PeakTrader.com

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PeakTrader:

To rebuild the American middle class, we need to get rid of unnecessary regulations, perhaps $1 trillion of the $2 trillion a year of federal regulations.

Also, we need to raise the minimum wage, e.g. to $15 an hour, which will raise real wages for workers up to $25 an hour, while workers earning more than $25 an hour will lose little, generate faster real growth, a higher level of consumption and saving for the masses, greater efficiencies in production, less dependence on government handouts, more tax revenue, and correcting imbalances built-up over several decades, e.g. the saving glut and idle labor.

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Since the minimum wage was established, per capita real GDP has grown at a much faster rate.

Annual per capita real GDP growth:

1863-1937 (75 years): 1.33%
1938-2012 (75 years): 2.44%

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We have a massive demand problem, and too much household debt, while a small group, with the lowest marginal propensities to consume, are hoarding cash or investing in unproductive assets, like gold, Treasury bonds, etc..

Why would “capitalists” share productivity gains with workers when they don’t have to?

When all the productivity gains go to capital and none to labor, although capital and labor are also complements, not just substitutes, it’s a “market failure.”

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The (positive) income and multiplier effects may be stronger than the (negative) employment effect, perhaps, up to $15 an hour. So, it may have a net positive effect on the economy, and help generate a virtuous cycle of consumption-employment.

Why pay low-skilled workers poverty wages, deny more experienced workers jobs, because they won’t accept low-paying jobs, add more capital to the saving glut, and keep labor force participation rates low, particularly the teen labor force participation rate, which is at an all-time low?

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We need to correct “market failures” to help the “middle class.”

The last time real wages rose, in the 1990s, we hired bag ladies and guys sleeping in the park for $12 an hour, and more.

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Morganovich can’t even grasp the “paradox of thrift,” in his upside-down world.

I guess, he won’t be happy, until American low-income real wages (which are falling) converge with Chinese low-income real wages (which are rising).

Raising low-income real wages, which are too depressed in the U.S., will facilitate a virtuous cycle of consumption-employment, to raise both consumption and saving.

It’s a “market failure” when all the productivity gains go to a leaf blower, for example, and none to the low-skilled worker operating the leaf blower.

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Nick Bradley, normal people have learned you can’t have a conversation on economics with Morganovich. and his circus, because he’s like a pre-20th century witch doctor, who believes voodoo is the only real medicine.

Don’t let him drive you away, like some others, who got fed-up with him.

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Raising the minimum wage will cause greedy, weak, and poorly managed firms (represented in the cartoons) to lose business or fail. Other firms will not only capture their market share, they’ll benefit from the increased demand.

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We’ve seen purity go up, prices go down, and yet demand fall. This proves drug laws are effective, and we know when government gets involved, it can create havoc in markets

I think, we should spend more to make it even more expensive for drug dealers, on the supply side, and spend more on rehabilitation and education, on the demand side. They’re worth the costs.

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The American people have been winning the drug war. The steep rise of drug use, in the ’60s & ’70s, was stopped and reversed.

The invasion has been contained, and the American people are stonger and safer as a result.

If I was a foreign government intent on destroying the U.S., legalizing drugs would be part of the strategy.

We should spend more on the drug war and kick more ass.

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“…firm that has raised $7 million has an interesting mission: Buy up companies that can ultimately serve and grow the marijuana industry.”

Yes, buy security firms, e.g. gates and locks, firms that help students with remedial classes and how to get GEDs, pizza businesses, when they get the munchies, and film studios that make really stupid movies.

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It was a cultural revolution that spread like wildfire. Government reacted to the epidemic.

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Prohibition and drug laws are much different. Alcohol was popular for hundreds of years, and there were many old wineries, distilleries, and breweries before Prohibition.

The drug cultural revolution was something that came out of hell. It spread like wildfire causing massive devastation, like crime rates to soar, and Congress overwhelmly passed drug laws to deal with the epidemic.

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PeakTrader:

I’ve already shown, based on mathematical and empirical models, raising the minimum wage, e.g. to $15 an hour, will raise real wages for workers up to $25 an hour, while workers earning more than $25 an hour will lose little in real wages, generate faster real growth, a higher level of consumption and saving for the masses, greater efficiencies in production, less dependence on government handouts, more tax revenue, and correcting imbalances built-up over several decades, e.g. the saving glut and idle labor.

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If wages rise 10% for every worker, inflation will likely rise 10% too. So, real wages are unchanged, at worst, although it boosted nominal GDP growth in the 1970s.

However, if wages rise 20% for the bottom 50% of workers and are unchanged for the top 50% of workers, then, because of imbalances built into the economy, real wages will likely rise for the bottom 50% much more than real wages will fall for the top 50%.

Two of the mechanisms are attracting idle labor, e.g. represented in falling labor force participation rates, particularly the teen labor force participation rate, which is at an all-time low, and shifting real income from high-wage earners (with low marginal propensities to consume) to low-wage earners (with high marginal propensities to consume), and therefore, shift unproductive assets, from the saving glut, including profit at a record high compared to GDP, into productive assets, through increased demand, which will facilitate real growth, to raise both consumption and saving.

We know, the Fed has been targeting a faster inflation rate, to raise nominal GDP growth, and therefore raise real GDP growth. However, its policy has become increasingly less effective over the past two or three years.

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Also, I may add, it seems, much more of the expansion from 2001-07 was fueled by household debt compared to the expansion from 1991-01, which was fueled, in part, by real wage increases. When the music stopped, in 2007, households were left with way too much debt, which has depressed consumption.

Chart Medium Household Real Income

http://research.stlouisfed.org/fred2/series/MEHOINUSA672N

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Here’s what one economist said a year ago:

“The decline and lackluster recovery in business investment has a wide range of causes, including globalization, regulatory barriers, and weak demand.

Many companies are investing overseas rather than in the United States. Multiple layers of regulation, even if well-intentioned, have the impact of discouraging capital investment and innovation. And the continued weakness in demand at home makes it difficult to justify building new factories.

Government has to invest in infrastructure, education, and research. Households have to invest in their own human capital. And businesses have to invest in buildings, equipment, and software.”

My comment: With much stronger U.S. corporate balance sheets, including $2 trillion held in cash, and little capital spending by U.S. corporations, to expand, Americans are basically holding much of their wealth in cash too, like in Europe.

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