381–390 of 477 posts
There are a few points not quite highlighted in this thread: - Woman entering the workforce: I think this is the primary driver of wage deflation. You suddenly doubled the supply of the workforce, this means you can afford to pay workers much less. The end of WWII also means you have new supply of men who were doing army stuff. - US Trade Balance: With the gold standard abolished and countries using the USD, the US c…
There are a few points not quite highlighted in this thread: - Woman entering the workforce: I think this is the primary driver of wage deflation. You suddenly doubled the supply of the workforce, this means you can afford to pay workers much less. The end of WWII also means you have new supply of men who were doing army stuff. - US Trade Balance: With the gold standard abolished and countries using the USD, the US c…
Aren't you a quarter of a century off on the WWII thing?
Earlier quoted context omitted.
Another great use of inflation is to reduce the value of the national debt. It's like a flat tax that affects everyone equally.
> a flat tax that affects everyone equally. I think you mean "a sneaky way of implementing a regressive tax". If you are spending 90% of your income on your day to day, inflation-sensitive expenses, versus 20% of your income, any positive inflation rate will have a greater effect on your margin of survival. Plug in 10% and 1% and see for yourself.
Let the tax system and social services systems stand on their own. Don't conflate one with the other.
There are a few points not quite highlighted in this thread: - Woman entering the workforce: I think this is the primary driver of wage deflation. You suddenly doubled the supply of the workforce, this means you can afford to pay workers much less. The end of WWII also means you have new supply of men who were doing army stuff. - US Trade Balance: With the gold standard abolished and countries using the USD, the US c…
Earlier quoted context omitted.
I find Yanis Varoufakis' account of the history leading up to the collapse of Bretton Woods very telling: As the combined costs of the Vietnam War and the Great Society began to mount, the government was forced to generate mountains of US government debt. By the end of the 1960s, many governments began to worry that their own position, which was interlocked with the dollar in the context of the Bretton Woods system,…
You can summarise this argument, and several of the other arguments in this thread as: It was large-scale government spending financed by seignorage/inflation instead of taxes that did this. "Free money" for politicians, hidden from the electorate. Not just in America, but as a global phenomenon. With GREAT emphasis on the fact that is was not the large-scale spending that did it in, but the hidden aspect of it. You…
That's the angle that a lot of people want to push, but is it actually correct? What about the trade deficit angle? Especially with regards to oil imports.
The author obviously wants you to believe that it was the abandonment of the gold standard, but there are several other theories that have more credence with mainstream economists. The early 70's was the start of a horrible period of stagflation: stagnation coupled with inflation. Some do blame the loss of the gold standard, but the leading theory is the OPEC oil crisis. Others blame market regulations, the EPA was p…
I find the great decoupling fascinating and I don't think it gets enough study. There are a couple other things that I think contributed: The massive increase of women joining the labor market in the US just after 1970 largely as a consequence of the widespread adoption of oral contraceptives in the young population. [1] The People's Republic Of China was formally admitted to the UN in 1971, and following that in 197…
I always wonder how much of the California economic claims are due to California vs due to access to cheap overseas labor with major ports.
The author obviously wants you to believe that it was the abandonment of the gold standard, but there are several other theories that have more credence with mainstream economists. The early 70's was the start of a horrible period of stagflation: stagnation coupled with inflation. Some do blame the loss of the gold standard, but the leading theory is the OPEC oil crisis. Others blame market regulations, the EPA was p…
According to Thomas Piketty [1], it's mainly a result of a bifurcation in education, and dramatically rising managerial compensation helped with tax cuts. I personally also think this is the main answer. In other words, all our massive productivity increases have come from people with a ton of education, and they reap all the rewards, helped with lower taxes. The median worker isn't any more educated and hasn't reape…
If I had to guess, would assume this timetable is based around the end of WW2. 1971-1945(end of WW2)=26 years. 26 years seems like a feasible amount of time for businesses to grow to the point where business owners don't need to share profits with employees to sustain growth. It's also around the amount of time when business owners welcomed their kids into company leadership positions. The post-war and somewhat "sheltered" children probably weren't as compassionate towards their fellow American (as their war-time parents were), leading to benefit reductions, lackluster pay-raises, and overall reduction of profit-sharing, etc. If you look around, it's pretty clear this has been compounding ever since.
Earlier quoted context omitted.
> Rich people have no reason to keep significant amounts of currency Eliminate inflation and they do though (if your currency is guaranteed to hold or even increase its purchasing power, the risk adjusted returns on investing it in productive activies aren't very attractive). Which is bad news for workers who feel they could be productive enough to negotiate for higher wages, if only the rich had any incentive to dir…
People can (and do) invest in gold right now. Nothing would change significantly for rich people as they would continue to put most of their money in the same investments they do today which generally have higher risk adjusted returns than gold and would continue to have higher risk adjusted returns than a gold backed currency. The difference would be in the liquid portion of a person's assets and poor people need to…
The promise of an absence of inflation (which I agree is not the same as a gold-backed currency; moderate price inflation took place throughout the Bretton Woods era) is a guarantee that currency will hold its's value; that's tautological. Which obviously isn't the case for people speculating on timing the market for gold. And taking away the ability for prices on average to rise reduces the yield and increases the risk on investments in production or extension of credit. If you make currency an attractive component of rich people's portfolios, you decrease the proportion of their wealth invested in the wider economy (and since achieving zero inflation means artificially maintaining these rich people's purchasing power, if they scale back their investments everyone else just has to work harder for less...). Which is why an absence of inflation isn't a good thing for workers.
Earlier quoted context omitted.
I find the great decoupling fascinating and I don't think it gets enough study. There are a couple other things that I think contributed: The massive increase of women joining the labor market in the US just after 1970 largely as a consequence of the widespread adoption of oral contraceptives in the young population. [1] The People's Republic Of China was formally admitted to the UN in 1971, and following that in 197…
Another big mover came just after, 1973, the oil supply shock. This in turn lead to stagflation. Another thing I didn't see in that data set was the relative growth / decline of union membership; i.e. how that affected wage growth, indirect effect of negotiating power. It would also be interesting to see whether that was a leading co-factor or a following co-factor.