Comments on: The Greek Plague: Sticky Wages

By: Matthew Swaringen

Matthew Swaringen — Mon, 28 Jun 2010 01:22:21 +0000

“Unless one advocates that the debt ratcheted up during the boom is forced to fall during the bust then he is addressing only 1/2 the problem.”

Yeah, they are saying Greece should default, which yes means that the debt ratcheted up also has to fall. The bond holders screwed up by giving the Greek government too much money.

By: FatBeard

FatBeard — Mon, 28 Jun 2010 00:58:17 +0000

The solution to sticky wages is laying off workers. Wages un-stick real quick when it’s a choice between a lower wage and no wage. David And that is why I moved on from Austrian Economics. You guys assume that since inflation is bad (that really depends, BTW) then deflation is good. Actually, both inflation and deflation are part of the conventional money and banking paradigm that violates Deuteronomy 23:19-20.

By: FatBeard

FatBeard — Mon, 28 Jun 2010 00:16:21 +0000

[ignore above comment; white spaces was deleted]

Speaking of “sticky”, debt is sticky. Unless one advocates that the debt ratcheted up during the boom is forced to fall during the bust then he is addressing only 1/2 the problem. See Deuteronomy 15 and Leviticus 25 for the concept of debt forgiveness. However, many of the savers might justly complain if debtors were forgiven so here is a solution that fixes everyone:

1. Set reserve requirements to 100% to shut down the counterfeiting cartel.
2. Create a sufficient amount of new legal tender fiat and distribute it to every adult.

This would:
a. enable underwater home owners to pay down their mortgages to market price levels.
b. compensate savers for years of artificially suppressed interest rates.
c. Fix the banks in nominal terms.
d. Fix state tax revenues.

Inflation risk? Maybe, but if banks were put out of the counterfeiting business via a 100% reserve requirement then the only source of new money into the system would be under government control, the Fed and US Treasury.

Long term solution? Allow liberty in money creation, usage, and acceptance. Government money should be legal tender for government debt only (“Render to Caesar …”) while private money would be allowed to serve the private sector.

By: FatBeard

FatBeard — Mon, 28 Jun 2010 00:06:13 +0000

Speaking of “sticky”, debt is sticky. Unless you advocate that the debt ratcheted up during the boom is forced to fall during the bust then you are addressing only 1/2 the problem. See Deuteronomy 15 and Leviticus 25 for the concept of debt forgiveness. However, many of the savers would justly complain if debtors were forgiven so here is a solution that fixes everyone:1. Set reserve requirements to 100% to shut down the counterfeiting cartel. 2. Create a sufficient amount of new legal tender and distribute it to every adult. This would:a. enable underwater home owners to pay down their mortgages to market price levels. b. compensate savers for years of artificially suppressed interest rates. c. Fix the banks in nominal terms. d. Fix state tax revenues.Inflation risk? Maybe, but if banks were put out of the counterfeiting business via a 100% reserve requirement then the only source of new money into the system would be under government control, the Fed and US Treasury.Long term solution? Allow liberty in money creation, usage, and acceptance. Government money should be legal tender for government debt only (“Render to Caesar …”) while private money would be allowed to serve the private sector.

By: David

David — Sat, 26 Jun 2010 13:29:22 +0000

The solution to sticky wages is laying off workers. Wages un-stick real quick when it’s a choice between a lower wage and no wage.

Did the British govenrment perhaps intervene in this process in the late 1920s, like Herbert Hoover did?

By: P.M.Lawrence

P.M.Lawrence — Sat, 26 Jun 2010 04:01:22 +0000

That should be “DANAOS”.

By: P.M.Lawrence

P.M.Lawrence — Sat, 26 Jun 2010 04:00:30 +0000

"Central banks — created ostensibly to combat downturns caused by sticky prices — are the reason wages are sticky to begin with". Wrong. It's one reason they are sticky now, but they were sticky even in the days of other stable prices, e.g. the 19th century bullion standards, or falling prices like Britain in the late 1920s. This was because wage earners (then, anyway) did not have much scope to settle for less before they couldn't make ends meet.

By: ang-li

ang-li — Fri, 25 Jun 2010 11:15:40 +0000

TIMEO DANAE ET DONA FERENTES

By: Bruce Koerber

Bruce Koerber — Fri, 25 Jun 2010 02:24:07 +0000

That’s a good point. Sticky prices are the result of the Keynesian quackery and fulfil the Keynesian quackery.

By: Bogart

Bogart — Thu, 24 Jun 2010 15:07:52 +0000

The Greeks themselves have no choice. They simply live as best as they can by ignoring the absurdly complex regulations and taxes their government drops on them.As for the Greeks suddenly or ever really paying taxes in full, forget about it…. I have met several Greek business folks in NYC and they keep cash in the safest place they have, in their shirt pocket. They only use banks to for transactions they want seen by the government and they convert most savings to physical assets. The advantage is they can not be charged with the payment of sales taxes and the like and they only do above board transactions with non-friends. With friends they do all under the table.So the only way to reconcile the whole mess is to do exactly opposite what Obama, Ben and the ECB are doing which is to buy Greek bonds. If no one buys the bonds, the government can’t issue debts, pay people etc and Greece will be forced to clean up its act through defaulting on their current bonds and laying off government workers.