Home-ownership costs fall for first time since early 1990s
Wages tumble toward 18-year low
| Recently when even wealthier people were feeling pinched by the stock market and the real economy, worried investors were not buying enough gold to push up its price. Now that the recession seems at or near bottom, they are floating up that hedge’s price. Where is this economy really at? We trim, blend, and append five 2009 articles from: (1) USA Today, Oct 14 on wages by Dennis Cauchon and Paul Overberg; (2) MarketWatch, Oct 15, on home-ownership by Rex Nutting; (3) LA Times, Oct 6, on gold by Tom Petruno; (4) BBC, October 6, on gold; and (5) The Weekly Standard, Volume 015, Issue 06, on cutting taxes by Matthew Continetti. |
By D. Cauchon and P. Overberg, by R. Nutting, by T. Petruno, by BBC, and by M. Continetti
- Wages tumble toward 18-year low
Employees are working fewer hours -- an average of 30 per week -- than at anytime since the government began tracking the data in 1964.
Hence for millions of private-sector workers, average wages have fallen this year through September, after adjusting for inflation. Hourly wages have dipped a half-percent to $18.67; weekly 1.4% to $616.11. If that trend holds, it will mark the biggest annual decline in real wages since 1991.
Colorado announced it will become the first state to lower its minimum wage since the federal minimum wage law was passed in 1938. The state will cut its rate by 4 cents to $7.24 an hour Jan. 1.
Social Security announced that it will not give cost-of-living increases to retirees next year.
Nearly 80 million people have wages or benefits tied to changes in the government’s consumer price index. Prices measured by the CPI are down 1.8% from their peak in July 2008.
JJS: Three things. The official CPI is noted for underestimating true inflation; housing, when included, does not include actual mortgage payments and “rents” do not note how many people reside in the apartment. Plus, even if the cost of living does actually fall, it’s not for long (see below), nor is it an absolute fall relative to income (see above). Interestingly, the period of eighteen years (above) fits in nicely with the 18-year land-price cycle which drives the rest of the business cycle, a phenomenon not officially recognized at all.
- Home-ownership costs fall for first time since early 1990s
US consumer prices drifted higher in September, 0.2%, led by higher prices for cars, energy, and medical care that offset falling rents and home-ownership costs.
The core CPI -- which excludes food and energy prices -- also increased 0.2% in September on a seasonally adjusted basis.
A separate official price index for workers, which government uses for paying cost-of-living adjustments to people on Social Security, fell 2.1% in the past year [more than their other official price index, meaning the government gets away with not paying the elderly and disabled quite so much].
President Barack Obama proposed that Social Security recipients be given a one-time $250 payment next year.
Over the longer term, the massive funds being pumped into the economy threatens to unleash inflation.
JJS: To have government benefit the citizenry in general -- not just the elite insiders -- our politicians must implement geonomics. That is, shift their massive spending out of bailouts and subsidies and empire, and shift their taxation off our work and savings and buildings, and instead recover (via taxes, fees, etc) and share the market value of land, resources, and privileges like corporate charters. Getting such Citizens Dividends and our earnings untaxed, then we’d not need any one-time supplements, and government would neither be going broke nor causing inflation, driving people out of dollars.
- Gold hits record high as dollar sinks e
The metal soared to record highs; gold futures in New York traded at nearly $1,043 an ounce, fueled by fresh fears that the dollar's status as the world's preeminent currency will continue to erode.
The dollar, which has been drifting lower for most of this year against other major currencies, took another hit after Britain's Independent newspaper said secret talks were taking place among Arab states, China, Russia, and other countries to stop pricing oil in dollars, and shift instead to a basket of currencies including the euro, the yen, and the Chinese yuan.
But some analysts say gold's ascent reflects increasing doubt about the value of all paper currencies, as the world's central banks have pumped enormous sums of money to lenders.
- Gold price rises to all-time high
The last time the spot price of gold hit a new high was in March 2008, when it reached $1,032.80 an ounce.
The price of gold is typically strong in the October to December period because of the higher demand for jewelry in the run-up to Christmas and the Indian festival of Diwali.
Other precious metals also saw their prices rise, with silver up 3% to $17.11 an ounce, and platinum adding 0.9% to $1,305 an ounce. Copper was up 2.4% to $6,060 a ton.
The rise in metal prices lifted shares in mining firms.
JJS: For gold to hit a true all-time high, it’d have to more than double, reaching $2,400 an ounce, once we’ve corrected for inflation. Meanwhile, what could politicians do immediately to restore falling wages and let people buy and sell again as they’d grown accustomed?
- Cut the Payroll Tax: It's the real pro-growth measure
Unemployment has risen to almost 10% despite the huge “stimulus”. So far, $16 billion in obligated stimulus contracts have bought the country 30,383 new jobs. Each new (temporary) job, probably paying on average less than $50,000 a year, has cost taxpayers $71,500.
Another DC proposal is a tax credit. The Tax Reduction and Simplification Act of 1977 tried it. By the time employers caught up to Washington's idea-of-the-week, the economy had already moved on.
Now some Democrats and Republicans are taking a look at a payroll tax cut. Where a tax credit is complicated and invites rent-seeking, a tax cut is transparent. It would be fast, easy, and effective.
The payroll tax hits 60% of Americans, including anybody who runs a business. If the payroll tax were suspended for 12 to 18 months, personal discretionary income would rise by 3.5%. Workers would have fatter paychecks to spend.
The main objection to a payroll tax cut is that it would cost the government money. True, but so would any of the other schemes being bandied about. And the deficits those plans would produce are far less likely to result in economic growth.
Another way to go would be not to suspend the tax, but to reduce it--permanently.
JJS: And replace it and all other taxes on our efforts with the taxes, fees, dues, and leases that recover for everyone the commonwealth, society’s surplus -- the worth of Mother Earth.
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Jeffery J. Smith runs the Forum on Geonomics.
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Also see: Could other taxes on use of nature get passed this way?
How the Fed Prints Money Out of Thin Air
Is inflation a solution? |
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