2 years ago: The three-step test for inflation

March 30, 2011, on this blog: The three-step test for inflation

Conveniently, there’s a simple three-step test to find out if inflation worries are founded or unfounded.

Step 1: March into your boss’ office. Don’t bother making an appointment, just open the door, walk in and tell him to listen up because you’re in charge here.

Step 2: Inform your boss of the substantial amount of the raise you will be receiving and that this figure is not optional.

Step 3: When your boss blinks in shock at the large figure you just quoted, remind your boss that you have plenty of options. Remind him that you could easily find another, better-paying job by late afternoon. Remind him that in this job market your boss knows very well that he would be hard-pressed to find anyone who could possibly replace you — that you have all the power in this negotiation and he has no choice but to do what you demand.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    How do you know it’s false?

  • EllieMurasaki

    Approximately 74.9 percent of the U.S. families surveyed in 2004 had credit cards, and 58 percent of those families carried a balance. In 2001, 76.2 percent of families had credit cards, and 55 percent of those families carried a balance. (Source: Federal Reserve Bulletin, February 2006)

    That alone proves that “most people are not in debt” is a bald-faced lie. Or will be next time you say it, since it’s possible that you really were completely uninformed.

    As for the rest, I am not your fucking Google bot.

  • http://blog.trenchcoatsoft.com Ross

    It also made for a system where if I suddenly had the capacity to produce twice as many goats or twice as much wine, but no one had discovered a new vein of gold, then we were all fucked because the economy couldn’t grow.

    But hey, it worked out pretty darned great for the rich guy who produced nothing but had managed to get his hands on a lot of gold — suddenly there were twice as many goats on the market, but he had the same percentage of gold. So without doing anything at all, suddenly he had twice the buying power he had before. And me, who had work so hard to produce that extra wine? Well too bad, there’s no more gold in the world today than there was yesterday, so the most I can get paid for today’s wine is only half as much per barrel as I got yesterday. I shoulda just stayed in bed.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    25 percent of families didn’t have credit cards. half of the families that did had debt. so 37 or so percent had credit card debt. Therefore the majority did not.

  • EllieMurasaki

    When did ‘most’ start meaning ‘simple majority’, not ‘supermajority’?

    Okay, let’s use your definition. How many of those people with no credit cards or no credit card balance also have no car loan, no house loan, no student loan?

    Find your facts your own fucking self.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    gold was seldom if ever tossed aside because there wasn’t enough of it. We didn’t leave the gold standard for that reason.

    I was also simply illustrating what a medium of exchange and a currency were. gold was a generic example. it also wasn’t a “system”. Someone at some point decided to use it as a medium of exchange and someone else accepted it. Other people did the same for a variety of mundane reasons, it was portable, couldn’t be watered down etc

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Again, even if it was 99 percent the principle would still be the same. you don’t incentivize debt and speculation. We’ve been living the nightmare of Greeenspan economics since the mid 80′s. You can’t paper over these problems with more liquidity.

  • LoneWolf343

    If someone disagrees with me that the earth is round, then yes, he is uninformed. Not specifically because he’s disagreeing with me, but he’s disagreeing with an easily verifiable fact that I happen to be stating. My involvement in the disagreement is merely an accident.

    As for the link between wages and inflation, here you go: http://www.usatoday.com/story/money/personalfinance/2013/02/01/jan-jobs-investors-analysis/1881047/ If you need it condensed for you, inflation tends to increase when job markets are good because employees have bargaining power. If the job markets are bad, then employees lose their marketing power, which means they’re stuck with low wages, which means that they will spend less, and when they spend less, inflation slows.

  • P J Evans

    Heck, the econ text I had was so boring I passed the class strictly on the lecture notes. (The best part: listening to the instructor explain how he *totally* didn’t grade on a curve, and describing the system he used, which sounded remarkably like … grading on a curve.) At least at the level we were taking (I think it was macro) common sense can usually get you through, unless you’re one of those that believe that tax cuts increase revenue, on zero evidence whatsoever.

  • P J Evans

    They used to have very severe penalties for counterfeiting, too.

    We left the gold standard because the economy was too fucking big to run on gold.

  • http://blog.trenchcoatsoft.com Ross

    Money has no rest mass. Saving money (beyond a modest savings to cover unexpected misfortune, and distinguished in its entirety from “saving up for something”) means taking money out of circulation, removing it from where it can do good and putting it away somewhere where it no longer serves the one and only purpose that money has.

    Saving money is not some kind of abstract good.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    PJ – not true at all. http://en.wikipedia.org/wiki/Nixon_Shock It had nothing to do with any shortage of gold or availability of gold.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “Saving money is not some kind of abstract good.” ???

  • EllieMurasaki

    Money in savings is not money that is being spent. Money that is not being spent is wages that are not being paid. I disagree with Ross–savings are necessary–but once one has enough to be sure that a sudden stroke of misfortune won’t do one in for lack of savings, and if one does not have a particular spending goal in mind (vacation fund, new car fund, etc), then better to spend, loan, or give away the money.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    in the 70s there was very high inflation and also high unemployment

  • http://blog.trenchcoatsoft.com Ross

    I was trying to specifically exclude setting aside something for a sudden misfortune or a fund to meet a specific goal when I disapproved of saving in the abstract.

  • EllieMurasaki

    Ah. Thank you for clarifying.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Yes, but even by that standard that’s pretty modest compared to the total Charlie Foxtrot Zimbabwe went through, or for that matter post-WW2 Japan or Hungary in 1946 and 1947.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    We had a much better fairer economy and a much higher savings rate

    Iiiiiiiiiiiiii wonder why that might be.

    Could it possibly be that in the 1940s, 1950s, 1960s and 1970s there was a government in charge devoted to a broad social and political consensus that dictated, in fundamentals, that it’s better when the country grows together than for a lucky few to reap the benefits of a country’s growth?

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Uh, actually it did. Nixon closed the gold window, ending the international exchange standard, because some countries were getting squirrelly and were, instead of accepting US dollars, their central banks were saying “Nuh-uh. Here’s your US dollars, we want our fucking gold.”

    You can spot the problem in about two seconds unless you think the US government could have printed gold.

  • P J Evans

    We’d effectively been *not using gold* for a long time before that.

    Have you ever considered that some of us are over 30 and remember these things from when they happened?

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Yeah, I remember doing Econ 101 type stuff and it was easy enough to repeat the dogma even though I didn’t really believe the simplified treatments.

  • LoneWolf343

    You mean…there are other factors to inflation than just wages?

    HEY EVERYONE! I just found out that the economy is extremely complex, inter-dependent system that relies of an abundance of factors for its health, some of which we don’t even know! This means what we do know is 100% wrong!…or something.

    Or maybe you’ll figure out that anecdotal evidence is not valid. I’m not holding my breath for that.

  • Lori

    I have figured it all out

    You clearly, demonstrably do not.

    I’m never going away

    And with this you end the debate on how people should deal with you. You are never going to learn and you’re never going away, so ignoring you is the best response.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    How would banks have any money to loan if no one saved money?

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ron Paul “End The Fed” is a good intro to feminist econ 101.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    so if you had done the inflation test the author is talkoing about in the 70′s you would have been fired and would have to take a much worse job if you could even find one. 70′s had high inflation and and unemployment, 80′s had high employment and low inflation.

    We had almost no inflation during the industrial revolution yet employment skyrocketed. economic growth doesn’t cause inflation,.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    that does not reflect an under availability of gold, it shows the other countries were quite correctly concerned that their dollars were not worth what they had been worth. The “problem” was the Vietnam war and Nixon’s policies, not that the economy was expanding at such A Rapid rate that there wasn’t enough gold in the ground.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    PJ- that is correct. The various changes didn’t occur because the gold standard was strangling the economy as implied above.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    social whatever wouldn’t affect the savings rate

  • LoneWolf343

    They didn’t even keep track of that stuff during the industrial revolution. You are REALLY BAD at this.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    the gold price was the same 20 dollars.

    and again, 70s had high inflation and unemployment and 80′s had low low. The topic starter is using a variation of the Phillips Curve which I doubt even Paul Krugman would defend post staglation

  • LoneWolf343

    “the gold price was the same 20 dollars.

    How many times do I have to say this? INFLATION DOESN’T WORK THAT WAY!

  • http://twitter.com/lesterhalfjr Chris Hadrick

    see edit

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    You can’t even tell the truth about your job. Why should anyone believe anything else you say?

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    “incentivize”?

    Shut the fuck up. I hate that dot-com bullshit.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Ok. This is the second time I’m gonna tell you to shut the fuck up because you do not know what the words mean that you’re even using.

  • EllieMurasaki

    Ron Paul, a feminist?

    *dies laughing*

    Hey, look what today is! HAPPY EASTER FROM JESUSMURASAKI!

    (sorry)

  • http://blog.trenchcoatsoft.com Ross

    And Ron Paul’s “Women who get sexually harassed have only themselves to blame for not having no-harrassment clauses in their contract and waht about all the poor women who would WANT to give their bosses the power to harass them sexually in exchange for a higher salary” is a good intro to feminist libertarianism.

  • P J Evans

    It was $35 an ounce for a long, long time.

  • LoneWolf343

    Seeing lots of 0%, which means the data is incomplete, and unusable.

    But, that’s to be expected from someone who doesn’t have the most fundamental grasp on what inflation is.

  • P J Evans

    Fail.Social policies are things like making education more affordable. If education is less expensive, people don’t have as big a debt load, and can actually save money.

  • phantomreader42

    You’ve made it abundantly clear that you don’t actually care about anyone or anything but yourself, and sometimes not even that. You obviously don’t care about reality, because you live in your own delusions.

  • phantomreader42

    Well, Ellie, you’ve got to remember that Chris Hadrick does not live in the real world, so he is incapable of comprehending that his delusions do not magically alter reality. He apparently thinks he is the only real person who has ever existed, and all others are merely scoring tokens in some elaborate game.

  • phantomreader42

    Yes, Chris, we are all well aware that you do not care about reality, you do not care if the bullshit you’re babbling has any resemblance to the truth, and you do not care who knows that you are completely full of shit.

  • http://twitter.com/FearlessSon FearlessSon

    I was implying that there were not price controls in place in the American health care market, at least not until recently.

    In a free market, customers can price-shop, comparing to find the ratio of best goods and services to the prices that they are willing to pay, and these social forces will in turn pressure the market toward a certain “sweet spot” between pricing and quality, so goes the theory of capitalism. Generally speaking, this theory works in practice more often than not, and a lot of wealth gets generated by its application.

    However, healthcare is one of those goods/services which does not fit into the theory as neatly as other markets. For example, when someone gets a broken leg, they generally do not have the opportunity to shop around and find the best prices on getting their legs set. You know, on account of their leg being broken. To use an analogy, imagine you could only fill the gas tank on your car once you had burned off all of the gas currently in the tank and your gas tank meter is broken so you do not even know when that will be. You would not have the opportunity to shop around for better gas prices, you would have to use whatever station was closest to your car when it ran out of gas. You can see how, if everyone was in that situation, the market forces of supply and demand would cause the price to creep up.

  • Lori

    I’ve read parts of this one:

    http://www.amazon.com/Elgar-Companion-Feminist-Economics/dp/1840647833

    This link has some resources on feminist economics.

    http://www.unpac.ca/economy/ecofem.html#6

    There’s also a journal called Feminist Economic, but unless you have access to a university library that subscribes to it you’re not going to be able to see much of it.

    http://www.feministeconomics.org/

  • EllieMurasaki

    Thanks! I did encounter the journal, but I don’t have the $45 to subscribe.

  • http://twitter.com/FearlessSon FearlessSon

    I kind of hit after it plateaued. I was just in the market, but before I could get much experience under my belt and transition from contract to full time work, the downturn hit, hiring departments froze, and both contracts and full time work became hard to come by. What contracts were available usually went to previously full-time people who had a good decade more experience than I did, and most of them were the first in line for new full time hires when those became available.

    At least now that the economy is picking back up my odds are looking better, especially since I used these doldrums to go back for some additional education. Hopefully when I graduate in the summer some opportunities will be waiting for me.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    without savings there would be no money for banks to lend and no way for people to make large purchases beyond what they make in one week. It’s pretty basic why individuals and societies need savings.


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