Jump to content
House Price Crash Forum
Sign in to follow this  
tennaval

Inflate By Raising Wages Is The Only Answer........

Recommended Posts

Yes, thats the only way out.

Its nominal wages that need to rise, as to whether real wages rise too, thats secondary when it comes to paying off the debt.

Expecting rising real wages is not realistic given competitive pressure from the developing word.

Share this post


Link to post
Share on other sites

Yes, thats the only way out.

Its nominal wages that need to rise, as to whether real wages rise too, thats secondary when it comes to paying off the debt.

Expecting rising real wages is not realistic given competitive pressure from the developing word.

For it to work you need a global understanding where by every country does it by the same amount. Also how to put a lid on it once you have achieved your target.

It's either that or default.

Share this post


Link to post
Share on other sites

Either way means default - inflation is just soft default and spreads the losses over more people (often different people to the ones who incurred the losses).

The problem is that once TPTB allow wage inflation then the whole thing risks going totally out of control. Restricted spending power is one of the few things holding back all out inflation. Of course, in a globalised World economy even that probably won't be enough.

Share this post


Link to post
Share on other sites

Didn't watch it but in answer to that statement....fine if you happen to have a job that can pay, higher wages create less demand, higher wages create higher prices that create even less demand, a greater deficit, more fear and greater unemployment.......

The only answer is to create more productive wealth creating jobs, services and stuff the rest of the world wants and can afford to buy......lower prices, less debt and lower rents and house prices.

Share this post


Link to post
Share on other sites

It looks to me like Merv would rather lop off an arm than either raise interest rates or encourage wage inflation.

We're all going to hell in a handbasket, until he makes one of those choices a reality imo.

Edited by Wait & See

Share this post


Link to post
Share on other sites

The only answer is to create more productive wealth creating jobs, services and stuff the rest of the world wants and can afford to buy......lower prices, less debt and lower rents and house prices.

That sounds like a lot of hard work and some pain.

Doubt they'd go fo it. The deluded are still looking for the pain and effort free choice.

Printy printy.

Share this post


Link to post
Share on other sites

A good friend of mine, working in a high-tech sector in the UK has just had his pay rise announced.

2%

And this in a company that has full order books and makes good profits year after year.

Wage inflation is a thing of the 70s............ ;)

Share this post


Link to post
Share on other sites

A good friend of mine, working in a high-tech sector in the UK has just had his pay rise announced.

2%

And this in a company that has full order books and makes good profits year after year.

Wage inflation is a thing of the 70s............ ;)

Exactly its pie in the sky econo-acedemia rubbish - real world is entirely different.

Got a debt problem? Then stop spending - simples.

Got a ponzi economy? Then kill it and start again.

Edited by gravity always wins

Share this post


Link to post
Share on other sites

Merv can fix this by raising IR's. If he doesn't want wage inflation, why doesn't he try controling price inflation??

They're making themselves look like total fools, but whats even more worrying is that they don't seem to care anymore.

Edited by Wait & See

Share this post


Link to post
Share on other sites

Watched this on RT yesterday - HPCtastic

Wonder if we could persuade MK to do a UK housing special rather than the US housing focus of last night.

Also loved MK inciting banker bashing on his trip to athens :P

Share this post


Link to post
Share on other sites

Exactly its pie in the sky econo-acedemia rubbish - real world is entirely different.

Got a debt problem? Then stop spending - simples.

Got a ponzi economy? Then kill it and start again.

The whole point was that there is no way wage inflation will actually happen therefore the outcome is going to be messy.:huh:

Share this post


Link to post
Share on other sites

Exactly its pie in the sky econo-acedemia rubbish - real world is entirely different.

Got a debt problem? Then stop spending - simples.

Got a ponzi economy? Then kill it and start again.

I think you need to visit the nearest re-education centre, the new paradigm is if you have a debt problem, keep spending and acquire more debt to grow yourself out of the debt problem.

Share this post


Link to post
Share on other sites

I think you need to visit the nearest re-education centre, the new paradigm is if you have a debt problem, keep spending and acquire more debt to grow yourself out of the debt problem.

What happens to the poor saps who don't have a debt problem though? Where do they fit in? :unsure:

Share this post


Link to post
Share on other sites

I don't disagree, but as a macro economic policy it's not practical.

The government only has it in it's power to raise public sector wages which represents a tax raise for everyone else.

A better way to create inflation and put money in peoples pockets would be a QE funded handout to taxpayers,

but then you would be left with the inflation when the handouts had to stop.

Just raise wages and inflate is very easy to say, but I don't believe it is possible to do in even a half equitable fashion.

Edited by Laughing Gnome

Share this post


Link to post
Share on other sites

The ONS look at monthly amounts into the bank for their wage figures - surely bonuses and share perks are excluded? If so that would keep the official figure lower than it really is, so there is less need for the bankster's thief at the B of E to be vigilant?

The budget red book in March predicted official wage rises of at least 5.1% from 2013/14 so how high will they really be?

wages.jpg

post-15752-0-96181600-1308928019_thumb.jpg

Share this post


Link to post
Share on other sites

Merv can fix this by raising IR's. If he doesn't want wage inflation, why doesn't he try controling price inflation??

They're making themselves look like trying to make total fools of the British people,

but whats even more worrying is that they don't seem to care anymore.

+1

I say thoroughly vet all MPC members. Let's remember, two world wars failed to conquer the UK, who's to say they aren't trying by another means? Highly unlikely? Hopefully. Impossible? Sadly, no.

Share this post


Link to post
Share on other sites

+1

I say thoroughly vet all MPC members.

ooopppssss.....

They have just replaced the only person calling for a 0.5% interest rate with a Goldman Sachs economist..

Posen keeps calling for more QE and he co-authored a book with his buddy Ben Bernanke

Share this post


Link to post
Share on other sites

ooopppssss.....

They have just replaced the only person calling for a 0.5% interest rate with a Goldman Sachs economist..

Posen keeps calling for more QE and he co-authored a book with his buddy Ben Bernanke

History teaches us to never laugh too much at the notion of people up to no good

- for the newcomers thinking I'm a few wings short of a KFC bucket: Operation Bernhard was the codename of a secret Nazi plan devised during the Second World War by the RSHA and the SS to destabilise the British economy by flooding the country with forged Bank of England £5, £10, £20, and £50 notes http://en.wikipedia.org/wiki/Operation_Bernhard

Absolutely no connection to me, but just in the same Google search have come across this website accusing the BoE http://www.cobdencentre.org/2011/04/mervyn-king-operation-bernhard/

And yet today we have a similar plan in action. Mervyn King, governor of the Bank of England, has undertaken his own little “Operation Bernhard.” The base money supply of the United Kingdom – the notes and coins in circulation – has increased by over 75 percent over the last decade. That supply of dingy notes and tarnished coins that weigh down Britons’ pockets has grown by leaps and bounds that Major Krüger could only dream of.

While the Nazi’s could only produce £134,610,810 over the course of the war, this is about 7 percent of what the Bank of England was able to produce in 2010 alone! Even at the height of the operation it is claimed that about 1 million counterfeit notes were produced per month. Even if we concede that all of these notes were of the largest denomination printed (£50), this would still only amount to £600 million a year. Even this massive figure pales in comparison to the approximately 1.9 billion extra pounds of currency that the Bank of England put into circulation last year.

To put it in other words: In the last year the Bank of England pursued an operation that was over twice as effective as the Nazi’s could only dream of during the height of the war. Mervyn King and his colleagues have pursued an inflationary policy the likes of which Britain’s largest enemies could only wish for during the war.

I know that you are supposed to have love for thine enemies, but this all begs the question: Mr King, whose side are you on anyway?

For the very young who are not students of history, getting into probably very unlikely territory now but anyway http://en.wikipedia.org/wiki/Sleeper_agent#Examples

Share this post


Link to post
Share on other sites

All the people saying wage inflation can't and won't happen are I suggest, extrapolating recent trends.

Wage inflation HAS happened, to a massive degree, in the developing world. It is the main issue china has been grappling with.

As the developing world slows (as it must do, since it can't grow fast enough to benefit from significantly moderated demand in the west without causing massive malinvestment like Pettis has highlighted in china), then a good deal of the money that went there the last two decades will start coming back, from where it will have no-where to gut BUT into wages.

Then longer term increasing age dependency ratios will raise wages even for low skilled workers.

Wage inflations run in cycles:

188_10_1108_S1569-3759_2009_0000091012.png

There were significant break-outs in 1920, 1948, 1970s, since then nothing. So according to the past beat of this cycle we are probably 15 years overdue for a breakout rise in nominal wages. The fact it hasn't happened is of course the reason we are where we are.

Share this post


Link to post
Share on other sites

Exactly its pie in the sky econo-acedemia rubbish - real world is entirely different.

Got a debt problem? Then stop spending - simples.

Got a ponzi economy? Then kill it and start again.

Its much more complex than that.

When we talk about too much debt what we really mean is too much debt relative to income. But when debt is created the corresponding money is created too. Thus the real issue is that instead of wages increasing in tandem as debt loads increased, the newly created money has gone elsewhere instead of into the average workers wage packet. This fact is pretty obvious when you look at the ~10% decline in share of national income going to labour, and the rising income labour share of the top couple % of workers. Overall that means debt loads of the typical individual increases while ability to service it decreases.

If we had stopped borrowing to spend as you advocate that would have killed economic demand, reduced employment, and via that mechanism hastened the decline in national income share going to workers. This is in fact what we are seeing right now, with high inflation, rising productivity, but extremely low wage increases. Its very unclear what the end result would have been if people had en mass decided not to take on debt, but myself i believe we would have reached a crisis point little different to the one we are in now. The supposed debt problem we have isnt really the problem, but a prominent symptom of the labour-capital imbalances occurring across the world economy.

Similarly we could pop the economic bubbles and force banks to take to writedowns and losses on their loans and force asset values lower. But that in reality solves nothing because of the labour capital imbalances. We either have more bubbles immediately start to grow as the continual excess going to capital again seeks a return. Or that excess is horded by wary capital owners, resulting in a collapsing economy as money no longer flows, demand decreases, employment decreases, resulting in further demand/employment destruction in a vicous circle. The printing the UK/US is doing is actually a futile attempt to prevent this cycle, an attempt to force capital to spend on consumption.

The only way out of all this in our current monetary system in a positive way, is real term wage increases for the masses with stagnating/falling incomes for the elites, and rebalancing of world income with more going to labour relative to capital. Of course this is the last thing capital wants and will fight tooth and nail. Which, given the relative power of capital in our globalised world, most likely means economically the world is going to have problems for a long long time.

Edited by alexw

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.