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Old Aug 21, 2013, 03:23 AM   #551
Dmunjal
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Having a no-inflation currency (be being tied to gold, silver or maybe even land) might sound like a good idea, but ...

- money accumalted by the rich can't be regained via inflation
- investing either pays no interest or interest paid has to come out og the ever decreasing pool of "free" money
- even for normal people it makes more sense to keep money in the cupboard instead of carrying it into a bank
- if you do get some economic growth you can't just increase the amount of money in circulation and therefore you end up with the same amount of money representing more and more goods&services.

Thats deflation and makes the above points even worse.

I'd also challenge the conception that the grwoth prior to the "new deal" was really felt as improment in the lives of normal workers/farmers.

A fair,stable and prosperous economy need just a little bit of inflation (1-3% I'd say) and some heavy&clear taxation to go on for more than just a few boom years.
I agree. Milton Freidman thought that 2% was the ideal number since that matches typical productivity increases. Interestingly, gold supply increases 2% a year through normal mining.
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Old Aug 21, 2013, 03:27 AM   #552
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Interestingly, gold supply increases 2% a year through normal mining.
But for how long ?
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Old Aug 21, 2013, 11:26 AM   #553
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But for how long ?
In the long run we're all dead right?

I still like it better than having one man decide based on a whim and a prayer. I would also prefer the Taylor rule which specifies a computer formula based on various measures.
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Old Aug 21, 2013, 12:02 PM   #554
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The nice thing with paper money is that one CAN adjust the amount of money to growth and/or an inflation target.

Those 2% increase in mining will come in every year, regardless wether the economy is shrinking or allready overheating.

Or the other way round, what if we sudenly find a massive gold deposit ? Uncontrolled inflation again.

Some along those lines happened in Spain when the got their hands on all that Inca gold.
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Old Aug 21, 2013, 12:13 PM   #555
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The nice thing with paper money is that one CAN adjust the amount of money to growth and/or an inflation target.

Those 2% increase in mining will come in every year, regardless wether the economy is shrinking or allready overheating.

Or the other way round, what if we sudenly find a massive gold deposit ? Uncontrolled inflation again.

Some along those lines happened in Spain when the got their hands on all that Inca gold.
You are correct. There is no perfect system. Again, that would still better than what we have now. One man controlling the entire monetary policy for the world and IMO, abusing that power.
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Old Aug 21, 2013, 12:20 PM   #556
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Such ignorance. Population growth drives inflation. Period.
How do you figure that? Look out, you're going to paint yourself into a corner here.

>
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Old Aug 21, 2013, 12:54 PM   #557
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How do you figure that? Look out, you're going to paint yourself into a corner here.

>
As population grows, more people start working. As more people start working, more value is created. If the money supply doesn't increase with the amount of value created, you get deflation. When you get deflation, people are encouraged to save instead of spend. When people don't spend, demand goes down. When demand goes down, people get fired. When people get fired the economy grinds to a halt. When the economy grinds to a halt you start to get riots. etc.

Why don't you want inflation exactly?

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Old Aug 21, 2013, 01:32 PM   #558
Dmunjal
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As population grows, more people start working. As more people start working, more value is created. If the money supply doesn't increase with the amount of value created, you get deflation. When you get deflation, people are encouraged to save instead of spend. When people don't spend, demand goes down. When demand goes down, people get fired. When people get fired the economy grinds to a halt. When the economy grinds to a halt you start to get riots. etc.

Why don't you want inflation exactly?

P-Worm
Why does deflation in high tech over decades not encourage people to hold off on purchases? In fact it's the opposite. Why do retailers have sales? Lower prices encourage buying. What backward thinking.

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Old Aug 21, 2013, 01:44 PM   #559
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Why does deflation in high tech over decades not encourage people to hold off on purchases? In fact it's the opposite. Why do retailers have sales? Lower prices encourage buying. What backward thinking.
Think of it this way. Say a camera is on sale for $500 and deflation is so bad that you know tomorrow you can buy it for 10% off or $450. So you wait, because, why wouldn't you? The next day deflation will cause the camera to be $405. So you wait on your purchase.

Obviously, 10% deflation is insane (I chose it to make the math easier), but the point remains. Deflation discourages buying something today when you can get it for less later. The last thing an economy wants is people not spending because one person's spending is another person's income.

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edit: A good rundown from Wikipedia. Reading Deflationary Spiral on the same page is also helpful.
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Old Aug 21, 2013, 02:06 PM   #560
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Think of it this way. Say a camera is on sale for $500 and deflation is so bad that you know tomorrow you can buy it for 10% off or $450. So you wait, because, why wouldn't you? The next day deflation will cause the camera to be $405. So you wait on your purchase.

Obviously, 10% deflation is insane (I chose it to make the math easier), but the point remains. Deflation discourages buying something today when you can get it for less later. The last thing an economy wants is people not spending because one person's spending is another person's income.

P-Worm

edit: A good rundown from Wikipedia. Reading Deflationary Spiral on the same page is also helpful.
I understand the concept. But it doesn't work like that in real life. At some point, you buy based on your own budget.

Do you own a flat screen TV? Did you buy it when they first came out to $10k? You waited for sure, but you eventually bought one knowing they would be cheaper in a year. And the TV market is bigger now. This applies to everything.

People buy more when prices go down. Deflation is better than inflation. Ask someone who is on minimum wage would they prefer gas and food prices to go down or up?

This deflation spiral theory is a boogie man created by Keynesian economists to justify their inflation policies. Seems like you fell for it.
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Old Aug 21, 2013, 02:12 PM   #561
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This deflation spiral theory is a boogie man created by Keynesian economists to justify their inflation policies. Seems like you fell for it.
What economist besides Hayek agrees with you? If you're not willing to admit that people wait to buy when they know it will be cheaper tomorrow, explain how those with debt can get out when there's deflation? When you have debt and the monetary base is deflated, it actually piles on more debt. That's now an economy you want.

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Old Aug 21, 2013, 02:27 PM   #562
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What economist besides Hayek agrees with you? If you're not willing to admit that people wait to buy when they know it will be cheaper tomorrow, explain how those with debt can get out when there's deflation? When you have debt and the monetary base is deflated, it actually piles on more debt. That's now an economy you want.

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The fact that most economists today are Keynesian doesn't make your point right. I do agree that most people wait for lower prices but they don't wait forever. Stimulating them to buy when they should be saving or paying down debt just makes things worse in the long run.

We've been on this stimulus binge for decades and it's going to be painful to get back on track to a normal economy, not one stimulated by artificial demand. The current approach just creates a boom/bust cycle that just blows the bubble bigger and bigger until it pops. Permanently.

We don't even practice Keynesian correctly. Even if we create inflation during down times, we're supposed to take that monetary stimulus back during good times. We never do the second part.
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Old Aug 22, 2013, 01:56 AM   #563
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One of the problems I see is that Conservatives and the GOP are advocating that because government is not working, ironically partially due to them, that we should neuter it, as if anarchy and deregulation would provide better results for society as a whole. I'd say that is a complete crap shoot.
I am arguing this more from a human services perspective with more a holistic approach. It is very difficult for the larger agencies to best appropriate what is needed in a nation with such diversity. One example would be culturally-tailored public health...factual backing indicates such programs are less expensive and very effective...but impractical or even impossible for larger agencies to spearhead.

It isn't based on deregulation as much as State and Local govt. control and better usage of the limited resources we have. We have two major intersecting issues...on one hand, a lot of good people are suffering and we shouldn't just sit on our asses and do nothing...on the other hand, the amount of money available is limited; forget hypotheticals as I mean in this sense, today, as-is, with a massive national debt. So I think a good question can start at what people need and leading to effectiveness of usage. I would look at the State setting something like minimum wage potentially better allocation of funds...at a further local level, it would allow better local relations in a business sense. The Federal government could raise minimum wage to $30 an hour, but if many companies are far and away from being able to pay that amount out and still be in business, it really isn't helpful to people in need and instead may put them out of a job. These are very important considerations and IMHO I believe best handed lower level.

I also really like NGOs because they often tailor to smaller and difficult to reach populations, are often extremely efficient, and have sustainable strategic and operational planning in effect. The ability for NGOs to offer niche services has only recently been given the attention it deserves...many of these NGOs provide services that not only increase the quality of life, but also decrease the amount spent on social welfare programs (but they are providing benefit). Another thing is that severely underserved populations often mistrust government greatly...NGOs can help connect people and living a better life in a fashion government could not.

All is just my personal opinion based on my own work and research. And with economic, work-and-retirement, and healthcare issues all hitting us hard and at once, new methods offer attractive means of potentially reducing the cost of living expenses, reducing spending but still providing good benefit, and increasing quality of life.

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If a large part of the population is doing just that, it would seem to be anything but unAmerican.
I'm speaking more to the ideology mentioned by others. In reality, we have a shrinking middle class and a growing number of people in the category of the 'working poor'. Based on both historic and contemporary evidence, this is a very, very, very bad place to be. Since it contradicts traditional American ideals, we have to make a genuine effort to do something as opposed to watching America turn into population demographic dynamics of a developing ("third-world") country. And we absolutely have to do something on the basis that our workforce isn't doing so well and we are being torn apart due to a market in which we have been unable to keep pace, let-alone raise the bar...
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Old Aug 22, 2013, 09:22 AM   #564
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I am arguing this more from a human services perspective with more a holistic approach. It is very difficult for the larger agencies to best appropriate what is needed in a nation with such diversity. One example would be culturally-tailored public health...factual backing indicates such programs are less expensive and very effective...but impractical or even impossible for larger agencies to spearhead.
I like the function of the Federal Government when it sets consistent rules across State lines. Let the programs be operated on the State Level.
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Old Aug 30, 2013, 04:56 PM   #565
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Heard on Rachel Maddow this week (paraphrased): If the 1962 minimum wage of approx $2 per hour kept up with inflation, today it would be:

$15 per hour.


According to Huffington Post if the minimum wage kept up with productivity, today it would be:

$21.72 per hour.

So why is it not higher today? I'd argue because business has made maximized profits the most important thing, and you low level worker will not stand in the way of maximized profits even if you just scrape by.
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Old Aug 30, 2013, 06:45 PM   #566
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Yes corporations needs to learn to stuff it when it comes to wages. It's a never ending battle with them in this regard. Plain and simple they care more about profit margins. You can extrapolate this to waitressing in the U.S. This whole tip-system is simply ludicrous. We're literally the ones paying for the waiters' wages in addition to our food, which is expensive as is. Why not just give them a proper wage so we don't have to fumble around with the tip money. I'd rather pay a little extra with the food to avoid having to tip, it's a far better system and waiters will have a more fixed income.
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Old Aug 30, 2013, 07:58 PM   #567
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I'd rather pay a little extra with the food to avoid having to tip, it's a far better system and waiters will have a more fixed income.
Some countries have that system. I don't understand the eye-rolling. You do know that's a corner case right? Tipped positions can be highly competitive. Try getting a bartending job in a popular nightclub. They do quite well in spite of being on minimum wage, yet they represent a small percentage of those who are at or close to minimum wage.

I should add that many states allow for a "tipped" wage that is lower than the typical minimum wage. It's just the combination of the two typically has to add up to at least minimum wage. I'm not sure of the interval used for calculation there. Anyway ours is low compared to other countries.
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Old Aug 30, 2013, 08:52 PM   #568
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Tipped positions can be highly competitive. Try getting a bartending job in a popular nightclub. They do quite well in spite of being on minimum wage, yet they represent a small percentage of those who are at or close to minimum wage.
It's been over 20 years since I worked in restaurants, so things may have changed, but the bartenders I worked with never made minimum wage.

Bartenders had the best of both worlds: the higher hourly wage like the cooks got and tips like the waitresses. Plus the waitresses had to give a portion of their tips to the bartender as well.
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Old Aug 31, 2013, 01:06 AM   #569
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I think this has been addressed before, perhaps even in this thread. It varies state by state, but the federal minimum wage for tipped employees is about one third: $2.33/hr. Four states, NV, CA, OR and WA do not allow a tip credit, minimum wage applies across the board, to everyone. Of course, restaurant owners do not like that, they want to get the laws changed in those states, some of them even find ways to cheat the system, but curiously, the prices in chain restaurants are not higher in those states (perhaps cheating is more widespread than we realize).

What appears to me to be the case is that the larger a business becomes, the more it strives to screw its workers. The message I get from that is that capitalism fails on a large scale, business runs better the smaller it is. This "economy of scale" BS is exactly that: rank fertilizer.
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Old Aug 31, 2013, 03:20 AM   #570
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(perhaps cheating is more widespread than we realize).
I know people who work in low end jobs who don't realise they are legally entitled to four weeks a year of holiday pay and they have been cheated out of that - so it is perfectly probable that they cheat.

That said I doubt people like McDonalds cheat their staff like that - it isn't worth the damage to their global reputation.
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Old Aug 31, 2013, 09:43 AM   #571
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I think this has been addressed before, perhaps even in this thread. It varies state by state, but the federal minimum wage for tipped employees is about one third: $2.33/hr. Four states, NV, CA, OR and WA do not allow a tip credit, minimum wage applies across the board, to everyone. Of course, restaurant owners do not like that, they want to get the laws changed in those states, some of them even find ways to cheat the system, but curiously, the prices in chain restaurants are not higher in those states (perhaps cheating is more widespread than we realize).

What appears to me to be the case is that the larger a business becomes, the more it strives to screw its workers. The message I get from that is that capitalism fails on a large scale, business runs better the smaller it is. This "economy of scale" BS is exactly that: rank fertilizer.
My observation is that any economic system especially one built on freedom of action, for the workers is only as good as the morality of the bosses.
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Old Aug 31, 2013, 04:21 PM   #572
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It's been over 20 years since I worked in restaurants, so things may have changed, but the bartenders I worked with never made minimum wage.

Bartenders had the best of both worlds: the higher hourly wage like the cooks got and tips like the waitresses. Plus the waitresses had to give a portion of their tips to the bartender as well.
It varies. I meant depending on the venue they can do okay to quite well. My point remains that he focused on one class of low wage employee.
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