The Sin Of Wages
http://boztopia.com/?p=21Alan Greenspan, Ben Bernanke, David Lereah, Ezra Klein, Housing.Com, Kevin Drum, The New York Timeshttp://boztopia.com/?p=21#comments
The New York Times takes a look around and notices that wages are indeed on the rise, thus lifting all boats on the tide:
After years of sharply rising income inequality, the recent rise in wages also appears to be increasing pay for both rich and poor. From July through September, the inflation-adjusted hourly pay of workers near the bottom of the wage scale - those making less than 90 percent of all workers but more than the worst-off 10 percent - rose 0.1 percent.
This would seem to be good news, right? More pay means more savings, more investment, and more consumption, without taking on excessive debt. Well, as Ezra Klein and Kevin Drum both note, the real concern for policymakers like Bernanke are those pesky labor costs:
Wages have risen so swiftly that some economists worry that they could push inflation up on their own, by forcing companies to raise prices. Last week, the Federal Reserve chairman, Ben S. Bernanke, warned that the central bank might have to raise interest rates again. “One factor that we are watching carefully is labor costs,” he said.
As I have said many times before, Bernanke’s job has been to continue Greenspan’s work of promoting economic “growth” through debt and consumption. The housing bubble of the last five years was absolutely empowered by low interest rates and massive debt assumption through the promotion of toxic mortgage products and the continual exhortations to spend money we don’t have.
Now that people are making more money, they’ll be saving more, and not needing credit cards, interest-only loans with no down payment, or any of that crap. And where will Wall Street be? Remember way back when David Lereah called people who paid off their mortgages unsophisticated? That’s the mentality.
These people live to make sure you don’t make enough money and use debt to finance your lifestyle, thus making them richer. It’s that simple. Don’t play that game.
This was originally posted at Housing.Com.
The New York Times takes a look around and notices that wages are indeed on the rise, thus lifting all boats on the tide:
After years of sharply rising income inequality, the recent rise in wages also appears to be increasing pay for both rich and poor. From July through September, the inflation-adjusted hourly pay of workers near the bottom of the wage scale - those making less than 90 percent of all workers but more than the worst-off 10 percent - rose 0.1 percent.
This would seem to be good news, right? More pay means more savings, more investment, and more consumption, without taking on excessive debt. Well, as Ezra Klein and Kevin Drum both note, the real concern for policymakers like Bernanke are those pesky labor costs:
Wages have risen so swiftly that some economists worry that they could push inflation up on their own, by forcing companies to raise prices. Last week, the Federal Reserve chairman, Ben S. Bernanke, warned that the central bank might have to raise interest rates again. “One factor that we are watching carefully is labor costs,” he said.
As I have said many times before, Bernanke’s job has been to continue Greenspan’s work of promoting economic “growth” through debt and consumption. The housing bubble of the last five years was absolutely empowered by low interest rates and massive debt assumption through the promotion of toxic mortgage products and the continual exhortations to spend money we don’t have.
Now that people are making more money, they’ll be saving more, and not needing credit cards, interest-only loans with no down payment, or any of that crap. And where will Wall Street be? Remember way back when David Lereah called people who paid off their mortgages unsophisticated? That’s the mentality.
These people live to make sure you don’t make enough money and use debt to finance your lifestyle, thus making them richer. It’s that simple. Don’t play that game.
This was originally posted at Housing.Com.