Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: frankw1900 who wrote (3252)	10/21/2001 12:14:08 PM
From: Ahda	Respond to of 24758

I'm quite sure that over the next year or two nearly all hospital anxillary sevices will be contracted out and janitors will no longer be getting ~$20/hr. Providing no one tinkers with your money supply, the end result of the policy of decreasing labor costs, if it is done on a national level, could create the added value of increasing your dollar. In many areas excluding medical your wages are higher than here.

To: frankw1900 who wrote (3252)	10/21/2001 3:56:34 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

As per your previous posts, if I understand them correctly, marginal interference Not marginal interference, interference at the margin through self destroying RPs which is a form of potential money creation far greater than the potential money creation of permanent reserves even while permanent reserves are far more potent, but while FED is stingy and provides little permanent reserves(currently). The strike interest rate of the RPs is set at a fixed constant over time of life rate and so while they exist the instantaneous desire of higher compensation seekers must remain also constant to keep prices of labor from rising, but it doesn't. The wealth effect, envy, keeps expectations for more compensation rising. The FED is slow to respond to this desire because they aren't that sensitive, but the market is, that is, if the FED doesn't interfere. compounds the basic rate of inflation (eg) inflation of x% + (y% of inflation of x%) and as this goes on over time inflation accelerates as banks create extra money loaning a bit more because they have some last, extra amount of low cost funds. Yes. in a vague way you're getting the downstream mechanism. And they will loan it out even though (because?) they don't really know if the rate they charge would be nearby that of an untampered market. You have the idea but you place too much emphasis on demand. The mechanism is independent of demand. We can be nearly in depression and still have inflation. This is completely denied by the world's most astute economists. They're all wrong. I haven't read one of them that has a good handle on what has transpired during the last 20 years. In the early '80s we were near to depression and inflation continued up. QED. Am I right in believing this is not quite symetrical? Yes and no. During the late '60s and '70s it was asymmetrical, but then it became symmetrical during the '80s when FED engaged in very little interference and made a big deal about money supply targeting. They finally did what they needed to do, target money and ignore rates, but at a time when it wasn't material to do it. That is, such targeting didn't generate what they considered to be constructive results. So they gave it up. Greenspan joyfully announced in '94 that they were quitting money targeting. Between '94 and '96 they brought back interest rate targeting under the guise that they were targeting everything. That's when "it" became asymmetrical again. I can make what you mean by "asymmetrical" rigorous, if you want. Central bank interference at margin by raising rates does not reduce the amount of previously created money but reduces loan making and business activity, eventually terminating marginal businesses and imprudent investments? Your statement is both false and true. The market would gradually raise rates and reduce business activity, but FED interferes because FED believes the market is wrong or FED has to act because if they don't, Congress will take away some of their power, or FED feels if they don't act, we will collapse in panic because they believe that intrinsically people are evil and can't be trusted. When FED interferes against a market that would raise rates, and I mean short rates, the market is co-opted and so all players must trust that FED is right. FED has never been right as the governors have endlessly testified. Inflation will then subside as productivity increases use up extra money and central bank makes money centers buy its paper? Productivity, like demand and supply, is an abstraction and can't be measured except way after the fact and even then, unclearly. What subsides is the difference between marginal cost and average cost of labor. Under this kind of environment which dominated the '80s there is allowed extra operating leverage because corporation's labor costs become visible. This allows earnings visibility and multiple expansion which we saw in the late '90s. If the central bank has a lucky stroke? <g> They never do because they react to their own past errors. It's drunken sailor. 1. The basic rate of inflation is caused by money created at a rate in excess of that of the rate of increase in productivity. I should think it reasonable to assume at this point marginal workers look for work keeping them even with inflation, and average workers sue for raises keeping them even with inflation . Is this assumption correct? No. Intuitvely it seems so and rhetoric I hear from unions and others might confirm this. Wage Settlements for part of the nineties were relatively quite small and inflation fairly minimal and marginal workers either few or not costly.. They had inherited the fear pervasive during the mild depression of the '80s. This is the psychological reaction that keeps the marginal cost workers constrained. 2. In the early 1980s where I live, business conditions were poor (nominal interest rates 12%+, etc) and average workers elected wage roll backs and marginal workers were laid off. This is the corrollary of your thesis, I think: the average worker underbid the price of marginal worker's output. Yes. 3. Sometimes it's tricky to figure out: >>> The hospitals ultimately, are run by the government, and furthermere, for most of the period of the dispute, run by a socialist government. This is the problem. Nurses and hospitals don't want a free market. They want what their protection money will buy. I'm quite sure that over the next year or two nearly all hospital anxillary sevices will be contracted out and janitors will no longer be getting ~$20/hr. We can either have gradual change through markets or sturm und drang which comes from the best that intellect can offer.