Posted on 03/11/2015 9:06:28 PM PDT by Paul R.
...the next time anyone asks why there is no broad-based pick up in consumer retail spending across the entire population, just show them the above charts.
(Excerpt) Read more at zerohedge.com ...
It also means the destruction of this country if sustained, I believe. But it falls into lib pols' plans perfectly (everyone except those in charge end up dependent on the gov't.)
Why does the Fed blame inflation on wage growth?
Maybe it has something to do with having to compete with third world labor, massive exporting of labor, and the importation of millions of foreign workers to replace the “overpriced” domestic labor.
How do you compete with slave labor?
The answer is: you can’t, unless you’re willing to become a slave.
I wonder if the chart for public sector looks similar?
The answer to why there has been no wage growth in America , even in the face of monetary policy intentionally intended to drive inflation and wage increase,is very simple.
The competition from low wage, mercantilist export based economies in China , Asia and India are keeping a lid on wages in the western world.
Alan Greenspan was virtually crowing about the fact that the massive growth in the Chinese export economy was allowing him to keep the pedal to the metal on his post 2000 crash Federal Reserve easy money and low interest rate with no inflation for years longer he ever though possible due to Chinese low cost exports.
What Alan neglected to understand or mention, was that those same economic dynamics were leading to the wholesale destruction of American domestic manufacturing and offshoring of American industry to the third world.
Alan also neglected to understand what his policies were doing to generate a real estate bubble in the American economy
“Why does the Fed blame inflation on wage growth?”
They don’t. Inflation is a monetary phenomenon that will drive all prices up, not just wages.
well said
If one reads the FOMC’s press releases and minutes one would certainly get the impression that they do blame wage growth for inflation. In reality, inflation is caused by currency devaluation, but you’ll never catch the Fed pissing off their Big Government and Big Business overlords by saying it.
Look at the bright side. Importing millions of illegal foreign workers will fix the problem according to the Dems and RINO’S.
Otherwise they would have to blame the people creating the 100 year monetary bubble: themselves.
In 100 years they've destroyed 96% of the value of the dollar. Time to squeeze out that last 4%.
There is something called ‘wage-push inflation’ and maybe you were reading a press release that was discussing that.
An example of wage-push inflation would be an increase in the minimum wage. A wage increase of that sort isn’t accompanied by a productivity increase so it simply pushes up the cost of labor for the same amount of work.
You will pay more for the same hamburger or anything else that has a labor input. Minimum wage earners will feel like they got ahead for maybe a year but prices will all adjust up so that it won’t be long before their real earning power is right back where it started.
The people who really get screwed are retired people on fixed incomes or people living off their savings.
The rise of the Chines export machine has given American manufactures essentially 4 options
1) Keep wages low to keep American made products from being priced out of the market.
2) Automate to reduce labor costs and improve productivity
3) Offshore manufacturing to a low cost country in Asia
4) Run your company for as long as possible without any reinvestment or maitance using low cost , unskilled labor until you go out of business.
For all practical purposes, numbers 3 and 4 are the most common. American small business was struggling but holding it's own under GWB but Obama has already killed or is in the process of killing much of America's small manufacturing business .
As Lee Iaccoca famously said about the 1990s trend of offshoring American Manufacturing and intentionally converting the US economy to a primarily services based economy , “Anyone who thinks than run an economy on services alone is smoking dope”.
Seems he knew what he was talking about
I take exception. These foreign usurpers are an elite group among their struggling foreign cohorts, to make it to the economic Shangri-La of the USA. Naturally, I’m thinking of China. Anybody who knows anything might imagine that this is a formidable group of people.
“In 100 years they’ve destroyed 96% of the value of the dollar. Time to squeeze out that last 4%. “
You are employing a post hoc propter hoc fallacy- “after this therefore because of this”. The destruction of the dollar was a result of years of bad decisions by Congress and a series of Presidents.
American price levels remained level until the post WWII era when Bretton Woods made the dollar the world’s reserve currency. This created major problems for maintaining the value of the dollar, a condition known as the Triffin Dilemma. The best solution would been to cut the dollar loose from its role as reserve currency.
That wasn’t done and inflation began to make an impact in the late Eisenhower years. By Kennedy’s Presidency the silver value of minor coins was becoming greater than their face value so silver was dropped and Silver Certificates were ended.
During LBJ there was a dual market in gold, the “official” price and the real market price. France dumped their dollar holdings and demanded gold.
Nixon’s reaction to this was to cut the dollar’s last link to gold and then the inflation of the ‘70s was off and running.
Congress played a big role in this process as well, by constantly raising the debt ceiling which has the effect of increasing the amount of dollars and in that manner devaluing them.
You sure did. You're going on my "watch list." Cheers!
You'll never solve anything if you start by lying to yourself.
It seems to me that wage growth cannot occur when there is a record number of unemployed/underemployed.
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