Wage Deflation
- Thread starter libertad
- Start date
Won't last long... right.
People will stop increasing the savings rate and go right back to a credit financed spending binge? The aftermath of a 25 years of household credit mania only lasted 8 months? Debt & interest service as a % of disposable income is at a 25 year high. How will this metric show any improvement?
And who'll be handing out all this extra credit? Banks and credit card companies will open the credit lines to white trash unemployed high school dropouts again -- the same clientele that defaulted on the last round of credit?
Wages are deflating, unemployment is up, part-time work is up, average work week is down. And the Fed (alone, without aggressive spending programs by Congress) can't do jackshit about it. The Fed (alone) could print gargantuan amounts of money, they can't force shell-shocked consumers to take out a loan instead of paying the old one down.
That does all, in fact, sound like a good argument for deflation, not inflation. Trouble is, shouldn't we be seeing some signs of that deflation by now? Aside from energy, can you name one thing that people regularly buy that costs less than it did last year? Last year companies were raising their prices and blaming rising energy costs. How many of them have lowered those costs again now that the energy bubble has burst?
Bettles
M
morganist
i noticed about a year ago that the cost of fast food rose one item in particular a mcflurry rose by about 20p about 20 per cent over night. it seemed weird at the time normally inflation is slower but a 20 per cent hike almost over night.
also i used to go to an italian place when i finished work i got friendly with the owners and asked if they were being affected by the credit crunch. they were selling pizzas much cheaper than the competition but just as good quality if not better. they said that they were doing better because the custom went from the competitors to them, but the cost rose for supplies. fortunately the value added tax was dropped so they combated the cost of supplies through tax reductions rather than passing it on to the customers. this also meant they did not have to send out new menus. anyway the point being the cost of food is rising fast and has been for about the last two years.
Fuck GM. They went BK because AMERICANS got sick of buying their shitty cars. By the time the figured out they had a problem and had better catch up with the japs on quality, the damage was already done.
As for WalMart. What's not to like? They sell crap for cheap. Maybe it makes Americans feel good to talk about all the poorly made "Chinese crap" that Walmart sells, but at the end of the day, that's what the consumer wants. They are buying the lower priced Chinese products over the "higher quality" American made (also more expensive).
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Exactly....
Thus one could construct an indicator regarding total market size ....ie what was a $70 T economy is now a $40 T economy and falling....suggests that there is less money overall to price goods and services....40/70x....
Of course houses, cars.....all big ticket items that typically require financing have had their prices and volume taken down....whereas there are small items that do not require financing.....that are commonly utilized and relatively small in price ....whose prices will respond to inelastic/elasticity....
One has $10 not $10,000 ....but can buy something....
Downsizing now is most prominant ....
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What will further negate the economy is govt. spending that is borrowed and offers no sustainable businesses....
Sustainability for money spent is what is most needed....
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This is also why the govt. should be restructuring such that businesses and big ticket valuations can be put back on the books....
A 10% state 5% fed C tax only....no other taxes.....would attract the best businesses, talent, and jobs to the US....
At the moment ....the govt. refuses to downsize in a shrinking economy and wants to take more from less....
This is the exact opposite of what should be happening....
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What would put big valuations back on the books....is a revamped worldwide exhange based on the BATS model....which should not be taxed at all in the name of efficient ....broad based capital.....
This alone would dwarf the $70 T economy that was present previously....
I don't think American consumers want "cheap Chinese", but that's what we buy to extend the buying power of our money. If American goods were perceived as equal quality for the same price, many/most of us would opt for American.
But all American-made products have a much higher labor cost component. So we have the choice of "equal quality at a higher price", or "shitty quality at an equal price".
Few mention it (except Ross Perot, remember...), but we really shot ourselves in the foot with the outsourcing and globalization play...
and much of the stuff in other stores are still "Made in China." Read the labels carefully. Just because the knife costs $30 instead of $3 at Brookstone's does not mean it was manufactured in the USA.
IMO, that is not the real reason. Itâs a simple fact, the only people who buy American cars are white and black people. 95% of non white or black people, as well as foreign white and black people, will NEVER buy an American car. Why? Well I think thatâs easy to figure out, but I wonât say it.
Now the white and black populations are somewhat stagnant, meanwhile the non white and black populations are increasing rapidly. Therefore the foreign car market is increasing just as rapidly. The non white white and black populations have given the foreign companyâs huge market share to compete with the Big 3. Due to the additional competition in the market, naturally some white and black people who would have otherwise bought American cars, now have the option of a foreign one, and they buy that. So the Big 3âs market share declines because these people donât buy their cars as much, and their populations are not rising at an exaggerated rate. Again, just my opinion.
I love Wal-Mart and go there all the time. I have nothing against it. I will say one thing about outsourcing. People say that if itâs made in America, it will cost more. Yes thatâs true, but youâre forgetting that that money is staying right here in America. If we eliminated the 900 billion dollar Chinese trade deficit, and instead made all those products here, that could create 18 MILLION, $50,000 jobs. Yes thatâs 18 millions new, good paying jobs. So do you think people will complain about paying more for a dvd player if they are making a lot more money? 18 million new jobs would virtually eliminate all unemployment. That would save billions in unemployment insurance, increase tax revenues significantly, and eliminate the need to borrow any additional money from China, among other things.
Instead, the money goes to China, and it is lost. It only comes back in the form of Treasuryâs which we have to pay back with interest. In the end, donât you think itâs worth paying a little more for that DVD player? Multinational companyâs sold out the American people for a quick profit.