?

Log in

No account? Create an account

Money as Debt

« previous entry | next entry »
Nov. 12th, 2007 | 01:36 pm
mood: complacentcomplacent

This seems to bring together a lot of things I knew individually to be true about money, but hadn't really considered all together:
http://video.google.com/videoplay?docid=-9050474362583451279

I'd be interested in hearing any comments. The simplest things seem to inspire controversy -- people get labeled as crackpots even when they're just referring people to primary sources, definitions, and written laws. There's too much la la la I can't hear you in the world.

Link | Leave a comment |

Comments {26}

Chef Monkey

(no subject)

from: chefmonkey
date: Nov. 13th, 2007 05:16 am (UTC)
Link

La, la, la, la, la! I can't hear you!

I went to a previous employer with a graph showing how their three-year salary freeze represented a decrease in purchasing power because of CPI, and asked why I was getting the equivalent of a 3% pay cut each year while average real income across the US was increasing (even after adjusting for CPI). They didn't have a good answer. I was rather blunt with my evaluation about what this would do to employee retention, including my own. I left four months later. (It was actually quite satisfying -- they really wanted me to stay, to the point that the CEO and the VP of Engineering flew down the morning after I turned in my resignation to try to talk me out of it. They wouldn't take the step of taking real steps to fix the salary-versus-inflation situation, so I had to leave).

Anyone who has held on to a job through 20 years of less-than-inflation raises just wasn't paying attention. If (and that's an important "if") they wanted to use purchasing power as their meterstick for success, then they weren't moving up in the world because they couldn't be assed to pay attention (or failed to take meaningful action, which would be even worse). All of this assumes that the money involved is important to said individual, of course -- there are always other potential factors that are far more important than what a job pays.

Anyway, calling the effects of inflation a "myth" puts the air of conspiracy around it. There's no myth to it -- it's just solid, basic macroeconomics. Slight inflation stimulates an economy because of the effect it has on credit. Deflation stifles an economy because debt becomes increasingly onerous. The few deflationary periods we've had have borne this out. As long as consumers don't go batshit crazy with credit, it all actually works pretty well.

Oops.

Reply | Parent | Thread

Triple Entendre

(no subject)

from: triple_entendre
date: Nov. 13th, 2007 06:55 pm (UTC)
Link

I'm getting some hints from here and there that entities which have the power or responsibility for making sure 'consumers don't go batshit crazy with credit' are entities which also profit from not doing so in the short term.

re your anecdote: so did they spend significantly more money on efforts to convince you to stay than it would have cost them to just pay you more? Seems like the smart money would have been to give you a double+ raise iff you signed an agreement to stop talking about it to anyone.

Reply | Parent | Thread

Triple Entendre

(no subject)

from: triple_entendre
date: Nov. 29th, 2007 10:43 am (UTC)
Link

...and I read a piece in last Sunday's NYT going into some depth on this. A consumer using too much of the credit they have access to is one thing. Intentionally selling someone a loan that they can't afford by any reasonable standard is another. Designing the terms of the loan so that it is viable for a short while, but then rapidly exceeds what they can afford is, at the very least, cynical. Tailoring the loan agreement and its presentation to conceal this situation is clearly wrong. Aggregating and reshuffling these "designed to fail" loans and selling them to a third party as if they were actually sensible financial instruments is large-scale fraud.

I'm pretty sure there are simple ways to regulate the blatant foolishness without impeding the overall markets.

Reply | Parent | Thread

Triple Entendre

(no subject)

from: triple_entendre
date: Nov. 14th, 2007 02:05 am (UTC)
Link

Anyone who has held on to a job through 20 years of less-than-inflation raises just wasn't paying attention. If (and that's an important "if") they wanted to use purchasing power as their meterstick for success, then they weren't moving up in the world because they couldn't be assed to pay attention (or failed to take meaningful action, which would be even worse). All of this assumes that the money involved is important to said individual, of course -- there are always other potential factors that are far more important than what a job pays.

I'll take the generous approach and postulate that the money involved per se is not important to them. A "job" is more of a social position -- a class issue fraught with social contracts. Or it's whatever you have to do to meet expenses, and most people stop there. There's limited room within that frame to better one's financial position, but it doesn't lead to the kind of "paying attention" you're referring to.

Who would be these mythical people who are paying attention, and what are they doing, then?

I quit working for a year or two, reduced my expenses to near zero, and made up the difference with my meagre savings. My quality of life felt about the same.

Now I'm back to doing consulting gigs, at least part-time, and still not doing much spending at all until very recently. (A possible side effect of having a steady girlfriend.)

Reply | Parent | Thread

Triple Entendre

(no subject)

from: triple_entendre
date: Nov. 29th, 2007 10:52 am (UTC)
Link

I've had it happen on at least two, maybe more, occasions that an employer declined to hire me at a salary that was above "market rate" for the class of position the job responsibilities represented, despite my value to the company being demonstrably worth many multiples of that salary.

I guess that's why people start their own businesses, eh?

and to be fair, maybe the overall problem there is complexity, not economics.

Reply | Parent | Thread