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WALMART AND THE ILLUSION OF QUANTITATIVE EASING. IT'S SO OVER FOR AMERICANS.




Allie: 

"Wal-Mart stock is tanking because if household income is $1,600 month and rents is $1,500 a month and if the price of ground beef has nearly doubled, milk and others up 30%, ya got nothing left. There is nothing left."

Me:

Current dollar prices are illusory. True food prices are falling, not rising.

See: PRICES HAVE BEEN FALLING FOR YEARS! INFLATION? MAJOR DEFLATION HAS BEEN UNDERWAY SINCE 2007.

The problem is that true wages have been falling faster than true prices of food and rent.

See: EVERYBODY'S WORKING FOR THE WEEKEND, FOR LESS.

Rent is rising because few built apartment houses during the residential realty boom and now few can afford mortgages on falling incomes. They need places to live. Population continues to grow.

When the prime working age increases faster than the spending rate on capital, wages fall. Wage rates are prices.

When wages fall, all prices fall. What are the source of other prices but wages?

Congress has accepted too many immigrants, legal and illegal. That has killed the return to capital and thus wages.

See: ILLEGAL IMMIGRATION. WHY IT'S BAD FOR YOU AND A BOON FOR ANTI-CAPITALISTS.

Allie:

Anyway - the point is CURRENT prices.

Me: 

Current dollar prices are meaningless. What counts is how much stuff you can buy for an hour's worth of work.

Prices in true dollars are down, way down. Wages in true dollars are down even more.

How can you believe in higher prices on falling true credit. What do you think happens after a great inflation stops?

A giant banking bubble bursts. That is the crisis. What comes next is deflation.

Quantitative easing has papered over massive deflation. There are 69.8% more dollars in circulation today that June 2008. Since all prices are tallied in current dollars, prices in dollars will be higher.

That most don't understand these concepts is why most believe as you.

The facts of reality and everything men have known about commercial banking and economies for 165 years fails to fit your narrative that you want to believe, desperately, and are trying to defend.

It's because of people like you that central bankers can engage in deceits like quantitative easing. If the many understood commercial banking, none of this would be happening because none of it could be happening. They couldn't get away with it.

If everyone believed as you, accepting statistics from the agents of Congress, stats expressed in current dollars for GDP and food prices, then pro-Congress politicians along with their hand-maidens and agents must be right. If so, the rest of us must be wrong.

Yet, if so, all market participants would have complete information. There would be no movement in stock prices or anything else. No one could gain competitive advantage.

We would be stuck in a dreary world of static Dystopian perfection.

Allie: 

You claim, "When wages fall, all prices fall. What are the source of other prices but wages?"

AND WHAT ARE THE SOURCE OF WAGES ? = JOBS

Me: 

Never in the history of mankind have jobs been the sources wages.  Returns to capital are the source of wages.

Wages are income and act like any kind of income. From the worker's perspective, wages are recurring sales in purchase and sales of cash or other bank credit for work done.

From the firm operator's perspective, work done by workers (employees) is capital (property put to production).


If firm operators lack income or credit supported by income, they can't buy capital (work done by employees) to put into a product.

Allie: 

The more JOBS the higher WAGES.

Me:

Wow, what another fallacy you have expressed. First, it's a non-sequitur. Second, you haven't proved it.


Wages are a result of capital. Without  capital and return to it, there are no wages.

Bare subsistence savages have no jobs and no wages precisely because no one has capital (property put to production) from which to gain returns and thus hire them to work at wages.

And for that reason, higher wages come from increasing returns to ever more capital.

Allie:

But ground beef is up!

Me:

Wage rates are prices. Wages have been falling, not rising.

Prices for everything else have been falling owing to efficiency gains and exacerbated, owing to falling wages. From whence prices exist except from wages?

You don't see these falling prices because you think in current dollars. As there are more dollars in circulation today than last month, last quarter, last year, last five years and so on, current dollar prices will seem higher, always. It's illusory.

How can you believe true food prices have been up on massive, increasing unemployment in America and Europe between 2008 and 2014? How does that magic work, exactly?

There have been no significant crop shortages owing to natural disasters and futures markets have provided for much grain storage.


————

Sadly, Allie believes as millions do.

Congress let in too many illegals and too many legal immigrants which swelled the ranks of the working age population. In so doing, returns to capital were impinged.

When collapse happened, extant capital bought on credit at much higher prices were crushed. 

Exacerbating this, idiots at the Federal Reserve engaged in near-ZIRP, which further damaged returns to capital. That led to firm operators doing the only act they could do to restore the return to exact capital bought on higher prices — they laid off workers.

Firm operators decide always on this alone: Is there a dearth or abundance of workers.

If there is a shortage of workers and firm operators want to produce, they must augment workers with capital.

Americans can't have massive immigration in a WTO, free-trade agreement world.

Adding would-be workers kills the return to capital. Without increasing returns to capital, there is no reason to hire anyway.