Hey the PArty is over already

Call me stupid, but how does inflation help those who have "next to no savings but plenty of debt"

If prices go up, you still have plenty of debt, but everything you need (or want) to buy costs more, so how does the debt go down?

@Dooley: You have $100,000 in debt. Prices rise but so do wages, all of a sudden your existing debt is easier to pay off. Conversely, any existing savings you have are worth less.

@Dooley:

your debt is worth less while your income increases. inflation doesn't just push up prices, it pushed up earnings to match. the one thing it doesn't push up is savings a debt.

dont worry, obama's the president.

@HIV 2 Elway: That only works if wages rise. Anybody want to put any wagers on their wages going up?

Yes, the Zimbabweian economic model will be our salvation. Thank god my Reardon metal stock is doing so well...

@Prole: i'd bet my life on it.

Trickle-down economics have failed the vast majority of this planet.

Unless companies are willing to pay living wages to their employees, there can't be any long term consumer demand.

Under our current system, every owner of at least a medium sized company is forced to increase profits and drive down price and costs to stay competitive. If they don't increase their profits faster than their competitors, they get bought out. If they don't reduce their cost (especially labor) they go under. With every company focused on their own individual needs to drive down labor costs, they don't realize that as a whole, they're reducing the purchasing power of their consumers at the same time.

It's a never ending race to the bottom.

For years people have been trying to maintain the same standard of living they, or their parents, had (thanks to unions, both directly and indirectly through the threat of unionization). When they couldn't maintain that standard of living with their regular income, their wife got a job. Then when their combined income couldn't cut it either, they went into debt. Now that credit has dried up, they're realizing they're at the end of the line.

Our free market system is slowly, but surely, reducing the vast majority of the people in this country to a third world standard of living.

It's time for a change, and it's going to take something significantly more than just electing someone like Obama.
[www.socialistworker.org]

@Prole: Wages always go up with extended inflation, otherwise the market couldn't support price increases.

@panzerschreck1: Are you trying to say that he will ruin the country before it has time to dissolve financially?

There's already talk of another "Stimulus". That will fix it.

@Prole: Ergo, inflation. It's not inflation if wages don't rise.

@trotskysghost: What do you have in mind (as though I couldn't guess)?

@trotskysghost: You mean third world like Cuba?

@HIV 2 Elway:

Let's take my position... I've been working for the same company for over a decade. Sure, I get a little raise each year, which is standard. (Cost of living, if you will, which this year was anything but)

So, if inflation causes prices to rise, I don't think my employer is going to say "Hey, we have inflation, so we're giving you a huge raise this year."

@Dooley: If your company, who will now be charging an inflated price for whatever they do, doesn't play ball and you can't afford basic goods you will quit your job and find one that will pay you an inflated wage. It's not inflation if wages don't rise too. This is the most basic of all economics.

@Dooley: Exactly. The other poster is also assuming that wages adjust for inflation. So lets say that inflation is 3% annually. I know that in my job (where I already make only 75% market average even at entry level) we have a wage freeze for two years. That means that I will make at least 6% less two years from now than I did today. Want to make a bet on whether we will all be given a cost of living adjustment plus 6% in two years time?

@sleze69: But but but...it's not fair that you benefit from investing in stock with a company that refuses to share it's secret formula with all the other steel companies! You should sell your Rearden stock and invest it in companies that need the money more than he does.

@trotskysghost: Alas, the economic plight of the laborers will continue so long as the Romanovs are in power in Moscow, doing the bidding of industrialists in Prussia, Berlin, and London!

@SarcasticDwarf: If wages don't increase with prices then the price increases can't be sustained and manufacturers, food providers, whoever will have to slash the prices of their goods that are just sitting in warehouses unsold. If the wages can't support price increases the prices come back down to an equilibrium.

BOHICA!

(bend over, here it comes again)

@trotskysghost: Sure thing. Show me any other country where people living at the poverty line have running water, electricity, a couple of color TV's, a car (or two, or five if you count the couple on cinder blocks), and generally struggle with being overweight.

Take your socialism and move to any number of other countries where it hasn't worked.

@sleze69:
And I planted soybeans!

@trotskysghost: Europeans don't even believe in this crap. SWEDEN of all places is privatizing its economy and is not bailing out its car companies. You can keep track of that at www.thelocal.se. I didn't know Sweden's pharmacies was a state monopoly until this year.

"Another step in the pharmacy monopoly deregulation, set to take effect on November 1st, will allow grocery stores and other retail outlets to sell certain non-prescription drugs to customers over the age of 18."

[www.thelocal.se]

@trotskysghost: But won't using a governmental system in use by nearly all the third-world countries reduce us to the same third-world conditions exhibited by those same third-world counties?

You seem to be saying that we have to become like them, or else we'll become like them???

What I think we need to do is get away from the short-sighted concept of investing based upon rising/falling stock values, and go back to long-term investing in dividend-based stocks. The stock-value rollercoaster encourages making short-term decisions to boost stock value, even though it results in bad long-term decisions.

@panzerschreck1: That is exactly why I am worrying.

@trotskysghost: And socialism has been proved as a failure, too.

I'm curious how many people are looking seriously at the possibility of leaving the country altogether?

I see riots in the streets over the horizon if things don't turn around--and quickly. I would rather watch that play out from somewhere else than the front lines.

@Bryan Fernandez:

Europeans don't even believe in this crap.

Yeah, the 20th century is going to be covered in next week's chapter. Cut him some slack.

@I Love New Jersey: I miss President Bush!

Nice - another example of punishing the people who did the right thing (save) inorder to bail out the people who did the wrong thing (spend). Whats next - a government program to infect people who are abstenant with AIDS?

@HIV 2 Elway: Wages certainly don't need to increase. The American standard of living is pretty high, and there's nothing stopping it from dropping until it hits Haiti or Somalia levels.

Americans tend to blindly believe in progress, but decline is just as possible, and probably at this point inevitable.

@trotskysghost: Time to have a dozen kids and send them to work by age 8. With 18 incomes (including grandparents or an unmarried sibling) the average family can easily afford that mortgage payment unlike all the lazy deadbeats.

Best case senario would be for the US to follow the Japanese model of the deflationary decade. There has been very little unrest and people are not starving to death.

@The-Lone-Gunman: Where would you go?

Who'd have though allowing whole industries to pursue workforces offshore for the very lowest price possible, circumventing the system the Labor movement spent the 20th century developing would result in- gasp- unemployment, no spending power, and inflation?

Capitalism- it's pretty sweet, eh?

@The-Lone-Gunman:

And you think riots *won't* happen somewhere else? They don't call it a 'global recession' for nothing...

@The-Lone-Gunman: Where do you plan on going? Unlike the USA, few other countries will let you just walk over their borders and start working.

Anyway the economic and political failure is ominously global. American rioting might be preferable to the Rivers of Blood traditionally favored by other countries.

@The-Lone-Gunman: Riots? Really? You are seriously overestimating both the problem and the ability of the general population to care about anything.

@The-Lone-Gunman: "I'm curious how many people are looking seriously at the possibility of leaving the country altogether?"

Started working on that plan last year. I have no intention of saving the economy by buying more useless crap, and I want to be long gone when it implodes.

All the talk about the recession ending this year or next year is utter bullshit. That talk is designed to keep the masses complacent. If people grasped the idea of how bad it really is, there would already be panic in the streets. Classic carrot on a stick.

For all the foreclosures out there already, there are countless houses sitting empty and in a no-foreclosure-date limbo indefinitely. The banks don't want them, there's no one to buy them, and they can't keep up. That's a hole that won't be filled for a long time.
College degrees are becoming more worthless than the paper they're printed on. There's only so many jobs to go around, and Starbucks Hippie Poet Wannabe is in decreasing demand.
Healthcare is so ridiculous I can't even discuss it any more.
The credit business, or we can call it what it really is, the Debt Business is in shambles. Tough to squeeze money out of empty pockets. Defaults are up, driving scores down, making future credit either impossible or too expensive to consider.
Banks continue to fail. Businesses continue to go under.

And yet..... nothing has changed. The tv is still trying to sell you more crap than ever. Feel bad? Buy some shit. Feel good? Buy some shit. Depressed? Buy some shit. Lose your job? We'll help you buy some shit.

If buying shit is the answer, we're fucking doomed.

Inflation can be a GOOD thing.

Say you owe $100,000 on your house. In theory, after 10 years of inflation, you still owe $100,000 but 100,000 buys less- so its helped you in that sense.

And sense houses/cars are the major debt people have, when prices rise, they just buy less crap they don't need.

Here is the problem:
Wages ARE tied to inflation in a non-service economy. In a service economy, perhaps not. We have yet to see. So far it doesn't look good.

The only answer I have: when the few at the top are FINALLY hit (the way they should have been w/out a Govt bailout), they'll start to make changes.

What changes can be made:
1) Stop outsourcing jobs. Its actually not hard. Just require goods manufactured to meet labor/wage/environmental threshholds.

2) Some form of Govt healthcare, so people can actually leave their jobs and negotiate for higher wages or become independent, without fear of losing healthcare,.

@GuinevereRucker: I don't.

@winshape: *Sighs* Who is John Galt?

@The-Lone-Gunman:

Canada's doing fine, though still hurt by the crisis. But you won't see Canadian cities burn in flames. Netherlands is doing fine too. The EU's unmeployment rate of 8.9% is lower than the US, it would've been lower if Spain's OMG 18.7% is omitted.

@JGKojak: I learned pretty quickly that you really can't be without health insurance, its just a bad idea. Many people won't leave their job because along with the job goes the benefits. Finding another job that offers benefits isn't always easy. Even with the extended unemployment and Cobra help which is a start at least people are still reluctant to leave their jobs (especially since finding another job could be a 6-12 month task these days). Paying for your own health insurance when your unemployed is nearly impossible, hope you have tons of money saved up. God forbid you get sick or have an accident during the time of unemployment, you might just go bankrupt. Its come to a point where your health depends on your job and your job depends on your health. Health is the most basic need, and this country can't even provide for that in its current state for those that don't have a benefits plan at the job they work or for those who are unemployed.

Don't even get me started on those that have insurance but the insurance isn't covering any of their conditions etc..

@SacraBos: You seem to be saying that we have to become like them, or else we'll become like them???

I think what he is saying is that we are going to become like them no matter what we do because we are now competing in a global economy. I agree - it is not a nice thing but it is correct.

What the Socialists bank on is that as the standard of living falls the INEVITABLE outcome is a sort of revolution in which workers assume control of the means of production. One of the major flaws of Socialist theory is that it relies on a chain of events that it asserts must always occur. In Marx's day it was possible for the people to rise up and forcefully overthrow the government. In Marx's day governments didn't have things like Apache Helicopters, Stealth fighters, aircraft carriers, etc. The only means that the people in the US have to cause a "revolution" is the vote. We vote in people who pass laws that redistribute wealth and make it more and more difficult for business to make a profit. In a global economy businesses can just close their doors and reopen in a place like China or India. By the time the existing government structure evolves to resemble socialism the "means of production" in the sense Marx thought of will no longer exist in the US - manufacturing will increasingly occur overseas. Marx did not contemplate a world in which it is possible to build a Kia in Korea and ship it across the world to the US and still have it cost less and be higher quality than a US manufactured vehicle. He assumes that the "means of production" are distributed relatively close to the point of consumption. This is not the case in today's world. By the time that our current government "evolves" to resemble socialism the only "means of production" left in our country will be the skills that individuals have to add value to processes - or Skilled labor - (not labor). It is much more difficult for the (unskilled) worker to seize your ability to program in Java than it is for them to seize a factory. Socialism won't work, technology has rendered it obsolete.

@winshape: The overweight thing frequently comes from poor nutrition because simple carbs like potatoes, white flour along with corn and soybeans are cheap and frequently subsidized foods.

People have running water in some pretty shaitty countries. The level of consumer crap someone in the lower income brackets have is really not an indicator of quality of life. If people still can't afford or obtain healthy food, decent education and proper health care they are not doing that great and frankly are not better off than people in some third world countries.

We allowed companies to continue to drive down wages to increase profits. They were too short sighted to see that if employees can't buy products the company will run out of people to sell things to. This isn't an excuse for some communist model. It is the result of short sighted unregulated "free market" greed. It would not have happened if there were some labor standards and some oversight in the stock markets.

@morlo: You're not getting the point. The government can flood the system with as much money as it wants. Therefore, everyone gets paid more, everyone pays more, and the value of your savings and debts drop. When more money enters the system than can be absorbed, you get inflation. If the goverment just started printing billion dollar bills, nobody would work for $8.50 an hour.