I give! Match conceeded to Parso because I have to go write a lecture on establishing fiscal policies in developing countries. But for the record: Let's assume that a primary deposit of $1000 is made into bank A. If the cash reserve ratio is 12%, then $120 must be kept on hand by the bank and $880 is available to be lent to someone else (called the excess reserve). Now if bank A uses its $880 in excess reserve by lending it out, and that is deposited in bank B, it represents a primary deposit to the second bank. Bank B must keep 12% of $880 on hand but can lend out $774.40. If that $774.40 is eventually deposited in bank C, the third bank must keep $92.93 on hand but can lend out $681.47. The process continues until there is no excess reserve left. Net zero loanable dollars.
:lol: Oh, come on... just re-visit the topic later when you have time if you want. Ah, an econ professor who uses wikipedia for an example... :lol: Okay, I misunderstood you when you said "net zero loanable dollars". Yes, of course money creation is not infinite, but that doesn't mean that money isn't created through savings & loans via the money multiplier.
Minimum wage = 5.15/hr or 10,712/yr. That is if you are able to get 40hrs/wk. Then you have to figure in taxes and health insurance and other withholdings. Probably at least 50/wk, which leaves 8112. A cheap apartment in Baton Rouge I think runs around 450. 450x12 = 5400. Leaving 2700 for other expenses for the year. 2700/12 = 225/month. Is that enough for food and electricity and gas? Phone bill? If a small business hires someone who's output is worth less than their wages, is that position really necessary? Sounds like a pretty inefficient way to run a business. I understand not wanting to raise minimum wage because of the ideals of capitalism, but if we were a purely capitalist country we would be paying less in minimum wage than we do now. We would welcome the unending stream of low wage laborers from the south and the low cost of production in distant lands more than we do now. And back home, many people would be making below poverty level wages and many more than now would be unemployed, creating a social cost that the government would be responsible for. Thus the government would subsidize the impoverished more than we do now.
i do welcome legal cheap immigrant and foreign labor. thats lots of theorizing on your part. i think freeing up the economy would creat more and better jobs worldwide.
You can get an apartment for alot cheaper than $450. $450 is a pretty dang nice apartment. And if you make minimum wage you aren't going to be paying much in taxes. Plus, consider most minimum wage employees live with their parents, or with another person. So double that & then figure out the expenses - it isn't as bad as you make it seem. It isn't our job to decide what jobs are necessary - it is that company's. And just because a job isn't worth a lot of money doesn't mean it isn't necessary. As I said earlier, I have no real problem with a minimum wage law so long as it is low enough to not negatively effect our economy. I believe that right now it is fine, but $7.25 is too high. Also, you ignore the fact that higher wages means less jobs, and less compensation for the good workers of the lower class - making it harder to move up into a higher class. And we already do allow low wage immigrant workers to pick fruit & clean hotel rooms, and also allow low cost production in foreign countries. While that might sound bad, economically it makes the entire world more efficiently & has long term benefits for us.
seriously though, unless you are brand new, chances are your getting better than minimum wage. McDonalds start a few dollars over minimum wage, wal-mart starts more than minimum wage though some may refute that. the only places that start at the $5.15 are small and local businesses. raising the minimum wage would kill them.
Have you guys seen the poor sections of Baton Rouge? When considering what's best for the nation, should you be willing to let people who work their tales off to slip through the cracks? You sound so blase when you say "for most people, minimum wage is fine." A single guy making 11,000/year at a minimum wage job would be lucky to get 40 hours. Tax and other deductions are taken out until tax season. I don't think 450 gets you that nice of an apartment, especially if you start considering cities with a higher standard of living than Baton Rouge. Hope he doesn't have any kids. How far removed are you from people without help from mommy and daddy who have to live on minimum wage? I understand it is artificial, but you really have to consider social costs instead of just capital gains.
Any apartment under 300 in Baton Rouge is a ghetto dump, IMO. In some areas of the country it is more like 800. But lets say a single person can find an apartment for $250, has a utility bill of $100, has a note on a used car for $100, food costs of $240 ($8/day), gasoline at $125 (2/fillups a month), other car expenses (oil change, repair, etc) of $25, clothing costs of $25, miscellaneous expenses of $50 (phone, water, etc,) This is an annual cost of $10980 versus an annual income of 11,000 before taxes for $20 annual money to spend on . . . dental and medical expenses. No money to pay for part-time tuition to better himself with some schooling. No money for out-of-town travel to visit family or seek better jobs. No money for child support, much less to actually raise a child and send him to school. No money for a couple of happy hour beers with his chums. No money to go on a date. No money to buy a newspaper or a book . . . or furniture. No money to save for the future. The rate the minimum wage should be is arguable, but clearly $5.15 is too low for a single person to live in Baton Rouge, much less Manhattan. Much less a single parent. Much less a handicapped person. Etc. Etc.
I am considering what is best for the nation, and time & time again capitalism has proved to be it. If people work their tales off, capitalism takes care of them - the will not make minimum wage for long. They don't slip through the cracks. What about the people who don't work their tales off? Should they be supported by high minimum wages whether they earn it or not? "most people" means most teenagers living at home with their parents making minimum wage - because thats who mostly makes minimum wage. My apartment is $525 and it is one of the nicest ones around LSU, & it includes all electricity & water bills. I have friends who live in pretty nice places for $350ish/month.
