Mike Maloney of gold & silver inc goes over charts and shows how the fed stopped all deflation since 2007. Deflation would have meant that prices and wages would have gone down. The democrats fear this because they never want to hear wages going down, and the republicans don’t want to hear that prices are falling, due to lower margins.
for you the public deflation would be a godsend, because that would mean, while you might make less, milk, cheese, eggs and lettuce would cost less and less each month.
the ben bern hates deflation and loves inflation. inflation means everything goes up and up. however, if you’re poor, it virtually kills you.
The bottom line is, that the US is the world market. Other than the closed and lower class economies of China and India, the US is the largest consumer market. These manipulations of the currency and monetary supply fights against the very market forces he’s trying to curtail. It is a losing battle at best, if you believe he is actually to do anything other than to make he and his european and zionist investors money.
I’ve mentioned before that the stock market it is a zero sum gain, I win at your expense, not a win win situation. In the cash for clunkers program the government is footing the bill for $2 billion. Now when I say the government is footing the bill, I mean US. But the cars that qualify for the trade in program are perfectly running cars; can’t be too old; can’t have bad emissions; can’t have great emissions; have to be paid off.
Now I thought on its face that those criteria were just awful. Why would a rational thinking American turn in a car and burden themselves with more debt? This is why were are in this mess to begin with. This is insanity. This makes me mad.
Not only does the cash for clunkers program make me mad, but now I’ve found out that these idiots fell for it hook line and sinker and the program is an “overwhelming success”. Idiocy is running rampant in America. They should have an intelligence quotient for people to call themselves American.
Now I am totally ballistic. I am so fuming mad I could spit.
BUT WAIT …
THERE’S MORE …
Enter the Charities
In the stimulus package, that Barrack Obama signed into being, you’ll see how in that bill, charitable donation tax write offs were lowered. I don’t know how a peace loving, hippie acting, granola eating, president could completely shaft charities like that.
Regardless of what some idiots who stick their heads in the sand say, charities do benefit heavily due to people wanting a tax write off.
As if that weren’t enough, let’s take a look at the Cash for Clunker stimulus package, i.e. car industry bailout.
The cars being turned in for vouchers are the cars that previously would have been the exact cars donated for a tax deduction. Car donations were left completely out of the entire cash for clunkers program, even though both the Congress and Senate were told of the problem months and months before.
Apparently, charities are not a big enough lobbying group. [ I guess they didn’t “donate” $1 million like Goldman Sachs did… ooops did i say that ]
And, Obama is gloating over the plan, and hoping it will get renewed. So once again, this president is shafting them.
I just don’t get it.
I say donate your car. If you really need a new car so badly, you can get dealer incentives to buy upwards of $4,500 anyway. Give your old car over because I’m not liking to foot your stupid bill in this $2 billion car bailout, because that’s all it is anyway.
Don’t misunderstand me, I am not a desocialistacrat nor a repukeblican. Both are the same thing.
Peter Schiff comes on to CNBC and they all have a good laugh at him. Of course Peter Schiff has a 1 minute 30 second spot to deliver his message of doom and gloom, competing with the idiot host who wants to give you the “THE RECESSION IS OVER, THE RECESSION IS OVER,” mantra they always spew.
Let me explain why we are in this situation, since I [and you] have all the time in the world.
Preparing You for a Life of Debt
Let’s start with you and I’ll get to your parents in a second and tie it all in. Your first taste of true economic freedom is clamped down and you’re straddled with debt immediately. How? College! You take out massive loans, not secured by anything other than your I.O.U. You are then strapped with this debt fresh out of college. You must secure a job immediately to start paying it back.
But, wait! These college loans afford you a lifestyle change unlike, what you would have had, had you paid for college yourself. I’m not talking rich people. I’m talking average middle-class America, paying for college with their own money. “Well, no one would go to college,” you might say. Not true, and this is where Peter Schiff, Ron Paul and the Austrian Economic School of thought come into play. If everyone in America stopped taking college loans, or begging for government grants, college tuition would plummet and we all could afford it. Colleges would have to compete with each other, to offer an affordable price to gain student dollars. Colleges right now are not run like businesses, the are run like governments, wasteful. Colleges rely on the fact that the government is going to continually bailout the students. They no more reign in spending than the city or state or federal government does. If they have waste, they just raise tuition to pay for it. What do they care?
Conditioning You for Debt
The point is, you are now conditioned to accept massive debt, to afford you a certain lifestyle. This is where your parents come in. Instead of them saving, I’m talking on a massive scale, and paying for college out of their pocket, they do stuff like take out home equity loans. It has become to common place,that banks now advertise for it. “Take out a home equity loan for your kid’s college tuition.” 80 years ago, that would have been unthinkable. People would have called you mad. So, immediately, your parents first financial lesson to you is, go in debt to afford you a certain lifestyle. Nice lesson dad.
This lesson is repeated over and over. People were relying on the equity in their home, with the notion that housing prices would continually climb, so they could borrow on it. Now, Barrack Obama and Ben Bernanke, is trying to continue this farce by propping up housing prices. They are fighting the recession with every ounce of strength they have. And, believe me, they have an entire treasury to do it. They have the sheep, that is the American public to give away their money, and no one asks a question.
“More than three-quarters (77 percent) of Americans with pre-college age kids, however, have saved less than $20,000 for their children’s college expenses; 62 percent have saved less than $10,000, and 43 percent have saved less than $5,000. Twelve percent have saved nothing at all.”
Your house is not worth $125,000.00. I’m sorry to be the one to tell you this. Go back and see what your house would be worth in 1970, and maybe then you’ll have an accurate picture.
What people are failing to understand is, housing prices are predicated upon the scarcity of housing. Unfortunately, there was a housing boom in construction. There is an over abundance of housing. So your house is worth far less now, than when you first bought it. There are parts of the country with entire huge condo buildings sitting empty. I don’t have the numbers, but I guarantee there are at least 10% of empty real estate in every city. That means your housing price, should be lowered.
So this notion of borrow on equity… You have no equity. You have nothing. You were being propped up by the government the entire time. Why do you think you can deduct the depreciation of the value of your house annually? The government knew the real story.
So we have a failing economy, lowered housing prices, what’s next? Unsecured debt! Besides all the lending done on real estate, people still took up debt that was unsecured, like college. The lenders knowingly were doing this, but we were still borrowing. No one forced us to sign on the dotted line.
We just had the FBI raid TBW based on fraud. Stories like that should show you. I guarantee the FBI could probably raid every bank in the land for nefarious lending practices.
No one wants to swallow the pill. I bet you’re sitting here muttering, “I don’t want to lose my equity”, “I don’t want the value of my house to go down.” Or, you might be a banker saying, “I don’t want my clients defaulting on their loans.” So everyone is hoping Obama will bail them out, prop up this farce of an economy and keep it, business as usual.
No One Wants to Swallow the Bitter Medicine
This is what Peter Schiff, Ron Paul, and the Austrian Economic School of thought is talking about. Everyone is sitting quivering in their living room, hoping they won’t have to be the ones to pay for all this excess. And, when I say excess, I mean all the loans.
Imagine for an instance, that you had no debt, at all. Imagine the only expenses you had were your power bill. *GASP* I bet for some of you, that is nearly impossible to imagine. This is what the recession needs to cure. This is where this recession needs to go. Not, bailing everyone out. Not, propping up housing prices.
If we could go back in time, I would be for Obama saying,
“Today I’m wiping out all the toxic real estate assets. I am wiping out all current housing loans. I am declaring a banking holiday.”
Housing prices would have plummeted, but no one would care, would they? If your house was paid for, but only worth $10,000 would you care? However, no toxic assets were removed from the system, not a single one. And, you are still in debt.
I find it interesting that people who call themselves Libertarian, Democrat, and Republican all jump on the “protectionism is bad” bandwagon. They wail and moan how it harms the american “consumer” with rising prices, if they are not allowed free trade.
BUT HOLD ON A SECOND, you can’t start a company in China without 51% ownership by a Chinese firm. You can’t sell goods in china without huge 40%-60% tariffs on all imported goods.
This notion of protectionism is a complete and utter lie. China has been doing this for 60 years. In fact, they are so bad, they even subsidize exports. That means, the cheap Chinese crap you buy, isn’t actually cheap, they use Chinese tax payer money to lower the prices. Then, when you see it on the shelf, it is twice as cheap as a US made piece of plastic trash, because the US doesn’t put tariffs on it. So instead of an American made plastic cup, you now can only find a Chinese made plastic cup. And, some idiot on the news says, OH ITS A MIRACLE, CHINESE PLASTIC CUPS ARE CHEAPER THAN AMERICAN PLASTIC CUPS, THE AMERICAN CONSUMER WINS.
No no no no no! Stop! Their government is lowering the prices of all Chinese exports to make sure the local plastic crap is more expensive.
The Chinese economy is not THAT far off of the American economy. They are not a 3rd world nation.
You’ve been had, bamboozled, hoodwinked, RUN AMUCK. These idiots crying about protectionism have no clue what they are talking about. We don’t need “free trade”, we need equal trade. Any country that has economic policies in place for American goods, the US should have an exact mirror of those policies. PROBLEM SOLVED.
A lot of women are finally waking up to the idea that they do not have to work. It was assumed that if a man can go out and win bread for the family, that if the wife also went out and got a job, the family would be twice as wealthy and successful. However, women are finally waking up to the reality that, that is not only not the case, but it is not even necessary.
Doing the Math
Thirty years ago, couples sat down and wives came up with the bright idea that, in order for the young couple to get ahead and not be stuck living in a shoebox for 15 years, that the wife could go get a job and bring in twice the paycheck to the family, than just the husband working. Without any other influences, this makes mathematical perfect sense.
However, this goes to complete shreds when the young couple becomes pregnant. Not just the expense of hiring a midwife to give birth to a child, but the wife immediately stops working. That stops her paycheck for however long that lasts. But then, other expenses pile on and the wife has to sit down with the husband and rethink the math of her getting a job.
I got into a rather heated 5 vs 1 debate about the issue of are console [gaming systems] better than the PC. The chief argument proposed against me, the PC champion, was that in order to play brand new games you have to constantly upgrade your PC, vs a console you do not.
A couple of things hit me immediately when confronted by this argument:
1. the person assumed that anyone that plays video games, always has to buy new video games
2. the person consumed PC equipment constantly, i.e. once a new system came in, they threw out the old PC system
This struck me as not only wasteful, but rather consumeristic.
I stopped arguing with the people but, I write this hear to show you a proof against consoles and against constant PC consumption.
What is a video game for? A video game is one source of entertainment. It is like music, movies, tv shows, books, etc. It is just a source of entertainment. The generation coming up now, and the one that grew up in the first decade of this century are indoctrinated with rampant consumerism, that you must constantly buy new things.
Hidden Facts about Martin Luther King, Traitor to Black America
Black History: the ultimate reason King was killed, was not his voter registration drives for Blacks, women and the poor, it was because he turned on Kennedy and friends and started speaking about economics for Black people. King was put in place by whites to stop the Black uprising originally. The buss boycotts were stopping entire cities in the south and threatened economic mayhem for whites. King was brought in to herd Blacks away from economic demonstrations to “political” demonstrations.
When he finally wised up, he was immediately killed.
Many historical revisionists will make King out to be for Blacks, but economic facts completely dismantle this love of King. Blacks enjoyed ownership of nearly every industry in America. Historians will try to confuse recent readers about Black wealth by saying how far apart Black income was, compared to white income. However, two things are wrong with that: 1. there were no 200 billionaires back then, and the economy was not that huge; 2. the income gap between whites and Blacks has actually gotten worse, not better. After the civil rights movement, Blacks were stripped of nearly all business ownership. Where Blacks were treated separately before, after the civil rights era they were targeted by wealthy white financial firms and destroyed since they were seen as competing with white businesses.
There has been a push recently to really study the reason of Black poverty and why the Black group in America, continually fails to make economic gains, falling behind latinos, newly arrived. Many recent books have found that Blacks are targeted at a very early age in school, namely Black boys. They are systematically termed learning disabled and sent into special education. In fact many school’s special ed sections are filled with Black boys.
After reviewing many of the cases, the reviewers found absolutely no learning disabilities in the Black boys. This shocking revelation was not only published in recent books, but was also on many local news casts.
But, the corruption doesn’t stop there. During high school it was found that Black kids were being passed on through grades without being taught. One story was featured on 60 minutes, where a mother discovered her teen son, about to graduate, could not read. After many meetings with the school board and state, it still was not resolved. After 20/20 got involved, they got the district to get the young man tutoring at a private charter school. Within a month he could read, work a computer, etc.
The Last Step
It is no surprise that the Black community is constantly targeted economically to bear the brunt of not only brainwashing, but unscrupulous business practices, but are targeted to ensure as many as possible never make it to middle middle-class as possible.
A movement is going on right now that is sweeping across the United States. It is the Buy Black movement. With real numbers of 25% unemployment, the Black community is in a crisis position right now that will render them out for the count. Some major cities are showing 50% unemployment rates among Black men. The community constantly looks to the half-Black president leftist Barack Obama for support, which is not forthcoming and has not been during his entire presidency.
In steps a movement that has the potential to revolutionize the Black community and put it back on its feet. It is the Buy Black movement.
Economically speaking, we understand that the major employer in the nation are not the big corporations, but small businesses. This Buy Black movement is the right answer. By supporting Black owned and operated businesses, Blacks will take back their communities, boost economic growth, expand Black business and trade, which will open up jobs. It is a one two punch to both poverty and unemployment in the Black community.
As I said I am sitting for the CFA (chartered financial analyst) exam, I will be posting financial educational information. I am quite sure and willing to accept that these posts will be my most unpopular, but I take it as a responsibility that since, I am a PanAfricanist and feel my people need financial education more than anything else.
Today’s topic is economics, specifically microeconomics
Investopedia explains ‘Microeconomics’
The field of economics is broken down into two distinct areas of study: microeconomics and macroeconomics. Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area.
Macroeconomics, on the other hand, looks at the big picture (hence “macro”). It focuses on the national economy as a whole and provides a basic knowledge of how things work in the business world. For example, people who study this branch of economics would be able to interpret the latest Gross Domestic Product figures or explain why a 6% rate of unemployment is not necessarily a bad thing. Thus, for an overall perspective of how the entire economy works, you need to have an understanding of economics at both the micro and macro levels.
As I said I am sitting for the CFA (chartered financial analyst) exam, I will be posting financial educational information. I am quite sure and willing to accept that these posts will be my most unpopular, but I take it as a responsibility that since, I am a PanAfricanist and feel my people need financial education more than anything else.
Today we learn about economics and specifically elasticity.
Investopedia explains ‘Elasticity’
Elasticity is used to assess the change in consumer demand as a result of a change in the good’s price. When the value is greater than 1, this suggests that the demand for the good/service is affected by the price, whereas a value that is less than 1 suggest that the demand is insensitive to price.
Businesses often strive to sell/market products or services that are or seem inelastic in demand because doing so can mean that few customers will be lost as a result of price increases. Continue reading Financial Education: Elasticity (economics)
Were you late one day and the boss was waiting for you with a pink slip? Were you shocked, since everyone is late and the work isn’t time sensitive? Was the work atmosphere casual and then all of a sudden got serious? Were there parties, pot-lucks and a spirit team and then suddenly that vanished?
Many people are fired and have their reputations ruined, and probably their hopes dashed, because the company is going under. You as an employee, probably, didn’t check the company’s books to see how they’re doing. All you knew is that your boss was always mad with you and wrote you up for everything for 2 straight months. While the average idiot would say that it was your own fault you got fired, I’m here to shed some light on the facts and show you an alternative view.
It Rolls Downhill
In an office space that is relaxed, low-key, normally quiet, it is very telling that all of a sudden the management becomes quite agitated and starts looking for minor infractions. For instance: if you work for a company, where you’re the guy that shades in the color on pictures that are handed to you, there’s no need for you to “come in on time.” You’re paid for a project. Sure you are paid hourly to shade in color, but the reality is, you’re paid to shade in color, not to sit at your desk for 8 hours. The reality is, they can’t afford you, so they seek to get rid of you, anyway possible.
After a 3 year vacation on another network, which shall not be named, I have returned to WordPress. I have nothing bad to say about the other network, but their heavy-handed actions were intolerable. I am not saying that this network is better, nor offers a relief from the other network, but the difficulty I had on the other network was never experience here.
New Direction
The direction I want to take this blog is in the financial. I have discovered, on my brief journey away, that Americans are terribly uneducated about finance, economics and politics. Notice we have a saying of, “never discuss politics nor religion.” Now, the understanding is that it is “impolite” to discuss politics and religion. I would put it to you that, if people WERE to discuss politics and religion, as a normal, average, every day occurrence, we would discover that more and more people would UNDERSTAND what is behind politics and what is behind religion.
I personally hate rap. In fact I really hate white rappers. I’ll take the Daniel Tosh approach and say if God intended white people to rap he would have given them rhythm first, taken away their trailers and stopped them from marrying their cousins. [oh that is such a Daniel Tosh joke, I can’t believe how good I am.] And, if you don’t know who Daniel Tosh is, you obviously don’t have your finger on the pulse of the intelligent design of comedy.
All kidding aside… I actually got this video from none other than Peter Schiff of all people who twittered it to me. [gasp! Peter Schiff listens to rap music?] It boggles the mind.
Recently one of my Shakaama Live on youtube viewers asked me about the disparity between the rich and the poor and how my explanation about the Austrian Business Cycle could help people understand. Below fine my brief response to him.
The Problem
One of the key aspects of the founders of the fed was to make sure no one knew who actually founded it; take over public education so that everyone was dumbed down; and make people completely dependent on the banking system.
Before, people nor businesses took out loans. AT ALL! For any reason! Imagine for one second, no car loan; no home loan; no school loan! If you wanted it, you saved and bought it.
Fast forward about 50 years after the creation of the Federal Reserve Bank, no one saved any more. Everyone was now in debt.
This is what happened. It’s not just about abolishing the Fed, it’s about returning the American way of life. Remember the saying “pull yourself up by your own boot straps”. That’s because if you wanted something, you worked hard, saved your money and got it. THEN, no one could take it away from you; not your land; not your car; not your furniture. There was no repo man. He didn’t exist. There was no such thing as credit. Credit was for rich people, and i mean the filthy rich people.
As wall street became more and more successful at their game of putting people in debt, the middle class began to slip into poverty. Imagine people with no self restraint. Why save when you can buy on credit, when you can take out a loan. When you take out a loan and buy on credit, not only do you not own the thing, you also owe all your money to someone else. You are basically working for them. People throw around the words “modern day slavery”, but it’s actually true.
The Solution
The first lesson any of these get rich quick people tell you or those motivational speakers say is “get out of debt first”. Why? Because then you own yourself. They say, pay off your credit cards, pay off your loans. That’s the first step. Now, if even the motivational speakers all agree on this, it should dawn on people what’s going on. To a man they all agree on this notion. And, this is from nearly every monitary speaker, or economic salesman with a book. They know that at the very least, if their plan to market whatever they are personally selling, they will be 70% ahead of the game if they get everyone out of debt that they are selling to.
Mine you I am not calling any of those people wrong or am I lambasting them. I’m simply saying that whatever their formula is -> over there, they know that <- over here you have to get out of debt just to start to get ahead. So if even the best and worst of the bunch, even the charlatans agree on this simple principle and they are not tin foil hat, conspiracy theorist, abolish the fed, libertarians, there must be something at the core foundation of sound money that says, get out and stay out of debt.
Even in the old testament, and a lot of my Jewish friends ascribe to this, never put yourself in debt to anyone. In fact this is repeated in the new testament where it basically says, go pay off all your debts first then come to your brother or father or enemy and have a reasonable discussion among equals.Once again you see that notion of the the disparity between rich and poor stripped away, simply by paying off your debts. Even some versions of the Lord’s Prayer has it as saying “forgive us out debts as we forgive our debtors“. You might be reading this and be atheist, but the wise man takes advice from every possible wise source, even if he doesn’t believe in the source. Good advice can be found in fools at times. [don’t prejudice yourself against something simple because you don’t like the package]
Get out of debt and stay out of debt. Throw away and destroy all credit cards.
Frtiz Henderson CEO of General Motors made the rounds today announcing the new restructuring plan of GM. He describe it as aggressive and they will come out leaner. He said the new restructure has 3 points:
1. they had to introduce a business plan that’s more stable and viable
2. they had to accelerate the Feb 17th restructuring plan due to the mandate placed on them by the treasury department
3. they had to strengthen their balance sheet; bond restructure; and have a solid plan for future investments
They will be getting rid of 4 brands: Hummer, Saab, and Saturn which will be completely phased out by the end of 2009; Pontiac will be over by 2010. He also announced an accelerated and larger plant closure from the former 47 to a 27 plants left in North America.
GM CEO Fritz Henderson
They want a break even mark at 10 million units, previously the break even was at 11.4 million units, but the treasury department did not agree with that. This is the 3rd restructuring plan. GM CEO says this is the final plan. It will focus on 4 core brands, giving up pontiac in the process. Pontiac has a history with the company as the muscle car and accounts for 10% of sales and profits. They think this restructure is more aggressive. They have until June 1 to comply with treasury mandates. The harshest part of the restructure comes at the expense of bond holders, who now hold 27 billion dollars in bonds. He wants to eliminate 24 billion dollars of that and they would only get a 10% equity stake. However, the UAW through viva payment would eliminate 20 billion dollars but get a 80% equity stake in the company, but only decrease 21,000 jobs. The treasury told them they would not support a recovery to bond holders over 10%.
Treasury Symbol
The decision on the 4 core brands to remain, centered on fleet sales not regular consumer sales. They think they can maintain market share with the 4 core brands. They want to 3600 dealerships over the next 5 years. However, they can’t just tell dealerships, which are private companies to close. Franchise laws prevent a company from nixing a dealership. They are in place to protect the dealer. However, experts say GM is grossly over subscribed and has been for decades.
This is not a bankruptcy at all. They are simply caving into the treasury department and will not go to bankruptcy court. The bond holders can take them to bankruptcy court if they don’t like the 10% equity stake and devaluing their 27 billion dollars down to nearly under 10% of its value. At 27 billion dollars I don’t see how GM can avoid going to bankruptcy court over this.
A G.M. Delearship
I got the sense from reading the CEO’s face that this entire deal is simply to save his skin. Everyone agrees that GM needs to go to bankruptcy court and completely restructure the company, including the union contracts. The unions in this case are the ones making the company completely unprofitable. The obligations to the union are staggering. And, the company cannot move into new technologies in the automobile industry. Even under this proposed restructure they are not going to retool any of their remaining 27 plants.
A lot of people are being hoodwinked and led down a path that if fraught with danger and bad times ahead. I’m counting an extra $10 trillion introduced into the economy since 2007. [I’m counting both the very open bailouts and the under the table cash infusions by the federal reserve bank, which Ben Bernanke says he doesn’t have to disclose to congress] The problem is the politicians are talking about economics, a subject most adults in America know nothing about, and they sound logical and reasonable about.
They say
” the problem is credit has stagnated and we wish to avoid credit from being unavailable to the general public. We need to get banks lending money, but they can’t since they have so many toxic assets on their books and if they lend more money they will be far more overleveraged and they refuse to do it. If we infuse the banks with cash and lower interest rates, then you the general public will continue to be able to purchase cars and homes and big screen t.v.s and our economy is based on consumer spending.”
If the economy indeed is based on consumer spending, then 1. freeing up credit markets will allow me to make purchases / loans at a reasonable level 2. lowering interest rates are in my best interest so I don’t have to pay for a house at a high interest rate 3. infusion of cash to banks allow them to lend me money.
Federal Reserve Bank Chairman Ben Bernanke
The problem is, this entire premise, is completely false, a lie and evil. Why do i say evil? If they are trying to convince you that our economy is based on consumer spending, then they are then allowed, BY YOU, to do whatever they need to free up lending so that you can continue to consume, at all costs, including devaluing your money. Also, if that’s the case, then the value of your dollar NEVER matters. For idiots that don’t understand, if you buy the notion that our economy is based on consumer spending then, if you have $1,000 in the bank, they can inflate the economy so you have only $500 effective buying power, because all prices have risen.
This means that no work you do; no matter what improvements your boss makes; no discoveries in efficiency to lower production costs will have any impact on the economy because they can wipe all that ingenuity away by inflating the economy overnight. If you understood that sentence , then my explanation about the Austrian Business Cycle will be easy. Reread that sentence and understand it and we can move forward.
John Maynard Keynes
How does your salary increase? Most Keynesian economist would say “pay me more money“. It’s a very ignorant statement to make and I’ll explain why shortly. To this end Keynesian economist say, to increase the amount of money people have, we need to raise the minimum wage. [since they can’t control other wages directly] Keynesian economist think that if you increase minimum wages then the workers can buy more, since they make more. You sitting at home immediately probably already figured out if you raise the minimum wage, a lot of people are going to be fired, so that the ones left can be paid more, OR if they pay the workers more, they increase the prices. So raising the minimum wage completely is thwarted by raising prices. If everyone raises their prices, the minimum wage raise buys less and you have a zero sum gain.
How should wages be increased? I’ve already alluded to it right in the last paragraph but I’ll point it out blatantly. You don’t get paid more money, what happens is, we become better at what we do. What does that mean? You do your same job. You get paid the same salary. Your boss however, makes improvements to the company to make your job easier, so you spend less time doing more. The store owner buys in larger bulk and gets a larger price cut per item. He then, lowers the price of goods. People discover new innovations to make your job even more efficient, so you spend less time doing the same tasks. Therefore you can do more stuff in the same amount of time, because each task is now easier to do. Your boss can now lower prices because each item is cheaper to produce.
Salary Raise in an Austrian Economist Scenario
So far, the store owner lowered prices, your boss lowered prices, and production lowered prices. Check this out. You make the same amount of money you did yesterday, but ALL PRICES OF GOODS AND SERVICES HAVE BEEN LOWERED, so your salary can buy much more.
If the system is left alone, these innovations can occur all the time and prices can be lowered and lowered. A house would take far less to produce and should cost less today than it did 10 years ago. And, because all other goods and services were lowered, you would be able to purchase a much larger house today, than you could before.
Next, let’s visit credit, because I talked about it above. Let’s think about my perfect scenario, but with banks now. Because your salary can now go further, let’s assume you don’t feel a dieing need to spend every last dime you have. You go and open a savings account, so does your neighbor, your pastor and your cousin. After several years all of you have nice lump sums in the bank. The bank says,
“oh my we have quite a bit of money in the bank. you know what we can make lots of money if we lent to more people, let’s lower interest rates.” So the bank lowers interest rates. The store owner sees interest rates go down and thinks, people have more money to spend, and interest rates are lower, let me go take a loan and expand my business. So he does. One day you walk by and now your local store has groceries and a barbershop with an old fashion shave by razor. You then decide to stop by every week and get a nice shave and haircut while you shop. The store owner pays back his loan and the bank makes money. Because of all these shaves you and your cousin have been getting, your bank accounts have gone down by half. The bank raises interest rates and less people take out loans. And, life goes on.
Ludwig Von Mises Proponent of the Austrian School of Economics
Are you getting angry yet? Is the light coming on? Are you putting 2 and 2 together? Yes, let’s go back the Keynesian economists? They think the government has to oversea you, and your boss and the store owner. If the store owner says, “oh no I bought to much corn meal, I’m going to lose my shirt over this” they say no problem, we’ll infuse cash to you, so you don’t lose your shirt. They just stopped all the progress you, your boss, and production have been making, because prices are now inflated. In essence, they stole from you. They also lower interest rates artificially. Then the store owner is confused and thinks he should take out a loan and expand his business. However, you and your boss don’t make what you should be making due to the new inflation. You stop by the shop and shake your head when you see the new addition, because you don’t have the money for it. After about 6 months to a year, the store owner goes completely out of business because he can’t pay back that loan he took out because no one gets haircuts and shaves.
Which brings me to the Austrian Business Cycle.
“The theory views business cycles (which they also call credit cycles) as the inevitable consequence of inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings. According to the theory, the business cycle unfolds in the following way. Low interest rates tend to stimulate borrowing from the banking system. This expansion of credit causes an expansion of the supply of money, through the money creation process in a fractional reserve banking system. This in turn leads to an unsustainable boom during which the artificially stimulated borrowing seeks out diminishing investment opportunities. This boom results in widespread malinvestments, causing capital resources to be misallocated into areas that would not attract investment if the money supply remained stable. A correction or “credit crunch” – commonly called a “recession” or “bust” – occurs when credit creation cannot be sustained. Then the money supply suddenly and sharply contracts when markets finally “clear”, causing resources to be reallocated back towards more efficient uses.The theory proposes that a sustained period of low interest rates and excessive credit creation results in a volatile and unstable imbalance between saving and investment.”
Production Increases Prices Lower
The boom comes from The Federal Reserve lowering interests rates [not because the banks have a lot of people who have large savings accounts] and business owners start a building frenzy or opening new businesses or whatever the latest fad is. The bubble is created because all these people are put to work, that didn’t work before. There’s all this money infused into something that wasn’t at the same volume before.
The burst comes from when you, YEAH YOU, don’t go out and buy these widgets from them. Why? Because you never said you wanted them in the first place. And, you never said you wanted them at twice the price. Did you?
So what’s the answer? First we need to do away with the entire federal reserve structure and dismantle all of their banks in America. We do not need a central bank dictating to everyone, including non-business people, such as yourself, by taking your savings away from you. We need to reduce regulation on businesses. It’s just taxes that takes away buying power from businesses. The only regulation we need from the government, is protecting your constitutional rights, and protecting you from being gouged economically. We need to go on a gold standard so this entire process can never occur again. On a gold standard you, your pastor, your neighbor and your boss all can rely on what a dollar is today and tomorrow. On a gold standard, if you put money in a savings account, the government can’t come steal it. On a gold standard, although your salary won’t increase, your dollar will increase due to the price of gold increasing. We were just on the gold standard all the way up until 1971 when Richard Nixon, by himself, took us off the gold standard. [wasn’t he a great guy?] On a gold standard a bank can gouge you either.
Mike Maloney of gold & silver inc goes over charts and shows how the fed stopped all deflation since 2007. Deflation would have meant that prices and wages would have gone down. The democrats fear this because they never want to hear wages going down, and the republicans don’t want to hear that prices are falling, due to lower margins.
I find it interesting that people who call themselves Libertarian, Democrat, and Republican all jump on the “protectionism is bad” bandwagon. They wail and moan how it harms the american “consumer” with rising prices, if they are not allowed free trade.
A lot of women are finally waking up to the idea that they do not have to work. It was assumed that if a man can go out and win bread for the family, that if the wife also went out and got a job, the family would be twice as wealthy and successful. However, women are finally waking up to the reality that, that is not only not the case, but it is not even necessary.
I got into a rather heated 5 vs 1 debate about the issue of are console [gaming systems] better than the PC. The chief argument proposed against me, the PC champion, was that in order to play brand new games you have to constantly upgrade your PC, vs a console you do not.
Black History: the ultimate reason King was killed, was not his voter registration drives for Blacks, women and the poor, it was because he turned on Kennedy and friends and started speaking about economics for Black people. King was put in place by whites to stop the Black uprising originally. The buss boycotts were stopping entire cities in the south and threatened economic mayhem for whites. King was brought in to herd Blacks away from economic demonstrations to “political” demonstrations.
There has been a push recently to really study the reason of Black poverty and why the Black group in America, continually fails to make economic gains, falling behind latinos, newly arrived. Many recent books have found that Blacks are targeted at a very early age in school, namely Black boys. They are systematically termed learning disabled and sent into special education. In fact many school’s special ed sections are filled with Black boys.
Were you late one day and the boss was waiting for you with a pink slip? Were you shocked, since everyone is late and the work isn’t time sensitive? Was the work atmosphere casual and then all of a sudden got serious? Were there parties, pot-lucks and a spirit team and then suddenly that vanished?
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