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The good news for the present economy is that Business has cut to the bone since 2008.
Raising the Min Wage ill NOT cause a reaction that lays people off, as it would in good times.
The Businesses today NEED the people they have hired or they would already have fired them.
You are right, the prices (inflation) must go up along with the increase in salaries paid.
And, right again, the median hourly wage for everyone will also rise once a new employee starts higher.
And, again you are right, that Corporations will quickly add to the GNP, too, by buying and expanding while things are so reasonable.
All these things together means the GNP will shoot up.
And, since the taxes collected by the government is based upon 18% of the GNP, tax collection will soar so QE3 can cease.
Upping the minimum wage far enough to do a 2X on the median wage will cause a short term cash flow shortage in small and large businesses. That needs to be covered or it will cause a retraction in GDP.
Upping the minimum wage far enough to do a 2X on the median wage will cause a short term cash flow shortage in small and large businesses. That needs to be covered or it will cause a retraction in GDP.
Sure.
It needs be done over a set duration, in increments, and with consideration for all the ramifications of mandating a Minimum Wage increase allowing time for prices to adjust to the new costs, and even setting down a schedule for small raises over a few years.
Yes I do, and have for decades. But of course I don't record the prices of hundreds of different items at thousands of different locations the way analysts for BLS do, so my individual shopping experience wouldn't mean anything. That's why I would look it up if I wanted to learn that food prices have increased by 8.2% in the four-plus years since 2008.
Where are you getting those fake numbers? The CPI?!
Because if you are... Be aware that they started with steak, then a cheaper cut of steak, now I think it's hamburger...
1) An axiom is an idea which can not be proven, and asks that people accept the premise as a postulate to an argument that then follows.
There is evidence that the Welfare Cost of $1 Trillion dollars in 2011 required borrowing, since our $2.7 Trillion dollar Federal Tax collections fell short of the $4 Trillion dollars the government spent.
2) There is ONLY one thing needed to get the economy back on track (a long with people working again), i.e., an enlarged Gross National Product that reaches $20 Trillion dollars asap.
OK but speaking of Axioms :
economy back on track = enlarged Gross National Product
is a bit axiomatic is it not?
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3) The Federal Government has the power to mandate all wages be increased immediately, which reduces the need for families to borrow and puts money in their pay check to spend.
This WILL immediately increase the GNP.
Problem solved.
They do have that power albeit with political backlash. However the power implicit in that leads to all sorts of other conclusions, like there is no national debt per se.
OK but speaking of Axioms :
economy back on track = enlarged Gross National Product
is a bit axiomatic is it not?
They do have that power albeit with political backlash. However the power implicit in that leads to all sorts of other conclusions, like there is no national debt per se.
There is no "axiom."
The fact is that Federal Taxes have taken @18% out of the GNP every year since 1943:
Our problem is that GNP leveled of @$14 Trillion since 2008 where it had been headed for the necessary $20 Trillion.
$20 trillion would be high enough for Taxes to pay all the Federal Govt bills without borrowing.
It would also mean business had expanded and unemployment had returned to normal.
If one looks at the tail end of above chart, one would notice that taxes as a p% of GDP dropped significantly after the Bush tax-cuts. The following view years it rebounded due to Americans selling houses to each other. But the graph stops at five years ago.
Revenue dropped greatly due to the Great Recession.
There is no "axiom."
The fact is that Federal Taxes have taken @18% out of the GNP every year since 1943:
Our problem is that GNP leveled of @$14 Trillion since 2008 where it had been headed for the necessary $20 Trillion.
$20 trillion would be high enough for Taxes to pay all the Federal Govt bills without borrowing.
It would also mean business had expanded and unemployment had returned to normal.
Well at least we can agree that it is the financial system that is choking off the economies potential. I am not for higher taxes that's for sure. we should be running deficits specifically aimed at tax relief. However I would shift taxes onto assets. The FIRE sector is a tax.
They do have that power albeit with political backlash. However the power implicit in that leads to all sorts of other conclusions, like there is no national debt per se.
The difference between our national debt and our currency is this. The debt pays you interest the currency doesn’t they are one and the same.
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Originally Posted by cupid dave
Sure.
Quote:
Originally Posted by cupid dave
It needs be done over a set duration, in increments, and with consideration for all the ramifications of mandating a Minimum Wage increase allowing time for prices to adjust to the new costs, and even setting down a schedule for small raises over a few years.
Quote:
Originally Posted by cupid dave
Our problem is that GNP leveled of @$14 Trillion since 2008 where it had been headed for the necessary $20 Trillion.
$20 trillion would be high enough for Taxes to pay all the Federal Govt bills without borrowing.
It would also mean business had expanded and unemployment had returned to normal.
It really is a numbers game. Our debt to income level is too high. Normal inflation is driven by loaning out too much money. Well they are trying to loan out to much money and they just can’t get it done.
So they are trying printing money. That is what QE I, II and III are about. We are just barely staying even.
Just upping the minimum wage all by itself won’t get us out of trouble. We need to balance trade. One aspect of being the world’s reserve currency is that the market will never demand a high enough savings rate in that country to balance trade. We can by statute get a higher than market driven savings rate. If you want to run a trade surplus with a country then you need to buy debt in that country to finance the trade deficit. We need a high enough domestic savings rate to meet our domestic demand for new debt. On top of this we need a high enough savings rate to be buying debt in foreign countries. We need to set the savings rate to get trade neutral in regards to surplus or deficit. Neither a trade surplus or a trade deficit is long term sustainable.
If one looks at the tail end of above chart, one would notice that taxes as a % of GDP dropped significantly after the Bush tax-cuts. The following view years it rebounded due to Americans selling houses to each other. But the graph stops at five years ago.
Revenue dropped greatly due to the Great Recession.
..."taxes collecteddropped significantly after the Bush tax-cuts?"
If we examine the chart of Taxes Collected from 2000 through 2008 what we see is the curve heading for $4 Trillion dollars collected.
This is the number which today would eliminate QE3 borrowing because the Fed Budget is $4 Trillion dollars!!!!
But what happened was 911, and the economy (i.e. GNP) declined as my chart shows.
The Bush Tax Cuts were heading the Fed Tax Collections up towards $4 Trillion again, since that is 18% of GNP. Clearly, after we had adjusted to the 911 recession, and can see the curve was again rising with EXACTLY the same Slope, when the Housing Bubble set us back again.
Even then, with the same "Bush Tax structure" in place, under Obama, after 2008, the curve, (as seen on your chart), resumed its rising slope heading towards the $4 Billion the government needs to pay its bills.
The worst tinkering that the Fed can do is slow the Curve in its upward Slope by taking OUT of the economy, when the economy needs adding to.
What is wrong is that the GNP is still too low and Flat.
You mean the government tells us the Inflation Rate is CPI, or what they calculate has been the Cost of Living last year... while they leave out important items like energy and such.
Dear Dave,
You've been lied to by hacks. Energy is 9.98% of the CPI-U. Food, by the way, is 14.16%.
Sincerely,
BLS
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Originally Posted by cupid dave
If you believe you know what is really happening because you have bought into the Economics they are explaining to you, you are in trouble as are they right now. They have no clue how to change the present stagnant GNP
Dear Dave,
GNP went away in 1991. It's been GDP ever since. Current dollar GDP has increased for 17 straight quarters. It is up by 17.5% over that span.
Sincerely,
BEA
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Originally Posted by cupid dave
...or unemployment which is really very close to The Great Depression numbers in spite they report 7.8% instead of U6...which is double.
Dear Dave,
U-6 has nothing to do with unemployment,. It is an alternative measure of labor underutilization that has been availble only since 1994. If there had been U-6 data available during the Great Depression, the rate would have been astronomical. Meanwhile, U-3 has always been and still is the standard unemployment rate. It is currently at 7.3%, not 7.8%. Glad we could help.
Sincerely,
BLS again
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