Posted by: graemebird | February 6, 2009

Its Possible To Increase REAL Wages During A Recession.

BROUGHT TO THE FRONT TO SHOW HOW COMPULSIVE LYING WORKS ON CATALLAXY. THIS THREAD ADVOCATES FALLING NOMINAL WAGES TO COMBAT RECESSION. AND ASSERTS THAT THE RESULT OUGHT NATURALLY BE RISING REAL WAGES. YOU HAVE TO BE SMARTER THAN CATALLAXY TO UNDERSTAND THIS. YOU HAVE TO BE ABLE TO TELL THE DIFFERENCE BETWEEN REAL AND NOMINAL VALUES. TOUGH GIG HEY?

Not only is it possible to increase real wages in a recession, but indeed it is the natural way of things under capitalism. Strictly speaking, capitalism is a system where there would be no recessions, since once a monetary metal like gold comes into existence it stays in existence.  This is a point that George Reisman emphasises. That while any gold standard would eliminate serious price inflation, 100% backing would also eliminate recessions. Since there is no, or very little scope, for the money supply to drop.

But supposing we started playing favourites with the banks. Suppose we give them special priviledges to pyramid upon gold and sell or loan ponzi-pyramided gold rather than the real thing?

Well you go down that path you set things up for a recession.

So what happens if an otherwise capitalist country winds up in recession thanks to bank/government collusion?

Well its actually the boom where real wages begin to erode and its a monetary collapse where real wages will increase.  But there is a catch to this.

Under this scenario we would expect REAL WAGES TO INCREASE WHILE NOMINAL WAGES WOULD FALL. There is really no way that this increase in real wages would pan out without a system so flexible that nominal wages would quickly fall, allowing prices to fall even faster.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

This post where I am giving Cambria a hard time is taken from elsewhere in this blog. It talks around this subject and does not comprehensively explain it. But if someone is genuinely trying to understand monetary economics, still it may be helpful:

Consider the occultism in what Cambria is claiming. Stealing all that money off us and squandering it on mindless vote-buying and investments in taxeater ego must, if Cambria is right, be doing us a net service of some sort. It must actually be helping business.

But how could that be? How could it be that us having to carry the taxeater, and his family……… well this must in some way be making the machines run better or something. Somehow it must be making the shift go more quickly. The paypacket larger at the end of the week and the prices at the shops less than they otherwise would be. That we are carrying these people must be making all our tasks and deadlines less arduous. If Cambria is right then these things must be true, but Cambria will not explain how.

Many hands make light work. And if almost all the public servants suddenly have to get work in the private sector, in the context of business finding itself in a situation where it is both willing and able to spend large now, to cut recurring costs, then those many hands formerly employed in the public service, will be turned to the task of our living costs going down every quarter.

Now there are some worries, and legitimate worries, about nominal wages not being downwardly flexible enough for these sorts of policies to work. Good policy in a monetary crunch leads to increasing real wages but reducing nominal wages.

This may seem counter-intuitive so I think its worthwhile highlighting the matter:

GOOD POLICY IN A MONETARY CRUNCH LEADS TO INCREASING REAL WAGES EVEN AS NOMINAL WAGES ARE REDUCED.

This is no joke. Real wages ought to INCREASE if prices are downwardly flexible in a recession.

This ought to be obvious since if people are saving more, and a greater proportion of spending is in producer goods…….. if people are cutting back on consumption………. still just as much consumer goods will be produced. More even. Less will be demanded and more produced and increasingly so, since we have devoted a greater proportion of gross domestic revenue to producer goods.

Hence the generation of extra savings and retained earnings leads to an immediate increase in real incomes at the bottom and CONTINUING increases in real incomes thereafter. Our job is to try to get pretty close to that ideal with policy.

It is unrealistic right now to get perfectly flexible prices downwards for the moment. But we can do our best and come pretty close……… to a sort of “something-for-nothing” increase in real incomes. We can achieve this but we just cannot achieve it as well as in the idealised model. We can muddle through and get somewhat close to this ideal. Good enough for positive results.

It is my contention that the policies advocated in the thread below, will promote some downward flexibility in wages costs to business, will get businessmen thinking about employing all sorts of people, and will throw enourmous resources into what I’m calling “business-renovation.”

The policies described should also allow us to CUT our welfare overhead, and it ought to allow us to cut our welfare burden right in the middle of a recession.

A lot of you may have seen this thread before but I think its worth reviewing:

Raiding The Sick, Blind, Lame, Old, The Solo Mums, And The Aboriginals, For Manhours. « A Better World: Graeme Bird For High Office

This thread ought also double as a place where economics illiterates like Jason Soon, Joseph Cambria and Mark Hill can explain how they think that government spending during a recession is inherently helpful for those paying for that government expenditure.

Truly we are talking occult-economics with these idiots.

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Responses

  1. The above thread is about REDUCING WAGES IN A RECESSION. And so Jason Soon has chosen to lie about it.

    “Birdy now wants to increase wages in a recession. He should blog for LP”

    See how hopeless our economists are? They don’t care at all if they fail to distinguish between real and nominal ANYTHING. They are such dummies. They are always confusing themselves since they refuse to define things clearly.

    The above thread is about wages falling and real wages rising.

    But Jason lied and tried to pretend that I was advocating what that idiot Bahnisch was claiming. Bahnisch reckoned we ought to do the Hoover thing and push wages up so that people would have more income to spend. Worked well last time hey Bahnisch you fuckwit.

    Anyway. Jason just lied again. Well. I suppose I’ll alert the media.

  2. “Birdy now wants to increase wages in a recession. He should blog for LP”

    That association should earn you a thread all your own, Jason.”

    Dover you dim bulb. He was lying and you were taken in.

    If you were even halfway smart you would have just told Jason he was lying since you would have known that I’d never advocate what Jason is claiming I’m advocating. A straight lie from Jason.

  3. “Bird’s an idiot.

    Raising nominal wages in a recession with downwards tending prices is lethal to the economy”

    You guys are such liars. Thats both you and Jason now that have lied about what I said.

    What are you up to JC?

    First Jason lied. And then you lied.

    You stupid stupid bootnigger.

    Why did you lie Cambria.

    You are a complete fuckwit. The whole thread is about reducing wages in a recession. You and Jason must be deranged.

  4. I may have to post another thread.

    CAMBRIA IS A LYING BOOTNIGGER

    (more to follow)

  5. Cambria. Why do you lie all the time.

    I was talking about a situation where nominal wages would fall. And you and Jason went out of your way to deceive everyone else.

  6. Seriously.

    Why do the two of you lie all the time?

    You do know the difference between REAL and NOMINAL wages don’t you bootnigger?

  7. Lets go AGAIN Cambria. Why are you continuing to lie about what I am saying?

    Do you not know that Hoover tried to push up NOMINAL wages. And that Bahnisch wants to push up NOMINAL wages.

    I’m not talking about that at you you filthy compulsive lying bootnigger.

  8. RETRACT YOU LIES CAMBRIA.

    Jason pimped you. He lied and so you started lying to like a stupid drooling retard.

  9. What are you saying now?

    You started off saying I was wanting to increase NOMINAL wages like Bahnisch and Hoover.

    What is your claim now?

    In the theoretical situation of a monetary contraction, where wages are falling, and if savings increase, and if there are less dividends paid and if government spending is slashed………… then REAL WAGES WILL increase even as nominal wages fall.

    What are you claiming I’m saying?

    Because you and Jason both lied on Catallaxy and misrepresented what I said. So why not clear this matter of you lying up first before you pretend to be some sort of economic theorist.

  10. Are you getting confused between NOMINAL and REAL?

    Are you just lying?

    Or are you posing as some sort of economic theorist.

    If we slashed government spending, got everyone to save more, made all the taxeaters get jobs, and if the companies stopped paying dividends……

    …. If wages were downwardly mobile then nominal wages would fall. But not as fast as consumer prices. So real wages would rise.

    Do you even have it sorted what I am saying here?

    You started off lying about what I was saying. Whether you agree or disagree is a separate matter. We have to get your lying out of the way.

  11. you are still saying that real wages should be increased right?

    so my interpretation is correct.

    real wages are the only wages that matter.

  12. No you fool. I’m saying they WOULD INCREASE AUTOMATICALLY. So long as prices and wages were able to fall fast enough real wages would increase.

    Jason you started this burst of lying. Why?

    Hoover and FDR wanted to increase NOMINAL WAGES and government spending and ended up impoverishing everyone.

    You claimed that I wanted to do what Hoover, FDR wanted to do. And you claimed that I wanted to do the same thing that Bahnisch wanted. So you just lied to everyone.

    But if we slashed government spending, managed to get everyone to save, delay dividends, and all that. In the context of flexible wages, nominal wages would fall and real wages would increase. It would do so naturally as a consequence of these policies.

    But

  13. You knew you were lying. There was no way, NO WAY you didn’t know you were lying. When have I said about forcing wages up? When was that?

  14. “real wages are the only wages that matter.”

    What sort of incredible ignorance could get you to say something as stupid as this?

    For employment its always nominal wages that matter. Always. But if everyone actually becomes employed, including former taxeaters, real wages will inevitably rise even as nominal wages fall.

    Nominal wages are what is important for employment. Increasing consumer and government spending will always reduce real wages. Reducing government spending and increasing savings and retained earnings, will always increase real wages but ONLY if nominal wages can fall quickly.

    So I was talking about the ability for nominal wages to reduce quickly.

  15. EVERY POST YOU HAVE STARTED THIS MORNING YOU HAVE BEGUN WITH AN IMBEDDED LIE.

    Graeme we had the gold standard how did that stop recessions?

    WHY DID YOU LIE IN THE FIRST PLACE? I’VE SEEN BLOGGERS, WHO FOLLOW HUMAN REASON, BLOCK OFF THEIR THREADS ENTIRELY FROM COMMENTS BECAUSE OF PEOPLE LIKE YOU NO DOUBT. I DON’T WANT TO DO THAT BUT MAY HAVE TO. AND ALSO I WANT PEOPLE AND THIRD PARTIES TO KNOW WHY I WIPE MANY COMMENTS WHILE SELDOM BLOCKING ANY POSTER FOR ANY LENGTH OF TIME.

    Graeme we had the gold standard how did that stop recessions?

    SO WHEN WAS THIS GOLDEN AGE WHERE WE HAD NO RECESSIONS? SO WHY DID YOU LIE IN THE FIRST PLACE?

    DON’T COME HERE TO TELL LIES. YOU KNOW VERY WELL THAT FRACTIONAL RESERVE ALWAYS LEADS TO RECESSION INDEPENDENT OF WHETHER IT IS A FIAT CURRENCY OR A COMMODITY-BACKED GOVERNMENT-CURRENCY. YOU KNEW VERY WELL THAT WE HAD RECESSIONS WHEN WE WERE ON GOLD. SO YOUR LYING WAS AN ATTEMPT TO CONFUSE THIRD PARTIES AND VANDALIZE AND WATER DOWN THE THREAD.

    WE DIDN’T HAVE A PROPER MULTI-COMMODITY STANDARD. RATHER WE HAD FRACTIONAL RESERVE. THE ABOVE QUESTION IS A STUPID AND DISHONEST ONE SINCE YOU KNOW VERY WELL THAT WE HAD RECESSIONS IN THOSE DAYS ALSO. WHENEVER THERE IS BANK-CRASH-PYRAMIDING THERE MUST ALSO BE RECESSIONS IN THE WORKS. THIS OUGHT TO BE OBVIOUS.

  16. IF YOU WANT TO KNOW THE ANSWER TO ANYTHING AT ALL WHY NOT JUST ASK A SENSIBLE QUESTION SENSIBLY WORDED.

    100% BACKED COMMODITY MONEY WOULD NOT BE SUBJECT TO RECESSIONS. SINCE IT IS THE BANK-CASH-PYRAMIDING THAT IS THE CAUSE OF THE RECESSIONS.

    THERE IS A FURTHER LIE INVOLVED HERE. THERE IS THE LIE OF YOU PRETENDING THAT WE HAVE NOT GONE OVER THIS BEFORE.

  17. ASK THE QUESTION STRAIGHT. IF THATS WHAT YOU WANTED TO KNOW WHY DIDN’T YOU JUST ASK THE QUESTION IN THE FIRST PLACE?

  18. Okay (again)

    What is a multi-commodity standard?

    • I go to sleep and you add insult to injury by using caps to pretend to be me. If you use commodities for money and you don’t have fractional reserve, and you use more than two of these commodities, well then you have a multi-commodity standard.

  19. What is a committed irrationalist like you Adrien, lying over at cattallaxy, and pretending that its me that is unreasonable. There is nothing I’ve said here that is not both true and rational.

    And yet you’ve come here, pretty much all the questions you’ve asked are stupid and dishonest, and everything you’ve said is idiotic. And then there you are at catallaxy you cunt…. running the leftist reversal.

    What is it that I’m wrong about in your view?

    You are just an asshole mate.

    Now when I say that am I being irrational?

    Fisk is the only person at Catallaxy who has managed to figure out that wasting billions of dollars isn’t helpful during a recession. Its pretty clear who the irrational people are shit for brains.

    Boris seems to want to figure out what the consensus is, being too stupid after three years to figure out what the truth is. Cambria is so fucking stupid he thinks there is an iron law against cutting spending in a recession. And Jason, Sinclair……… none of these guys has come out IN PRINCIPLE against high levels of government spending in a recession.

    And you you dumb cunt… you reckon I’m the irrational one.

    You are a useless cunt mate. There is no subject that you don’t cock up in a pretty comprehensive way. You are just not fit for any sort of analysis at all.

    And look you dumb cunt…. you had a chance to learn something about economics and you’ve tossed it in out of sheer dishonesty and lack of interest.

  20. I go to sleep and you add insult to injury by using caps to pretend to be me. If you use commodities for money and you don’t have fractional reserve, and you use more than two of these commodities, well then you have a multi-commodity standard.

    Halleluhah!!!! Jay-sus Graeme was that hard or what. How many fucking comments and barbs did it take for one simple question be answered.

    I’ve got another one but the century will be over in 91 years.

  21. BTW What do you think of this?


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