The $15 minimum wage

terp said:

On the deflation.  Is deflation itself bad? In and of itself, the answer is no. In fact, we've had periods of growth in this country during deflation.  Think about a situation where the money supply is stable.  Now assume we have periods of growth in productivity.   That is going to push prices down, because we will increase supply at a greater rate than demand is increasing.    That would be a very good thing as everyone is getting richer. 

Now if the government printed money enough to devalue the currency at the same rate that supply is increasing over demand, you would have stable prices.  But that would simply take that benefit from all society and place it in the hands of the wealthy(asset holders, those connected to the governement, etc)

The issue with this is the way our economy is structured today.  Essentially, our monetary system is a debt based system.  Historically, money has been a medium of exchange.   That is: it is something that has inherent value(i.e. gold, silver).   Our money today is actually based on credit.  

That means it is debt. If you increase debt you increase the money supply.  If you decrease debt by either paying back debt or by defaulting on debt, you decrease the money supply.  When you decrease the money supply debts are more difficult to pay back as the value of your debt increases.  

So, the reason why deflation is so scary is because of the structure of our modern monetary system and thus the structure of our economy.   The fear is that we start paying down debt. This then causes deflation.  The value of money increase, and the value of debt increases.  The debt gets more difficult to pay back & you start to see defaults increasing.   This could cause a pretty significant economic dislocation.

That is the fear. The problem is to avoid that fate, you need to keep increasing the money supply or the system collapses on itself.  But in doing this, you have to keep adding leverage to the system.  This growing leverage makes the potential for dislocation even greater.   Thus, the system over time gets increasingly brittle and the potential resulting disaster keeps growing. 

To put this all in perspective, 42% of all the dollars ever printed were printed in 2020.  Each crisis or risk of crisis will require greater and greater monetary growth.  While these situations can certainly last longer than someone like myself may anticipate(I was calling the housing bubble for years), you can see that the system may have its limits. 

As you can see, efforts to slow down speculation just inhibits the monetary growth.  The issue with that is that runs completely counter to what this system needs. And thus, is not very likely to occur in any real way.  Basically, the people running monetary policy are not very likely to get behind such a plan.

 deflation is not good because it can cause a perpetuating cycle of negative growth. Why would anyone buy a big ticket item today if they know it will cost less tomorrow? People can put off discretionary spending indefinitely waiting for lower prices. 

ml1 said:

terp said:

On the deflation.  Is deflation itself bad? In and of itself, the answer is no. In fact, we've had periods of growth in this country during deflation.  Think about a situation where the money supply is stable.  Now assume we have periods of growth in productivity.   That is going to push prices down, because we will increase supply at a greater rate than demand is increasing.    That would be a very good thing as everyone is getting richer. 

Now if the government printed money enough to devalue the currency at the same rate that supply is increasing over demand, you would have stable prices.  But that would simply take that benefit from all society and place it in the hands of the wealthy(asset holders, those connected to the governement, etc)

The issue with this is the way our economy is structured today.  Essentially, our monetary system is a debt based system.  Historically, money has been a medium of exchange.   That is: it is something that has inherent value(i.e. gold, silver).   Our money today is actually based on credit.  

That means it is debt. If you increase debt you increase the money supply.  If you decrease debt by either paying back debt or by defaulting on debt, you decrease the money supply.  When you decrease the money supply debts are more difficult to pay back as the value of your debt increases.  

So, the reason why deflation is so scary is because of the structure of our modern monetary system and thus the structure of our economy.   The fear is that we start paying down debt. This then causes deflation.  The value of money increase, and the value of debt increases.  The debt gets more difficult to pay back & you start to see defaults increasing.   This could cause a pretty significant economic dislocation.

That is the fear. The problem is to avoid that fate, you need to keep increasing the money supply or the system collapses on itself.  But in doing this, you have to keep adding leverage to the system.  This growing leverage makes the potential for dislocation even greater.   Thus, the system over time gets increasingly brittle and the potential resulting disaster keeps growing. 

To put this all in perspective, 42% of all the dollars ever printed were printed in 2020.  Each crisis or risk of crisis will require greater and greater monetary growth.  While these situations can certainly last longer than someone like myself may anticipate(I was calling the housing bubble for years), you can see that the system may have its limits. 

As you can see, efforts to slow down speculation just inhibits the monetary growth.  The issue with that is that runs completely counter to what this system needs. And thus, is not very likely to occur in any real way.  Basically, the people running monetary policy are not very likely to get behind such a plan.

 deflation is not good because it can cause a perpetuating cycle of negative growth. Why would anyone buy a big ticket item today if they know it will cost less tomorrow? People can put off discretionary spending indefinitely waiting for lower prices. 

 That's exactly why nobody buys big flat screen televisions or computers.  

terp said:

 That's exactly why nobody buys big flat screen televisions or computers.  

 it's exactly why many people don't buy these items when they are first introduced. How many people do you know who paid $5K for an HDTV?

ml1 said:

terp said:

 That's exactly why nobody buys big flat screen televisions or computers.  

 it's exactly why many people don't buy these items when they are first introduced. How many people do you know who paid $5K for an HDTV?

 People buy them.   They are called early adopters.  If you bought a computer 5 years ago, you could get the same computing power for a fraction of the price today. The same is true of today's computers and cell phones. In 5 years you could get the same power for much less.  Yet, people buy computers all the time.   

People buy the goods that they need to be productive and enjoy life.  If clothes were going down in price, do you think people would walk around in burlap waiting for the price to hit rock bottom?    

If you are willing to give it even a moment of thought, I think you'll what a silly asserition your are making.  Don't feel bad though, it's a pretty common one.

terp said:

 People buy them.   They are called early adopters.  If you bought a computer 5 years ago, you could get the same computing power for a fraction of the price today. The same is true of today's computers and cell phones. In 5 years you could get the same power for much less.  Yet, people buy computers all the time.   

People buy the goods that they need to be productive and enjoy life.  If clothes were going down in price, do you think people would walk around in burlap waiting for the price to hit rock bottom?    

If you are willing to give it even a moment of thought, I think you'll what a silly asserition your are making.  Don't feel bad though, it's a pretty common one.

You are the one being silly by ignoring the word "discretionary" in my reply. People don't feel an urgency to make non-essential purchases if the prices are going to go down. It's actually been an issue in the consumer electronics industry, which I have some professional knowledge of. 

ml1 said:

terp said:

 People buy them.   They are called early adopters.  If you bought a computer 5 years ago, you could get the same computing power for a fraction of the price today. The same is true of today's computers and cell phones. In 5 years you could get the same power for much less.  Yet, people buy computers all the time.   

People buy the goods that they need to be productive and enjoy life.  If clothes were going down in price, do you think people would walk around in burlap waiting for the price to hit rock bottom?    

If you are willing to give it even a moment of thought, I think you'll what a silly asserition your are making.  Don't feel bad though, it's a pretty common one.

You are the one being silly by ignoring the word "discretionary" in my reply. People don't feel an urgency to make non-essential purchases if the prices are going to go down. It's actually been an issue in the consumer electronics industry, which I have some professional knowledge of. 

 Really? Do you know anyone without a smartphone or a computer?

"Honey, I'd take you out for our anniversary, but food prices are going down. Maybe next month!"

terp said:

PVW said:

terp said:

PVW said:

Another thought on the minimum wage, triggered by DB's observation that "almost 40 million workers make less than $15" -- why are so many workers making so little?

A plausible theory here, with proposals that propose alternatives to the minimum wage to address the proposed causes, is one I'd find pretty compelling. When I try to think through why workers are paid so little, I have a hard time coming up with theories that lend themselves to a solution other than "pay workers more."

For instance, one theory is increased automation. Ok, but we're hardly going to abandon all the technologies that have made automation possible. I fully expect automation will continue, and at a greater rate. Possibly raising worker's wages will speed this up somewhat, but that'd just be a speeding up of the inevitable. So if we're not going to actually stop or reverse automation, I have a hard time seeing what policy besides "require workers to be paid more" would actually result in workers being paid more.

But maybe I'm just being unimaginative. Perhaps others have come across proposed alternative to the minimum wage (ie something that's not just "don't do anything and the invisible hand will work it out") that were interesting, even if not ultimately convincing to them?

It is an interesting question.  At the end of the day its because they do not offer $15 an hour to their employer.  But, then the question is why is that?

There are probably numerous forces at play.  First, I would say is globalization.  Unless you are talking about highly skilled jobs(and really even there) the wage pool has widened.  And I would point out that workers in many of these other countries have much lower wages(that's why its worth having the goods shipped, pay tariffs, etc).  Another force is automation. 

Now the question I ask myself is: "Well great.  We're getting cheaper goods from overseas.  This should bring prices down." Then, even if you are making a low wage, that wage is going to buy more.  This would be a real raise, but a nominally, you are not getting a raise.

However, we don't see that phenomenon either.  By all rights, we should be in a highly deflationary environment.  We have lower cost structures, why aren't we seeing the pay off in lower prices. 

And the reason, as far as I can tell, is that we have been printing $$ this whole time. And most of the advantages of this go to the wealthy and connected. And we have seen rampant inflation in assets.   But, the little guy can't save. The prices for things she wants to buy do not go down. In fact they are going up.  Some of this is statistcally understated.  So, the little guy falls further behind.  

I'd agree that globalization is a huge factor, but, as with my point on automation, I don't see that reversing. Sure, there's been a bit of a step back from that as we've seen a mini-revival of some protectionism, but we're never going fully back to a world that doesn't have a heavy reliance on global supply chains.

As for being in a deflationary environment, IIRC one of the great fears in the 2008 crisis was that we were headed toward one, and all the money printing was meant to stave that off. Putting aside our potential disagreements on whether that's what actually happened, I don't think you're saying it would be good to be in a deflationary environment, are you? As I understand it, that would be pretty awful.

To your point on asset inflation -- wouldn't a policy of raising taxes on the wealthy (thereby removing the excess money they're sticking into assets) while raising wages for the underpaid (who aren't going to be using that money betting on the stock market) address that? It seems that it's less the "printing money" and where that money's been going that's the problem, no?

On the deflation.  Is deflation itself bad? In and of itself, the answer is no. In fact, we've had periods of growth in this country during deflation.  Think about a situation where the money supply is stable.  Now assume we have periods of growth in productivity.   That is going to push prices down, because we will increase supply at a greater rate than demand is increasing.    That would be a very good thing as everyone is getting richer. 

Now if the government printed money enough to devalue the currency at the same rate that supply is increasing over demand, you would have stable prices.  But that would simply take that benefit from all society and place it in the hands of the wealthy(asset holders, those connected to the governement, etc)

The issue with this is the way our economy is structured today.  Essentially, our monetary system is a debt based system.  Historically, money has been a medium of exchange.   That is: it is something that has inherent value(i.e. gold, silver).   Our money today is actually based on credit.  

That means it is debt. If you increase debt you increase the money supply.  If you decrease debt by Neither paying back debt or by defaulting on debt, you decrease the money supply.  When you decrease the money supply debts are more difficult to pay back as the value of your debt increases.  

So, the reason why deflation is so scary is because of the structure of our modern monetary system and thus the structure of our economy.   The fear is that we start paying down debt. This then causes deflation.  The value of money increase, and the value of debt increases.  The debt gets more difficult to pay back & you start to see defaults increasing.   This could cause a pretty significant economic dislocation.

That is the fear. The problem is to avoid that fate, you need to keep increasing the money supply or the system collapses on itself.  But in doing this, you have to keep adding leverage to the system.  This growing leverage makes the potential for dislocation even greater.   Thus, the system over time gets increasingly brittle and the potential resulting disaster keeps growing. 

To put this all in perspective, 42% of all the dollars ever printed were printed in 2020.  Each crisis or risk of crisis will require greater and greater monetary growth.  While these situations can certainly last longer than someone like myself may anticipate(I was calling the housing bubble for years), you can see that the system may have its limits. 

As you can see, efforts to slow down speculation just inhibits the monetary growth.  The issue with that is that runs completely counter to what this system needs. And thus, is not very likely to occur in any real way.  Basically, the people running monetary policy are not very likely to get behind such a plan.

 The two deflationary episodes in modern US history I'm aware of are the Great Depression and the Great Recession -- neither of which I'd call a ringing endorsement of deflation as good times. My understanding is that deflation was more common in the 19th C, but that prices in general were much more volatile -- the bargain we've made in modern economics is persistent, but low and predictable, inflation.

You note that our monetary system is a debt based system, but it seems to me that it's actually the economy as a whole that's debt based. Indeed, it's difficult for me to imagine how an industrial economy would even be possible absent large amounts of debt. I think that's an intuitive point when we think of kind of "classic" industrial growth like factories and railroads and other capital-intensive projects, but even in our post-industrial economy where areas like software have driven a lot of growth, you do still end up needing quite a bit of capital, and absent debt I just don't see how that would even be possible.

So debt is pretty central to our entire economy, so the idea of that debt getting more expensive I think is legitimately pretty scary. Everyone from people with student loan debt to multinational corporations would be in for a world of hurt in the face of significant deflation.

Now if I understand you properly, you're arguing that this is the problem -- that our economy shouldn't rely so much on debt. But, again, I have a hard time seeing how our economy could work without it, so this sounds to me more like an argument for a very different economy than we have now -- one where companies are much, much smaller, where supply chains are shorter, and where growth in general is much lower. I don't think that's the argument you are intending to make, though, so where am I going wrong in my reading?

terp is the new right wing of MOL now with mtierney seemingly gone. I applaud that, as he at least is willing to back up his positions unlike MT.

Interesting how terping has become a verb.

PVW said:

terp said:

PVW said:

terp said:

PVW said:

Another thought on the minimum wage, triggered by DB's observation that "almost 40 million workers make less than $15" -- why are so many workers making so little?

A plausible theory here, with proposals that propose alternatives to the minimum wage to address the proposed causes, is one I'd find pretty compelling. When I try to think through why workers are paid so little, I have a hard time coming up with theories that lend themselves to a solution other than "pay workers more."

For instance, one theory is increased automation. Ok, but we're hardly going to abandon all the technologies that have made automation possible. I fully expect automation will continue, and at a greater rate. Possibly raising worker's wages will speed this up somewhat, but that'd just be a speeding up of the inevitable. So if we're not going to actually stop or reverse automation, I have a hard time seeing what policy besides "require workers to be paid more" would actually result in workers being paid more.

But maybe I'm just being unimaginative. Perhaps others have come across proposed alternative to the minimum wage (ie something that's not just "don't do anything and the invisible hand will work it out") that were interesting, even if not ultimately convincing to them?

It is an interesting question.  At the end of the day its because they do not offer $15 an hour to their employer.  But, then the question is why is that?

There are probably numerous forces at play.  First, I would say is globalization.  Unless you are talking about highly skilled jobs(and really even there) the wage pool has widened.  And I would point out that workers in many of these other countries have much lower wages(that's why its worth having the goods shipped, pay tariffs, etc).  Another force is automation. 

Now the question I ask myself is: "Well great.  We're getting cheaper goods from overseas.  This should bring prices down." Then, even if you are making a low wage, that wage is going to buy more.  This would be a real raise, but a nominally, you are not getting a raise.

However, we don't see that phenomenon either.  By all rights, we should be in a highly deflationary environment.  We have lower cost structures, why aren't we seeing the pay off in lower prices. 

And the reason, as far as I can tell, is that we have been printing $$ this whole time. And most of the advantages of this go to the wealthy and connected. And we have seen rampant inflation in assets.   But, the little guy can't save. The prices for things she wants to buy do not go down. In fact they are going up.  Some of this is statistcally understated.  So, the little guy falls further behind.  

I'd agree that globalization is a huge factor, but, as with my point on automation, I don't see that reversing. Sure, there's been a bit of a step back from that as we've seen a mini-revival of some protectionism, but we're never going fully back to a world that doesn't have a heavy reliance on global supply chains.

As for being in a deflationary environment, IIRC one of the great fears in the 2008 crisis was that we were headed toward one, and all the money printing was meant to stave that off. Putting aside our potential disagreements on whether that's what actually happened, I don't think you're saying it would be good to be in a deflationary environment, are you? As I understand it, that would be pretty awful.

To your point on asset inflation -- wouldn't a policy of raising taxes on the wealthy (thereby removing the excess money they're sticking into assets) while raising wages for the underpaid (who aren't going to be using that money betting on the stock market) address that? It seems that it's less the "printing money" and where that money's been going that's the problem, no?

On the deflation.  Is deflation itself bad? In and of itself, the answer is no. In fact, we've had periods of growth in this country during deflation.  Think about a situation where the money supply is stable.  Now assume we have periods of growth in productivity.   That is going to push prices down, because we will increase supply at a greater rate than demand is increasing.    That would be a very good thing as everyone is getting richer. 

Now if the government printed money enough to devalue the currency at the same rate that supply is increasing over demand, you would have stable prices.  But that would simply take that benefit from all society and place it in the hands of the wealthy(asset holders, those connected to the governement, etc)

The issue with this is the way our economy is structured today.  Essentially, our monetary system is a debt based system.  Historically, money has been a medium of exchange.   That is: it is something that has inherent value(i.e. gold, silver).   Our money today is actually based on credit.  

That means it is debt. If you increase debt you increase the money supply.  If you decrease debt by Neither paying back debt or by defaulting on debt, you decrease the money supply.  When you decrease the money supply debts are more difficult to pay back as the value of your debt increases.  

So, the reason why deflation is so scary is because of the structure of our modern monetary system and thus the structure of our economy.   The fear is that we start paying down debt. This then causes deflation.  The value of money increase, and the value of debt increases.  The debt gets more difficult to pay back & you start to see defaults increasing.   This could cause a pretty significant economic dislocation.

That is the fear. The problem is to avoid that fate, you need to keep increasing the money supply or the system collapses on itself.  But in doing this, you have to keep adding leverage to the system.  This growing leverage makes the potential for dislocation even greater.   Thus, the system over time gets increasingly brittle and the potential resulting disaster keeps growing. 

To put this all in perspective, 42% of all the dollars ever printed were printed in 2020.  Each crisis or risk of crisis will require greater and greater monetary growth.  While these situations can certainly last longer than someone like myself may anticipate(I was calling the housing bubble for years), you can see that the system may have its limits. 

As you can see, efforts to slow down speculation just inhibits the monetary growth.  The issue with that is that runs completely counter to what this system needs. And thus, is not very likely to occur in any real way.  Basically, the people running monetary policy are not very likely to get behind such a plan.

 The two deflationary episodes in modern US history I'm aware of are the Great Depression and the Great Recession -- neither of which I'd call a ringing endorsement of deflation as good times. My understanding is that deflation was more common in the 19th C, but that prices in general were much more volatile -- the bargain we've made in modern economics is persistent, but low and predictable, inflation.

You note that our monetary system is a debt based system, but it seems to me that it's actually the economy as a whole that's debt based. Indeed, it's difficult for me to imagine how an industrial economy would even be possible absent large amounts of debt. I think that's an intuitive point when we think of kind of "classic" industrial growth like factories and railroads and other capital-intensive projects, but even in our post-industrial economy where areas like software have driven a lot of growth, you do still end up needing quite a bit of capital, and absent debt I just don't see how that would even be possible.

So debt is pretty central to our entire economy, so the idea of that debt getting more expensive I think is legitimately pretty scary. Everyone from people with student loan debt to multinational corporations would be in for a world of hurt in the face of significant deflation.

Now if I understand you properly, you're arguing that this is the problem -- that our economy shouldn't rely so much on debt. But, again, I have a hard time seeing how our economy could work without it, so this sounds to me more like an argument for a very different economy than we have now -- one where companies are much, much smaller, where supply chains are shorter, and where growth in general is much lower. I don't think that's the argument you are intending to make, though, so where am I going wrong in my reading?

 You basically understand it, but rather than it shouldn't rely so much on debt, I'd say it more that it is based on debt.  

And you're right.  Debt is necessary.  People and companies should take on some debt in order to increase production.   However, I am of the thinking that this debt should be based on saving.  It should not be issued by a politboro like the FOMC.   

Proper pricing of debt would tend to lead to better risks being taken and a more optimal resource allocation.   Instead we go from 1 bubble to the next.

jimmurphy said:

terp is the new right wing of MOL now with mtierney seemingly gone. I applaud that, as he at least is willing to back up his positions unlike MT.

Interesting how terping has become a verb.

 Funny factoid. In college sports circles, terping was used to mean a fanbase complaining about the refs. In the late 90's early 2000's we were the worst.  

terp said:

 Funny factoid. In college sports circles, terping was used to mean a fanbase complaining about the refs. In the late 90's early 2000's we were the worst.  

 So that makes you a Maryland Terrapin, I take it?

jimmurphy said:

terp said:

 Funny factoid. In college sports circles, terping was used to mean a fanbase complaining about the refs. In the late 90's early 2000's we were the worst.  

 So that makes you a Maryland Terrapin, I take it?

 Yes. I went to the University of Maryland. I know, public university.  A land grand college no less!

As an aside, I do not consider myself right wing exactly.  I would say maybe I'm just the outsider here? I'd have just as many disagreements with a republican audience though likely on a different set of topics.

jimmurphy said:

terp is the new right wing of MOL now with mtierney seemingly gone. I applaud that, as he at least is willing to back up his positions unlike MT.

Interesting how terping has become a verb.

 And terpene is a naturally occurring compound in his brain cells.

Jaytee said:

 And terpene is a naturally occurring compound in his brain cells.

 I probably would have gone with "And he's guilty of moral terpitude"

terp said:

 I probably would have gone with "And he's guilty of moral terpitude"

 Turpitude is appropriate 

terp said:

 Yes. I went to the University of Maryland. I know, public university.  A land grand college no less!

As an aside, I do not consider myself right wing exactly.  I would say maybe I'm just the outsider here? I'd have just as many disagreements with a republican audience though likely on a different set of topics.

I understand that you don’t like that label. Close enough for this board.

Despite those who have said not to encourage you, I do.

We need something to think about.

And I didn’t like thinking of myself as the right wing, given the discussions lately. Somebody smarter (as some might agree), or at least more committed than me needs to be the foil.

jimmurphy said:

I understand that you don’t like that label. Close enough for this board.

Despite those who have said not to encourage you, I do.

We need something to think about.

And I didn’t like thinking of myself as the right wing, given the discussions lately. Somebody smarter (as some might agree), or at least more committed than me needs to be the foil.

 Seems to me you're way smarter than you give yourself credit for. Thank you for seeing the value in different points of view.

PVW said:

 The two deflationary episodes in modern US history I'm aware of are the Great Depression and the Great Recession -- neither of which I'd call a ringing endorsement of deflation as good times. My understanding is that deflation was more common in the 19th C, but that prices in general were much more volatile -- the bargain we've made in modern economics is persistent, but low and predictable, inflation.

You note that our monetary system is a debt based system, but it seems to me that it's actually the economy as a whole that's debt based. Indeed, it's difficult for me to imagine how an industrial economy would even be possible absent large amounts of debt. I think that's an intuitive point when we think of kind of "classic" industrial growth like factories and railroads and other capital-intensive projects, but even in our post-industrial economy where areas like software have driven a lot of growth, you do still end up needing quite a bit of capital, and absent debt I just don't see how that would even be possible.

So debt is pretty central to our entire economy, so the idea of that debt getting more expensive I think is legitimately pretty scary. Everyone from people with student loan debt to multinational corporations would be in for a world of hurt in the face of significant deflation.

Now if I understand you properly, you're arguing that this is the problem -- that our economy shouldn't rely so much on debt. But, again, I have a hard time seeing how our economy could work without it, so this sounds to me more like an argument for a very different economy than we have now -- one where companies are much, much smaller, where supply chains are shorter, and where growth in general is much lower. I don't think that's the argument you are intending to make, though, so where am I going wrong in my reading?

 you have more patience for nonsense than I do. Kudos

I’d like to go back to the question of delayed purchases: people purchase or don’t, based on need as well as wants. We’ve had to purchase a new desktop recently so my D can continue working from home; in fact we had to purchase a new desk, office chair, and other furniture too. After only a few years here, the old equipment couldn’t handle consistent heavy everyday use, and bulkier furniture was proving unworkable. 
Stimulus payments helped us with these decisions, even though we shopped around and bought on sale. 
i can’t remember the last time we went out for a celebratory meal, just us, or even to the pics or a concert. It’s several years. Why pay more when you can cook/eat at home? (Sigh)

We don’t dryclean as often anymore, partly because it’s out of our way, and because we don’t wear formal business clothes as much lately. But for about 6 years at least, we’ve been washing & pressing clothes ourselves because of costs. Same with my fancy tablecloths - I don’t use them because they need special laundering services. So I don’t ‘entertain’ (luckily this place is very small). 

terp said:

jimmurphy said:

terp said:

 Funny factoid. In college sports circles, terping was used to mean a fanbase complaining about the refs. In the late 90's early 2000's we were the worst.  

 So that makes you a Maryland Terrapin, I take it?

 Yes. I went to the University of Maryland. I know, public university.  A land grand college no less!

I was there around the same time for graduate school. Was also working in DC, and rooming with a friend who was in the CIA. She ended up in a bit of trouble by dating the wrong person... good times.

terp said:

 You basically understand it, but rather than it shouldn't rely so much on debt, I'd say it more that it is based on debt.  

And you're right.  Debt is necessary.  People and companies should take on some debt in order to increase production.   However, I am of the thinking that this debt should be based on saving.  It should not be issued by a politboro like the FOMC.   

Proper pricing of debt would tend to lead to better risks being taken and a more optimal resource allocation.   Instead we go from 1 bubble to the next.

 That still seems like a pretty strict constraint on debt to me. The modern economy is based on growth. It is fundamentally future-oriented. It's basically a giant collective bet that in the future there will be more money, more growth, more consumption, than there is today.

If debt is based on savings, though, that's based on the past. It's money set aside from previous earnings, not an expectation of future ones. And that's an orientation I just don't see as compatible with a growth-based economy

There are of course people who do take issue with growth as the basis for the economy, arguing that capitalism itself, with its drive to constantly grow more and consume more, is the problem. I don't really associate you with those kinds of views, though -- you seem pretty staunchly pro-capitalism. What seems to me a contradiction must mean you see this differently.

Maybe if you were to explain what you mean by "proper pricing of debt?"

Good morning!

Thought you might be amused by this quote from the rolling-live column of Guardian Australia’s coverage of our political day today:

“And outside of parliament, RBA governor Dr Philip Lowe will address the National Press Club, outlining the central bank’s plans for the year – the bank has a focus on employment, over inflation, with a keen eye on wage growth. Which is a bit of a turn around, so it will be interesting to hear him explain more about what the bank wants. Wage growth in Australia, even before the pandemic, was almost non-existent and it turns out that people not having money means the economy suffers. Who would have thought it?”

(RBA is Reserve Bank of Australia our central bank.)

I’ve just a report that Mr Biden believes the $15/hr minimum wage claim will fail to pass the Senate ‘because it’s not in the spirit of Reconciliation’. 
i don’t quite understand what this means - Reconciliation in this sense? Could some pls explain it to me? (Relatively simply,pls; been a very rough week with multi-migraines and post-chemo effects)

TIA

Also, do we laugh at Texas apparently getting serious at succession moves?? - yeah, I know that’s a sep thread. 

"Reconciliation " is actually a Senate parliamentary procedure which allows certain legislation to be passed by simple majority instead of the 60 votes required for other legislation. The Dems are setting up to pass Biden's plan under reconciliation so as to bypass the 60 vote requirement.

Having said that, I don't quite understand Biden's comment, unless he's just stating that the $15 minimum wage definitely would not get 60 votes.

ETA: the rules for which legislation fits within reconciliation are kind of arcane, but apparently the min. wage is a tough fit, which is the context for Biden's comment.

Thank you for that. From what I’d read, I thought the legislation had gone through thanks to the casting vote - but then, as I said, my head’s all scrambled. 
The article was based on the CBS interview Mr Biden gave; apparently he’s prepared to let the wage rise drop ‘for now’ although he doesn’t think it’s fair to work for less. Sounded like he’s being pragmatic. 

if i've got it right, or rightish, "Reconciliation" is supposed to be used only for budget items, and maybe including a change in the minimum wage under that heading was a stretch.  I believe the vote that already took place was on the procedural issue, Are we going to use Reconciliation for this bill?  Vote on the bill itself will come later.

Now for corrections - 3 - 2- 1...

The House passes a bill, the Senate passes their version of the bill, then the differences between them need to be reconciled -- hence reconciliation.

Most bills in the Senate can be filibustered, but one of the exceptions is yearly budget resolution. So "budget reconciliation" -- which often gets shortened to just "reconciliation" becomes a way to get things passed in the Senate without the threat of a filibuster. You can do one per fiscal year budget, so you do have to be strategic in using it.

Because budget reconciliation is, theoretically, about the federal budget, measures in a reconciliation bill are supposed to be relevant to spending, revenue, or debt. You can get pretty creative on this, but ultimately the Senate Parliamentarian rules on any dispute.

The House passed their budget resolution, and the Senate also just did (the "vote-a-rama"), setting up the path for a reconciliation bill.

here ya go. get lost in the reconciliation rabbit hole

However, I don't see the relationship of the reconciliation process to the act of reconciling Senate and House versions of a bill. I guess there must be and that's why it's called reconciliation - but I don't see it.

drummerboy said:

here ya go. get lost in the reconciliation rabbit hole

However, I don't see the relationship of the reconciliation process to the act of reconciling Senate and House versions of a bill. I guess there must be and that's why it's called reconciliation - but I don't see it.

 Well there's two different bills currently. The House passed a budget bill, the Senate passed a budget bill, (joanne's reference to voting is on one of those bills -- probably the Senate one, I'd guess, based on timing), and now a third bill to reconcile them needs to be written. That third, yet-to-be-written bill is the "reconciliation". It's that third bill, passed by both the House and Senate, that will actually become law.