Thursday, January 21, 2010

What Thread to pull

I will first present this Piece from Menzie Chinn, basically because he always comes up with such interesting Graphs; if one enjoys a good field focus. He comes up with a graph at the end which suggests that there has to be some level of Inflation (around 5%) which must be sustained to get back full employment. I know that this level of inflation will trigger other inflation flares in the Country much sooner than in a 3-year Period, which will cancel continuous employment effects. The retention of a 2% inflation rate at this point already produces a Job loss which is unacceptable. The truth is We have to endure a Product deflation, in order to gain a reversal of declining Job losses at this time, without some technological breakthrough coming into Production. All economists are terrified of this deflation, because of its impact upon the structure of Credit extension in this Country. I am not as worried, knowing that the deflation has already been priced into Credit rates, and We have now had 2 years of Mortgage reductions; now if We could only get banks to engage in mortgage renegotiations.

I take the exact opposite view to that expressed in this Ditty advanced by one of our latest Nobel laureates. The principle means by which We can regain Jobs will be by pressuring efforts on the business world to produce greater Product. The only real way to do this at this time must be by propelling a reduced Profit per Item Sale, something which will not come by making business personnel more comfortable within their environment. I personally would like to see legislation which insists Labor get some Share of the Profits, which would be a propellant to more new Hires, as business hates disturbance through larger Return to labor. It makes it far easier to suggest Drops in Product pricing, and a spread of Profits distribution through new Hires to cancel unwelcome Income distribution.

A pattern micro-management that may be effective is a regulatory law which insists that at least 30% of Wage Increase must come is direct Return of funds to the laborer–coupled with a Statement all Tax reductions on stapled Expenses will be additionally taxed, if such distribution is not maintained. Knowledge of the business resentment at this legislation leads me to call it the ‘Mad Money’ clause; I am quite sick of watching all Wage increase being shipped off to other business management, as proclaimed payment for higher Cost services; all of which would not be higher Costs, without this shipment of funds from other businesses. It is alright, children; business personnel always consider me Nuts anyway! lgl

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