Essential Economics for Politicians

[Bruddah IZ]

The Fed refuses to do business with the safest bank on earth — and depositors pay the price

http://www.aei.org/publication/the-...aTisrNlVPXC9aSEUyWHY3ZzR4OFVqemxNUjNndGEifQ==
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If you deposit $1 dollar in a bank account, the bank can deposit that dollar at the Fed and earn 2 percent while the bank pays you, on average, somewhere between 0.09 percent and 1.22 percent, depending on the type and maturity of the account. In theory, competition for deposits among banks should have put pressure on the rates banks pay depositors and pushed them closer to the IOER, but after ten years under the Fed IOER regime, this has not happened.

One reason competition has failed is that the IOER rate is only paid to banks. While there are a handful of nonbank institutions that are legally permitted to have master accounts at the Fed, the Fed only pays interest on banks’ reserve balances.

 

[Bruddah IZ]

Republicans have a big new economic idea. It’s terrible

http://www.aei.org/publication/repu...aTisrNlVPXC9aSEUyWHY3ZzR4OFVqemxNUjNndGEifQ==
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Yet just as Cass overplays the downside of globalization, he underplays the potential disruption for workers from automation, including the impact machines have already had on the job market. Economist Daron Acemoglu has done some of the best work on the potential impact of technology on jobs. He doesn’t think all the jobs will disappear, but warns that “the future level of employment and labor share may be lower in the future than the past.” Just as with globalization — not to mention the Industrial Revolution — there might well be lots of losers as AI spreads throughout the economy, at least for a time. And when you obsess about protecting existing jobs rather than helping workers adjust to change through education and a work-encouraging safety net, you give aid and comfort to modern Luddites who would ban ride-sharing and kiosks at fast-food restaurants. Neither jobs nor the communities they’re located in are protected over the long run if shielding them from globalization and technological advance means an uncompetitive private sector that eventually sheds workers or doesn’t expand as much as it would have otherwise.

Perhaps some future populist president will rage against the machines like the current one does trade agreements. If so, Cass might have just provided the blueprint for such attacks.

 

[Bruddah IZ]

Why Single-Payer Health Care Delivers Poor Quality at High Cost

American's directly pay for only 10.5% of their health care costs.

 

[Bruddah IZ]

The Best Argument Against Minimum Wage Laws: You Don't Own Other People

https://fee.org/articles/the-best-argument-against-minimum-wage-laws-you-dont-own-other-people/

But as economically sound as the unemployment argument against minimum wages may be, it ignores a previous and much more important one: you don’t own other people

You Own Your Labor because You Own Yourself
We think of the basis of what used to be called “the liberal tradition” as being the fundamental rights to life, liberty, and the pursuit of happiness. Governments are ostensibly instituted among men “to secure these rights.” But these rights are pillars, not the foundation of a free society, according to the essay Jefferson himself said established the “general principles of liberty and the rights of man, in nature, and in society,” as Americans of his time understood them.

Rather, these rights proceed, said John Locke, from the self-evident, inherent human condition of self-ownership. In Chapter V of his second treatise on civil government, he wrote,

Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his.

Proponents of minimum wage laws focus all the attention on the buyers of labor services and none on the sellers. In their zeal to curtail the rights of the former, they run roughshod over those of the latter, never asking themselves who owns the labor in question.

 

[Bruddah IZ]

If a big economic collapse occurs, what would you do with a closet full of gold coins or bullion? You can't eat it, you can't wear it, you can't burn it for heat or to move a car or generate electricity... Anyone who would accept it in trade for useful items would be relying entirely on its symbolic value.

That just shows that the "intrinsic value" of commodity money is not so "intrinsic" after all. Value comes from demand and faith.

You are confusing fiat money which has intrinsic value that relies on supply and faith/ignorance with commodity money that you can trade for silver with a certificate like the one you see in post #7.

 

[Bruddah IZ]

Another question for you BIZ.

Is the value of fiat money affected by more than supply and demand?

If it is fiat money why would it be affected by other than the supply and demand for fiat money?

 

[Bruddah IZ]

Another question for you BIZ.
Does the velocity of circulation affect the value of money?

No. The supply of money determines the value of money, more accurately known as interest rates, and thus the velocity of circulation. Remember, interest rates are prices. The lower the price of money, the higher the demand for money.

 

[Bruddah IZ]

Another question for you BIZ.

If so, a vigorous market by itself would create inflation, doesn't it?

An inflation in the money supply reduces interest rates like it did during 5 years of QE and during the crisis build up. With more people qualifying for cheap money, vigorous competition drives home prices up due to an inflation of the money supply.

 

[Bruddah IZ]

If so, does it really matter if it's fiat money or commodity money?

Of course. Fiat money is much cheaper than commodity money. Commodity money ceases to be commodity money when there is nothing to back up the commodity money.

 

[Bruddah IZ]

Another question for you BIZ.
Whether it's fiat money or commodity money, what are free market checks against inflation? And how do they work?

Currently, there are no free market checks against the inflation of the fiat money supply. Commodity money no longer exist.

 

[Bruddah IZ]

Are you saying something isn't an asset unless it is bringing in profit on an ongoing basis?

Yes

 

[Bruddah IZ]

Printing money is not QE - IDIOT!

Printing money to replace older paper money ,taken out of circulation, is not QE. Creating new money, without removing any of the current money in circulation, to “stimulate” the economy is QE....or fiat money.

 

[Bruddah IZ]

The Federal Reserve was established by Congress. The members of its board are appointed by the President with approval of Congress. Many of its functions overlap with other government bodies, such as the Treasury. The only way it could be eliminated is by an act of Congress and approval of the President.

Congress was wise when it established the Fed to make it as independent as possible from political influence by Congress and the President. Its Governors are appointed for terms of 14 years and cannot be removed except "for cause", and none ever has been. The Fed also funds itself by charging fees to its banking customers, returning its surplus every year to the Treasury, so it can't be blackmailed by threats to cut its funding. Don't confuse that independence with its existence as part of the US Government.

21 trillion in debt. Who’s confused?

 

[espola]

Yes

Ignoramus.

 

[Bruddah IZ]

Ignoramus.

Oh right. Your net worth argument.

 

[espola]

21 trillion in debt. Who’s confused?

Relevance?

 

[espola]

Oh right. Your net worth argument.

What is my "net worth argument"?

 

[Bruddah IZ]

Relevance?

Yes.

 

[espola]

Yes.

As I suspected, you have nothing.

 

[Lion Eyes]

As I suspected, you have nothing.

Let's hear Magoo's "relevant" argument...