"With financial markets buffeted by renewed fears about the credit drought and a deepening housing slump, Mr Bernanke could hardly boast of the economy’s soundness. To make matters worse, figures released on Wednesday July 16th showed that year-on-year inflation rose in June to 5.0% (see chart), the highest rate since 1991. Paltry pay rises, as well as job losses, mean employment income is probably growing by less than 3%, well below the inflation rate. Falling real income, slumping share and house prices and tighter credit all cast a cloud over consumer spending. Firms worried about future demand will be more cautious too about shelling out for costly capital projects, even if they could raise the finance." Economist July 17., Boxed-in Ben
Inflation just for reference means things will cost more and that is bad.
"In other words, if the inflation rate is 5 percent a year that means you’ve got to get a 5 percent pay raise just to keep pace with rising costs.” Dr. Walden, a professor in the Department of Agricultural and Resource Economics.
I could have said that, but I only barely have a undergrad in Philosophy. I wouldn’t want you think I was bullshitting about the costing more thing and it being bad and things. I know there are people out there who view me as “negative”.
So anyone out there getting a 5 percent raise?
If you are on a fixed income are you going to get a 5 percent increase on your cost of living to keep up with inflation, well most people are going to answer no. If you keep doing what you’re doing right now as far as finances, you’re going to be in the hole. If you lose your job, you are really going to be in the hole. If you don’t currently have a job right now, skidrow is shaping up to be a nice little section of town.
Now inflation isn’t always bad, if your wages are keeping up with inflation, well then it could point to something other than a failing economy. Now I could use my own or other readers personal anecdotal stories of their friendly boss who gave them 25% wages just for being fabulous, but lets look at some facts.
Let’s take a look at the Real Wage earning report for the average American worker released July 16 for June 2008 by the Department of Labor’s Bureau of Statistics.
Oh look at that it’s down $0.07. So I guess this would be the bad inflation.
Here are the two types of inflations:
Demand-Pull Inflation - This theory can be summarized as "too much money chasing too few goods". In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies.
Cost-Push Inflation - When companies' costs go up, they need to increase prices to maintain their profit margins. Increased costs can include things such as wages (browne’s entertaining commentary, yeah right, during my life I have never seen this phenomenon) taxes, or increased costs of imports.
I think we’re suffering from costs-push inflation, owing to bad choices that were rooted in greedy bastardness.
"Despite these unsettling prospects, the Fed’s rate-setters bumped up their forecasts for GDP growth in 2008, to 1.0-1.6%..." Economist, July 17,, Boxed-in Ben
Well I guess everything is going to be ok then. The GDP is the end
all and be all of what’s actually going on. There is never any
manipulation in its presentation or on emphasis on items that would benefit corporate businesses and make good campaign sound bites.
I’ll keep an eye out for you.
Let’s see what the lead story is at the LA Times today: Jobless rates up by 6.9%
That’s a little better than the tagger lead story, but why is it up 6.9%?
Because the economy is shit. I wonder are the politician going to morality talk their way out of this one.
“If you went to church more often and had family values and went to college, you’d have a job. Yeah that job won’t pay for shit, because the wages of the American worker are not even kind of keeping in step with inflation, but that’s the taggers fault and we’re putting all of them in jail,” random politician.
Browne Molyneux
Recent Comments