Replace Trickle Down with Middle Class up

[Spungo]

Really? Companies don't invest here?

Correct.

http://www.reuters.com/article/2015/05/14/us-usa-capex-idUSKBN0NZ1HH20150514

Analyst projections for all S&P 500 companies point in the same direction: a grim year for capital expenditures.

The numbers suggest that corporate bosses across many sectors are less confident in the economy than they had been in recent years.

"They're not spending at a pace that would suggest a global recovery," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Tech companies don't invest here?

Correct. Next time you buy something, look where it's made. Almost everything comes from China, Taiwan, Japan, or South Korea. The two DVD drives I have laying around were made in China and the Philippines.

Bio-tech and pharmaceutical firms don't invest here?

Pharmaceuticals do, largely as a result of unregulated prices. Crazy how that works. The incentive to make hundreds of billions of dollars attracts investment money from around the globe. If you tried taxing those companies at 90%, they would move away. That's how capitalism works. Things that are rewarded happen more often. Things that are punished happen less often.

Manufacturing doesn't invest here?

Correct.

Entertainment industry doesn't invest here?

This is probably the one sector that is growing, not including minimum wage service jobs. Ironically, California is doing everything possible to crush this industry. Paraphrasing the Angry Video Game Nerd after he filmed his movie: They make it as expensive as possible. If you need to film a tree, you need a permit to film the squirrel living in the tree. (I can't remember the exact words, but he did mention something about a "fucking permit" to film a squirrel).

Aerospace doesn't invest here? Is that what you're saying?

You mean the military industrial complex? I suppose that's one sector that is always well funded. I'm invested in Lockheed Martin for this reason.

 

[Spungo]

Of course it can go up. Why the fuck couldn't it go up? Inflation has been near zero for years. Do you understand what that means? It means the money supply is too low for demand to drive prices up.

Who told you inflation was zero? The chapwood index has it pinned somewhere around 5-10%.
Peter Schiff did his own basket of goods and came up with a similar estimate. video.
John Williams has it between 5-10% as well. graph using 1980 inflation calculation.

To understand why the government's inflation numbers are so screwed up, Chris Martenson's Fuzzy Numbers video explains it. It's basically a progression of removing things from the inflation numbers. In the stagflation 1970's, housing prices were included in inflation. 10% inflation meant housing prices were going up 10% per year. That was considered bad. Back then, owning a house was considered a good thing, so rising cost of housing was bad. Today, the fed says owning a house is a bad thing, so they "help" everyone by making housing as expensive as possible. See that link posted earlier about home ownership hitting a 48 year low. Among young people, it's at an all time low.

If we were truly in a deflationary environment, housing would be booming. Nobody says "Housing is too cheap! I refuse to move out of my parent's basement until housing is more expensive!"

Even parts of the government think the government numbers are bullshit.
HR 3074, CPI for seniors act: link

5) According to numerous credible authorities, the present methods (CPI–U, CPI–W, and CPI–E to a lesser extent) used to measure inflation are flawed and deficient in measuring the average price of consumer goods and services purchased by senior citizens, and the overall impact of inflation on such citizens.
...
(9) Senior citizens neither have the flexibility or the ability that younger consumers have to substitute necessary purchases in response to changes in prices, nor the same options as younger consumers have to supplement their income.

So the bill is saying seniors need a special measure of inflation because old people don't have the luxury of substituting a lower cost good, such as fake heart medication, in place of something more expensive, like real heart medication. Thank god young people have that ability. If I need my appendix removed, I can just substitute death in place of surgery, so I'm no longer subject to inflation! Yay hedonics!

 

[JSt0rm]

10% inflation? What does LK think of that?

 

[Blackjack200]

I don't think you understood what I said.

The only time changing the supply changes demand, is during the change in money supply. Once the money supply is stable, the long run demand will be the same. If the money supply increased that would cause inflation as the relative value of goods/services the money represents would be the same but the supply of bills would increase. Money is the value per nominal value, so its really just a simple fraction. Increase the value of the denominator relative to the numerator and you get less value per dollar.

Firms and individuals would hold off on spending while deflation was happening in some situations because the value of the money may go up enough to make up for the lost utility of forgone goods.

Firms and individuals would spend money while inflation is happening in some situations because the value of the money may go down and thus investing in utility may give less of a loss then holding onto the money.

The assumption in all the aforementioned is the real money supply and its velocity.

It does not increase demand in the way you think it does. There might be a small boost in people spending money because the value of said money is going down, but it wont be long term. Investing now means you can't buy later. You may end up getting people to invest in things that are not as productive as they could have been had you not fucked around with the market.

What you are advocating is to use inflation to make the value of their money less so they will be less likely to hold onto it. Thats pretty shitty to me.

You seem to be stuck on supply in terms of push pull inflation I think. Read up on some economics and you will learn some shit.

The reason inflation is not rocketing up is because of a neat trick that the FED cooked up. See, there is the money supply and the real money supply. The FED has increased the money supply, but not the real money supply. This has made the velocity of money not increase and thus inflation has not increased.

The FED gave a shit tone of money to the banks, but effectively made the money given unusable. What the FED did was to pay interest on excess reserves. The FED raised the minimum amount a bank must hold. That money cannot be used and thus does not really factor into velocity. Then, the FED pays the banks interest on the Reserves banks hold.

The FED gave the banks money, then paid the banks for holding that money. This allows the banks to balance their books while giving them a small revenue stream.

Like I said, a neat trick.

Look at what you said like this.

There is a family who is poor who is deciding on a tank of gas or dinner for the night. Say you give that family $50. Did you pay for the dinner, the gas, or both?

If you gave students money, are you paying off their debt, their dinner or both. Are you giving the banks your money, the restaurant, or both?

I didn't follow all of your arguments, so I'm not going to respond directly to them, but a couple points.

1. Banks were recapitalized by the quantitative easing to a degree, and they do have much stricter capital requirements now, but I've never heard someone suggest that the higher capitalization requirements completely or even largely offset the $4.5 the Fed added to their balance sheets. I'm not sure if I buy that. That said, I've seen many suggest that capitalizing the banks has had a muted effect because consumers are so debt laden right now. So if the banks have lots of money to lend, but nobody can buy houses or cars because they owe too much money, it's a bit of a kink. it's why many, including me, believe there should be an effort to recapitalize the consumers themselves. Though I'm not sure how you do that.

2. In a vacuum, if you give a family a suitcase full of money, they can demand more goods and services. If that family is indebted, they will likely use a substantial chunk of the money in that suitcase to retire debt, so the marginal increase in demand is reduced. This works in the aggregate too. If the IRS added an additional $5k to each refund check it mailed out, many many taxpayers would be using that money to service debt, so the aggregate shift in the demand curve is reduced.

Correct.

http://www.reuters.com/article/2015/05/14/us-usa-capex-idUSKBN0NZ1HH20150514

That article is talking about reduced capital investment in 2015 due to concerns about energy prices and growth prospects in foreign markets. I have absolutely no idea why you would think that supports your statement that "the reason companies don't invest here is because it's a nightmare of red tape and bullshit."

You are aware that our economy is essentially the only developed economy that's been growing for the last few years?

Correct. Next time you buy something, look where it's made. Almost everything comes from China, Taiwan, Japan, or South Korea. The two DVD drives I have laying around were made in China and the Philippines.

Wow, you can't possibly be serious. Four of the five largest tech companies in the world are American. Who fucking cares where DVD drives come from? I haven't used a DVD in years.

Pharmaceuticals do, largely as a result of unregulated prices. Crazy how that works. The incentive to make hundreds of billions of dollars attracts investment money from around the globe.

That makes no sense. Drugs that are developed in Switzerland, Germany, and the UK are not subject to price controls in American markets, so that cannot be a factor in their decision to base their operations here.

If you tried taxing those companies at 90%, they would move away. That's how capitalism works. Things that are rewarded happen more often. Things that are punished happen less often.

Lol, thanks Adam Smith. Pretty sure I've never suggested taxing anything at 90%, and in fact already said corporate taxes should be zero in this thread.

Correct.

While manufacturing has certainly declined, it's still a huge sector.

https://www.mapi.net/china-has-dominant-share-world-manufacturing

What's the major theme in that chart? The decline of American manufacturing or the rise of Chinese manufacturing? China has passed us but we are closer to them than #3 (Japan) is to us.

This is probably the one sector that is growing, not including minimum wage service jobs. Ironically, California is doing everything possible to crush this industry. Paraphrasing the Angry Video Game Nerd after he filmed his movie: They make it as expensive as possible. If you need to film a tree, you need a permit to film the squirrel living in the tree. (I can't remember the exact words, but he did mention something about a "fucking permit" to film a squirrel).

California should try harder since it doesn't appear anywhere near crushing Hollywood.

You mean the military industrial complex? I suppose that's one sector that is always well funded. I'm invested in Lockheed Martin for this reason.

It'd be pretty great if we cut military spending and put it to more useful things like alternative energy investments, infrastructure, etc. But it's cool to have a bunch of CVBGs steaming all over the globe too I guess.

Who told you inflation was zero? The chapwood index has it pinned somewhere around 5-10%.
Peter Schiff did his own basket of goods and came up with a similar estimate. video.
John Williams has it between 5-10% as well. graph using 1980 inflation calculation.

To understand why the government's inflation numbers are so screwed up, Chris Martenson's Fuzzy Numbers video explains it. It's basically a progression of removing things from the inflation numbers. In the stagflation 1970's, housing prices were included in inflation. 10% inflation meant housing prices were going up 10% per year. That was considered bad. Back then, owning a house was considered a good thing, so rising cost of housing was bad. Today, the fed says owning a house is a bad thing, so they "help" everyone by making housing as expensive as possible. See that link posted earlier about home ownership hitting a 48 year low. Among young people, it's at an all time low.

Oh god. That shit's basically equivalent to 9/11 truthers and birthers. The cost of housing is absolutely part of CPI, 40% of it in fact. This is libertarian nut job bullshit.

From his Wiki:

In his writings and in interviews with various media outlets, Martenson regularly warns his audience of economic crises. In 2010, he predicted a new era of stagflation,[4] in which monetary inflation outpaces economic growth, or even simultaneous stagflation and deflation.[5] In 2012, Martenson warned of a liquidity crisis.[6] He has recommended that consumers take steps to prepare themselves for "peak oil", after which he asserts that recovery of petroleum resources will decline.[7] According to Martenson, large changes related to economic, energy, and environmental factors will occur in the near future (2015-2020).[8]

Simultaneous stagflation and deflation! Economic stagnation combined with inflation combined with...deflation!!

If we were truly in a deflationary environment, housing would be booming. Nobody says "Housing is too cheap! I refuse to move out of my parent's basement until housing is more expensive!"

I mean, we just had one of the biggest housing price crashes ever, and clearly that did not happen, so I really have no idea why you even typed that.

Even parts of the government think the government numbers are bullshit.
HR 3074, CPI for seniors act: link

So the bill is saying seniors need a special measure of inflation because old people don't have the luxury of substituting a lower cost good, such as fake heart medication, in place of something more expensive, like real heart medication. Thank god young people have that ability. If I need my appendix removed, I can just substitute death in place of surgery, so I'm no longer subject to inflation! Yay hedonics!

"Lets give money to seniors." Yeah, never seen that political strategy before.

 

[Blackjack200]

10% inflation? What does LK think of that?

It's absurd. The dollar is up against all major currencies, would that be the case if inflation was over 10%? I guess all those other countries have more than 10% inflation, or we're exporting WAAAAY more than we're importing (don't think that was case last time I checked).

 

[Blackjack200]

It hasn't resulted in runaway inflation? How are median home prices compared to median income? Oh, it's worse than it was during the bubble? And how about that stock market "recovery"? Consumer goods haven't increased because the wealthy don't use their money to consume. Increased money in the hands of consumers will drive consumer good inflation. Increased money in the hands of investors will drive inflated asset prices.

Median prices for existing homes are flat over the last 10 years. So no, I wouldn't call that "runaway inflation. Median income has nothing to do with inflation (with respect to measuring it).

https://research.stlouisfed.org/fred2/series/HOSMEDUSM052N

I take it back, I'm going to insult you. Go fuck yourself sideways with a rusty garden rake, asshole.

I'm not accepting that it's too much money. You're the one who stated that money drives demand which drives supply. Can increased the money supply increase supply of consumer goods infinitely or can it not? If it can, then $300T has no downside. If it can't, then eventually the train is going to run out of track.

Increased money supply is needed when demand is depressed as it is now. That does not mean that printing more money without limit or end is a good or beneficial thing. HTH.

Let me put it to you another way. What if China started buying tons of our stuff. Like, billions of dollars a month more, would that be a good thing or a bad thing?

 

[realibrad]

I didn't follow all of your arguments, so I'm not going to respond directly to them, but a couple points.

1. Banks were recapitalized by the quantitative easing to a degree, and they do have much stricter capital requirements now, but I've never heard someone suggest that the higher capitalization requirements completely or even largely offset the $4.5 the Fed added to their balance sheets. I'm not sure if I buy that. That said, I've seen many suggest that capitalizing the banks has had a muted effect because consumers are so debt laden right now. So if the banks have lots of money to lend, but nobody can buy houses or cars because they owe too much money, it's a bit of a kink. it's why many, including me, believe there should be an effort to recapitalize the consumers themselves. Though I'm not sure how you do that.

I think you agree that increasing the money supply would cause inflation to prices. The reason for that is that increasing the money supply would give more nominal dollars to people to spend. So really, the way the FED would increase inflation is by giving money to firms and people that they can use.

Currently, the banks have much more reserves. This is money that the banks have to hold in case a depositor wants to withdraw their money. So, where as banks used to be able to say loan $95 for every $100 deposited, they can now only loan $90 for every $100. This inherently takes money out of the real money supply and decreases velocity aka use.

Further, the FED is now pay interest on excess reserves. These reserves are like they sound, in excess of what is required. So, the FED is paying for banks to hold money and keep it out of the real money supply. If nobody can use the money, then it will not cause inflation.

This is why all the money being dumped into the economy has had little to no effect on inflation. The FED is trying to balance banks sheets so they do not look insolvent because pre 2008 everyone was so laden that no bank looked good.

I wont get into overnight lending, as its not really important in this context, but I hope this helps you understand why inflation has not gone up as we would normally expect with the amount of nominal dollars pumped into the economy.

2. In a vacuum, if you give a family a suitcase full of money, they can demand more goods and services. If that family is indebted, they will likely use a substantial chunk of the money in that suitcase to retire debt, so the marginal increase in demand is reduced. This works in the aggregate too. If the IRS added an additional $5k to each refund check it mailed out, many many taxpayers would be using that money to service debt, so the aggregate shift in the demand curve is reduced.

You seem to be missing the fact that while the family is paying off a debt, someone else is getting paid. Assuming that is a lender who is now paid, they will lend money again to someone else. If the family say paid off their car, the car lender would now be able to use that money to lend to another family to buy a car.

You cant just look at the family, you have to look at the whole system.

 

[sm625]

No it doesnt. It costs more because the materials are better. That pair of denim has a copper zipper and all copper hardware from a place in Kentucky that has been making zippers since the civil war. The cotton used is the finest on the planet and it has ben died with real indigo ink.

also the looms used are from the 1800's and they use a chain stitching machine from the 1800s as well.

https://en.wikipedia.org/wiki/Chain_stitch


So again we see the average american has lost the ability to see quality.

Who cares about a frickin copper zipper. WTF? I want a zipper that will never break. It doesnt need to be copper. WTF? Same goes with the cotton. Finest on the planet. WTF kind of nonsense is that? It's cotton. Thick denim is strong denim. The "finest cotton in the world" aint gonna make a bit of difference if they only use half of it compared to some other pant. I would agree with the chain stitch. But that in itself doesnt add too much to the cost.

 

[sm625]

Oh god. That shit's basically equivalent to 9/11 truthers and birthers. The cost of housing is absolutely part of CPI, 40% of it in fact. This is libertarian nut job bullshit.

At this point I'd believe a 911truther over your bs. The chapwood index is a bit overblown. But its much closer to reality than any bogus nonsense that you've been fooled into believing. And Martenson isnt wrong. Idiots like you are gonna find out one way or another. But it is pointless to try and argue any of that with you now. You gonna learn eventually.

 

[glenn1]

You seem to be missing the fact that while the family is paying off a debt, someone else is getting paid. Assuming that is a lender who is now paid, they will lend money again to someone else. If the family say paid off their car, the car lender would now be able to use that money to lend to another family to buy a car.

You cant just look at the family, you have to look at the whole system.

But for the left it doesn't count unless the very first person in the chain spends it on some kind of consumer goods. When you pay off debt or buy an investment the money doesn't actually change hands, it just completely disappears by magic. That's why it's so bad the rich have so much money, they simply buy stocks and bonds with it and then this happens.

 

[realibrad]

But for the left it doesn't count unless the very first person in the chain spends it on some kind of consumer goods. When you pay off debt or buy an investment the money doesn't actually change hands, it just completely disappears by magic. That's why it's so bad the rich have so much money, they simply buy stocks and bonds with it and then this happens.

I think the major problem is accounting mentality people use for economics. They only look at one side of things, and if that one side is better, then we should do that for everyone. This is how we get the push to give out more grants for education, and never look at the huge amounts of money going to colleges, just the live of the people getting the degrees.

 

[Blackjack200]

I think you agree that increasing the money supply would cause inflation to prices. The reason for that is that increasing the money supply would give more nominal dollars to people to spend. So really, the way the FED would increase inflation is by giving money to firms and people that they can use.

Yes, I agree that generally speaking increasing the money supply will cause inflation.

Currently, the banks have much more reserves. This is money that the banks have to hold in case a depositor wants to withdraw their money. So, where as banks used to be able to say loan $95 for every $100 deposited, they can now only loan $90 for every $100. This inherently takes money out of the real money supply and decreases velocity aka use.

You're not being precise here. Reseve ratios have not changed. What's changed is how financial institutions (especially SIFIs) have to carry assets on their books that they borrow against, and how much they can leverage those assets.

I don't want to be pedantic here though, the effect is largely the same, the additional capital requirements effectively force banks to reduce their leverage and therefore reduce the money in circulation.

Further, the FED is now pay interest on excess reserves. These reserves are like they sound, in excess of what is required. So, the FED is paying for banks to hold money and keep it out of the real money supply. If nobody can use the money, then it will not cause inflation.

This is why all the money being dumped into the economy has had little to no effect on inflation. The FED is trying to balance banks sheets so they do not look insolvent because pre 2008 everyone was so laden that no bank looked good.

I wont get into overnight lending, as its not really important in this context, but I hope this helps you understand why inflation has not gone up as we would normally expect with the amount of nominal dollars pumped into the economy.

The FED is paying 1/4 of a percent for the excess reseves. Would a bank rather get that 1/4 of a percent or 4% from a creditworthy consumer on a home loan? The reason the money didn't get lent out is because the consumers themselves are overleveraged.

You seem to be missing the fact that while the family is paying off a debt, someone else is getting paid. Assuming that is a lender who is now paid, they will lend money again to someone else. If the family say paid off their car, the car lender would now be able to use that money to lend to another family to buy a car.

You cant just look at the family, you have to look at the whole system.

The whole point is that as the lender is getting money from the debtor, they can't loan it out again because everyone else is leveraged too.

 

[Blackjack200]

At this point I'd believe a 911truther over your bs. The chapwood index is a bit overblown. But its much closer to reality than any bogus nonsense that you've been fooled into believing. And Martenson isnt wrong. Idiots like you are gonna find out one way or another. But it is pointless to try and argue any of that with you now. You gonna learn eventually.

Okay Chicken Little. One of these days you'll be right about the sky.

 

[realibrad]

Yes, I agree that generally speaking increasing the money supply will cause inflation.



You're not being precise here. Reseve ratios have not changed. What's changed is how financial institutions (especially SIFIs) have to carry assets on their books that they borrow against, and how much they can leverage those assets.

I don't want to be pedantic here though, the effect is largely the same, the additional capital requirements effectively force banks to reduce their leverage and therefore reduce the money in circulation.



The FED is paying 1/4 of a percent for the excess reseves. Would a bank rather get that 1/4 of a percent or 4% from a creditworthy consumer on a home loan? The reason the money didn't get lent out is because the consumers themselves are overleveraged.



The whole point is that as the lender is getting money from the debtor, they can't loan it out again because everyone else is leveraged too.

Banks had the fear of god in them, and nobody really felt safe investing, which is the likely reason banks had forgone lending money above the interest rate on reserves. There was likely other reasons, but I would bet that was the main one.

Creditworthy meant something totally different post 2009. I work for a timeshare company that uses credit scores for our lending, and we had to change a lot. We needed to for our sake, and our investors also required it. Before our investors were willing to buy our loans with credit scores above 550. Post 2009 that shot up to 650+. My company buys back loans that we sold if they default, but that is not how the rest of the world works. Why gamble on a +4 when you can for sure get a .25+ with zero risk?

Also, it sounds like you now understand why inflation has been flat. So I think we can be done with the idea that raising the money supply has not caused inflation, because the real money supply has not increased.

 

[Blackjack200]

Banks had the fear of god in them, and nobody really felt safe investing, which is the likely reason banks had forgone lending money above the interest rate on reserves. There was likely other reasons, but I would bet that was the main one.

Creditworthy meant something totally different post 2009. I work for a timeshare company that uses credit scores for our lending, and we had to change a lot. We needed to for our sake, and our investors also required it. Before our investors were willing to buy our loans with credit scores above 550. Post 2009 that shot up to 650+. My company buys back loans that we sold if they default, but that is not how the rest of the world works. Why gamble on a +4 when you can for sure get a .25+ with zero risk?

Also, it sounds like you now understand why inflation has been flat. So I think we can be done with the idea that raising the money supply has not caused inflation, because the real money supply has not increased.

The money supply has absolutely increased.

Sorry for the linear scale, it should be logarithmic but I couldn't find the setting. So the increase is not as dramatic as this chart makes it look, but the point is that the money supply has certainly expanded.

 

[BoberFett]

Median prices for existing homes are flat over the last 10 years. So no, I wouldn't call that "runaway inflation. Median income has nothing to do with inflation (with respect to measuring it).

https://research.stlouisfed.org/fred2/series/HOSMEDUSM052N

Look, I can link to FRED too!

https://research.stlouisfed.org/fred2/series/COMPHAI

Affordability is worse now than it was during the bubble.

 

[dank69]

...

You seem to be missing the fact that while the family is paying off a debt, someone else is getting paid. Assuming that is a lender who is now paid, they will lend money again to someone else. If the family say paid off their car, the car lender would now be able to use that money to lend to another family to buy a car.

You cant just look at the family, you have to look at the whole system.

In reality, the creditor is likely losing money because they are losing out on extra interest.

 

[realibrad]

The money supply has absolutely increased.

Sorry for the linear scale, it should be logarithmic but I couldn't find the setting. So the increase is not as dramatic as this chart makes it look, but the point is that the money supply has certainly expanded.

You need to look at velocity remember. If nobody is using the money, and just saving it like the banks are doing, then inflation wont happen. Once people feel safe enough to spend that money, inflation will happen. This is why the fed is looking to raise rates, because eventually that money will be used.

 

[Blackjack200]

Look, I can link to FRED too!

https://research.stlouisfed.org/fred2/series/COMPHAI

Affordability is worse now than it was during the bubble.

Okay, how does that support your claim of "runaway inflation"?

 

[realibrad]

In reality, the creditor is likely losing money because they are losing out on extra interest.

Maybe, but its not inherent.

If inflation were going up higher than the interest rate, then they would want you to pay off your debt asap.

I really should start on a finance/economics degree. I would be able to go much deeper into this stuff.

 

[Blackjack200]

You need to look at velocity remember. If nobody is using the money, and just saving it like the banks are doing, then inflation wont happen. Once people feel safe enough to spend that money, inflation will happen. This is why the fed is looking to raise rates, because eventually that money will be used.

Yeah, I don't disagree. I'd just say that the reduced velocity is not totally offsetting the increased supply, otherwise we wouldn't be seeing economic growth.

 

[Spungo]

That article is talking about reduced capital investment in 2015 due to concerns about energy prices and growth prospects in foreign markets. I have absolutely no idea why you would think that supports your statement that "the reason companies don't invest here is because it's a nightmare of red tape and bullshit."

You are aware that our economy is essentially the only developed economy that's been growing for the last few years?

And who told you that? Just taking a quick look at the political landscape implies the exact opposite is true. People on the left are going more extreme by supporting Bernie Sanders, and people on the right are going more extreme by supporting Donald Trump. That kind of political extremism only happens when the economy is bad. There are tons of examples of this throughout history. People didn't revolt against the king of France because the economy was doing awesome. People didn't vote for Hitler because everything was awesome. Even our own history shows this behavior. The revolution against Britain was economic in nature.

Let's take a quick look at the numbers. Source:
http://www.federalreserve.gov/econresdata/scf/scfindex.htm

Median net worth of every age demographic is down:

Median income for every age demographic except those 65+ is down:

For the bottom 90%, there has been no economic recovery:

Wow, you can't possibly be serious. Four of the five largest tech companies in the world are American. Who fucking cares where DVD drives come from? I haven't used a DVD in years.

And their names are?

That makes no sense. Drugs that are developed in Switzerland, Germany, and the UK are not subject to price controls in American markets, so that cannot be a factor in their decision to base their operations here.

The drug industry is as much about bribing politicians as it is about making products. Having your office located in the US makes it easier to bribe politicians. It's also done for regulatory reasons. The FDA wants to be involved in every step of the approval process, so you try to locate your company as close to the FDA as possible while the drug is being developed. You can base your drug company in India, but you'll have a bitch of a time getting products to market.
Did you ever notice that generic drugs are always made in India? Why is that? It's because the drug has already been approved. All of the bribery steps have been completed, so it's safe to move operations to India to cut costs. Companies could make already-approved drugs in the US, but they choose not to.

While manufacturing has certainly declined, it's still a huge sector.

But it's rapidly shrinking in percentage terms. The population of the US is rising, but the number of manufacturing jobs is declining. For whatever reason, people assume that there's a limited amount of stuff to manufacture, so they assume it's natural for our manufacturing to decline while China's rises. People assume that if I'm making a product, that means you can't be making a product. This type of thinking is deeply flawed because there are no limits to human wants. It's possible for me to make a product you want to buy, while at the same time, you are making a product I would like to buy. The same weird logic is applied to jobs as well. People think that if you let a million people into the US, the number of jobs stays the same, and it leads to a million unemployed Americans. People also use this logic to assume that we'll all be unemployed when computers become mainstream. Here we are, with computers everywhere, and I'm working on right now, yet most people have jobs. The computer didn't take my job. It made me more productive at my job. It changed my job.

China making stuff DOES NOT explain why our manufacturing is in decline. We should be making stuff too. They can sell things to us, and we can sell things to them. We already do this on some level; it's not like America has zero exports. Those Chinese people want stuff too, and we could be the ones making it. We already sell things like trains and passenger jets, so why can't we sell them other things? Our manufacturing should be increasing to deal with China's increased demand for consumer products. It's not increasing, and we should try to figure out why. China is not our enemy. They're not stealing our jobs, just as immigrants and computers are not stealing our jobs.

Oh god. That shit's basically equivalent to 9/11 truthers and birthers. The cost of housing is absolutely part of CPI, 40% of it in fact. This is libertarian nut job bullshit.

Oh?
rent rising much faster than wages. That crazy Wall Street Journey and their conspiracy theories about rising cost of living.
CNN saying the same thing. But you can keep saying to yourself that the cost of living is not rising, the poverty rate is not rising, food stamps usage is not at a record high, child poverty is not at a record high.
(This stuff isn't Obama's fault. The system has been declining for many years.)

Simultaneous stagflation and deflation! Economic stagnation combined with inflation combined with...deflation!!

Biflation is when inflation and deflation exist at the same time but in different asset classes or places. This is the logical result of a limited amount of capital chasing an unlimited amount of goods or services. If my job pays me $100, I must decide where that money goes. If I'm a renter and rent is getting more expensive, more of my money will go into rent (inflation), which means less of my money will go into consumer spending (deflation).
The best example of this was is during Germany's hyperinflation. The price of food increased dramatically in real terms, but the price of real estate crashed through the floor in real terms. Imagine a scenario where a loaf of bread is $10, but you can buy a house for $20,000. The loaf of bread is unusually expensive, but the house is unusually cheap. That's biflation.


I'm also not sure why people get on his case for being concerned about Peak Oil. So far, everything we've seen agrees with the general concept of peak oil. 100 years ago, you could drill a hole in the ground, pipe a pipe in the hole, and oil comes out for the next 40 years. Now we're resorting to weird stuff like fracking and tar sand to get oil (I'm very slowly starting to invest in Suncor for this reason). That tar sand was there 100 years ago, and it's at surface level. Nobody thought to extract the oil because there was no reason to. Conventional oil is getting harder to find, so we're resorting to more complicated and expensive ways of extracting oil. It's ultimately a race of technology. Chris is pessimistic about future developments in technology because he's looking at it in terms of energy in vs energy out. In the past, one could expend 1 barrel of oil to get 50 barrels back. For something like tar sand, one needs to burn a barrel of oil to get only 3 barrels of oil back. Chris believes that this trend will eventually get near a 1:1 ratio, so there won't be any feasible way to extract energy.
I'm a lot more optimistic. Oil is just one form of energy. That yellow thing in the sky seems to have a lot of energy. The wind has a lot of energy. Ocean currents have a lot of energy.

 

[realibrad]

Yeah, I don't disagree. I'd just say that the reduced velocity is not totally offsetting the increased supply, otherwise we wouldn't be seeing economic growth.

What does the money supply have to do with economic growth?

 

[BoberFett]

Okay, how does that support your claim of "runaway inflation"?

/epicfacepalm

If the price of housing has gone up relative to income, that's inflation. You understand the relationship between CPI and inflation, right? I'm sorry, is this too hard for you?

 

[Blackjack200]

/epicfacepalm

If the price of housing has gone up relative to income, that's inflation. You understand the relationship between CPI and inflation, right? I'm sorry, is this too hard for you?

Inflation (deflation) is the sustained increase (decrease) in the general level of prices for goods and services. Has nothing to do with income.

I do enjoy your sarcasm when you can't even get the basic terminology right.