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Old 02-09-2020, 04:09 PM
 
517 posts, read 222,416 times
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Quote:
Originally Posted by Mircea View Post
Spoken like someone who has absolutely no understanding of Inflation whatsoever.

There are four forms of Inflation, each with a unique cause and thus each with a unique solution to mitigate the Inflation.

1) Monetary Inflation is effectively too many dollars chasing too few goods and services. The solution is to cut spending, raise taxes, raise the interest rate or reduce the money supply, or a combination of those to combat Monetary Inflation. Wages do not cause Monetary Inflation and in fact wages rise at the annual rate of Monetary Inflation albeit usually with some delay.

2) Wage Inflation occurs when rising wages drive up the prices of goods and services. Unlike Monetary Inflation where every single good and service that exists is affected, Wage Inflation may negatively impact select goods and services, like housing, for example. That has occurred twice in history on a wide-spread scale and the solutions offered by FDR and Nixon were a Wage & Price Freeze. That is not the correct solution. The correct solution is a Price Freeze only. The Laws of Economics will ultimately curtail Wage Inflation on their own, as in fact they really did both times anyway. Wage Inflation can occur on smaller scales like regional, State and local scales. Increasing minimum does in fact cause Wage Inflation on local scale. Note that Wage Inflation does not cause the price of goods and services to increase uniformly. In other words, the price of housing may increase a 5% while other goods and services increase at 3% and still others at 2% or less and other goods and services may increase at rates in excess of 5%.

3) Demand-pull Inflation is caused by consumer demand exceeding available supply. It does not affect every single good and service, only those goods and services that are impacted by Supply & Demand. The solution is to either stop consuming, seek substitutes or increase Supply to match Demand. Note that increasing Supply to meet Demand is often not possible for a variety of reasons. For housing, if an area is saturated then no new housing can be built so Supply cannot possibly be increased. At other times, the cost of production or providing a service would not allow break-even or a profit, in which case you have to wait until prices rise even higher in order to begin production or provide a service so that you can break-even or make a profit.

Minimum wage increases exacerbate Demand-pull Inflation, causing prices to rise higher.

That is readily apparent in housing markets, but it occurs elsewhere, too.

4) Cost-push Inflation is the result of taxes, fees and other costs stemming from statutes, laws, rules or regulations.

Case in point, daycare in Ohio. It used to cost about $3,500/year but now it costs more than one year's tuition at a 4-year university. Why? Because the legislature in its infinite wisdom decided that daycare workers needed a 1-year certificate or 2-year associate degree from an accredited institution of higher learning in early childhood education. The result was the Supply of Labor decreased 90%. Since Demand for Labor remained constant, labor costs increased dramatically almost over-night.

Why? Because many daycare workers don't have diplomas or GEDs, and don't care to get one and care even less about going to college. Others don't have the time or money, and for those who do have the time or money, it's an issue of Opportunity Costs. If you're going to spend the time and money, then you might as well get certification or a degree in a field that pays more than daycare or which will provide more opportunities for employment than daycare might provide.


In the future, do try to keep up.
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Old 02-09-2020, 04:42 PM
 
17,905 posts, read 16,074,968 times
Reputation: 6525
Raising minimum wages does not automatically result in inflation.



For example, if I would pay someone $8 an hour to mow the lawn and no more than $10, it means I get a $2 surplus in new opportunity fro my time . If the minimum wage is $12 an hour, then I get no surplus and mow it myself. The productive value is still $10 an hour . There will be an unemployed lawn mower, however there will be no inflation.



....disaster averted. by a dead weight loss.



There was a time I wanted to raise wages, but that was because of da guberment minimum return on asset policy that bailed out debt deflation. If your asset was losing 20%, you got Treasuries earning 3% instead. Thus the minimum return on asset rate is 3%. That kept asset prices out of reach and caused stagnation.





Every time da gubermnet mucks around.....
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Old 02-09-2020, 06:37 PM
 
1,499 posts, read 781,915 times
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Quote:
Originally Posted by Mircea View Post
… (2) Wage Inflation occurs when rising wages drive up the prices of goods and services. Unlike Monetary Inflation where every single good and service that exists is affected, Wage Inflation may negatively impact select goods and services, like housing, for example. That has occurred twice in history on a wide-spread scale and the solutions offered by FDR and Nixon were a Wage & Price Freeze. That is not the correct solution. The correct solution is a Price Freeze only. The Laws of Economics will ultimately curtail Wage Inflation on their own, as in fact they really did both times anyway. Wage Inflation can occur on smaller scales like regional, State and local scales. Increasing minimum does in fact cause Wage Inflation on local scale. Note that Wage Inflation does not cause the price of goods and services to increase uniformly. In other words, the price of housing may increase a 5% while other goods and services increase at 3% and still others at 2% or less and other goods and services may increase at rates in excess of 5%. …
Mircea, Due to employers’ practices of wage differentials, the minimum wage rate affects other wage rates, but its proportional effects differ upon different rates. Minimum wage rate’s effects upon jobs’ rates are inversely related to differences between the minimum and the job’s rate; (i.e. lower wage rates are greater, and higher wage rates are proportionally lesser effected by the minimum rate).

To the extent that some portion of a product’s price or cost is attributable to direct or indirect labor costs, such labor certainly affects those product’s prices. The interrelationships between these two concepts, explain minimum rates net effects upon the products’ prices. It also explains why proportional increases of the federal minimum wage rate have, and future increases will always be much less than their effects upon costs or prices of aggregate products;
(i.e. the minimum wage rate has never been among the primary causes of the U.S. dollar’s rate of inflation. Inflation occurs even when the minimum wage rate is not increased.) Respectfully, Supposn
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Old 02-09-2020, 08:58 PM
 
7,600 posts, read 7,088,021 times
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MW is a lagging indicator, so how can it have that much effect on anything?
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Old 02-09-2020, 09:20 PM
 
19,918 posts, read 14,556,678 times
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Why do you start multiple threads to simply cross reference your posts in each of them?
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Old 02-09-2020, 09:24 PM
 
7,600 posts, read 7,088,021 times
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Quote:
Originally Posted by TMSRetired View Post
Really ? How much do you think an orange would cost if the picker was making $20/hour ?
When people start paying pickers $20/hr, then likely the price already increased alot.

Quote:
Originally Posted by Mircea View Post

Minimum wage increases exacerbate Demand-pull Inflation, causing prices to rise higher.
People at the lowest level of income suddenly having more money does not mean the demand will jump up for certain items.

If a state or city suddenly increases MW, sure people may wish they can live there if they qualify, but there has to be available openings.

If MW workers suddenly get a sudden spike in income, does not mean they will go out and buy 50 pairs of Doc Martins from single vendor. Nor will they go out to premium steakhouses every night until they are broke again.

Sure they will probably buy more, but most likely more cheap stuff on discount/sales. And if the price goes up, MW workers may not see the bargain/worth in purchasing it.

If vendors increase prices for the sake of gouging the MW workers, they likely scare off their other above MW customers. Or will these vendors somehow be able to spot the MW workers out of crowd?

And there is not more new money in the system. MW is just existing money changing hands.
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Old 02-09-2020, 09:43 PM
 
1,499 posts, read 781,915 times
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Quote:
Originally Posted by NJ Brazen_3133 View Post
MW is a lagging indicator, so how can it have that much effect on anything?
NJ Brazen_3133, a legally defined, and mandated minimum wage rate is not an indicator. Within itself, doesn’t lag anything. (But the U.S. congress’s updating of its purchasing power can, and too often does lag the changing value of the U.S. dollar.

The minimum wage rate effects the wage rates of the lowest 40 percentile of USA’s wage earners, and its proportional effects upon their rates range from critical to substantial. It also affects higher wage rates but doesn’t affect those rates substantially.
Respectfully, Supposn
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Old 02-09-2020, 09:59 PM
 
7,600 posts, read 7,088,021 times
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Quote:
Originally Posted by gwynedd1 View Post
You cannot raise wages because people with more wages will buy and drive up asset prices making the effective wage what it was before. It has been known since the 1870s.
Even theoretically this wont happen. Not all items are that elastic in price. What in 1870s illustrates your statement?
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Old 02-10-2020, 12:44 AM
 
1,499 posts, read 781,915 times
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Quote:
Originally Posted by Lowexpectations View Post
Why do you start multiple threads to simply cross reference your posts in each of them?
Lowexpectations, would you prefer that I not reference the discussion thread that's fully devoted to the specific sub-topic?
The thread I referred to is fully devoted to the discussion of the minimum wage rate's relationship to the inflation rate of the nation's currency. Respectfully, Supposn
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Old 02-10-2020, 02:45 AM
 
76,418 posts, read 75,809,787 times
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Quote:
Originally Posted by Lowexpectations View Post
Why do you start multiple threads to simply cross reference your posts in each of them?
don't you know , if you repeat things that may not be true long enough they become truer
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