Fed Ends Zero-Rate Era

Singapore wages aren't zero but they are really low for the non-managerial classes (i.e. the people who do all the work) and oversized for the managerial classes.

It's about 3x the size of San Francisco and clearly has aspirations of becoming a similar center for startups but with the prevailing wages for the people who do all the actual work so low the quality of what is produced is usually shitty.

It's not a place you'd want to emulate.

Demand is not want. Demand is standing at a cash register with cash, asking for a product.

Although demand in the economic sense sort-of-sounds like want - certainly I'd like a new Lamborghini - I have zero effect on the demand for lamborghinis.

The level of spending (poverty vs wealth) is mostly irrelevant because that's a value line someone draws on a graph somewhere. Poverty in the Midwest is not the same as poverty in Sub-Saharan Africa. Absolute Poverty (in which a person has insufficient resources to survive) has a wide variety of causes but essentially reduces down to the inability of an individual or family to produce enough to exchange for what they need.

Savings are just postponed consumption in the same way as debt is the promise to hand over your future production.

The reason many economists are unsure or against the minimum wage is not because they're some agents of bourgeoisie capitalists, but because arguments in favor of it tend to be moral, not economic.

For instance, here's a case for the minimum wage presented by an (otherwise very knowledgeable, I'll grant) Post-Keynesian economist: http://socialdemocracy21stcentury.blogspot.com/2013/02/the-e...

It's pretty weak. The first two are very flimsy normative/moral arguments that, even if true, do not at all imply minimum wage is the solution over say, basic income, unionization, community-based mutual credit or a variety of other initiatives.

The third one is a can opener assumption. "Oh, minimum wage might work, but only in the case of Post-Keynesian full employment with buffer stocks of labor." You might as well speak of spherical cows in a vacuum. Followed by an unsourced claim about post-WWII prosperity being strictly due to Keynesian policies, when there's no consensus what factors exactly caused it.

The downside of everyone piling into index funds isn't something systemic that'll bring down the financial system the way the real estate bubble did. Rather, it's that the capital market as a whole becomes less efficient. All the money parked in index funds is money whose owners did no due-diligence about where they put it; it means that if reality changes and the value of the underlying businesses goes up or down, the index fund will be the last to profit from it, and we can expect price changes in the stock market to lag fundamental changes in the businesses by a greater time period.

The effect of this is basically that returns for active smart-money investors go up, as there's less competition amongst folks actively trying to discover new relevant business facts. We see this already - a lot of the wealth-creation in Silicon Valley is because folks who have an information advantage can invest in new private businesses before the general public is willing or able to invest in them, creating large private fortunes. But because the price mechanism lags the business reality in this case, you don't have crises where a large number of people suddenly find out that they are poorer than they expected, like the 2008 housing bust and 2001 dot-com crash. Rather, you end up with chronic societal inequality where a small number of people end up with fortunes that everyone else thinks are implausibly large.

We have indeed seen it in action since 2008, to horrific results.

$9+ trillion in new public debt added in eight years, to go with ~$11 trillion in additional government spending, boosting federal spending by nearly 1/2, to achieve the slowest average growth in non-recessionary times in US history, and the slowest employment recovery in US history.

More typically you get examples like the governments of Japan and China, which over-spent by the trillions of dollars and misallocated resources on purpose to fake economic prosperity that doesn't really exist so their citizens don't get upset. To say nothing of the favor and bribe based system large governments always operate by - so eloquently demonstrated by the entirely worthless American Recovery and Reinvest Act - in which they choose to allocate resources to their favorite causes (or to build things that aren't even needed) instead of to the most productive outcomes.

China is providing an amazing example of how incompetent command spending always is in an economy. Inevitably when the tide goes out, the fraud begins to reek. In the case of China, they've been busy arresting people to make it look like they're doing something about the vast corruption they've caused through distorting the economy to a truly massive degree. They caused the problems, and then arrest people for their own incompetence. The big difference with the US, is the US doesn't arrest its executives based on the mistakes the Fed made in intentionally creating asset bubbles that inevitably collapsed.