“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”
~~~Albert Einstein
“Never underestimate the power of stupid people in large groups.”
~~~George Carlin
“Sometimes a man wants to be stupid if it lets him do a thing his cleverness forbids.”
~~~John Steinbeck
Cheers on your weekend!
[youtube://http://www.youtube.com/watch/?v=mqT82oGeax0 450 300]
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“An incredible discovery that was recently made in Russia threatens to shatter conventional theories about the history of the planet. On Mount Shoria in southern Siberia, researchers have found an absolutely massive wall of granite stones. Some of these gigantic granite stones are estimated to weigh more than 3,000 tons, and as you will see below, many of them were cut “with flat surfaces, right angles, and sharp corners”. Nothing of this magnitude has ever been discovered before. The largest stone found at the megalithic ruins at Baalbek, Lebanon is less than 1,500 tons. So how in the world did someone cut 3,000 ton granite stones with extreme precision, transport them up the side of a mountain and stack them 40 meters high? According to the commonly accepted version of history, it would be impossible for ancient humans with very limited technology to accomplish such a thing. Could it be possible that there is much more to the history of this planet than we are being taught?
For years, historians and archaeologists have absolutely marveled at the incredibly huge stones found at Baalbek. But some of these stones in Russia are reportedly more than twice the size. Needless to say, a lot of people are getting very excited about this discovery. The following comes from a Mysterious Universe article…
Alternate history buffs are about to be whipped into a frenzy! OK, maybe not, but they will find this interesting.
An ancient “super-megalithic” site has been found in the Siberian Mountains. Found recently in Gornaya Shoria (Mount Shoria) in southern Siberia, this site consists of huge blocks of stone, which appear to be granite, with flat surfaces, right angles, and sharp corners. The blocks appear to be stacked, almost in the manner of cyclopean masonry, and well…they’re enormous!
Russia is no stranger to ancient megalithic sites, like Arkaimor Russia’s Stonehenge, and the Manpupuner formation, just to name two, but the site at Shoria is unique in that, if it’s man-made, the blocks used are undoubtedly the largest ever worked by human hands.
When I say that this is a new discovery, I am not kidding. In fact, the very first expedition to study these stones happened just a few months ago. Prior to this expedition, there were no known photographs of these megalithic stones. Archaeologist John Jensen is mystified by these ancient ruins, and the following is an excerpt from a post on his personal blog…”
Comments »“For years, many Americans followed a simple career path: Land an entry-level job. Accept a modest wage. Gain skills. Leave eventually for a better-paying job.
The workers benefited, and so did lower-wage retailers such as Wal-Mart: When its staffers left for better-paying jobs, they could spend more at its stores. And the U.S. economy gained, too, because more consumer spending fueled growth.
Not so much anymore. Since the Great Recession began in late 2007, that path has narrowed because many of the next-tier jobs no longer exist. That means more lower-wage workers have to stay put. The resulting bottleneck is helping widen a gap between the richest Americans and everyone else.
Editor’s Note: Get These 4 Stocks Before 399% Stock Market Rally!
“Some people took those jobs because they were the only ones available and haven’t been able to figure out how to move out of that,” Bill Simon, CEO of Wal-Mart U.S., acknowledged in an interview with The Associated Press.
If Wal-Mart employees “can go to another company and another job and make more money and develop, they’ll be better,” Simon explained. “It’ll be better for the economy. It’ll be better for us as a business, to be quite honest, because they’ll continue to advance in their economic life.”
Yet for now, the lower-wage jobs once seen as stepping stones are increasingly being held for longer periods by older, better-educated, more experienced workers.
The trend extends well beyond Wal-Mart, the nation’s largest employer, and is reverberating across the U.S. economy. It’s partly why average inflation-adjusted income has declined 9 percent for the bottom 40 percent of households since 2007, even as incomes for the top 5 percent now slightly exceed where they were when the recession began late that year, according to the Census Bureau.
Research shows that occupations that once helped elevate people from the minimum wage into the middle class have disappeared during the past three recessions dating to 1991.
One such category includes bookkeepers and executive secretaries, with average wages of $16.54 an hour, according to the Labor Department. Since the mid-1980s, the economy has shed these middle-income jobs — a trend that’s become more pronounced with the recoveries that have followed each subsequent recession, according to research by Henry Siu, an economist at the University of British Columbia, and Duke University economist Nir Jaimovich.
That leaves many workers remaining in jobs as cashiers earning an average of $9.79 an hour, or in retail sales at roughly $10.50 — jobs that used to be entry points to higher-paying work. Hourly pay at Wal-Mart averages $8.90, according to the site Glassdoor.com. (Wal-Mart disputes that figure; it says its pay for hourly workers averages $11.83.)
Since the Great Recession began, the share of U.S workers employed by the retail and restaurant sector has risen from 16.5 percent to 17.1 percent.
“It really has contributed to this widening of inequality,” Siu said…..”
Comments »“BEIJING (Reuters) – China’s economy slowed markedly in the first two months of the year, with growth in investment, retail sales and factory output all falling to multi-year lows, a surprisingly weak performance that raises the specter of a sharper cooldown.
The weaker-than-expected data is bound to amplify global investors’ worries about slackening growth in the world’s second-largest economy, and will almost certainly feed speculation that Beijing may loosen policies soon to bolster growth.
China’s industrial output rose 8.6 percent in the first two months of 2014 from a year earlier, the National Bureau of Statistics said on Thursday, missing market expectations for a 9.5 percent rise.
That marked the worst performance for China’s factory output growth since April 2009.
“Policy easing should be imminent,” said Hao Zhou, an economist at ANZ Bank in Shanghai, adding that Thursday’s data implied that China’s economy may grow 7 percent in the first quarter.
Sources told Reuters earlier this week that China’s central bank is prepared to take its strongest action since 2012 to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves.
A cut would be triggered if growth slips below 7.5 percent and towards 7.0 percent, and would be expected only in the second quarter, according to the sources who are involved in internal policy discussions.
Other sectors of the economy also appeared to have lost steam…..”
Marc Faber says 4% growth is ok for China
Comments »“There is a war going on right now and it doesn’t involve guns or the military industrial complex.
It’s a war on consciousness and most people are clueless that it even exists.
Ultimately, the education system can be blamed for feeding us propaganda and forcing us to regurgitate it so we can “fit in” with the rest of society. Our public school systems are set up to get the students primed foreconomic slavery without ever offering courses that allow to students to think creatively or freely.
If you trace the company’s who print our children’s textbooks, you’ll find a Zionist agenda behind them all. For example, George W. Bush’s grandfather, Prescott Bush, was arrested for funding both sides of World War II, yet we never learned this in school. Why? Because had we learned this, NEITHER Bush would have been elected president for having a traitor in their lineage.
And surely, Christopher Columbus didn’t “discover” America.
Granted some things that we learn in school are the truth, such as math, music and some science but our TRUE history has been kept from us for reasons of subservience, control and conformity.
In all forms of education, there are still perpetual references to “fossil fuels” including at the college level. How ridiculous is this? Oil is abiotic, which means it replenishes itself, yet we are draining the planet of a lubricant that serves no other interests other than economic.
For example, in the late 1980′s, Stanley Meyer invented a car that could go from coast to coast in the United States on 21 gallons of water. He was offered $1 billion from the automobile industry for his invention but turned it down because he wanted this idea to go to the people. Shortly afterwards, he was poisoned to death and the invention has been hidden from us ever since, yet our children are not learning about inventors such as Meyer in school, nor are they being encouraged to develop alternate fuel sources.
[youtube://http://www.youtube.com/watch?v=GFIlXaABU54 450 300]Our children are inevitably asked, “What do you want to be when you grow up?” Their answers becomeconditioned responses in various forms of economic subservience instead of what they truly would like to do.
A better question to ask them, once they understand the concept of money is, “If there was no such thing as money, then what would you like to do with your life?”
Surely, the fry cook with a high school education would not still be making french fries at a fast food “restaurant”…..”
“Washington’s decision to provide financial aid to the coup-appointed government of Ukraine goes against the US laws, Russia’s Foreign Ministry said, urging American politicians to think about the consequences of supporting the radicals in Kiev.
Ukraine’s ousted president, Viktor Yanukovich, said on Tuesday that the US plans to loan $1 billion to the country’s new authorities are illegal.
“Indeed, in accordance with the amendments introduced to the 1961 law (Foreign Assistance Act) a few years ago the provision of foreign assistance is prohibited to ‘the government of any country whose duly elected head of government is deposed by military coup or decree.’ The relevant provision is contained in22 US Code § 8422,” the Russian Foreign Ministry said in a statement.
“Thus, by all criteria the provision of funds to the illegitimate [Kiev] regime, which seized power by force, is unlawful and goes beyond the boundaries of the US legal system,” the statement added.
However, the ministry said it realizes that the American side “would hardly recognize this obvious fact” due to the stance it has already taken in the Ukrainian crisis.
“The US administration will most probably continue to close its eyes on the dominance of the ultranationalist forces in Kiev, which have launched a hunt for dissidents across the country, increasing pressure on the Russian-speaking population and our compatriots, threatening the people in the Crimea with punishment for their desire for self-determination,” the ministry stressed……”
Comments »“Top-secret documents reveal that the National Security Agency is dramatically expanding its ability to covertly hack into computers on a mass scale by using automated systems that reduce the level of human oversight in the process.
The classified files – provided previously by NSA whistleblower Edward Snowden – contain new details about groundbreaking surveillance technology the agency has developed to infect potentially millions of computers worldwide with malware “implants.” The clandestine initiative enables the NSA to break into targeted computers and to siphon out data from foreign Internet and phone networks.
The covert infrastructure that supports the hacking efforts operates from the agency’s headquarters in Fort Meade, Maryland, and from eavesdropping bases in the United Kingdom and Japan. GCHQ, the British intelligence agency, appears to have played an integral role in helping to develop the implants tactic.
In some cases the NSA has masqueraded as a fake Facebook server, using the social media site as a launching pad to infect a target’s computer and exfiltrate files from a hard drive. In others, it has sent out spam emails laced with the malware, which can be tailored to covertly record audio from a computer’s microphone and take snapshots with its webcam. The hacking systems have also enabled the NSA to launch cyberattacks by corrupting and disrupting file downloads or denying access to websites.
The implants being deployed were once reserved for a few hundred hard-to-reach targets, whose communications could not be monitored through traditional wiretaps. But the documents analyzed by The Intercept show how the NSA has aggressively accelerated its hacking initiatives in the past decade by computerizing some processes previously handled by humans. The automated system – codenamed TURBINE – is designed to “allow the current implant network to scale to large size (millions of implants) by creating a system that does automated control implants by groups instead of individually.”
In a top-secret presentation, dated August 2009, the NSA describes a pre-programmed part of the covert infrastructure called the “Expert System,” which is designed to operate “like the brain.” The system manages the applications and functions of the implants and “decides” what tools they need to best extract data from infected machines…..”
“The Federal Trade Commission has opened a probe into Herbalife.
The stock, which had been halted, is now trading down 14%. Before the news came out, it was up 4.45%.
Herbalife confirmed that they received a Civil Investigative Demand from the FTC.
“Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace, and will cooperate fully with the FTC. We are confident that Herbalife is in compliance with all applicable laws and regulations. Herbalife is a financially strong and successful company, having created meaningful value for shareholders, significant opportunities for distributors and positively impacted the lives and health of its consumers for over 34 years,” the company said in a statement.
A spokesperson for the FTC would not comment on the matter. A spokesperson for Pershing Square Capital Management also declined to comment on the investigation.
Herbalife, a multi-level marketing firm that sells weight loss products and nutritional supplements, has been at the center of a major hedge fund battle.
Hedge fund manager Bill Ackman, who runs Pershing Square Capital Management, announced about 14 months ago that he is betting $1 billion that the stock will go to $0. Ackman’s thesis is that the company operates as a “pyramid scheme” that targets lower income individuals, particularly those from the Hispanic population.
Ackman believes that regulators, particularly the FTC, will be persuaded to shut the company down.
He was recently the subject of a critical page-one New York Times article about how he’s been coordinating lobbying efforts in Washington, D.C. to bring the company down.
Ackman commented on a conference call yesterday it wasn’t his “favorite” article, but he thinks it will be “helpful.” He thinks that regulators will have to pay attention now that it’s a mainstream news story.
Herbalife has publicly refuted Ackman’s allegations that they operate as a pyramid scheme….”
Comments »Since your generation was not around for most of this b.s. you can thank the interwebs for creating a collective conciousness to help you discern the next lie; ’cause you know they are not teaching this in school.
[youtube://http://www.youtube.com/watch?v=vZNXt_u7Cr0#t=53 450 300] Comments »What the article fails to mention is that corporattions hold multiple headquarters overseas to bring their tax rates down to as little as 1-4% in most cases….so repartiating dollars back home is really not that big of a deal…..espcially when you get corporte welfare.
[youtube://http://www.youtube.com/watch?v=I01-9yujhCA 450 300]“An inefficiency in the US tax code is causing US multinationals to hold more and more cash overseas.
According to data analyzed by Bloomberg, US companies are now holding about $2 trillion abroad.
The multinational companies have accumulated $1.95 trillion outside the U.S., up 11.8 percent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News. Three U.S.-based companies — Microsoft Corp. (MSFT), Apple Inc. and International Business Machines Corp. — added $37.5 billion, or 18.2 percent of the total increase.
The basic issue is that US companies are taxed again on money they make abroad when they repatriate that money to the US (for investment or dividends). So they opt to let it pile up in bank accounts abroad. …”
Comments »“Here was the score after Tesla Motors spent more than a year attempting to establish a direct sales operation in New Jersey: 0 to 696,749.
It was a blowout.
The luxe electric car company was outraged Tuesday when the The New Jersey Motor Vehicle Commission approved a proposal banning auto manufacturers from selling cars directly to consumers. In a blog post and series of tweets Tesla blamed the move on bad faith negotiating by the administration of Gov. Chris Christie and “attacks” from the New Jersey Coalition of Automotive Retailers. However, if Tesla was indeed under attack, it looks like the company didn’t make any attempt to fight back against the car dealers’ lobby on a crucial political front — the company didn’t give any money to local politicians.
Campaign finance records show, the New Jersey Coalition of Automotive Retailers’ political action committee, CAR PAC, has made hundreds of political donations as the group lobbied on behalf of car dealers in the Garden State. In contrast, records show no donations to any politicians in New Jersey coming from Tesla, its employees, or the company’s co-founder and CEO Elon Musk….”
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“(Reuters) – EU member states have agreed the wording of sanctions on Russia, including travel restrictions and asset freezes against those responsible for violating the sovereignty of Ukraine, according to a draft document seen by Reuters.
The seven-page document describes in detail the restrictive measures to be taken against Moscow if it does not reverse course in Crimea and begin talks with international mediators on efforts to resolve the crisis over Ukraine.
If approved by EU foreign ministers at a meeting on Monday, they would be the first sanctions imposed by the European Union against Russia since the end of the Cold War, marking a severe deterioration in East-West relations.
“Member states shall take the necessary measures to prevent the entry into, or transit through, their territories of the natural persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine,” reads Article 1 of the document.
The second article covers assets held in the European Union and states that “all funds and economic resources belonging to, owned, held or controlled” by those responsible for actions which have undermined Ukraine’s integrity “shall be frozen”.
The document was approved by what is known as a silence procedure after no EU member states raised objections to the wording by 1100 GMT on Wednesday, officials said…..”
Comments »“(Reuters) – A fall in copper to near four-year lows compounded increasing concern about China’s economic slowdown on Wednesday to send a wave of unease through world financialmarkets.
Global stocks fell for a fourth day and copper, often regarded as a proxy for China’s economic fortunes, hit its lowest level since 2010 after Shanghai futures had again fallen by their 5 percent daily limit.
In Europe, bourses from London to Lisbon tumbled .FTEU3 and safe-haven German government bonds were in demand as the jitters added to the effects of the tug-of-war over Crimea, which has pitted Russia against Ukraine and the West.
“Markets are watching what is happening in copper with awe and trepidation,” said Societe Generale head of currency strategy Kit Juckes. “It’s partly ongoing concern about Chinese growth (or lack thereof) and nagging worries about the Ukraine. And partly it is just that the commodity bubble burst last year and not everyone noticed.”
Copper’s fall follows China’s first domestic bond default which has raised concerns about a possible unraveling of the many loan deals which have used the metal as collateral.
The metal has been in freefall for the last three days but the worries finally appeared to be catching up with other markets. Stocks across Asia – although ironically not in China – had seen sizeable falls, while the Australian dollar, Chilean peso and South African rand, currencies highly sensitive to commodities, all buckled.
The aussie was last down 0.5 percent at $0.8935 though traders said it could have fallen much more had it not been for demand created by a big A$7 billion bond sale.
Japan’s Nikkei .N225 retreated 2.6 percent, continuing the see-saw pattern of the last couple of months, while Australian stocks shed 0.6 percent .AXJO. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.2 percent.
That mirrored a lackluster performance on Wall Street, where soft data left investors no wiser on whether the U.S. economy’s troubles were weather-related or something more worrisome.
Futures prices pointed to another negative start when trading resumes later with little in the way of U.S. data to drag attention away from China and copper.
CHINA CHILL…”
Comments »“The globalist establishment, Russian authorities, and the Obama administration are pushing hard for a series of controversial “reforms” aimed at massively expanding the power and resources of the International Monetary Fund (IMF) while further scaling back U.S. influence at the institution. Using various pretexts — and especially thecrisis in Ukraine — governments and dictatorships, including Vladimir Putin’s Russia, are even threatening to proceed with the radical plot to empower the IMF whether the U.S. Congress approves it or not.
The most important and far-reaching elements of the “reform” agenda include a doubling of taxpayer resources available to the IMF. Member governments would have to supply twice as much taxpayer funding to meet their “quota” under the agreement. Even more important, the reforms would also dramatically reduce U.S. influence while handing more power to what propagandists refer to as “emerging markets.” In reality, “emerging markets” would continue to have no influence whatsoever at the powerful globalist institution. The dictators and governments that rule them, however, would be given far more authority to dictate IMF policy and decisions.
Chief among the regimes that would be empowered under the “reforms” is the communist dictatorship ruling over mainland China, which for years has been calling for the IMF to become a sort of planetary central bank in charge of a global currency. Other governments that would have more influence include those ruling over the rest of the so-called BRICS — primarily socialist and communist regimes in Brazil, Russia, India, and South Africa. All of the “BRICS” regimes have been strongly pushing for more control over the IMF in recent years, even as they push to radically expand its mandate to include a planetary currency.
“We support the reform and improvement of the international monetary system, with a broad based international reserve currency system providing stability and certainty,” the five BRICS regimes said in a joint 2013 declaration, calling for Third World dictators to have a greater say in the IMF and the emerging global monetary regime. “We welcome the discussion about the role of the [IMF’s] SDR [a proto-global currency known as Special Drawing Rights] in the existing international monetary system including the composition of SDR’s basket of currencies.”
The biggest barrier thus far to the IMF “reforms,” reportedly agreed to in 2010, has been the U.S. Congress, which is so far refusing to approve the funding. In a statement, however, the Obama administration said it was working on overcoming that obstacle. Among other demands, the administration wants lawmakers to approve a shift of some $63 billion from a “crisis” fund to the IMF’s general accounts to comply with the 2010 reform “commitments” made by the Obama administration and the IMF board.
“We are working with Congress to approve the 2010 IMF quota legislation, which would support the IMF’s capacity to lend additional resources to Ukraine, while also helping to preserve continued U.S. leadership within this important institution,” the White House said in a “fact sheet” released last week, exploiting the ongoing fiasco in central Europe to advance the controversial agenda to empower the IMF and its less-than-friendly member regimes. The radically expanded U.S. “quota” would presumably be met going forward by borrowing from foreign governments or the Federal Reserve, which simply conjures currency into existence out of thin air and usuriously lends it to the Treasury at interest.
Having apparently lost hope of getting the legislation through on its own, the administration is now trying to tie the IMF funding demands to a bill showering U.S. taxpayer funds on Ukraine’s new rulers. “It is imperative that we secure passage of IMF legislation now so we can show support for the IMF in this critical moment and preserve our leading influential voice in the institution,” Obama Treasury Secretary Jack Lew said last week in a congressional hearing, just months after demanding a debt-ceiling hike. It remains unclear whether the GOP-controlled House will submit to the administration’s demands.
In a report from Reuters citing “sources,” however, the news agency reported that Russian officials are working to push ahead the drastic IMF reforms without the support of the U.S. government, which holds a controlling share of votes at the institution because U.S. taxpayers are its primary source of funds. If the Kremlin and its allies succeed in advancing the reforms without U.S. congressional approval, the news agency claimed, it could result in Washington, D.C., losing its veto even over major IMF decisions. Moving ahead without Congress, though, would reportedly require “complicated” changes to IMF rules.
The anonymous “sources” cited in the Reuters article claimed that the G20 governments — the regimes ruling China and Russia are both among the members — would give the U.S. government until IMF and World Bank meetings next month to obey. If Congress remains uncooperative, the “sources,” presumably speaking to the news agency in a bid to pressure U.S. lawmakers, said the G20 regimes would be “taking more aggressive measures” to ram through the reforms empowering the controversial global institution.
“It was agreed that in the absence of progress by the United States on the 2010 package by the April meeting of the IMF and G20, that there will be formulated a list of ‘bad options,’ which will allow [us] to move forward in this matter, excluding the opinions of the United States,” one of the three unnamed sources told Reuters. In other words, either the U.S. Congress does the bidding of foreign governments at the G20, or those regimes will advance the radical agenda anyway.
In an editorial, the establishment mouthpieces at the New York Times urged lawmakers to promptly obey, too. “As Congress moves forward with providing financial assistance to Ukraine in the form of loan guarantees, lawmakers should also ratify much-delayed reforms that would strengthen the International Monetary Fund and give it more resources to lend to troubled nations like Ukraine,” the Times editorial board argued on Monday, adding that the Obama administration had “led a global effort” to increase IMF funding to over $750 billion while curtailing U.S. power at the institution.
“Some Republicans in the House have steadfastly refused to let the reforms come to a vote, arguing unconvincingly that the fund doesn’t need the money,” the Times complained, presumably also suggesting that the IMF and the nations it shackles with debt need the money more than struggling U.S. taxpayers. “Ukraine’s troubles serve as evidence that it’s important to increase the fund’s resources.”
Ironically, the Times suggested that it was in “America’s interest” that authorities in Ukraine and other countries receive bailouts from U.S. taxpayers through organizations such as the IMF rather than from Russia directly. The claim is especially ridiculous considering that the Kremlin is leading the push to adopt the IMF “reforms” without approval from the U.S. Congress. The argument becomes even more absurd when realizing that Moscow is participating in the IMF bailouts agreement for Ukrainian officials. And it borders on lunacy when considering a New York Times report last week acknowledging that much of the “aid” to Ukraine will end up in Russian institutions anyway….”
Comments »[youtube://http://www.youtube.com/watch?v=W2ftZ1g4FtE 450 300]
Comments »“It has been quite some time since we did a ‘Myth Busters’, even though there obviously remains quite a bit of mythology. So we’re going to chop away at it piece by piece and demonstrate once again that the media, government, and what I like to the call the ‘establishment’ (which is the concatenation of the aforementioned and the banksters) couldn’t give a rip about the truth. The establishment only cares about what is expedient and convenient for itself.
I am continually amazed, especially when I step outside the world of economics and finance, how LITTLE people really understand what is going on. It’s all about paradigms and where your comfort zone is. At any rate, we’re here to smash paradigms and hopefully encourage some critical thought in the process. This week’s Myth Buster deals with the idea of a minimum wage. Recently there has been quite a bit of scuttlebutt as Congress and politicians in general try to cozy up to the public before another set of what will almost assuredly be ‘more of the same’ elections slated for this fall. The catering is on. Suddenly the local intelligencia is on the radar of the politicians and we’ll get to spend the next 8 months listening to them tell us how they hear us and feel our pain, etc. Hogwash.
One of these cheap show gimmicks is the idea of raising the minimum wage. It sounds really good because all those people who are working for $7+/hour up to maybe $9 or so are expecting a nice raise if this goes through. It has already gone through for certain government contractors. One might make a very good case for discrimination, but we’ll leave that for the slip and fall crowd to hash out. We’re going to throw some cold water on the euphoria – as usual – and tell you why this is yet another really BAD idea.
The Myth:
“A minimum wage is good for the economy because it ensures that everyone has an equal chance to earn a living wage.”
It is my opinion that this gimmick is particularly appealing because we live in an instant gratification world for the most part. People will have their wage go up by as much as, say 40% from one week to the next, and suddenly the economy will be absolutely splendid. And they will benefit in real terms. But this is the NFL – and in this case that means ‘not for long’. But since most can’t see past their noses financially, it’ll work – until the inevitable happens and they find themselves right back where they started – and probably in worse shape when all is said and done. Will the establishment then pump another increase? There are ramifications to that, but we’ll save that for the end.
The Anatomy of the ‘Minimum Wage’
Essentially, the minimum wage is nothing more than a price control. Think of a supply and demand chart. Price is on the y-axis (see below). Well, labor has a price as well, just like any other good or service. And the price of labor is generally referred to as the wage. So, in classical fashion, we can plot a simple supply and demand chart. For the purposes of this essay, we’ll use linear functions to depict supply (QS) and demand (QD), but acknowledge that these functions are almost never linear. In the case of a price floor, the price is set (by the government) at some point above the equilibrium price. We’re already in trouble, because now the system is not efficient. There is what we economists call a welfare loss. If we were to analyze this quantitatively, we could calculate the magnitude of the welfare loss. However, in this case, we’re only interested in demonstrating that such an inefficiency exists. This is a point of very hot contention between the various schools of economic thought, but it’s actually a lot worse than the price control alone.
There is another concept one needs to consider and that is the cost of labor. This is the point of view the employer looks at. What does it cost the shop to hire another worker? Well, obviously there is the wages paid. Then there are various carrying costs associated with the new marginal (economic definition) employee. This is not to imply that the employee is of a low quality, but it is an employee who is hired at the margin, or edge. Think of a microeconomic situation where we look at marginal cost. That is the cost of adding one more unit of production. Well, the marginal employee is adding one more employee. What is the marginal cost (MC) of that employee? It is his/her wages, plus unemployment insurance costs, plus workmen’s compensation costs, plus social insecurity costs, training, and the list goes on. So it’s not just the minimum wage. The cost, depending on the industry, can be much, much higher.
At this point, the employer asks the question: “Does this employee’s marginal revenue (the value the marginal employee generates for the firm) at least equal the marginal cost of having the employee? If the answer is no, a smart employer won’t hire. If the answer is ‘yes’, the hire will happen, and there will likely be additional hires until MR=MC. In the case where MC > MR, there will be layoffs until that micro equilibrium is met. I realize there are factors and variables that play into these decisions that are simply too numerous to count. The point is to paint a general picture and bring some common sense to the subject.
Now let’s consider the situation where we have an individual who is working for $8/hour. Let’s say the carrying costs are another $2/hour, making the cost of that employee $10/hour. At this level, the business is fairly near equilibrium (MR~MC). The employee is paying for him or herself by working there. Then you have Congress, with its infinite desire to meddle in the business of others in its never-ending quest to be loved, stepping in. Given that Congress’ approval rating currently rests several orders of magnitude lower than the Titanic, it figures it needs to do something for the people before asking for votes. And all the advisors think this is a great idea because they were taught by a bunch of Marxist-Keynesians – like the ones who ‘educated’ Bernanke and Yellen.
So Congress steps in and jacks the minimum wage to $10/hour. Looking back on the aforementioned example, the carrying costs are still $2/hour – for now. Suddenly the MC for any new hires is greater than the MR and subsequent hires won’t be made – or the firm will raise prices. Perhaps a combination of the two will be used. In addition, it is also very likely that some firms will cut back on employees because their equilibrium is now upset. Many firms don’t have the pricing power to just pass it all on to the consumer. They have to eat it. Well, they don’t end up eating it – their employees do because they now have people on the payroll that can’t pay for themselves. It’s not any fault of the employee, but rather, is the fault of Congress for using an idiotic price control.
The Macro Perspective
Let’s look at things from a macro perspective. Most people are aware of the fact that the vast majority of the jobs that have been ‘created’ since the great recession allegedly ended have been lower-end service/retail and temporary positions. They’re exactly the types of positions that stand to be affected by a change in the minimum wage. Again, we’re assuming these jobs were even created at all. We know for a fact there haven’t been nearly as many as the government says, but that’s another essay. We’ve been down that road. So the net effect is that you’re going to have a bunch of people who are suddenly going to get the equivalent of a raise. What do you think they’re going to do with it? The responsible thing would be to attack the liabilities portion of their balance sheets, but a thinking person is going to look at past history and conclude that since we learn next to nothing from history, that this money, by and large, will be spent. More dollars chasing a fairly static supply of product? Shazam – price inflation. There is plenty of money in the system. There now needs to be a vehicle to get it into the hands of the spenders because the economy is flagging big time.
This is precisely the thinking of what I like to call ‘Flat-Earth Economists’. These are intellectual reprobates like Paul Krugman, Ken Rogoff, Mike Norman, and the majority of the policy steering arm of the Western banking syndicate. These are the sort of klutzes who think that the government should take your retirement accounts, force you to buy their debt, and bombard you with massive inflation – and yes, the minimum wage is a very good vehicle. More on that in the conclusion section.
It is very likely that I’m not the only one who is paying attention to the velocity of money metrics and staring aghast. The big shots in DC and NY watch those metrics too and they know full well what they mean. There is no recovery. M2 velocity of circulation is cratering with no bottom in sight. This means that money is moving more and more slowly through the economy. Not good. Things need a boost. People are strung out on credit and they must know the end is in sight. After all, there is a point certain when one simply cannot borrow anymore, at least from a practical perspective. The establishment needs to get some money in the hands of these people. It is not to increase their standard of living, however, it is merely another trick to buy some more time. A stunt to push the sun up just enough to get past another election.
Some Common Arguments for a Minimum Wage….”
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