Grafton, NH

Quote: kenarman

You are making my point for me. People can find work well above minimum wage and few are paid at that rate so the fact it so low is irrelevant in most instances.

I want the fact that it is the equivalent of $5.07/hour (in 2009) to be relevant in zero instances, which is why I am arguing for an increase in the first place. That's also why I would index it to inflation, that way, for that 1.4%, the relative spending power of what they are earning remains close to constant.

Mission146, have you studied Ron Paul, since he's a centrist?


For example:


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Ron Paul: The “Inflation Reduction Act” Is Another DC Lie

AUGUST 9, 2022
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Inflation is the act of money creation by the Federal Reserve. High prices are one adverse effect of inflation, along with bubbles and the bursting of bubbles. One reason the Federal Reserve increases the money supply is to keep interest rates low, thus enabling the federal government to run large deficits without incurring unmanageable interest payments.

The so-called Inflation Reduction Act increases government spending. For example, the bill authorizes spending hundreds of billions of dollars on energy and fighting climate change. Much of this is subsidies for renewable energy — in other words, green corporate welfare. Government programs subsidizing certain industries take resources out of the hands of investors and entrepreneurs, who allocate resources in accordance with the wants and needs of consumers, and give the resources to the government, where resources are allocated according to the agendas of politicians and bureaucrats. When government takes resources out of the market, it also disrupts the price system through which entrepreneurs, investors, workers, and consumers discover the true value of goods and services. Thus, “green energy” programs will lead to increased cronyism and waste.
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https://schiffgold.com/guest-commentaries/ron-paul-the-inflation-reduction-act-is-another-dc-lie/

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I don't agree with Ron when he states his reasons for keeping the interest rates low, etc. The reason is to continually generate a supply of labor by eroding savings.

Quote: DoubleGold

Mission146, have you studied Ron Paul, since he's a centrist?


For example:


------------------------

Ron Paul: The “Inflation Reduction Act” Is Another DC Lie

AUGUST 9, 2022
.
.
.
Inflation is the act of money creation by the Federal Reserve. High prices are one adverse effect of inflation, along with bubbles and the bursting of bubbles. One reason the Federal Reserve increases the money supply is to keep interest rates low, thus enabling the federal government to run large deficits without incurring unmanageable interest payments.

The so-called Inflation Reduction Act increases government spending. For example, the bill authorizes spending hundreds of billions of dollars on energy and fighting climate change. Much of this is subsidies for renewable energy — in other words, green corporate welfare. Government programs subsidizing certain industries take resources out of the hands of investors and entrepreneurs, who allocate resources in accordance with the wants and needs of consumers, and give the resources to the government, where resources are allocated according to the agendas of politicians and bureaucrats. When government takes resources out of the market, it also disrupts the price system through which entrepreneurs, investors, workers, and consumers discover the true value of goods and services. Thus, “green energy” programs will lead to increased cronyism and waste.
.
.
.
https://schiffgold.com/guest-commentaries/ron-paul-the-inflation-reduction-act-is-another-dc-lie/

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I don't agree with Ron when he states his reasons for keeping the interest rates low, etc. The reason is to continually generate a supply of labor by eroding savings.

Let's start that I'm a bit out of my depth on national monetary policy, so these are going to be generalizations and pure, straight from the hip, opinion.

The first thing is that Ron Paul's article, at least superficially, seems to get one thing wrong. Paul said that this bill would increase the inflation rate and the exact opposite happened:

https://www.statista.com/statistics/1394307/monthly-inflation-vs-core-inflation-us/

The inflation rate has, objectively, been on a steady decline since that article came out. I don't know that the bill exclusively reduced the inflation rate, or that the bill didn't contain components (as Paul mentioned) that, without those components, the inflation rate wouldn't be decreasing at an even faster rate, but it has decreased, one way or another.

When you talk about eroding savings, I'd have to know what economic class of people you're referring to. When you have a stagnant rate of wage growth that generally hasn't (it hasn't until very recently) even attempted to keep up with inflation, then there's no savings for the lower class and lower-middle class anyway. They're also not (generally speaking) a class inclined towards savings and investment, even if they could, in theory, be positioned to do those things-which they're often not positioned to do anyway.

I would say that there are many different inflation drivers, but obviously, one of the biggest ones is spending. Naturally, spending refers to all forms of spending, not just discretionary spending, so the greater the costs of even necessary spending (rent, gas, utilities, food) contributes to greater levels of spending. At that point, you have to factor in that the income classes referenced tend to do discretionary spending when they have the money, perceive they have the money or have access to sufficient credit to do so. That's where most of the money (for those classes) that might otherwise be saved/invested goes, but to refer to, 'Eroding savings,' for those income classes is largely immaterial because they wouldn't be saving anyway.

As far as they are concerned, the increase to interest rates mainly impacts future spending to the extent of...higher interest rates means that they are going to get sticker shock that much faster whenever they look at their credit card balances or try to take out new lines of credit and look at the variable interest rates they are offered or variable interest rates on other lending products.

If you'll turn your attention here and look at the average credit card interest rates over the years (about halfway down the page):

https://www.lendingtree.com/credit-cards/average-credit-card-interest-rate-in-america/

What you will see is that the average credit card interest rate is at its highest point ever in history by a country mile. In addition to that, the average outstanding credit card balances (per household) are at the highest rate ever in history...also by a friggin' mile.

So, what does that mean?

Basically, it just means that the low and low middle income classes of people find themselves in an absolutely unsustainable position that MUST eventually burst and will come in the form of refinancing/consolidation of debts (many people will not succeed in paying these off anyway) and personal bankruptcy.

The average thirty-year mortgage rate:

https://fred.stlouisfed.org/series/MORTGAGE30US

Remains at or near the highest levels seen in twenty years and have just recently started to come down from that peak. Current interest rates remain higher than those of 2008...and I think we all remember what happened in 2008. We're basically doing the same thing all over again. History repeats.

With that, what'll end up happening with these debt restructures (some of which will fail) and people who just go straight to the bankruptcy route is some of them will also not re-affirm on their home loans. Because of that, they will eventually be foreclosed upon which will crater existing property prices (we can hope) as well as eventually cratering the interest rates on home loans....because very few people will be buying.

In my opinion, the bubble burst won't be quite as bad as The Great Recession (in the housing market) because I think the banks have been slightly more cautious about who they're giving credit to, and also, wages might be high enough by now that, as long as people keep their jobs, they'll be able to keep their homes (via reaffirmation) even if they file bankruptcy on everything else.

In addition to price increases that have kept up with inflation almost dollar for dollar, secured loan interest rates on new vehicles is at, you guessed it, an all-time high by a mile. It's difficult to say, when the bankruptcies eventually happen en masse, how many people will reaffirm on their auto loans. This can also be potentially problematic for lenders as repossessing the vehicles can be something of a pain in the @$$ and they are also an asset that depreciates REALLY QUICKLY!!!

In fact, not only do vehicles depreciate in value quickly, but people not being able to keep up with their auto loan payments is going to result, in varying ways, of a flood of used cars hitting the market. In other words, it should be the case that the prices of both new vehicles (especially if the manufacturers don't slow production) and used vehicles tank. On the other hand, used vehicles might actually hold close to current pricing levels...depending on how bad the upcoming downturn is...because anyone who ABSOLUTELY NEEDS a vehicle, or can actually afford a vehicle with discretionary spend, are more likely to be looking for used cars; interest rates should also be pretty low, by then.

However, if you have a historical high number of repossessions, then all of that is off the table and the price of vehicles is just going to crash, across the board.

Ultimately, I don't agree with Ron Paul on keeping the interest rates low in the face of runaway inflation and the last couple years are the area where I would want the Federal Reserve to take action, which they did.

The reason why I don't agree is because it just kicks the can down the road some more. Spending continues at extremely highly levels, which further ramps up inflation and everything that I just described above (which is inevitable) takes longer to happen. In addition to that, it would actually go much worse for the banking system because...eventually...you're going to see a lot of bankruptcies and defaults from the low and lower-middle classes, perhaps even some in the middle class who are overleveraged...but the banking system will have generated less by way of interest revenues when those people actually could afford to pay. Most households generally try to hold on as long as possible.

In general terms, the Government shouldn't be subsidizing businesses and corporations, period, but especially not when we're faced with a tremendous national debt, continued budget deficits and are paying any interest whatsoever on loans that the Government took, which we are.

The government should be looking for areas where they can make cuts and also be divesting not profitable or revenue-producing assets to private interests in order to pay down the debt faster, but that'll never happen.

In the statement below, Ron refers to inflation, not the inflation rate.

The "rate" can fluctuate as you expertly describe, meaning prices can come down temporarily, even though more currency (debt) is outstanding.

Fiat currency (USD) is debt, meaning if we paid off the deficit, there would be no currency.


Do you agree with Ron's specific statement below?

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"Inflation is the act of money creation by the Federal Reserve."

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Quote: DoubleGold

In the statement below, Ron refers to inflation, not the inflation rate.

The "rate" can fluctuate as you expertly describe, meaning prices can come down temporarily, even though more currency (debt) is outstanding.

Fiat currency (USD) is debt, meaning if we paid off the deficit, there would be no currency.


Do you agree with Ron's specific statement below?

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"Inflation is the act of money creation by the Federal Reserve."

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I agree that's a component of it. Interest rates remaining too low is another component.

Certainly, there has been a drastic increase in U.S. currency in circulation since 2019, and I think we all know why that happened. That's why the rate of increase was so high when you compare 2020 to 2019 and 2021 to 2020. The rate of growth slowed (but there was still growth) between 2022 and 2021 and we should have a bit more currency in circulation after this year, compared to last year.

Anyway, that had to do with the Covid-19 unemployment measures and various stimulus plans that just crapped a bunch of, 'Free Money,' into the market. Again, those in the lower and lower-middle income classes, who saw the most immediate short-term benefit...and I am really emphasizing short-term benefit because they'll pay for it in the long-term, disproportionately, at that, are also the ones who drove the rampant spending. There was also a broader market transition, particularly in the second half of 2020, from services to goods. Naturally, that came about due to a lot of services (which discretionary things that you might attend, such as concerts or games) would also fall under being still restricted, or unavailable altogether, also due to Covid policies.

Again, what I am saying is that the Federal Reserve is simply doing the best it can to manage an environment that...even if you wanted to say they directly caused the environment...they only did it because they had to as...how else are you going to make it rain unemployment and stimulus money everywhere?

Quote: Mission146

I agree that's a component of it. Interest rates remaining too low is another component.

Certainly, there has been a drastic increase in U.S. currency in circulation since 2019, and I think we all know why that happened. That's why the rate of increase was so high when you compare 2020 to 2019 and 2021 to 2020. The rate of growth slowed (but there was still growth) between 2022 and 2021 and we should have a bit more currency in circulation after this year, compared to last year.

Anyway, that had to do with the Covid-19 unemployment measures and various stimulus plans that just crapped a bunch of, 'Free Money,' into the market. Again, those in the lower and lower-middle income classes, who saw the most immediate short-term benefit...and I am really emphasizing short-term benefit because they'll pay for it in the long-term, disproportionately, at that, are also the ones who drove the rampant spending. There was also a broader market transition, particularly in the second half of 2020, from services to goods. Naturally, that came about due to a lot of services (which discretionary things that you might attend, such as concerts or games) would also fall under being still restricted, or unavailable altogether, also due to Covid policies.

Again, what I am saying is that the Federal Reserve is simply doing the best it can to manage an environment that...even if you wanted to say they directly caused the environment...they only did it because they had to as...how else are you going to make it rain unemployment and stimulus money everywhere?

I think Milton Friedman was a Libertarian.

In theory, he believed that if the increase in the supply of money (debt) was equivalent to the GDP, then there would be no inflation.

Paul Volcker followed many of his theories.

It could be, Powell is trying to escape his legacy.


The total increase in the supply (debt) during C19 is about equivalent to the increase of the net worth of the top 1%.

Mission……. I gave an example of a babysitter. I’m not contracting with a business to babysit, I’m HIRING a kid. I’ll let you contact the IRS or Labor Board or whatever and ask if minimum wage rules apply! You for some reason think because I am not a business they don’t apply! Just humor me, where would you possibly get that idea? And by the way, repeating something multiple times AND CAPITALIZING it does not imply it makes any sense. I can’t remember the beginning of this disagreement, but I think it’s because I think minimum wage laws are BAD. BAD. BAD. BAD.

(I must be right because I both repeated and capitalized!)

Quote: SOOPOO

Mission……. I gave an example of a babysitter. I’m not contracting with a business to babysit, I’m HIRING a kid. I’ll let you contact the IRS or Labor Board or whatever and ask if minimum wage rules apply! You for some reason think because I am not a business they don’t apply! Just humor me, where would you possibly get that idea? And by the way, repeating something multiple times AND CAPITALIZING it does not imply it makes any sense. I can’t remember the beginning of this disagreement, but I think it’s because I think minimum wage laws are BAD. BAD. BAD. BAD.

(I must be right because I both repeated and capitalized!)

Because it qualifies as a personal expense. You're not required to report anything.

It seems you have also changed the topic from a pet sitter to a babysitter; there are actually special rules regarding babysitters:

https://www.care.com/hp/do-you-need-to-pay-taxes-for-your-part-time-caregiver

TL:DR---You would have to file on a babysitter exceeding $2,700/annual because they would constitute a household employee.

Even then, at least according to Cornell, such individuals would be excluded from minimum wage laws:

https://www.law.cornell.edu/cfr/text/29/552.104

Quote:

(a) Employees performing babysitting services on a casual basis, as defined in § 552.5 are excluded from the minimum wage and overtime provisions of the Act. The rationale for this exclusion is that such persons are usually not dependent upon the income from rendering such services for their livelihood. Such services are often provided by (1) Teenagers during non-school hours or for a short period after completing high school but prior to entering other employment as a vocation, or (2) older persons whose main source of livelihood is from other means.

They do go on to say:

Quote:

(d) Individuals who engage in babysitting as a full-time occupation are not employed on a “casual basis.”

Of course, provided they're under that $2,700/annual, from above, they are not YOUR household employee.

Like I said, your original example was that of a dog sitter. They aren't your employee, so minimum wage doesn't apply. You don't have to file any paperwork on what you pay them (below a certain number, likely $2,700/year), and even if you did have to report their income, you still wouldn't have to meet Federal Minimum Wage requirements on them.

Here's also the IRS:

https://www.irs.gov/taxtopics/tc756

Apparently, you don't have to pay taxes (as an employer) if they are under $2,600 for the year (this can change from year to year, evidently); below that, and it constitutes a personal expense as they are not considered a household employee. It also never requires you to withhold Federal Income Tax (just FICA type taxes). Individuals under 18 never apply unless it is their primary source of income.

Beyond that, even if you did pay a dog sitter $5,000 over the course of a tax year, I don't know why either of you would want to file on that or why you'd expect the IRS to ever find out about it if you didn't, especially if you paid them cash.

In any case, you're not required to pay them minimum wage. Even if you paid them enough to have to pay certain payroll taxes on them (link above) you still wouldn't necessarily have to pay minimum wage for sitting services.

seems to me most of the concern is that it can get out of hand, nobody cares if you don't pay a babysitter much, but don't employ them full time and not follow the law.

Newspapers [back when people read them] used to get hold of stories where a crackdown on lemonade stands that weren't collecting sales taxes took place. The reporters would love to spin the story as something like "little kids' lemonade stand shut down by heartless city officials" . Turns out, almost always, the "kids'" stand was starting to make a lot of money and really being run by adults.