Wall street Jargon....

It sounds as if he worried about deflation becoming a problem.
Who’s going to buy a $35,000.00 car when they know that I next year’s model be $30,000.00 next year!?

zephcom said:

In that article is this comment, "He suggested encouraging investment across a broad spectrum and removing barriers to labor force and economic participation."

Does that mean what I think it means??? I think it means labor unions are okay and having too many people who have no money means there isn't a market for all the stuff we produce.

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No, that's not what it means. Labor unions are a barrier to labor force participation. They're effectively a cartel that, among other things, limit participation to members of the cartel and restricting the ability of non-members to join.

I don't know what this guy's philosophy is, but I read that as code for (mostly) reducing regulation on businesses, though one could argue that it also includes added investment in education and regulations restricting the ability of employers to filter out certain classes of applicants, like convicts.

iluvatar5150 said:

Labor unions are a barrier to labor force participation. They're effectively a cartel that, among other things, limit participation to members of the cartel and restricting the ability of non-members to join.

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All 13% Of the labor force are holding the other 87% hostage, got it!

Pommer said:

All 13% Of the labor force are holding the other 87% hostage, got it!

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I didn't say that they were very powerful, or even that they were bad. But what I said was true.

The guy is lamenting that inflation is too low. The target is 2% and since it is not being achieved he expects more central bank action. I will interpret this "code." First, inflation is measured poorly, and though they claim it is higher than the actual, I would argue the opposite. When the government owes 22 trillion in debt and has to pay interest, do you think they will be honest? Higher inflation means higher interest rates, as money is less valuable in the future. Since the reported inflation is low, this Fed President thinks interest rates need to be lowered. Never mind that interest rates for government securities are in the 2.2 - 3% range, which historically is already very low. If you look around the world, the trend is to set interest rates near zero. Some countries even have attempted to make you pay to have your money in the bank with negative interest rates. This also ties in with many in government wanting to switch to a cashless society. Negative interest rates and no ability to get cash, are the next steps to government wanting to control and monitor your spending.

zephcom said:

Does that mean what I think it means??? I think it means labor unions are okay and having too many people who have no money means there isn't a market for all the stuff we produce.

One would have thought all these wealthy people would have figured out already that people who have no money don't buy stuff.

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No it does not mean what you think it means. He didn't mention labor unions at all. Broad investment to remove barriers to labor force participation and economic participation would mean investing in things that get more people more involved in the economy.

Low inflation means people with money are prompted to save more and spend and invest less. When people with money are prompted to save more and spend and invest less, then people who need to work to make it will have a harder time.

The danger is recession, in which people put off spending because they are more afraid of the future which drives the economy further down.

Economists jobs are often to worry about such feedback loops and what policies to set to avoid them.

zephcom said:

Of course he didn't say "labor unions", it is in code. He did say, "... removing barriers to labor force". Not having labor unions creates barriers to becoming involved in the labor force since non-union jobs are usually lower pay than union jobs. Not being able to get a job which paid enough to live would be a barrier to me.

Why work for someone only to find out you can't survive anyway? Labor unions seem to be the only sure way for the working person to get ahead. I think that is why the man used code words because the article appeared in a website designed for wealthy people. He could get run out of the club for openly backing labor unions.

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He didn't say it at all, an "investment" into things that remove barriers to entering the labor force isn't code for anything to do with labor unions.

zephcom said:

Of course he didn't say "labor unions", it is in code. He did say, "... removing barriers to labor force". Not having labor unions creates barriers to becoming involved in the labor force since non-union jobs are usually lower pay than union jobs. Not being able to get a job which paid enough to live would be a barrier to me.

Why work for someone only to find out you can't survive anyway? Labor unions seem to be the only sure way for the working person to get ahead. I think that is why the man used code words because the article appeared in a website designed for wealthy people. He could get run out of the club for openly backing labor unions.

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No, he means the exact opposite. Removing barriers to the labor force is usually shorthand for reducing or eliminating the minimum wage, weakening labor unions and reducing labor regulations.

zephcom said:

When you say, "people with money', you are talking about the very wealthy, right? Those people, on a percentage of their income, generally spend very little regardless of the economy.

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No I mean literally people with money.

Everyone who has money that they can either save or spend is part of the equation.

Rich people tend to spend less of their discretionary income and thus tend to be a bigger part of the problem with accumulated savings not doing work in the economy. Which can tend to be a big part of the problem in low inflation environments.

If the rich tend to sock their money away in T bills less is getting done in the overall economy.

And if the danger is recession, which is probably true since recession is the last step before depression, then getting people (I assume that now you are talking about those people without money) to keep spending only serves to drive up their debt. How can that possibly be good for them?

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It's good for the economy if people feel like they can spend their money rather than saving it all.

Medium and long term it's good for people to also save and invest their money at reasonable rates.

The next major recession will occur I think because the younger generation isn't being given as much opportunity to find good paying jobs and thus won't be able to buy things like houses and cars and such when the baby boomers finish all being a big fat retirement glut.

-I- think this whole vicious circle really comes down to one thing...paying people, all people, enough so they can have a warm, dry place to live, support a family, have three meals a day, own a 401k and enough extra to have a holiday occasionally.

Without consumers, the wealthy have no one to sell their goods to. And consumers have to get money from somewhere since it is against the law to make your own money.

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Indeed pay increasing well enough is one of the main parts of this equation that has been structurally depressed for almost a generation now.

Which is one of the reasons why unions wouldn't really be part of the problem here, they don't present a barrier to economic entry but rather tend to help increase wages and balance the system out more.

Can't savings help the economy, by providing for capital investments? There must be a balance, but savings is a necessary part of the economy.

jacks said:

Can't savings help the economy, by providing for capital investments? There most be a balance, but savings itself is a necessary part of the economy.

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It does when it translates into investments.

Investment and banking end up being stabilizing forces in the economy if done well.

When done poorly it does that thing you saw last time.

variant said:

It does when it translates into investments.

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That is why banks want savings, they invest it.

jacks said:

That is why banks want savings, they invest it.

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Traditionally yes. Which means that banks transfer money from savers to people who need capital for business purposes. They do best when they have access to such capital and are in an environment where they can make loans that don't default.

zephcom said:

Of course he didn't say "labor unions", it is in code. He did say, "... removing barriers to labor force". Not having labor unions creates barriers to becoming involved in the labor force since non-union jobs are usually lower pay than union jobs. Not being able to get a job which paid enough to live would be a barrier to me.

Why work for someone only to find out you can't survive anyway? Labor unions seem to be the only sure way for the working person to get ahead. I think that is why the man used code words because the article appeared in a website designed for wealthy people. He could get run out of the club for openly backing labor unions.

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This:

Arcangl86 said:

No, he means the exact opposite. Removing barriers to the labor force is usually shorthand for reducing or eliminating the minimum wage, weakening labor unions and reducing labor regulations.

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The cheaper it is to do something, the less barrier there is to start doing it. Regulations and high wages are examples of barriers to economic participation for would-be employers.

Low wages aren't, in this sense, a barrier to participating in the labor market. Things like prerequisites for education and criminal record would be.