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Thread: The economy

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    The economy

    I'm really starting to wonder how the economy is doing. The media is screaming recession, housing bubble bursting, and doom and gloom (with an election looming). Common sense tells me that inflation should be higher than reported because of oil prices/ transportation costs, plus corn, beans and wheat prices going up and up. All this, and the DOW keeps on trucking? The company I work for is having a pretty good year too, and it is construction related. Any opinions on this?



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    Re: The economy

    I think your best bet is to use the media sparingly, like salt, and personal research much, like grains for a healthy political diet.


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    Re: The economy

    Quote Originally Posted by Cyclonepride View Post
    Common sense tells me that inflation should be higher than reported because of oil prices/ transportation costs, plus corn, beans and wheat prices going up and up.
    I'm really wondering about that myself. I work in the manufacturing sector. Raw materials (particulalry stainless steel, copper, and CuNi) prices have been crazy for awhile now, because supposedly China is hogging everything. The prices we pay have been raised dramatically, and we've raised our prices dramatically, but somehow, the reported inflation rate is not that bad. Something is fishy...


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    Re: The economy

    inflation will kick off the new year with a HUGE bang. the state of Iowa minimum wage went up 41%. so just be patient.. .it is coming my friends.. IT is coming.


    -keep.


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    Re: The economy

    Quote Originally Posted by jbhtexas View Post
    I'm really wondering about that myself. I work in the manufacturing sector. Raw materials (particulalry stainless steel, copper, and CuNi) prices have been crazy for awhile now, because supposedly China is hogging everything. The prices we pay have been raised dramatically, and we've raised our prices dramatically, but somehow, the reported inflation rate is not that bad. Something is fishy...
    I work at a flooring company, and nylon carpet has increased about 50% over the last three or four years, due to being a petroleum based product. It has been fairly stable for the last year, but there were times when we would get a price increase before the previous price increase even went into effect.



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    Re: The economy

    Quote Originally Posted by keepngoal View Post
    inflation will kick off the new year with a HUGE bang. the state of Iowa minimum wage went up 41%. so just be patient.. .it is coming my friends.. IT is coming.
    FWIW... Here's what the conservative Cato Institute has to say about this:

    Some opponents of the minimum wage argue that it aggravates inflation by pushing up the costs of individual businesses. Those businesses, unwilling or unable to absorb such costs, pass them on to consumers in the form of higher prices. In this view, any artificial increase in labor costs can produce so-called cost-push inflation.

    There are several problems with the notion of cost-push inflation. The primary error in this analysis is that it confuses a shift in the structure of relative prices with a general rise in the level of prices. If the labor costs of businesses are increased and they succeed in passing on the costs to consumers in the form of higher prices, they will have managed to change the structure of relative prices at the expense of businesses that are unable to raise their prices because of more-intense competition. This is quite distinct from a general increase in the level of prices, which would be possible only if the real supply of money was increased.

    When prices increase, it won't be due to changes in the minimum wage. In the near run, the biggest impacts will be:

    • Increasing energy prices. E.g., oil is at $80/bbl.
    • Devalued dollar. The dollar is falling against other currencies, making imports on which we heavily rely (e.g., oil, Chinese products) more expensive.


    My 3 cents worth (sorry, adjusted for inflation).


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    Re: The economy

    The Cato Institute is a "Libertarian" think tank. Probably the best known "conservative" think tank is the Heritage Foundation.

    There are major differences between these two ideologies:

    Conservatism vs. Libertarianism



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    Re: The economy

    Quote Originally Posted by alaskaguy View Post
    The Cato Institute is a "Libertarian" think tank. Probably the best known "conservative" think tank is the Heritage Foundation.

    There are major differences between these two ideologies:

    Conservatism vs. Libertarianism
    I guess I'm neither.......or I'm a conservative that only believes in about a third of that list, mostly having to do with national defense.



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    Re: The economy

    one of my sources:

    NCPA - Minimum Wage - Unemployment, Inflation And The Minimum Wage

    Federal Reserve economist Peter Tulip says the largest single component of the NAIRU has been the minimum wage. The minimum wage prevents wages from falling when unemployment is high. Higher wage costs force employers to raise prices, thereby contributing to inflation.


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    Re: The economy

    the wages for the office I run will increase over $100K next year due to the increase of the minimum wage. For the same amount of work and output!!! We pay above the minimum now of course, but we want to be at the same level above it that gives us the type of ppl we need.

    The increase is a windfall for the state coffers .... they get an extra 9% of the 100K from my shop... grrrrrr..

    my services just increased in cost.... think i want to pay it out of my pocket? So, I pass it on to my customers. Sounds similar to the link above right?

    - keep.


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    May you only need 39 acres to turn your rig around. - keep

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    Re: The economy

    Quote Originally Posted by keepngoal View Post
    the wages for the office I run will increase over $100K next year due to the increase of the minimum wage. For the same amount of work and output!!! We pay above the minimum now of course, but we want to be at the same level above it that gives us the type of ppl we need.

    The increase is a windfall for the state coffers .... they get an extra 9% of the 100K from my shop... grrrrrr..

    my services just increased in cost.... think i want to pay it out of my pocket? So, I pass it on to my customers. Sounds similar to the link above right?

    - keep.
    Exactly. There are two options.......raise prices, or let workers go. Or both.



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    Re: The economy

    Quote Originally Posted by alaskaguy View Post
    The Cato Institute is a "Libertarian" think tank. Probably the best known "conservative" think tank is the Heritage Foundation.

    There are major differences between these two ideologies:

    Conservatism vs. Libertarianism
    Libertarian: "I believe in individual liberty, free markets, private property, and limited government." I would argue that these are traditional conservative values. But, yes, Libertarian is more accurate.


    "The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity." -Jared Diamond, Collapse

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    Re: The economy

    Quote Originally Posted by Cyclonepride View Post
    Exactly. There are two options.......raise prices, or let workers go. Or both.
    This may cause some businesses to increase their prices, but does this necessarily mean inflation overall for the economy? I don't think you can conclude that overall inflation will increase, certainly not as dramatically as keepngoal suggested above. I think the Cato Institute point is that the big driver for inflation is the amount of money flowing into the economy. For instance, economies before WWII experienced hyper-inflation because their governments basically printed new money.

    I agree that some jobs will be lost. But new jobs will be created as the people making more money will have more to spend. Overall, it's probably a wash. From what I've read, predictions of dire consequences for minimum wage increases at the local level have turned out never to materialize.

    I'm sorry for keepingoal that his business will have to deal with this, but I think overall things will be better for society if we can raise up the people at the bottom end of the pay scale. And to me, at least, this seems like the best way to do so.


    "The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity." -Jared Diamond, Collapse

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    Re: The economy

    There is a very strong economic argument that the proper minimum wage is $0.00.



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    Re: The economy

    Quote Originally Posted by alaskaguy View Post
    There is a very strong economic argument that the proper minimum wage is $0.00.
    Do you like labor unions? I think a hushed psychological side effect/benefit of the minimum wage is that it helps deter workers in certain industries that tend to make low wages from unionizing or joining unions. I'm sure there are some (perhaps many?) "minimum wage" jobs where the market on its own would not command a minimum wage salary. Remove the minimum wage and union membership in those industries will explode. That would be much uglier than paying a minimum wage.

    Personally, I don't have a problem with the minimum wage.


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