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Lol, QE3? Try raising wages and giving something back to people to SPEND

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Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


how do you arrive at any number in the first instance?......it's like smoking, the next cigarette fixes the hook from the first one.....eventually, no matter how many numbers are given out, the group using them becomes exhausted, doesnt matter if the number s are positive or negative its the exhaustion of one trend that defines the next .......remember, liquidity is merely a facility.....think on it
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


Why should I find evidence for something I am not arguing?

You have very obviously NOT understood what I am saying.

For some reason you persist in arguing "wages" as a ubiquitous whole and linking them to some uniform economic outcome, they are not ubiquitous and I am not arguing for lower wages. Go back, read and think.... you are over simplifying things.

Keep this in mind --> In the end you cannot successfully fix any price in a market that is free to respond to such an action. Take Nixon and price controls for an instance! The market will always undo in some form or fashion what you do, overprice it and demand will fall away, there will be less of any given job if the wage is forced to an artificial high, there is always an alternate for business and they will, import, mechanize or simply close or not establish businesses that are impacted by wage mispricing. SME's choices are being slowly limited in this country but they still have some freedoms and they are free to respond! So comrade, who will your seek to control next after wage fixing fails. Will you dictate to the consumer what they must buy and how much they must pay?

:bekloppt:
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


Thanks to the egg to suck... marginal utility & the cost of money more that adequately explain the phenomena you keep bringing up.

Essentially in manipulating the interest rate you are artificially setting the price of an item with high marginal utility. This will produce a strong economic reaction, due to the nature of money and its high margin utility it will impact social mood. However in the end even money reaches the limits of its marginal utility, a point at which at any cost you don't need or want to buy another dollar. Altering the price merely accelerates the trip to, and extends the magnitude of, the extreme in the cycle. In the short run CB's controlling the short term rates works, this has been proven over and over again. Eventually it fails once we reach an extreme, unfortunately the extremes are far between and political memory is not that long.... so we attempted to do what is doomed to failure while looking at the recent past for supporting evidence when we should be looking further back for a practical working example. It is a debt super cycle after all!
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


youre working harder and harder to find mechanics to drive price and a market (people), yet, you are not explaining say, Singapore, which invokes none of the mechanics that are proffered as a driving reason for price movement.....in short the fed or a government, so long as they do not impede a market, cannot, ultimately, decide for a market what it's trend is going to be......such are the opportunities.......remember a "cycle" is brought about by the trends within not a mechanic......mechanics are, in my experience, borne of a reactionary within a trend, in other words, actions that fit within, commensurate with a trend, which, of course, you as a trader need to determin where you are within that trend......

what is fair to say is that temporary bounces are bought about by fears and the mechanics that are introduced by those fears simply, as far as i've seen, embellish the ultimate larger swing or larger cycle.....the difference is the amount of time taken to play out what would have played out if the larger authority had not interceded into that cycle with a synthetic hope-hold.......
 
thanks, Mr Z ........i think i get where youre coming from......thanks, for the generous opines

 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND

Mr Z said:
It is a debt super cycle after all!
Click to expand...

Amen.

Putting money directly into the publics pocket would more likely spur inflation harder and faster than buying MBS's. jmo. Or worse, have people start paying down debt and saving. Then this wonderful world of credit contracts even more, which is exactly what bernanke doesnt want. You can't make people spend.

Then magoo, you will then be complaining that things are too expensive(if the former were to occur).
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND

Joules MM1 said:
youre working harder and harder to find mechanics to drive price and a market (people),
Click to expand...

Not at all... you are the one proffering the nebulous theory that markets change because we collectively feel like it and not in response to stimuli. So far you are not convincing.

Joules MM1 said:
yet, you are not explaining say, Singapore, which invokes none of the mechanics that are proffered as a driving reason for price movement.....
Click to expand...

So what? If price is set by a market or a central bank the mechanism still exists and functions well only the inputs to the mechanism are changed. You may as well say Singapore is immune to gravity!

Joules MM1 said:
in short the fed or a government, so long as they do not impede a market, cannot, ultimately, decide for a market what it's trend is going to be......
Click to expand...

It is a mistake to think that is what I am arguing. Directing trend and fueling a preexisting fire are two very different things.


All trends in financial markets are heavily impacted by the underlying mechanics of the money supply, this is what central banks ultimately cannot control. This is what caught goldbugs short in 2008


Again so what? If you understand the argument I put forward it fully explains both short and long term cycles and the limits of central bank intervention, exactly where they can have an effect and why and similarly where they can't and why. More importantly it makes it obvious as to why they should not mis-price money and why they should leave it to the market to set rates.

There are four elements that decide price, supply and demand for the item and supply and demand for the currency that the item is price in. You are effectively arguing that altering the supply and demand for money will have no impact on price. This is patently not so, in the short run it can artificially buoy price if there is sufficient marginal utility left in the market and in the long run it pushes price beyond the normal limits that a market would tolerate.

This may help you....playing with money supply is directly analogous to taking cocaine, the dynamic is damn near identical to the introduction of an artificial stimulus to the body. It will take you to higher highs and lower lows faster than you would achieve in a normal balanced state. Jiggering rates is altering the money supply.... !

Your argument is complete nonsense to me, the idea that we collectively move in a pack for no apparent reason is an affront to reason! You may not get the reason, as appears to be, but none the less we do nothing without reason.
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


No you can't.... but damn it they will try!

Bernanke's tool box is fast becoming ineffective, the scary thing is that a logical extension of this mess is completely nationalizing the banking and credit system in a desperate attempt to stabilize the increasingly unstable monster they have created. Goldbugs beware, if this happens at this point they will come for your gold, you do need a plan B and if gold is your plan B you need a plan C.... this is not a market to ride to the end. JMO but I am keeping an eye out for alternates that make sense, alternates that will not be attractive taxation targets or as with gold confiscation targets. FWIW Australian law supports gold confiscation now, little or no change required as far as I understand it.

This is not as extreme a view as you might think considering the gobsmacking derivatives pile that is sure to go bang sometime!
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND

​
Mr Z said:
Why should I find evidence for something I am not arguing?

You have very obviously NOT understood what I am saying.
Click to expand...

The law of numbers tell us that 2>1. i.e if i have 2 dollars I have more to spend than if I only had 1 dollar.

You're suggesting that if we aggregate all the dollars in the economy, certain people having more dollars due to a minimum wage increase, does not result in them having more money to spend. You're also postulating this reduces overall wealth.

You need to reject the idea that this would simply be a wealth transfer. You need to find evidence to reject the idea that more is more if you're going to argue that minimum wage increases harm the economy.

Just like I would need to reject that same idea to prove that a minimum wage increase benefits the economy.

Now I don't honestly expect (or want) you to go off and research this because that would be pretentious and silly but what I'm saying is that Austrian ramblings devised using rigid assumptions in a text book are not scientific, nor have they in any way been proven.

Infact the US economy, with its lower wages, and more "agile" employment laws should be experiencing much greater prosperity than the Australian market if this were to be true. Even in the low growth areas of the eastern states not associated with mining this is starkly untrue. A broke ass Australian is miles better off that his US counter part in a great many ways.

Never mind the externalities of broke crack heads with nothing to live and no hope of finding well paying employment.
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


I have the idea that high inflation is not caused by general wage increases, but EXCESSIVE wage increases in targeted groups. That means if all the tradies in an area get a 100k raise, the market would simply aim its products at those workers as they're able to make a higher profit for less effort. Low cost goods are not allocated for scarce capital.
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND



you seem to have never payed any attention to economics whatsoever, show me the link between pareto efficient/optimal conditions and a high minimum wage above the market rate??

If you think high minimum wage is the source of prosperity you should export your ideas to the Sth Americas and Africa, they would become world super powers within no time at $50/hr min wage..

There is NO debate in economics that high minimum wage above market rates causes lower unemployment... there is none, I award you no points, may god have mercy on your soul
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND

white_goodman said:
There is NO debate in economics that high minimum wage above market rates causes lower unemployment... there is none, I award you no points, may god have mercy on your soul
Click to expand...

An analysis of supply and demand of the type shown in introductory mainstream economics textbooks implies that by mandating a price floor above the equilibrium wage, minimum wage laws should cause unemployment.[14][15] This is because a greater number of people are willing to work at the higher wage while a smaller numbers of jobs will be available at the higher wage. Companies can be more selective in those whom they employ thus the least skilled and least experienced will typically be excluded.

According to the model shown in nearly all introductory textbooks on economics, increasing the minimum wage decreases the employment of minimum-wage workers.[16] One such textbook says:

If a higher minimum wage increases the wage rates of unskilled workers above the level that would be established by market forces, the quantity of unskilled workers employed will fall. The minimum wage will price the services of the least productive (and therefore lowest-wage) workers out of the market. ... The direct results of minimum wage legislation are clearly mixed. Some workers, most likely those whose previous wages were closest to the minimum, will enjoy higher wages. This is known as the "ripple effect". The ripple effect shows that when you increase the minimum wage the wages of all others will consequently increase due the need for relativity. (Formby, J., Bishop, J., & Kim, H.. (2010). The Redistributive Effects and Cost-Effectiveness of Increasing the Federal Minimum Wage. Public Finance Review, 38(5), 585. Retrieved April 18, 2012, from ABI/INFORM Global. (Document ID: 2140268271).) Others, particularly those with the lowest prelegislation wage rates, will be unable to find work. They will be pushed into the ranks of the unemployed or out of the labor force. Some argue that by increasing the federal minimum wage, however, the economy will be adversely affected due to small businesses not being able to keep up with the need to subsequently increase all workers wages. (Belman, D., & Wolfson, P.. (2010). The Effect of Legislated Minimum Wage Increases on Employment and Hours: A Dynamic Analysis. Labour, 24(1), 1–25. Retrieved April 18, 2012, from ABI/INFORM Global. (Document ID: 1960232931).) [17]

ect ect herp derp.

Criticism of the "textbook model"

The argument that minimum wages decrease employment is based on a simple supply and demand model of the labor market. A number of economists (for example Pierangelo Garegnani,[20] Robert L. Vienneau,[21] and Arrigo Opocher & Ian Steedman[22]), building on the work of Piero Sraffa, argue that that model, even given all its assumptions, is logically incoherent. Michael Anyadike-Danes and Wyne Godley [23] argue, based on simulation results, that little of the empirical work done with the textbook model constitutes a potentially falsifying test, and, consequently, empirical evidence hardly exists for that model. Graham White [24] argues, partially on the basis of Sraffianism, that the policy of increased labor market flexibility, including the reduction of minimum wages, does not have an "intellectually coherent" argument in economic theory.

Gary Fields, Professor of Labor Economics and Economics at Cornell University, argues that the standard "textbook model" for the minimum wage is "ambiguous", and that the standard theoretical arguments incorrectly measure only a one-sector market. Fields says a two-sector market, where "the self-employed, service workers, and farm workers are typically excluded from minimum-wage coverage… [and with] one sector with minimum-wage coverage and the other without it [and possible mobility between the two]," is the basis for better analysis. Through this model, Fields shows the typical theoretical argument to be ambiguous and says "the predictions derived from the textbook model definitely do not carry over to the two-sector case. Therefore, since a non-covered sector exists nearly everywhere, the predictions of the textbook model simply cannot be relied on."[25]

An alternate view of the labor market has low-wage labor markets characterized as monopsonistic competition wherein buyers (employers) have significantly more market power than do sellers (workers). This monopsony could be a result of intentional collusion between employers, or naturalistic factors such as segmented markets, search costs, information costs, imperfect mobility and the 'personal' element of labor markets. In such a case the diagram above would not yield the quantity of labor clearing and the wage rate. This is because while the upward sloping aggregate labor supply would remain unchanged, instead of using the downward labor demand curve shown in the diagram above, monopsonistic employers would use a steeper downward sloping curve corresponding to marginal expenditures to yield the intersection with the supply curve resulting in a wage rate lower than would be the case under competition. Also, the amount of labor sold would also be lower than the competitive optimal allocation.

ect ect all copied from wikipedia in about 5 seconds,doesn't sound like there is "no debate whatsoever".
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND

Mrmagoo said:
The law of numbers tell us that 2>1. i.e if i have 2 dollars I have more to spend than if I only had 1 dollar.
Click to expand...

Not always, nominal v real values and time come into play. A dollar is not a fixed measure so what you say is only true at any given point in time, i.e. in a static analysis. An economy is neither static or linear and as such if the new dollar is created from nothing it changes all other relationships to one degree or another.

Mrmagoo said:
You're suggesting that if we aggregate all the dollars in the economy, certain people having more dollars due to a minimum wage increase, does not result in them having more money to spend. You're also postulating this reduces overall wealth.
Click to expand...

Over time yes, you will lose jobs and spending power in line with the distortion you have introduced. Lets keep it simple, x minimum wage rise means that it is cheaper to import widgets than to make them in Australia. The importers will win out over the local producers and jobs will go. There will be no net benefit here, same case if they mechanize. If that cannot happen costs will be pasted on, to the degree which that cokes demand (you cannot tell a buyer what they will pay!) you will lose jobs and you will also deter new players in that space, restricting job growth... the jobs lost that government never seem to understand are potentially there.

Mrmagoo said:
You need to reject the idea that this would simply be a wealth transfer. You need to find evidence to reject the idea that more is more if you're going to argue that minimum wage increases harm the economy.
Click to expand...

You need to come to grips with the reality that is is simply a wealth transfer that cannot alter possible improve the situation. It is far better to encourage re-skilling and have a workforce that commands a higher market driven wage than to give people money they are not earning.

You also need to come to grips with the idea that in a open system such as an economy more is not always more... as said infinitum the system will and can adjust to unrealistic prices.

Falsely set minimum wages destroys jobs, it is far better that people get the price signal that a low wage is delivering, reskill and pursue higher paying jobs. When this happens the whole economy benefits and eventually that will lift the minimum wage via the market mechanism (where it is possible), as less people are doing the lower skilled jobs and more people are earning more and don't mind paying more for hamburgers or whatever.

Mrmagoo said:
Just like I would need to reject that same idea to prove that a minimum wage increase benefits the economy.
Click to expand...

Things in complex systems are often very counter intuitive if you are ignorant of the underlying mechanisms.


Not true, they are as close to making economics a functional science as you will see. The Austrian school argues discipline, but we all know that you can't get elected preaching truths about hard work and discipline hence we have heavily politicized economic practices that are just plain dysfunctional.

You have not read Austrian economics, I can tell from you arguments, until you do you are in no position to judge the school of thought.


You are ignoring the myriad other issues in the US economy, mostly rooted in goverment, you simply cannot do that and make any sensible analysis. Yes the flexibility of the US economy is still superior to most and it is still a strength that will allow them to surprise in many ways BUT they are still lifting a big fat old government and transfer payment system. More people take from government in the US than give to it, it is past the tipping point and heading toward a government induced crisis that is unavoidable now.

Mrmagoo said:
Never mind the externalities of broke crack heads with nothing to live and no hope of finding well paying employment.
Click to expand...

All governments own work... sad ain't it. Talk to an American in business about the crap they have to wade through in order to give someone a job. Then you may understand why fewer and fewer are game to try... it is the same way here. I for one would like to run a business but not in this environment and not with the red tape in the system. My response to suggestions like yours has been to invest elsewhere.... now do you think that the government is counting the jobs that I didn't create in Australia by starting a SME locally? Not on your life... they are like you... static and linear in their view. Sometimes 10% tax is greater than 20% tax, despite the indisputable fact that 20>10.... because the system responds! Get it grasshopper?
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND


Inflation is an increase in the money supply and one of the potential symptoms of this is price rising.

Price changes due to a supply demand imbalance in the good/service or the unit used to pay for the good/service. Changing pressures in any quadrant will alter price, it doesn't matter how uniform or not a change in any quadrant is, as in your example. In your example supply would respond in short order and only if we had an increased pool of money would prices settle at a new high.

Inflation is a simple notion yet it acts in complex ways and with a lag, not an easy thing to attempt to control given our systems.
 
Re: Lol, QE 3? Try raising wages and giving something back to people to SPEND

Mrmagoo said:
ect ect all copied from wikipedia in about 5 seconds,doesn't sound like there is "no debate whatsoever".
Click to expand...

Academics that have never had to survive in business can argue all sorts of bull****.

Riddle me this... if it works why not set a minimum of 150K and end poverty in Australia forever! Do you really believe that would work? After all if as you suggest we have established what I am saying is just a lie then we are only discussing magnitude. If it is valid then why not 150K? We'd all be spending like drunken sailors and happy as... no?

You know that is absurd, yet you try and justify the same on a lesser scale... all that happens is the same as would happen @ 150K but on a lesser scale.

Face it, when they set a minimum wage these idiots can argue anything because they don't look close enough to see the 2,3,4,5% of low paying jobs that disappear over time.

Sure some things cannot be imported or mechanized etc but in the end the money that pays the extra wage $$$ comes from someone who would have spent it elsewhere creating other jobs that better serve their real needs. If effect and as always government takes from the successful and gives to the unsuccessful and in doing so rewards the wrong action. If you reward something you get more of it, in this case we are rewarding FAILURE to do what the wider economy needs. If you can rationalize how that benefits all in an economy you are probably delusional.
 
http://www.economist.com/node/494922

theres also that which can be used to support your view guess what, it means very little... we could have rising minimum wages and lowering unemployment or lowering minimum wage and rising unemployment, and it still wouldnt prove a thing.. i see what these econometrics gurus put in their models, it always has a funny knack of having a massive 'catch-all' variable or error term that is the bulk of the explanation.. These econometrics models are pseudo science at best, A happens whilst B happens, therefore A causes B.. the high minimum wage with mining boom probably trumps the low minimum wage and balance sheet recession of the US.. its not a simple high vs low wage.

Simple logic is all that is required..

would you expect employers in this country to hire more or less if the minimum wage was increased to $500/hr?

my prediction for the next 30years, a good bulk of the mathematisation of economics will end up on the scrap heap, many of the neo-classical models will be shown the door and a revert back to classical-esque theory...
 

Hey would you expect employers to hire more or less people in this country if everyone could only earn $1 a day to buy some rice and sleep outside their work ? What would happen to employment then ? How would anyone buy anything ? What would happen to all those people associated with producing goods that used to be purchased ?

Focus on common sense - could a person on $8 an hour consume and contribute to the economy ? If no, then maybe make it $15 an hour to keep consumption going. Then study the empirical evidence.

As I said this is a political thing : those "born to rule" do not want to see the poor crawling their way out of the gutter without their express permission to do so.
 

exactly why they promote minimum wages...

if the minimum wage was $0, would people work for $0? can people earn more than the minimum? how many would be paid at the minimum?

 
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