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Printing Money = Wage And Savings Deflation

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Printing Money = Wage and Savings DEFLATION

Let me get this straight, if we have £100.00 in a system, then we introduce a further £100.00, then now there is double the amount of money in the system? Not rocket science.

I am external to this system, I am an individual entity, but do extract a wage from this system and all of my savings make up part of this system.

So of the original £100.00 in the system, I earn a very finite amount I call a wage, by which is paid to me yearly for carrying out a task. Say I am a big earner, I earn 50p per annum, I also have 50p in savings, so my yearly wage combined with my total savings will equal 100th of the total amount of money in the original system?

Now they have introduced this further £100.00 into the system, my savings have devalued by half, but more importantly, my yearly wage has devalued by half.

So yes I have lost half my savings relative to the original buying power prior to the introduction of the further £100.00 into the system.

But now I am working for half my original wage, so the staples have increased in cost by 100%. The printing of money to such an extent where it has a cost inflationary effect of the necessities for us all to survive, will either put many in the gutter, or cause rampant WAGE inflation, and we all know what happens to interest rates when wage inflation starts to fly?

By printing money will cause cost inflation yes, but you can bet the majority will need a wage rise or benefit rise to offset the cost inflationary effect? Strikes anyone?

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\o/

Well done.

Someone will be along in a minute to tell you that wages must go up or they won't be able to afford things. Therefore no wages rises means no inflation. :lol:

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\o/

Well done.

Someone will be along in a minute to tell you that wages must go up or they won't be able to afford things. Therefore no wages rises means no inflation. :lol:

No need to get nasty

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Printing Money = Wage and Savings DEFLATION

Let me get this straight, if we have £100.00 in a system, then we introduce a further £100.00, then now there is double the amount of money in the system? Not rocket science.

I am external to this system, I am an individual entity, but do extract a wage from this system and all of my savings make up part of this system.

So of the original £100.00 in the system, I earn a very finite amount I call a wage, by which is paid to me yearly for carrying out a task. Say I am a big earner, I earn 50p per annum, I also have 50p in savings, so my yearly wage combined with my total savings will equal 100th of the total amount of money in the original system?

Now they have introduced this further £100.00 into the system, my savings have devalued by half, but more importantly, my yearly wage has devalued by half.

So yes I have lost half my savings relative to the original buying power prior to the introduction of the further £100.00 into the system.

But now I am working for half my original wage, so the staples have increased in cost by 100%. The printing of money to such an extent where it has a cost inflationary effect of the necessities for us all to survive, will either put many in the gutter, or cause rampant WAGE inflation, and we all know what happens to interest rates when wage inflation starts to fly?

By printing money will cause cost inflation yes, but you can bet the majority will need a wage rise or benefit rise to offset the cost inflationary effect? Strikes anyone?

Nicely put. They've kept the miracle economy going for the last decade by turning Keynsian economics on its head, the public have been pump priming and are now maxed out. It's now that they want to adopt real Keynesian principles and force the public into even more debt. If they think they can pull this off and avoid any negative consequences then they're barking.

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Printing Money = Wage and Savings DEFLATION

Let me get this straight, if we have £100.00 in a system, then we introduce a further £100.00, then now there is double the amount of money in the system? Not rocket science.

I am external to this system, I am an individual entity, but do extract a wage from this system and all of my savings make up part of this system.

So of the original £100.00 in the system, I earn a very finite amount I call a wage, by which is paid to me yearly for carrying out a task. Say I am a big earner, I earn 50p per annum, I also have 50p in savings, so my yearly wage combined with my total savings will equal 100th of the total amount of money in the original system?

Now they have introduced this further £100.00 into the system, my savings have devalued by half, but more importantly, my yearly wage has devalued by half.

So yes I have lost half my savings relative to the original buying power prior to the introduction of the further £100.00 into the system.

But now I am working for half my original wage, so the staples have increased in cost by 100%. The printing of money to such an extent where it has a cost inflationary effect of the necessities for us all to survive, will either put many in the gutter, or cause rampant WAGE inflation, and we all know what happens to interest rates when wage inflation starts to fly?

By printing money will cause cost inflation yes, but you can bet the majority will need a wage rise or benefit rise to offset the cost inflationary effect? Strikes anyone?

The problem that needs to be corrected is excessive asset inflation (mainly property) that has, because of excessive leverage, left too many economic actors bankrupt.

The point of printing money will be to re-balance the books, this means that everything else (wages, food, clothes, computers...) must undergo the same high inflation that property underwent, while property prices are somehow restrained from joining in the fun.

That, IMO, is the only credible argument in favour of 'quantitive easing' -- a one-off inflationary injection to bring asset-prices back into the proper relation with everything else, as an alternative to the more orthodox (and fairer) corrective measure which would be asset-price deflation.

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2+2=?

Except it doesn't in this case. It all depends on how much the printed money is racked up by the banking system. It could double the amount of credit swilling around or make very little difference.

Either way, printing money is still a bad idea. The amount that would need to be printed to replace destroyed credit would be a lot more than double.

p-o-p

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\o/

Well done.

Someone will be along in a minute to tell you that wages must go up or they won't be able to afford things. Therefore no wages rises means no inflation. :lol:

Lets say we have a million percent inflation but wages stay static. Nobody in britain would be able to afford a penny sweet. So how can you have one without the other?

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Lets say we have a million percent inflation but wages stay static. Nobody in britain would be able to afford a penny sweet. So how can you have one without the other?

Presumably a million pound sweet under your scenario.

p-o-p

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\o/

Well done.

Someone will be along in a minute to tell you that wages must go up or they won't be able to afford things. Therefore no wages rises means no inflation. :lol:

time is an asset in itself and in any business, human resource is the most important asset. if the cost of goods and services go up due to inflation, it stands to reason that the cost of your time goes up along the same lines as well.

Edited by mfp123

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time is an asset in itself and in any business, human resource is the most important asset. if the cost of goods and services go up due to inflation, it stands to reason that the cost of your time goes up along the same lines as well.

Or you get sacked and the business fails.

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i think the header is meant to say printing money = wage devaluation - not deflation.

to be fair its pretty obvious really.

Nope, it was meant to say "Printing Money = Wage And Savings Deflation! ;) i.e. wages and savings deflate in value! :lol:

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Give it 2 years and we will know if the deflationists or the inflationists are right.

Unless someone has a crystal ball on them.

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Lets say we have a million percent inflation but wages stay static. Nobody in britain would be able to afford a penny sweet. So how can you have one without the other?

the problem comes in that there wont BE ANY penny sweets.

reason: shop sells its stock in the morning, but cant afford to buy the afternoons stock with the proceeds as th eprice has gone up.

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the problem comes in that there wont BE ANY penny sweets.

reason: shop sells its stock in the morning, but cant afford to buy the afternoons stock with the proceeds as th eprice has gone up.

Why does the price go up?

Because of bidding from those with the new money.

Here is the genius bit in our "miracle economy" - most middle and lower class people do not bid. They do not haggle. They go to the shops and pay whatever the price is. Indeed, there is no mechanism to haggle at asda. You pay the listed price or get chucked out.

It might be the only thing slowing the inevitable down.

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Why does the price go up?

Because of bidding from those with the new money.

Here is the genius bit in our "miracle economy" - most middle and lower class people do not bid. They do not haggle. They go to the shops and pay whatever the price is. Indeed, there is no mechanism to haggle at asda. You pay the listed price or get chucked out.

It might be the only thing slowing the inevitable down.

I think there is a bit of confusion between nominal and real price here. Its simple really because we can just look at Zimbabwe.

A sweet in Zimbabwe may cost a hundred million zim dollars (if you can find one) but someone with a hundred US dollars or an oz of gold could buy the shop and employ the people working in it for a year. So the real price has come down (because no one is buyng) and the nominal price has gone up (because the currency has been devalued).

Money, at its most basic form, is the value of labour. For example the cost of a handmade pair of shoes or clogs has approximated to the cost of a days labour for generations. The fact that you can buy shoes for £10 now is the result of mechanisation and globalisation benefiting from low labour cost elsewhere.

If there is hyperinflation savings in currency are wiped out but anyone earning a wage will just about maintain the purchasing power of their wage (especially if they are employed by the people printing the money)

Like someone above said, if you expect this, buy gold.

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I think there is a bit of confusion between nominal and real price here. Its simple really because we can just look at Zimbabwe.

A sweet in Zimbabwe may cost a hundred million zim dollars (if you can find one) but someone with a hundred US dollars or an oz of gold could buy the shop and employ the people working in it for a year. So the real price has come down (because no one is buyng) and the nominal price has gone up (because the currency has been devalued).

But they won't until things steady because while you get the street, you then get the tax bill for it, meaning you need to have billions of zim dollars.

Money, at its most basic form, is the value of labour.

Marx's labour theory of value has been discredited for about 80 years.

For example the cost of a handmade pair of shoes or clogs has approximated to the cost of a days labour for generations. The fact that you can buy shoes for £10 now is the result of mechanisation and globalisation benefiting from low labour cost elsewhere.

No, really, labour has nothing to do with value, it's a cost.

If there is hyperinflation savings in currency are wiped out but anyone earning a wage will just about maintain the purchasing power of their wage (especially if they are employed by the people printing the money)

Like someone above said, if you expect this, buy gold.

Or something in demand, that people want.

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But they won't until things steady because while you get the street, you then get the tax bill for it, meaning you need to have billions of zim dollars.

Marx's labour theory of value has been discredited for about 80 years.

No, really, labour has nothing to do with value, it's a cost.

Or something in demand, that people want.

Injin.

I never read Marx. I worked it out for myself and it seems to work. The last 80 years have been an aberration which we might be in the process of correcting.

The trouble with "something in demand" is that it changes over time. I have a stash of 40 inch CRT computer monitors in my empty city centre 2 bed flat I was hoping to sell at profit when the time is right!

I'm no gold bug but it has the advantage of being exchangable for other assets, portable and non-perishable and I am beginning to warm to it (just as it reaches all time high in Sterling - am I a mug?)

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= buy gold and silver.

;)

As Cgnao would say - protect yourselves now.

indeed

two points

1) there is too much competition from abroad for wages to rise

2) assett prices (especially houses) will fall with reduced affordability.

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indeed

two points

1) there is too much competition from abroad for wages to rise

2) assett prices (especially houses) will fall with reduced affordability.

Wow. Are you THE CGNAO I have heard so much about?

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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