Why do we have poor people?
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09-12-2013, 03:04 PM
RE: Why do we have poor people?
(09-12-2013 05:29 AM)Nineteen Wrote:  
(04-12-2013 09:59 AM)bemore Wrote:  Simple question. Would be interested to hear people's reasons as to why we have poor people.

Because of selfishness and the adoration for the worldly things .

How does that work? Do you mean rich people cause others to be poor?

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09-12-2013, 03:17 PM
RE: Why do we have poor people?
(09-12-2013 03:04 PM)Chas Wrote:  Do you mean rich people cause others to be poor?

Depends:

1. If rich people get richer by investing in starting a business, inventing new products, etc., then it's a win-win for everyone, including the poor. They're just growing the size of the pie, as the economy and gdp grow and unemployment goes down.

2. On the other hand if the "rich" in question are the banks and they get richer by printing money, the pie isn't growing; you still have the same amount of wealth (buildings, factories, homes, etc.) as before. In this case, it IS just transferring wealth. For example, if the big banks have $1 trillion on hand, and everybody else has $99 trillion, then the bank has 1% of the nation's wealth (1% of $100t). When they hit 'print' and instantly add $9 trillion to their own accounts, then they have 9% of the nation's wealth ($10t out of $109t). This is just a transfer of wealth, and yes, it makes everybody else poorer since we just went from having 99% of the nation's wealth to having 90%.

What I find disturbing is that a lot of people vilify the former (those who grow the economy to everyone's benefit), and couldn't care less about the latter (those who transfer massive wealth).
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11-12-2013, 03:20 AM
RE: Why do we have poor people?
Thank you for explaining percentages to us. Although I think you forget who issues promissory notes.

But explain to me, (cos i just dont get it) why is inflation targetted at a positive rate? surely whats best for everyone is deflation when what we have and earn starts becoming more valuable?

Am i stupid or is inflation, i.e the governments printing money, actually good for a country?

And as for baking a bigger pie, a companies profit margin could double, do you think the wages of the employees would double? would it even increase significantly? NO. the pie might be getting bigger, but that just mean more pie for those on top.. and the same scrapings for those underneath.
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11-12-2013, 01:34 PM
RE: Why do we have poor people?
(11-12-2013 03:20 AM)PursuingTruth Wrote:  Thank you for explaining percentages to us. Although I think you forget who issues promissory notes.

Which promissory notes are you referring to? Federal Reserve notes (aka "US Dollars") were, according to the Bretton Woods treaty, claim checks for gold. The world's countries sent the US their gold, and got back these claim checks. But then when France figured out Nixon started printing "claim checks" for which there was no gold, to pay for the Vietnam War, they tried to redeem their claim checks (dollars), and so Nixon ended the convertibility. This would be like going to a night club and you give them your nice coat in exchange for a claim check, the night club runs out of money and sells everybody's coats, and at the end of the night, when you hand them the claim check, the bouncer says "Oh, we stopped redeeming the claim checks for coats. But you do get to keep the claim check and use it for bartering."

(11-12-2013 03:20 AM)PursuingTruth Wrote:  But explain to me, (cos i just dont get it) why is inflation targetted at a positive rate? surely whats best for everyone is deflation when what we have and earn starts becoming more valuable?

No, deflation is even worse than inflation. If you know that tomorrow your money is going to be worth more than it is today, you won't buy anything today. You'll just hoard your money. And nobody would make loans since they would be repaid with money that's worth less than it is today.

The ideal, imo, is 0% inflation. That's what Switzerland achieved, and how they became so prosperous. It totally changed the way people behave. For example, the Swiss are unique in that even though the average family has $700k in savings, very few buy homes--they all rent. Having lived there and asked why, they all said "Why would I invest my money in a depreciating asset like a house or a car?" This is because, after decades of 0% inflation, they knew that in 20 years a brand new 2 bedroom house would cost the same as a new one today; in 20 years their then old house would be worth less than what it was when new. So they (wisely) realized that it was better to invest in stocks and business. Americans live in constant fear of inflation. We're always afraid that if we don't buy that house TODAY, then in 10 years we won't be able to afford it. So inflation causes us to make malinvestments, and park our money in depreciating assets (like houses) because we THINK they're appreciating investments, when in reality they're depreciating assets and the gains are purely inflation.

So, there is truth to say that, although 0% inflation is ideal, a small, positive inflation is better than negative deflation. BUT, it's very dangerous because governments LOVE inflation. It's a way for them to pay their bills and not have to get voters to approve tax increases, and bankers love it because it's a transfer of wealth to them, which comes at the expense of the poor and middle class.

(11-12-2013 03:20 AM)PursuingTruth Wrote:  Am i stupid or is inflation, i.e the governments printing money, actually good for a country?

It's GREAT for politicians. It helps them get re-elected. Remember, Nixon was very unpopular when the Pentagon Papers came out and Americans realized we were losing the Vietnam War. And, if he remained on a gold standard with 0% inflation, he'd have to pay for Vietnam by raising taxes, and would have lost the re-election. Instead he ended the gold standard, had the Federal Reserve hit 'print' and pay for the war with new money. Americans loved it, thinking it was a free lunch. He was re-elected with a landslide. Naturally there was no free lunch and later in the 1970's there was horrible inflation and a terrible economy. But by then everybody forgot Nixon did it and they blamed Carter.

(11-12-2013 03:20 AM)PursuingTruth Wrote:  And as for baking a bigger pie, a companies profit margin could double, do you think the wages of the employees would double? would it even increase significantly? NO. the pie might be getting bigger, but that just mean more pie for those on top.. and the same scrapings for those underneath.

Not really. When a companies profits margins double because the company is making twice as many products, they need twice as many workers in the factoriess. Supply and demand. As there's more demand for workers, they have more job opportunities as unemployment goes down, and they can negotiate higher salaries. And when there's a scarcity of workers, they can unionize and form collective bargaining agreements to improve their salary and working conditions even more. That's not possible when there's little economic activity because then the corporations are in the drivers seat, with so many people willing to work for peanuts, they can replace workers who try to ask for more.
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11-12-2013, 02:04 PM
RE: Why do we have poor people?
@PursuingTruth,

simpler version: If you know next month a widget will cost as much, you won't buy it now. If you know next month it will cost as much, you will buy it now even if you can't afford it (think housing bubble). If the price remains constant, then you feel no pressure and can make a rational decision. That's why, imo, 0% inflation is best.

0% inflation also allows you to think long-term. You can sign, for example, a 20 year contract with a supplier, whereas if there's inflation or deflation, you're forced to think short-term since you don't know how much prices will change in the long run.
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11-12-2013, 02:21 PM
RE: Why do we have poor people?
(09-12-2013 03:04 PM)Chas Wrote:  
(09-12-2013 05:29 AM)Nineteen Wrote:  Because of selfishness and the adoration for the worldly things .

How does that work? Do you mean rich people cause others to be poor?


Yes. Exactly.

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16-12-2013, 04:23 AM
RE: Why do we have poor people?
yes frankksj, that is EXACTLY what a few countries have done, sold the coats and kept the check tickets.. But the government prints the check tickets, not the banks so banks cant print money.

Somethng forgotten in the inflation/deflation argument is that the poorest of us, dont decide when to buy things, dont get a dozen loans a year to buy the fancy luxuries, and would very much appreciate their money going further.. and currently, if inflation was 0% my wages would go up 0%.

And as for a company doubling products to double profits, I am sure you know how supply and demand really screws over the customer? If there is a large demand for a a product, the price for the product goes up before supply is increased. So the company could double its profits with no need to increase employee levels, infact in the era of mechanization and computerisation, employee levels are typically falling, along with higher product outputs. Yet that fat cat at the top will get more cream, and the lucky ones remaining are just happy to have their jobs rather than ask for bigger pay rises.
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16-12-2013, 11:04 AM
RE: Why do we have poor people?
(11-12-2013 02:21 PM)Minimalist Wrote:  
(09-12-2013 03:04 PM)Chas Wrote:  How does that work? Do you mean rich people cause others to be poor?


Yes. Exactly.

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What you supplied is simply descriptive. You provided no causal evidence. Just sayin....
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16-12-2013, 06:44 PM
RE: Why do we have poor people?
@Minimalist,

You can tell a Democrat made that chart because he resets all the numbers to 0 when Reagan took office so they can blame this on him.

If the author cared about solving the problem, he'd start the chart after WWII so you could see things got better in the 50's and 60's, and this trend began in 1971. Then he'd ask "what happened in 1971?"
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16-12-2013, 06:51 PM
RE: Why do we have poor people?
(16-12-2013 04:23 AM)PursuingTruth Wrote:  But the government prints the check tickets, not the banks so banks cant print money.

It's more complicated than that. Central Banks, which print money, are generally privately owned by the big banks--not the government. The current US Federal Reserve system was architected by the big banks at a secret meeting at Jekyll Island in 1910. However, a completely private central bank has trouble printing money because people simply stop using the money. So, the central banks needs the government to force everyone at gunpoint to use their money, or else go to jail. Thus, while the regional Federal Reserve banks ARE still private corporations owned by the big banks, they receive authorization from Congress, which also enforces legal tender laws and the gov't get to appoint the Chairman. However, they still operate in secret and even Congress is unable to audit the Fed or learn how much money they're printing.

(16-12-2013 04:23 AM)PursuingTruth Wrote:  if inflation was 0% my wages would go up 0%.

It doesn't matter if your wages go up or down, what effects your standard of living is how the cost of living goes up and down relative to your wages. You'd be better off to have inflation and wages at 0%, then to have inflation increase faster than your wages (which it does, btw). Would you rather live in a place where you earn $10/hour and your salary isn't enough to cover rent and food, or live where you earn $1/hour and can buy a nice home, luxury car, and eat at nice restaurants every day? If you like 0's on your paycheck just for the fun of seeing big numbers, you should have lived in Germany in the 1920's. There you could earn 1,000,000,000,000 marks per day. Of course you couldn't buy a loaf of bread with it, but at least inflation would give you a HUGE salary. The fact is the Germans were so destitute after their hyperinflation it eventually led to WWII. Every time there's been high inflation, society gets wiped out. The time when the average working American family really gained ground was during the 50's and 60's--when we had 0% inflation.


(16-12-2013 04:23 AM)PursuingTruth Wrote:  supply and demand really screws over the customer...

That's a illogical. Name one product you've seen in your lifetime where demand (and prices) went up, and the situation didn't quickly self-correct as more and more companies scrambled to open factories and get their piece of that pie, which in turn creates more jobs and drives costs back down again. I'll bet the ONLY times you can find that happened is with government assistance, such as patents. In the real world, it doesn't happen. When demand goes up, there's tons of competitors scrambling to increase supply. Remember 10 years ago a plasma TV was just for rich people and cost $5,000. Now, you can buy a bigger, better LCD TV for $500, and everybody has them. Did the demand for flat-panel TV's drive the cost up? or down? Did it benefit the customer, or screw the customer?

Even if your wages remained flat, if the cost of living went down, like it does with increased efficiency and greater automation, your standard of living would go up. Yes, it's true that as companies become more automated they need fewer employees to do the same job. BUT, with every new technology a lot more jobs come too. Perhaps some day there will be robots and AI doing all the work and humans will be obsolete. But, today, technological innovations creates more jobs than it destroys. If you question that, just go to a country that has no technology--like Zimbabwe. What's the job market like?
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