MrSmith Posted December 23, 2011 Share Posted December 23, 2011 not really demand exceeding supply pushes prices up far more I didn't say it doesn't but the OP thinks increasing wages will counter inflation when in fact it will just increase inflation, and increasing wages would also increase demand which again will drive inflation higher. Link to comment Share on other sites More sharing options...
truman Posted December 23, 2011 Share Posted December 23, 2011 not really demand exceeding supply pushes prices up far more If we all have more money through higher wages then won't demand increase... pushing up prices? Link to comment Share on other sites More sharing options...
andyofborg Posted December 23, 2011 Share Posted December 23, 2011 If we all have more money through higher wages then won't demand increase... pushing up prices? depends what we do with the money, we could save it for a rainy day..... Link to comment Share on other sites More sharing options...
wednesday1 Posted December 24, 2011 Share Posted December 24, 2011 At my company there has not been a pay rise for 5 years.This year the union negotiated an extra 3p per hour, this is too littlre and there should be legislation to make sure wages rise with the rate of inflation. What's wrong with you politicians? I'm afraid if you work in manufacturing this is common. Infact many people earn less now since the Credit crunch kicked-in, as hard-fought-for pay agreements were torn up to enable businesses to keep going. Unfortunately this is not the story at the top, where executive salaries have risen 47% in just a YEAR! Don't forget though Camerons friends the Bankers who brought all this about will be getting their giant Christmas bonuses now! Link to comment Share on other sites More sharing options...
ChrisT70 Posted December 24, 2011 Share Posted December 24, 2011 The minimum wage was the biggest con ever thought up in this country. why shouldn't people who work 40hrs a week get a minimum wage level? without it no one on low pay would bother, benefits would be a better option. the very rich would be perfectly happy to see the average working man earn less to give themselves more profit/higher pay and bonus. the min wage was one of the only bright things to come out of the last labour govt, they pledged to do it and carried it through. IMHO they also improved the NHS as promised, however at a cost. luckily i dont earn min wage but there are a lot of people extremely thankfull for the legal pay protection it offers as numerous companies have been found guilty of underpaying/trying to get round the act. without it there would be thousands of people at the bottom of the jobs market who would be the first to have had a pay cut right now to keep the profit line up Link to comment Share on other sites More sharing options...
kidley Posted December 24, 2011 Share Posted December 24, 2011 You need to understand what "inflation" is. There shouldn't be any inflation really. Rather there should be a tendency towards deflation. Inflation is just a hidden tax paid to the banks. It is caused by the printing of new money without there being anything to back it up. This new money is often created by high street banks and lent out at interest. Consider the scenario where 100 people are magically teleported to a completely isolated island. Assume these 100 people start off with nothing but a collective bag of exactly $100 in pennies which they determine to make their island's permanent, fixed currency. They divide up the pennies equally so the citizens of the island will each start off with 100 pennies. Within the first week you probably have people buying and selling firewood, coconuts, and maybe even a few huts made with palm fronds. Maybe some fish are being bought and sold as well. Would you buy a coconut for a penny? Would the person who was able to climb trees and gather coconuts pay 5 pennies for a hearty fish to get energy for tomorrow's coconut harvest? Would the coconut entrepreneur pay 50 pennies for the best hut on the island so they could get rejuvenating rest after each work day? In 60 years the population might have grown to 500 people. Think of all the goods and services being bought and sold after 60 years of people creating things on the island. There would be things like furnished homes, transportation, tools for farming, boats for fishing, and the list would go on and on. How much might things on the island sell for? Keep in mind that the average amount of money per person is now only 20 pennies. Maybe a two bedroom log cabin somebody outgrew might sell for half the average net worth of the island's population which is a mere 10 pennies. That is a lot of price deflation in 60 years. Imagine if a few hundred years passed and the people of the island grew to a population of a million. Imagine they produced lots of automobiles, trains, tractors, planes and skyscrapers. The 100 founders each started with 100 pennies each and, after a few hundred years of growth, the total amount of money on the entire island would be 1/100 of a penny per person. However, that fraction of a penny would have tremendous purchasing power as an average home might sell for around the average net worth of a person which is only 1/100 of a penny. By introducing new money, governments and banks try and keep prices the same (or have a modest level of inflation). This new money is created by banks out of thin air and lent in to circulation, either to businesses or to the government. It's too simplistic to say that wage increases in line with inflation would have helped stop the financial crisis without understanding the fundamental mechanics of both inflation AND the actual causes of the crisis. If what you describe was to happen every bodys wages would decrease every year so would the price of a house eg accordingly and nobody would ever get any further on they would stay the same forever, this system is far from perfect but i know that i am a lot better off than i was in the sixties inflation and all, have you got a conclusion to your post i would be interested to read it? Link to comment Share on other sites More sharing options...
MrSmith Posted December 24, 2011 Share Posted December 24, 2011 You need to understand what "inflation" is. There shouldn't be any inflation really. Rather there should be a tendency towards deflation. Inflation is just a hidden tax paid to the banks. It is caused by the printing of new money without there being anything to back it up. This new money is often created by high street banks and lent out at interest. Consider the scenario where 100 people are magically teleported to a completely isolated island. Assume these 100 people start off with nothing but a collective bag of exactly $100 in pennies which they determine to make their island's permanent, fixed currency. They divide up the pennies equally so the citizens of the island will each start off with 100 pennies. Within the first week you probably have people buying and selling firewood, coconuts, and maybe even a few huts made with palm fronds. Maybe some fish are being bought and sold as well. Would you buy a coconut for a penny? Would the person who was able to climb trees and gather coconuts pay 5 pennies for a hearty fish to get energy for tomorrow's coconut harvest? Would the coconut entrepreneur pay 50 pennies for the best hut on the island so they could get rejuvenating rest after each work day? In 60 years the population might have grown to 500 people. Think of all the goods and services being bought and sold after 60 years of people creating things on the island. There would be things like furnished homes, transportation, tools for farming, boats for fishing, and the list would go on and on. How much might things on the island sell for? Keep in mind that the average amount of money per person is now only 20 pennies. Maybe a two bedroom log cabin somebody outgrew might sell for half the average net worth of the island's population which is a mere 10 pennies. That is a lot of price deflation in 60 years. Imagine if a few hundred years passed and the people of the island grew to a population of a million. Imagine they produced lots of automobiles, trains, tractors, planes and skyscrapers. The 100 founders each started with 100 pennies each and, after a few hundred years of growth, the total amount of money on the entire island would be 1/100 of a penny per person. However, that fraction of a penny would have tremendous purchasing power as an average home might sell for around the average net worth of a person which is only 1/100 of a penny. By introducing new money, governments and banks try and keep prices the same (or have a modest level of inflation). This new money is created by banks out of thin air and lent in to circulation, either to businesses or to the government. It's too simplistic to say that wage increases in line with inflation would have helped stop the financial crisis without understanding the fundamental mechanics of both inflation AND the actual causes of the crisis. It would be more likely that some of the islanders would by now have all the money and the other islanders would have to borrow money to buy things, and so debt is created and they would end up exactly where we are today with an economy driven by debt. Link to comment Share on other sites More sharing options...
mafya Posted December 24, 2011 Share Posted December 24, 2011 why shouldn't people who work 40hrs a week get a minimum wage level? without it no one on low pay would bother, benefits would be a better option. the very rich would be perfectly happy to see the average working man earn less to give themselves more profit/higher pay and bonus. the min wage was one of the only bright things to come out of the last labour govt, they pledged to do it and carried it through. IMHO they also improved the NHS as promised, however at a cost. luckily i dont earn min wage but there are a lot of people extremely thankfull for the legal pay protection it offers as numerous companies have been found guilty of underpaying/trying to get round the act. without it there would be thousands of people at the bottom of the jobs market who would be the first to have had a pay cut right now to keep the profit line up Before the NMW came in I was making £3.50 an hour, I bought two 2bed houses for £11,000 each in 1998. After NMW came in prices started creeping up on everything, these two house I bought are now worth £50k all day long and what you can get for a tenner today is less than you could before the NMW. You may be getting more pay per hour but it is soon swallowed up by the other rises. When the pay of workers goes up so does the cost of the products they produce so we end up paying more therefore negating any benefit due to the rise of the minimum wage per hour. Link to comment Share on other sites More sharing options...
ChrisT70 Posted December 25, 2011 Share Posted December 25, 2011 Before the NMW came in I was making £3.50 an hour, I bought two 2bed houses for £11,000 each in 1998. After NMW came in prices started creeping up on everything, these two house I bought are now worth £50k all day long and what you can get for a tenner today is less than you could before the NMW. You may be getting more pay per hour but it is soon swallowed up by the other rises. When the pay of workers goes up so does the cost of the products they produce so we end up paying more therefore negating any benefit due to the rise of the minimum wage per hour. house prices rocketed tho purely due to the speculative housing boom and the willingness of banks to lend mortgages that could never be affordable, not as a direct result of the min wage. its barely a living wage now, its not exactly high society living. Link to comment Share on other sites More sharing options...
mafya Posted December 25, 2011 Share Posted December 25, 2011 house prices rocketed tho purely due to the speculative housing boom and the willingness of banks to lend mortgages that could never be affordable, not as a direct result of the min wage. its barely a living wage now, its not exactly high society living. I'm not saying house prises rose because of the NMW, what I'm saying is since it came into effect the cost of everything has gone sky high. Link to comment Share on other sites More sharing options...
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