't believe it - I believed that if I worked hard and showed my usefulness and skills I'd be compensated.  Well, I helped the company get ISO 9000 certified, and the parent company congratulated me and singled me out. I was then asked by my corporate counter part - how much was I making.  I told him and he replied, either move to corporate headquarters and work for us there, or quit and find something else - because they won't pay you.  I still didn't believe it ....until I received my pay raise - which was bigger than anyone's raise on the floor....an entire $0.50!!!! They said they usually only give 5 cent raises.  I had to work overtime on several occasions but didn't qualify for overtime pay because although they pay me hourly - I'm not a clock person!!!!! I decided to leave that company and eventually landed in IT.  Tell me what businesses won't do for profit.  Oh that company is now closed!!!! 

[Woofers and Tweeters]

 

QUESTION FOR ALL:

Who has turned down a raise telling the boss, "No thanks, boss! It's bad for the economy!"

Google "Dan Price, Gravity Payments".

Dude largely turned down his 1 million salary so he could make all his workers have $70,000 minimum wage salaries, pretty much doubled everybody's pay overnight while drastically cutting CEO pay. His actions are a wet dream for you and another guy or two here. Unfortunately this led to a sad state of affairs for his company.

 

 

Read Atlas Shrugged years ago. People need to read about why the Twentieth Century Motor Company failed

[Jim Naseum]

Pulp fiction writers make lousy economists. Although, if you want the best of Survival of the Fittest philosophy, it's "OK".

Sent from my ALCATEL A564C using Tapatalk

[JJkizak]

My economics is very simple---What comes in equals what goes out or I am in trouble.

JJK

[Ski Bum]

Google "Dan Price, Gravity Payments". Dude largely turned down his 1 million salary so he could make all his workers have $70,000 minimum wage salaries, pretty much doubled everybody's pay overnight while drastically cutting CEO pay. His actions are a wet dream for you and another guy or two here. Unfortunately this led to a sad state of affairs for his company.

 

Sad state of affairs?  Maybe to Ayn Rand fans, but I don't think the Randian reaper has come to Gravity's door, at least not yet.  Yes, some of the middle manager types were suddenly on par with others of less merit, and they felf peeved, and one or two left.  That's not a sad state of affairs for those who stuck around, or for the business in general, which is booming:

 

Since his big announcement, customer inquiries ballooned from 30 per month to 200, drastically dropping the money spent on customer acquisition. Gravity now has an employee retention rate of 91% compared to the 68% usually found in the tech industry. Over the past six months, revenue is growing at double the previous year’s rate. Although Gravity did lose a few customers that were put off by what they saw as a political statement, overall, Gravity’s customer retention rate grew from 91% to 95%.

Edited November 12, 2015 by Ski Bum

[Jeff Matthews]

 

If you inherit a lot of money and property, but don't make $20,000, you are poor. If you make less than $20k but live at home and your parents pay for everything, you are poor

 

And at least in the first case, you don't qualify for federal/state benefits either.  So what?

 

 

The "so what" is that we count these people as "poor" in order to paint a negative picture and make it appear to be worse than it is.  It exposes one's agenda.

[Paducah Home Theater]

Google "Dan Price, Gravity Payments". Dude largely turned down his 1 million salary so he could make all his workers have $70,000 minimum wage salaries, pretty much doubled everybody's pay overnight while drastically cutting CEO pay. His actions are a wet dream for you and another guy or two here. Unfortunately this led to a sad state of affairs for his company.

 

Sad state of affairs?  Maybe to Ayn Rand fans, but I don't think the Randian reaper has come to Gravity's door, at least not yet.  Yes, some of the middle manager types were suddenly on par with others of less merit, and they felf peeved, and one or two left.  That's not a sad state of affairs for those who stuck around, or for the business in general, which is booming:

 

Since his big announcement, customer inquiries ballooned from 30 per month to 200, drastically dropping the money spent on customer acquisition. Gravity now has an employee retention rate of 91% compared to the 68% usually found in the tech industry. Over the past six months, revenue is growing at double the previous year’s rate. Although Gravity did lose a few customers that were put off by what they saw as a political statement, overall, Gravity’s customer retention rate grew from 91% to 95%.

I haven't even followed up recently, but back in August there were multiple stories saying that customers are leaving, several key employees left, and hinting that the company is in trouble. His brother even sued him. I even called the company inquiring about their services and it was the weirdest most awkward business phone call I've ever had, they wouldn't give you any prices, they wanted you to name your own price then try to negotiate, except the end result was higher than PayPal, like in the mid 3% range is the best they could come up with, which is ridiculous.I don't see how you can be a card processing company and not have a pricing structure that you can quote, and I especially don't see why a business would voluntarily pay those kinds of rates.

Edited November 13, 2015 by MetropolisLakeOutfitters

[Jeff Matthews]

Inflation - why it didn't happen after adding trillions of dollars.

 

QUOTE

Many feared that QE would spell hyperinflation for the U.S. economy following the economic crisis of 2008. The crisis, however, was largely a deflationary phenomenon and the money being injected into the system by QE, as seen by spike in the M0 monetary base, was by and large retained by the financial sector, with the more important M2 money supply remained fairly stable.

Hyperinflation is an exponential rise in prices and tends to occur not when countries print too much money, but is instead associated with a collapse in the real underlying economy. The printing of money is a desperate effort to maintain stability and prevent production from coming to a halt. Weimar Germany was ruined by the production standstill following WWI in the Ruhr valley, and Zimbabwe’s Mugabe destroyed the country's agricultural production capacity and infrastructure. On the other hand, the U.S. economy remained productive during the period of the Great Recession and only saw very modest increases in inflation.

 

Wow!  The pundits strike again!

 

Look.  There's the things we call "sectors" in the economy.  The presence of more money does not mean everyone has more money.  If you give stock purchasers more money, they will bid up stock prices.  That's why you see the DJI as high as ever with other sectors sitting stagnate, or even flailing.  Wasn't one of the big criticisms of QE that the money was not making it to intended recipients and was sitting in the hands of banks and corporations?  If you give all the Joe Six-Packs more money to buy more beer, they will bid up the price of beer.  

 

The rich can only consume so many TV's.  If you give them more money, the price of TV's will not rise.  But if you give the poor and middle class a lot more money, they will consume more TV's.  The price of TV's will rise.

 

Try to understand you paint with far too broad a brush while trying to recite how inflation works.  Focus first on what inflation is.  It is not just a government statistic.  It is a concept.  The concept is more money in circulation.  Now, what's left is to discuss where this additional money will be circulating.

[oldtimer]

 

 

If you inherit a lot of money and property, but don't make $20,000, you are poor. If you make less than $20k but live at home and your parents pay for everything, you are poor

 

And at least in the first case, you don't qualify for federal/state benefits either.  So what?

 

 

The "so what" is that we count these people as "poor" in order to paint a negative picture and make it appear to be worse than it is.  It exposes one's agenda.

 

Maybe.  I did not compile the stats.  I would also assume that whoever did compile the stats simply compiled the stats, with no agenda. Exposure may come when others use the stats to make a point.  However, what percentage of what you consider "not really poor" that are being lumped in with the "truly poor" do you think these aberrations represent?  The so what actually points to a better statistic:  i.e. how many working poor are on government assistance?  Then we could compare figures.

[Jeff Matthews]

 

Thanks.  For the most part I've only been trying to check facts to see if I could substantiate various information presented in the thread through public information that can be verified as credible.  It sure is an interesting picture being created when placing all of these pieces together.

 

Right. It's a picture of the collapsing middle class. It's ironic beyond belief that so many people complain about the loss of the middle class, but when you show them how it happened they deny the evidence and claim the opposite!  

 

 

Who here is denying this?  I am not so sure I see anyone denying it.  I think what I am seeing is disagreement on how to address it.

[Jeff Matthews]

 

 

 

 

INFLATION

 

There is a horrible amount of absolutely nonsensical talk about inflation here. The claim being that some pay hikes at the low end is going to lead to some immediate inflation that swamps the purpose of the pay hike. Why is this rubbish? First, no one, not especially me, is asking for "new money" to be added to the system. Without changing the money supply by even $1, wages can be raised without inflation because what is proposed is a SHIFT of money away from profits and into wages. Second, because this is a debt system, even adding lots of new money doesn't cause inflation. We just proved this in the 2008 banking crisis. For three years, the Federal Reserve added over ELEVEN TRILLION DOLLARS to the money supply through Quantatative Easing programs, and the inflation rate remained so low, that it was almost zero. Money is being pumped into the system through bailouts too. no inflation detected. Interest rates, which the FED uses to battle inflation have been at a nominal 0% now for many years. Just now, they are considering a quarter point hike! 

 

people don't understand inflation because they don't even the faintest clue how a "debt based" monetary system operates. Its the same reason they panic over the "national debt." A complete lack of fundamental understanding. However, I also understand that business propagandists constantly use the scare of inflation to get people to accept ever falling wages as they reap in the difference as windfall profits. 

 

You are so wrong.... at least I think.

 

My understanding is that the money pumped into American companies is being invested in emerging markets.  That would be the reason why inflation hasn't been so bad over here.

 

Inflation comes from a bigger supply of money in circulation.  Money that is not here, or that sits idle and remains idle, ought not to be considered as contributing to inflation.  Take idle money and give it to 50 million consumers and yes, you will see inflation.

 

No sir. It is being given to banks to invest as they wish, and most of what they are investing in is M&A, Derivatives and bankrolling takeovers. e.g. they are using it to invest in their own growth. 

 

Dollars added are dollars added. The reason it is not inflation, is because fiat money has NO FIXED BASIS OF VALUE. What counts in our debt based economy is only ONE THING and ONE THING ONLY: Growth. In order to sustain a debt economy the "debts" must be rolled over with interest each year as an approximation. So when you borrow a million, you must pay back $1.1M, as an example. Well, were does the 0.1M come from, if not new sales? If the debts can't be rolled over, DEFLATION occurs followed by an immediate depression. So each year, all the debt in the world must be figuratively "rolled over" into new debt. And the requirement is an ever growing growth pattern to cover the interest on the debt. So, how to grow? BORROW MORE MONEY! That's our economic system, like it or not. 

 

The easiest way to learn how our economy works in gory detail is to watch CNBC each morning from 5am to 7am. About 3 months of that, and you will be an expert on the debt economy, inflation, profits, offshoring and the quarterly golden quest for growth. 

 

 

I don't disagree that debt is money. But you have gone off-point with that.  You suggested that adding more money does not cause inflation.  This is wrong.  Just as adding more debt causes inflation, so does adding more money.  Why do you think we had a housing bubble?  Lax lending.  More debt.

 

 

I see something in your comment which has a special explanation. I can see you are identifying "rising house prices" as "inflation." And that is throwing you off. Houses are assets like stocks and bonds and diamonds. The rise in asset prices is not inflation. Otherwise, we would claim that the 90 year rise of the DOW was just inflation. Assets generally rise because money moves from one to the other. Let's say, out of stocks and gold and into houses, for example. Assets are investments and held for investment gain. Whatever amount of money exists that can be applied to assets is done, but it's a zero sum game. Houses go up, something else, some other asset went down. 

 

INFLATION is the unchecked rising of the price of GOODS AND SERVICES, not assets. When milk and bread and gas and electricity and cars and boots and tires are rising unchecked, together as a whole,  you have inflation. 

 

 

Wrong, at least for purposes of our discussion. For our purposes, inflation is a rise in prices people pay for whatever they purchase.  You can define it differently, and you can even rely on government figures to emphasize the distinction you are making, but none of that matters for our purposes.  If a home costs you more, it costs you more.  I call it inflation.  You say it's not.  Either way, the buyer is paying more... out of his pocket... using his wages.  It's all the same, no matter how you want to label it.