Your weekly liberal assesment of the economy

[WickedLou9]

Originally Posted by Stylerod

That part was so ignorant I had a hard time getting passed it. But I realize this is what democrats seem to think. Which is amazing

realizing that I was not an economics major, could you explain to me at what point a dollar is created? I am being serious. I am having trouble getting past the idea that the supply of dollars is infinte.

If you start a business and you make money, the money came from other people who chose to spend thier dollars. They are most likely earning dollars as well so really it seems like money is not truly being generated but rather circulated. Maybe I am thinking on a microeconomic level. BUt then why would the government try to redistribute wealth? why have an estate tax? The entire purpose of the estate tax is to move dollars from the top of the scale back down to the bottom.

But all technicalities aside.. I'd still like you to address the substance of what I have been saying. That being that there is a widening gap between the rich and the poor.

[Publius]

Originally Posted by WickedLou9

realizing that I was not an economics major, could you explain to me at what point a dollar is created? I am being serious. I am having trouble getting past the idea that the supply of dollars is infinte.

If you start a business and you make money, the money came from other people who chose to spend thier dollars. They are most likely earning dollars as well so really it seems like money is not truly being generated but rather circulated. Maybe I am thinking on a microeconomic level. BUt then why would the government try to redistribute wealth? why have an estate tax? The entire purpose of the estate tax is to move dollars from the top of the scale back down to the bottom.

But all technicalities aside.. I'd still like you to address the substance of what I have been saying. That being that there is a widening gap between the rich and the poor.

You are thinking on a micro level, and a far too literal level too. The Fed can create and destroy money at will through open market purchases. Now, does that necessarily mean there are more dollar bills in people's hands? Figuratively yes (bank accounts get larger when banks make more loans with the new money, etc.), but not necessarily literally.

You must remember, all a bank account is is an electronic number that says you have X amount of money. It is not at all times backed by actual cash in the vault, I believe the current Fed Reserve Requirement is something like 5%, maybe less... That means if I have $100 in my bank account, the only cash the bank is required to keep on hand is $5 of it... The other $95 of mine can be loaned out to someone else, meaning we technically BOTH own that $95... That means there is now $190 instead of $95.

[Ardentfrost]

A dollar is just a representation of the value of a good or service. The more goods and services produced, the more dollars there are.

[Ardentfrost]

Also it might be important to point out that money is both finite and infinite. Finite in that we have a specific GDP every year, and we can look at that year and see how much of that finite amount was used for this and that (that's why government spending can be looked at from the standpoint of % of GDP). However, GDP varies from year to year and has an infinite potential based on, as I said before, goods and services.

So basically, from a now standpoint looking forward, there's no telling how much money there is, but from a now looking back, we know exactly how much there was.

[WickedLou9]

Originally Posted by Ardentfrost

Also it might be important to point out that money is both finite and infinite. Finite in that we have a specific GDP every year, and we can look at that year and see how much of that finite amount was used for this and that (that's why government spending can be looked at from the standpoint of % of GDP). However, GDP varies from year to year and has an infinite potential based on, as I said before, goods and services.

So basically, from a now standpoint looking forward, there's no telling how much money there is, but from a now looking back, we know exactly how much there was.

so I don't see why there is a problem believing that money is being concentrated in a particular area of the population..

[Diesel66]

Originally Posted by Thorgrim

By PAUL KRUGMAN
Published: September 8, 2006

while most Americans were worse off in 2005 than they were in 2000.

Love this idiotic sentence. You mean the peak of the dot-com bubble was better then today

Originally Posted by Thorgrim

A basic corvette was 31k and 250hp in 1990
A basic corvette was 44k and 350hp in 2004

13k price increase, plus 14 years of inflation, for 100hp...yeah, real deal

NO. Inflation alone would raise the price from 31k to 44,900. So you got a safer car, faster car etc..... for free.

[Ardentfrost]

Originally Posted by WickedLou9

so I don't see why there is a problem believing that money is being concentrated in a particular area of the population..

It means that the rich getting richer doesn't mean the poor get poorer. The two statements are independant. The only way it would be true is if the rich were in complete control of what the poor make, and kept them at low pay in order to make more money.

We're not at the point yet where our capitalism is so fucked up that workers have no control of their own pay.

[Thorgrim]

diesel the point was the corvette was supposed to be SIGNIFICANTLY CHEAPER and all this stuff isn't, its a total misrepresentation

[JaJae]

Originally Posted by Thorgrim

diesel the point was the corvette was supposed to be SIGNIFICANTLY CHEAPER and all this stuff isn't, its a total misrepresentation

The product changed. Milk is milk. A corvette is no longer the same product compared to twenty years ago.

[avsp]

Originally Posted by Publius

You are thinking on a micro level, and a far too literal level too. The Fed can create and destroy money at will through open market purchases. Now, does that necessarily mean there are more dollar bills in people's hands? Figuratively yes (bank accounts get larger when banks make more loans with the new money, etc.), but not necessarily literally.

You must remember, all a bank account is is an electronic number that says you have X amount of money. It is not at all times backed by actual cash in the vault, I believe the current Fed Reserve Requirement is something like 5%, maybe less... That means if I have $100 in my bank account, the only cash the bank is required to keep on hand is $5 of it... The other $95 of mine can be loaned out to someone else, meaning we technically BOTH own that $95... That means there is now $190 instead of $95.

I'm not sure about this

The $95 of your that the bank borrows from you (secretly, sort of) & lends to someone else isnt owned by that borrower even technically.

The 'magically' created $95 is 'owned' by the bank isnt it? I may very well be wrong about this though.

The further magical creation of money from the depositing of this $95 just stounded me me when i first came across it.

The 'backing' for the newly created money is the belief that that the bank has correctly assessed the borrowers ability to pay it back, the ability for the bank to persue defaulters through the courts & seize tangible assets & the belief that the bank can ultimately 'write off' such debts from its profits if all else fails.Is this correct?

I'm surprised at the 5% asset ratio BTW, ..., i think the UK's is 12.5%, but I should check

[WickedLou9]

Originally Posted by Ardentfrost

It means that the rich getting richer doesn't mean the poor get poorer. The two statements are independant. The only way it would be true is if the rich were in complete control of what the poor make, and kept them at low pay in order to make more money.

We're not at the point yet where our capitalism is so fucked up that workers have no control of their own pay.

See: Wal-mart

It's heading in that diretion. CEO's make eleven billion dollars and they cut 5,000 low paying jobs to "save money"

[Ardentfrost]

Originally Posted by WickedLou9

See: Wal-mart

It's heading in that diretion. CEO's make eleven billion dollars and they cut 5,000 low paying jobs to "save money"

Doesn't prove anything. If they offered their employees extremely poor wages, people wouldn't work there. It's one of those facets of capitalism that I was referring to when I said that we hadn't fucked it up that much yet.

[Diesel66]

Originally Posted by Thorgrim

diesel the point was the corvette was supposed to be SIGNIFICANTLY CHEAPER and all this stuff isn't, its a total misrepresentation

If GM sold the 1991 corvette today, it would be significantly cheaper. BUT they decided to upgrade the vette, and the price of today's car is the same price as the 91 vette.

[WickedLou9]

Originally Posted by Ardentfrost

Doesn't prove anything. If they offered their employees extremely poor wages, people wouldn't work there. It's one of those facets of capitalism that I was referring to when I said that we hadn't fucked it up that much yet.

Somtimes Walmart is the only major employer in an area. They move in, artificially lower prices to drive out any smaller operations. The people who used to work at other stores go work for walmart.

[Ardentfrost]

Originally Posted by WickedLou9

Somtimes Walmart is the only major employer in an area. They move in, artificially lower prices to drive out any smaller operations. The people who used to work at other stores go work for walmart.

lowering prices to move out competition only works if the prices stay lower. and if people are paid too little in that area, they'll be forced to move out and a ghost town would be created.

Plus, Wal-mart is in large areas too and finds plenty of people to work at their store. There's one opening in downtown Atlanta next year and I assure you, they'll find people to work there.

[WickedLou9]

Originally Posted by Ardentfrost

lowering prices to move out competition only works if the prices stay lower. and if people are paid too little in that area, they'll be forced to move out and a ghost town would be created.

Plus, Wal-mart is in large areas too and finds plenty of people to work at their store. There's one opening in downtown Atlanta next year and I assure you, they'll find people to work there.

I think you have too much faith in the free market and more importantly too much faith in people. People become complacent and won't necasarily do what is best for themselves. People don't like change. They get comforatble and they stay where they are. If walmart pays them less.. they will probably stay as long as they can still survive.

[Ardentfrost]

Originally Posted by WickedLou9

I think you have too much faith in the free market and more importantly too much faith in people. People become complacent and won't necasarily do what is best for themselves. People don't like change. They get comforatble and they stay where they are. If walmart pays them less.. they will probably stay as long as they can still survive.

The stuff I talk about happens all the time, it just needs to happen more often, and would without the "protection" of nationalized unions and federally enforced regulation. They SLOW people standing up for themselves, which is unsafe.

[ballz2wallz]

Originally Posted by ballz2wallz

yah, everyone i know that graduates with a business degree picks up a job on wall street making 150k straight outta college. maybe i'm just surrounded by the better of the mix, but still, i've seen no problems with anybody i know getting jobs. i know 23 yr olds making close to 200k, and i hate it.

but good for them. i constantly tell myself i went into the wrong field.

I hate to bring this up, but I was constantly questioned about this statement...now I know I'm not far off from the truth!

http://today.reuters.com/news/articl...STREET-PAY.XML

NEW YORK, Oct 17 (Reuters) - Wall Street workers took home nearly $300,000 on average last year as profits from trading and merger advising fueled record earnings, New York State Comptroller Alan Hevesi said.

Wall Street compensation averaged $289,664 per person, 5.1 times the average $56,634 for workers citywide, the comptroller said in a study released Tuesday. The highest-paid bankers and traders can command eight-figure pay packages.

Bonuses totaled a record $21.5 billion, or $125,500 per person. The securities industry paid out $48.8 billion, while generating $2.1 billion of taxes for the city, Hevesi said.

Wall Street compensation increased 21.9 percent in 2004 and another 11.8 percent in 2005, Hevesi said. The securities industry accounts for 4.7 percent of citywide employment, but 20.6 percent of its wages.

Industry employment is also on the rise, up to 170,800 last year from 161,300 in 2003.

The new jobs restore one-third of those lost during the three-year bear market that began in 2000 as the technology and telecommunications bubble burst. Another 6,300 jobs have been added this year, Hevesi said.

"Wall Street is recovering," Hevesi said in a statement. "And, as we have seen in the past, when Wall Street does well, the city does well."

Pretax profit at seven major New York City-based securities firms -- Bear Stearns Cos. <BSC.N>, Goldman Sachs Group Inc. <GS.N>, Lehman Brothers Holdings Inc. <LEH.N>, Merrill Lynch & Co. <MER.N>, Morgan Stanley <MS.N> and investment bank units of Citigroup Inc. <C.N> and JPMorgan Chase & Co.'s <JPM.N> -- rose 42.5 percent last year to $45 billion, Hevesi said.

On Tuesday, Merrill said third-quarter operating profit rose 41 percent to $1.94 billion, or $2 per share, topping analysts' average forecast for $1.47 per share.

Quarterly results at Bear, Goldman, Lehman and Morgan Stanley also topped forecasts. JPMorgan reports results on Wednesday, and Citigroup on Thursday.

Securities industry employment nationwide totaled 801,300 at the end of August, up 2.3 percent from a year earlier and the most since April 2002, Bureau of Labor Statistics show.

The median annual full-time salary for all American workers 16 and older was $34,268 in the second quarter, BLS data show.