Making less as inflation raises prices of goods? (minimum wage, insurance, cost)

[pnwmdk]

Originally Posted by Opin_Yunated

Yet, you can't explain why.



Yep. Inflation has been just 2-3% (trending down to 1-2% as of late), yet Middle Class wages are stagnant. However, wages in the financial sector and CEO pay has risen astronomically..

Because the financial value of manipulating money and commerce is vastly greater than producing low value commodities.

[pnwmdk]

Originally Posted by remoddahouse

I'm educated as are all of my friends. I think the part time work is for the knuckledraggers who sit around and whine about Obama all day. Engineers, doctors, lawyers, accountants, and the slew of other professionals aren't being moved to part time work.

Oh yes they are!

[pknopp]

Originally Posted by Opin_Yunated

Yet, you can't explain why.

Wow. You also don't understand that the "working class" and the "middle class" are one and the same?

[Volobjectitarian]

Originally Posted by Opin_Yunated

Money supply is only one variable (out of four) in the equation you are referring to.

The problem with your argument is that money hasn't been changing hands. Pumping the economy with cash hasn't stimulated it, because the rich took their money and ran (overseas tax shelters, holding it in unrealized gains, etc). Money has to change hands for the inflationary effect you speak of to come to fruition.

You should read your own article, because in that article, inflation (as in the price of things) is a FUNCTION OF THE MONEY SUPPLY.

And you really should weigh your comments against that article, because those comments pretty much adhere to QTM's equation making the money supply MOST directly responsible for inflation.

If (from your article):

MV = PT

and your contention is that money is not changing hands and the rich are hoarding it, we know that V and T are either decreasing or staying the same. Given your own premise, and the observable fact that M1 and M2 have doubled in the last 10 years (last 6 for M1), then in this case, inflation is most assuredly a function of the freaking money supply.

Now, more generally theoretical, if it is true that: ax = by, with 'a' and 'b' being constants (or nearly so), then x is a function of y and vice versa.

In MV = PT, P is always a function of M, and with V and T held constant or nearly so, P becomes a directly proportional function of M. In short, inflation is always and everywhere a function of the money supply.

But even diehard Keynesian monetarists wouldn't advocate DOUBLING the money supply in such a short time. Small temporary infusions into things NOT CURRENTLY BEING DONE is the root of Keynesian economics. Look back at the equation and see if you can spot why Keynes advocated small infusions into THINGS NOT ALREADY BEING DONE. That increases T and M, leaving V and P mostly constant. More actors using more money, and the increase in total transactions allows the economy to grow without raising prices, and if demand increases naturally (thus raising V) then prices would naturally raise as well, but not dramatically. But we have had massive infusions of money into things either already being done or things that shouldn't be done, which has resulted in lower velocity and fewer transactions, meant to create an illusion. Freaking neo-Keynesians can't even get Keynes right.

[toryturner]

Originally Posted by remoddahouse

I'm educated as are all of my friends. I think the part time work is for the knuckledraggers who sit around and whine about Obama all day. Engineers, doctors, lawyers, accountants, and the slew of other professionals aren't being moved to part time work.

If you are as educated as you say you are then you would realize how many college grads are not able to get jobs upon graduation, some resorting to taking part-time jobs. Not to mention many of the people in your party, i.e. "knuckledraggers" are not educated and are working these very jobs you are sneering at.

[Mircea]

Originally Posted by Opin_Yunated

Money supply is only one variable (out of four) in the equation you are referring to.

The problem with your argument is that money hasn't been changing hands. Pumping the economy with cash hasn't stimulated it, because the rich took their money and ran (overseas tax shelters, holding it in unrealized gains, etc). Money has to change hands for the inflationary effect you speak of to come to fruition.

From where did you cut and paste that?

That's not you talking....you got that from someone else. The first part is wrong, but this....

Money has to change hands for the inflationary effect you speak of to come to fruition.

...is spot on.

That applies to Real Inflation only -- Monetary Inflation if you wish -- and to no other forms of Inflation such as Demand-pull Inflation or government-induced Cost-push Inflation and Interest Inflation.

For several years, I have been predicting an annual Real Inflation rate of 35%-45% to begin circa 2025. That rate is worse than the post-WW I Era rate (15%-25%) leading into the Great Depression, but less than the post-Depression/Civil War Era rate (50% to 100%).

I also said there will be a warning spike preceding. Real Inflation will jump 10%-12% for one, maybe two fiscal quarters, then go away, before the real deal comes and sits on your head for 8-15 years.

How do you calculate that?

What is $1 worth? It is worth $1 in goods and services.

If you have $10 and there are $10 in goods and services, what is $1 worth? It is worth $1
If you have $5 and there are $10 in goods and services, what is $1 worth? It is worth $2
If you have $20 and there are $10 in goods and services, what is $1 worth? It is worth $0.50

There is a relationship between the currency and the value of goods and services produced....

1] 10 units of goods and services / 10 units of currency = 1 unit of currency.
2] 10 units of goods and services / 5 units of currency = 2 units of currency.
3] 10 units of goods and services / 20 units of currency = ½ unit of currency.

Notice that the value of goods and services remains unchanged, while it is actually the value of the currency that changes.

Nearly all States use some measure of GDP to determine the total value of goods and services. The money supply is then adjusted to the GDP. If your GDP is 100 Billion units and you have 100 Billion units of currency circulating, then the value of one unit of currency = 1.

100 Billion units GDP / 80 Billion units of currency = 1.25 units of currency....that is Real Deflation
100 Billion units GDP / 110 Billion units of currency = 0.90 units of currency....that is Real Inflation

This is were most people become massively confused.

I'm selling a good that is 1 currency unit. You're going to give me 1.25 currency units? Are you daft? You just lost 0.25 currency units. So, what do we do? I lower the price of the unit so that the value of the unit remains at 1 unit, and the cost to you is 1 unit. That's Real Deflation. The value of goods and services is not declining, rather the value of the currency is increasing.

I'm selling a good that is 1 currency unit. You're going to give me 0.90 currency units? Are you daft? I'm going to lose 0.10 currency units. So, what do we do? I raise the price of the unit so that the value of the unit remains at 1 unit, and the cost to you is 1 unit. The value of goods and services is not increasing, rather the value of the currency is decreasing.

Again, notice the value of the goods or services remains unchanged; it is the currency that is being manipulated to achieve an equilibrium.

When you have Real Inflation, the price of everything rises, with everything meaning every thing as in every single thing as in every single freaking thing as in every damn single friggin' thing.

Are "wages" everything? Yes, they are. Are your wages rising? No, ergo there is no Real Inflation of any consequence.

Why do your wages rise when Real Inflation exists? Not because the value of your labor increases --it's because the value of the currency is worth less.


When you see a stu-tard ranting about Federal Reserve blah blah Inflation blah blah Blue Meanies, just ask them about their pay raises........if that don't shut their festering gobs, at least they'll continue to look like stu-tards, but maybe you'll save someone from drinking their Kool-Aid®.


Now, let's talk about the stu-tards and see how stupid these people really. And they really are stupid.

The stu-tards are looking at US GDP and money supply.

That would be appropriate if the US Dollar was not a de facto international reserve currency and if the US Dollar was not a de facto international trade currency and if the 317 Million Americans were the only people on Earth using the US Dollar and if there was no Petro-Dollar.

As you can see, the stu-tards have constructed quite the fantasy world, since none of those things are true.

You must consider the total value of all units of goods and services against the total global circulation of US Dollars which includes trade transactions.

Yes, that means you have to account for every damn barrel of oil sold on the Global Market in US Dollars, as well as every stinking cubic meter of natural gas, all metal ores, all minerals, and all commodities traded globally in US Dollars.

We use integral and differential calculus to do that, to determine the upper volume limits of US Dollar currency saturation and money velocity will give you the rate of Real Inflation.

Why ~2025?

That's about how long it would take the US to pump $9 TRILLION to $13 TRILLION excess US Dollars into the Global Economy (from 2008 onward -- not from today).

Still one thing missing...the trigger-event.

I have no idea, but if forced to guess, I'd say it would be a political event (and not necessarily within the US). And no, not WW III (or WW IV)....please, can we have a bit o' common sense? Maybe a politico-economic even, like the introduction of a new regional currency; a new trade agreement; or maybe this new BRICS global bank.

As I've pointed out, the world moving away from the US Dollar is in part responsible for the lack of money velocity, and you can see that here....



Something will have to happen to get that rocking again.

Monetarily....

Mircea

[Opin_Yunated]

Originally Posted by Volobjectitarian

You should read your own article, because in that article, inflation (as in the price of things) is a FUNCTION OF THE MONEY SUPPLY.

And you really should weigh your comments against that article, because those comments pretty much adhere to QTM's equation making the money supply MOST directly responsible for inflation.

If (from your article):

MV = PT

Oh Jeez try reading my post again.

Originally Posted by Opin_Yunated

Money supply is only one variable (out of four) in the equation you are referring to.

The problem with your argument is that money hasn't been changing hands. Pumping the economy with cash hasn't stimulated it, because the rich took their money and ran (overseas tax shelters, holding it in unrealized gains, etc). Money has to change hands for the inflationary effect you speak of to come to fruition.

Originally Posted by Volobjectitarian

and your contention is that money is not changing hands and the rich are hoarding it, we know that V and T are either decreasing or staying the same. Given your own premise, and the observable fact that M1 and M2 have doubled in the last 10 years (last 6 for M1), then in this case, inflation is most assuredly a function of the freaking money supply.

Now, more generally theoretical, if it is true that: ax = by, with 'a' and 'b' being constants (or nearly so), then x is a function of y and vice versa.

In MV = PT, P is always a function of M, and with V and T held constant or nearly so, P becomes a directly proportional function of M. In short, inflation is always and everywhere a function of the money supply.

Rule 1 of multiplication: X * 0 = 0

If money isn't changing hands, there is no velocity of money.

Therefore, M(0) = 0

If the rich are hoarding (which they are), V and T are decreasing. Therefore, inflation is sustained by pumping the money supply further (increasing M). Without stimulus, we would have suffered deflation (we actually did in 2009). This isn't exclusive to the United States. Most industrialized countries are fighting deflation due to population demographics.

Originally Posted by Volobjectitarian

But even diehard Keynesian monetarists wouldn't advocate DOUBLING the money supply in such a short time. Small temporary infusions into things NOT CURRENTLY BEING DONE is the root of Keynesian economics. Look back at the equation and see if you can spot why Keynes advocated small infusions into THINGS NOT ALREADY BEING DONE. That increases T and M, leaving V and P mostly constant. More actors using more money, and the increase in total transactions allows the economy to grow without raising prices, and if demand increases naturally (thus raising V) then prices would naturally raise as well, but not dramatically. But we have had massive infusions of money into things either already being done or things that shouldn't be done, which has resulted in lower velocity and fewer transactions, meant to create an illusion. Freaking neo-Keynesians can't even get Keynes right.

Money supply is increased through our banking system.

What are you talking about? We are fighting deflation due to pitiful demand. You are also assuming that the Federal Reserve doesn't manipulate the money supply at will. If it gets out of hand too quickly, they simply raise interest rates.

[Opin_Yunated]

Originally Posted by Mircea

As I've pointed out, the world moving away from the US Dollar is in part responsible for the lack of money velocity, and you can see that here....



Something will have to happen to get that rocking again.

Monetarily....

Mircea

..........except the world isn't moving away from U.S. dollars. Do you call 66% in 2002 to 60% in 2014 drastic? The land of Fox News would have you think otherwise.

Deflation is lack of demand. Economics is all about the producer and consumer. Extreme wealth inequality and poor demographics (baby boomers getting old, millenials being **** broke) are your culprits, not the U.S.'s status in world currency.

What does currency have to do with Japan, the EU, and Canada having the same low-inflation / deflation issues? No amount of stimulus is going to bail Japan out of its aging problem.

[Opin_Yunated]

Originally Posted by Mircea

That applies to Real Inflation only -- Monetary Inflation if you wish -- and to no other forms of Inflation such as Demand-pull Inflation or government-induced Cost-push Inflation and Interest Inflation.

Demand pull and cost-push are excluded from "government-induced" CPI for obvious reasons. Demand-pull (global demand for oil / energy) affects our prices and is out of our control. Cost-push can be a result of demand-pull inflation. All those foreigners driving cars... affects the price of your food via transportation costs. Severe weather affects food prices also. Etc. Etc.

So yes, I agree with Mircea. Whether we trade in dollars, chickens, eggs, or fairy tales, we will have inflation if a lot of idiots want to buy the same thing.

[Mircea]

Originally Posted by stburr91

Inflation has been rising faster than the wages of the working class for almost 40 years now.

And what else has been rising?

Population.

The number of developing States.

The number of emerging States.

Extreme levels of stupidity and sloth.

What, you thought you could add 5 Billion to Earth and a loaf of bread would still cost $0.05?

Really?

How does one have fantasies like that? Does it require Orange Barrel or Window Pane?

Originally Posted by stburr91

The middle class turned a blind eye to the plight of the working class, now it's their turn to see their real wages drop. The middle class choose poorly when the decided not to help the working class fight the policies that were driving their wages down. It didn't take a financial expert to know that the assault on wages would eventually include the middle class.

Um, wages are based on Supply & Demand, not the Federal Reserve. Prices are based on Supply & Demand, not the Federal Reserve.

Ever been to an auction? The Federal Reserve doesn't hang around auctions.

An auction is an excellent example of Demand-pull Inflation in action.

The only policies driving wages down are people's own stupidity.

I have an idea.....why don't you order your government to devise the E85 Ethanol Standard. That will pull corn out of the wholesale and retail household consumer markets and cause the price of corn to rise for consumers in that Market. Then you can sit around blaming the Federal Reserve for something they never did.

Oh....wait....you already did that.....never mind....carry on.

Hey...how about this.....how about a drought that further reduces corn supply causing prices to rise for all consumers, but in particular for household consumers, and you can blame the drought on the Federal Reserve.

Oh, wait....hold on....you're doing that now....never mind...carry on.

Hey...what about this.....why don't you construct your foreign policy to oppress the political, economic and social growth in dozens and dozens of other States using puppet-dictators. Then you can steal all of the wealth from those States and use it to build up America while those States have nothing to build on. And then BRICS can come and develop those States and the workers can compete against Americans and take the jobs that Americans never should have had in the first place.

Ah, well, you already did that, too.

Never mind...carry on...

Mircea