Obama might be the dumbest president we have ever had.

[Avinash_Tyagi]

Kasz216 said:

Avinash_Tyagi said:

Jackson50 said:

Avinash_Tyagi said: And was struck down in 1935, you're really reaching if you think it had much of an effect

It is not reaching to think that two years of disastrous economic policies had a negative effect. If we now exempted industries from antitrust legislation and allowed wages to inflate higher than market equilibrium for two years, the negative effects would be incomprehensible.

 

 First off Wage inflation would not be a concern in a depression, a depression is a period of a debt-deflationary cycle, wage inflation would actually be a net positive, because at most it would result in an inflationary push, and in fact evidence has shown little effect on price inflation due to wage inflation, in fact by inflating wages and having little or no increase in prices, you are increasing disposable income, a very very good thing in a downturn, when aggregate demand is depressed.

Now the issue with Antitrust legislation isn't that big of a concern, because the issue with trusts cartels and monopolies, is they effect supply side of the equation,  but a Depression isn't a supply side issue, its a demand issue, demand is down across the board in a depression, partly due to fear, partly due to the fact that people just don't have the disposable income, and partly because people see prices falling, so they put off consuming until prices go lower.  So while letting industries tkae advantage of such a thing in a period of normal economic activity may be very detrimental, a depression is demand driven not supply driven.

 

By inflating wages you lower how many people buisness can hire leading to unemployement.

Or at least i assume that's his arguement with wage inflation.

 

interestingly, during the period between 1933 and 35, unemployment dropped