Whitslack

Employment: Neither Quality Nor Quantity

Peter is largely right on the money, as usual. However, like sticktoitiv, I have to disagree about health care being an unproductive industry. It's true that it doesn't produce any goods, but it does produce a highly valued service. Health care providers have training (and have generally spent large amounts of money to acquire that training) that most people do not have. I cannot set my own bone if I should break it; I cannot remove my own appendix if it becomes inflamed. There is real value in the health care industry. However, the picture does become a little muddied when you start to consider an economy that's 100% service-based.

Consider a simplified economy where half of all workers are doctors or nurses and the other half are stockbrokers and financial planners. Could such an economy be self-sustaining? Assuming no one had to eat, maybe. But since people do have to eat, that economy would have to import food. In order to do so, we'd have to export something. (Currently our main export is inflation, but in a sustainable world it'd have to be a zero-sum game.) If the countries producing our food valued our health care and financial services, we could export those, but it's usually not too convenient for consumers to buy health care or financial services from the other hemisphere. Basically, we'd have to export goods to import goods. And that means we'd have to produce goods. Either we'd need farmers in addition to our doctors and bankers, or we'd need some other goods producers to produce goods that we could trade for food.

So in a way, health care is not a productive industry, but in a way it is. Service-producing industries are not necessarily bad, but we cannot survive on *only* producing services.

Employment: Minimum Wage, Maximum Stupidity

Agghghh! You people are all missing the point. Abolish the minimum wage and suddenly the cost of producing goods and services falls through the floor. Price wars flare up, and everything gets cheaper. If Antonio's Pizzeria is allowed to pay its workers $2/hr., they can make a profit selling pizzas for much less than the $10 Vancetti's is charging. Natural effect: prices fall, and the people earning $2/hr. can afford to buy pizzas.

The minimum wage is just a political gimmick, and it's sadly a very effective gimmick because the people at the bottom of the ladder haven't yet learned enough about economics to understand why it's a gimmick. All the minimum wage does is make everything more expensive, increase unemployment, and increase the burden to society of all those receiving "assistance" from the taxpayers.

National Health Insurance, 'Cap and Trade': Two Steps in the Wrong Direction

Peter Schiff does it again. This article covers THREE concepts that I often bring up in conversation with government teat suckers:

• Government-run "businesses" can operate at a loss indefinitely because their losses will always be subsidized by taxpayers held at gunpoint. What private business, which actually has to break even just to continue operating, stands a chance of competing with that? Extortion is illegal, unless the government is doing it.

• So-called health "insurance" is not really insurance at all but more of a prepaid health service plan. There is no incentive for one to curtail consumption or minimize waste when a given procedure will be covered whether one obtains it from an emergency room that charges $700 or from a walk-in clinic that charges $300.

• The correct solution to rising health care costs is to get *market forces* acting on them again. This means putting consumers back in the driver's seat so they will, in due course of serving their own self-interest, seek out the best quality service for the lowest price. The reason health care is broken is because the forces that make capitalism work have been artificially shunted and distorted by tax policy.

Don't Be Fooled by Inflation

I love this metaphor!

"Although [inflation] can often look like growth, it is no more capable of creating wealth than a hall of mirrors is capable of creating people."

Will Quantitative Easing Work?

Enjoying a weaker currency? If a weak currency were a good thing, why wouldn't we just print a quadrillion dollars and make our currency worth next to nothing? Wouldn't that be good?

A weak currency is only good for net debtors. Those of us who have been fiscally responsible and have positive net worths would prefer that our nest eggs not be chiseled away by inflation.

Plunge Protection Team Attacks BofA: This Ends Now

"Strong legislation must also be passed to insure that all the activities, especially all funds transfers, undertaken by the U.S. Treasury and Federal Reserve, are completely opened to public inspection."

Instruct your congressperson to cosponsor H.R. 1207, the Federal Reserve Board Transparency Act. The non-partisan bill has huge momentum right now, having recently surpassed 100 cosponsors.

Is Inflation in Our Future?

Punch bowel, indeed. Feels like that's what the Fed is doing to mine.

Monetary Policy Response to Inflation Is a Fool's Journey

Saying something is down by a negative factor is actually saying it's up, which I think is not what you meant. Watch out for that in the future.

Monetary Policy Response to Inflation Is a Fool's Journey

Saying something is down by a negative factor is actually saying it's up, which I think is not what you meant. Watch out for that in the future.

Where Is the _flation?

There's one glaring problem with your analysis: the stock market crash is not destroying money. Consider a simple example:

With $1000 that I have today, I buy 50 shares of XYZ for $20 per share. In order to buy those shares, someone else, let's say you, have to sell them to me. So now you have my $1000, and I have your 50 shares of XYZ. A few months and a few scandals later, XYZ is trading at $5 per share. I've had enough, so I sell my 50 shares back to you for $5 per share. Your claim is that $750 was destroyed, since I had $1000 to start and only have $250 now. But you're overlooking the fact that YOU still have $750 of the $1000 that I originally paid you. So I have $250, and you have $750. That equals $1000. No money was destroyed at all!

So the stock market's plunging is not destroying any money at all. Money is merely changing hands, which is all that ever happens in the market. In order for money to be destroyed, the Federal Reserve has to sell assets and then actually eradicate the money it receives for them.

Even a borrower defaulting on a loan does not constitute destruction of money. If I borrow $1000 from you, spend it on a nice suit, and then default on my loan, the $1000 wasn't destroyed: the tailor has it now. It's a zero-sum game.

Where it becomes non-zero-sum is when the government manipulates the money supply by conjuring new dollars out of thin air or by annihilating existing dollars. Given that the only thing the Federal Reserve (which is neither federal, nor do they have any reserves) knows how to do is conjure new money, I'd say we're looking at severe inflation down the road.