Soros: ECB QE means inequality and asset bubbles

How many people are trapped long A/U, E/U, G/U from trying to catch a falling knife? We'll find out on Sunday evening if we get gaps down.

"Soros: ECB QE means inequality and asset bubbles" -


So, under the disguise of "helping" the economy, the rich will get richer and the poor will get more poor,.....and the middle class will disappear!

The problem is not the lack of money. This sort of "QE" is just a carnival juggling act that is more like the "...Danish boy running out of fingers to plug into the holes in the dam.." Except that with this juggling act, the inevitable outcome is forestalled while the rich get richer and everyone else is fooled.

The only solution, whether in the euro zone or anywhere else, is to make better use of the money/wealth that does exist. We know that the 1% super-rich will by next year own 96% of the world's wealth. They already control 99% of it! This cannot be allowed to continue.

There is not the lack of money. There is the inequitable ownership of it, by greedy hoarders (many being corrupt),....money that could be repatriated to countries and then infused back into their economies, to benefit the majority, not just the minority.

There is no other way! More taxation of the super-rich, and creative new taxes on all of their wealth - no matter in what form or what location - needs to be implemented.

The current "decision makers" are part of the super-rich. This is a direct conflict of interest.

May God in His Grace help resolve this evil.

What Taxing the Rich Does to the Budget

Myth 1: Raising taxes on the rich will close budget deficits.

Truth: Increasing the progressivity of the income tax code by raising the top two rates will not close the deficit. In fact, it will lead to more revenue volatility, which will lead to larger future deficits.

A progressive income tax system collects increasing amounts of revenue during periods of economic growth and decreasing revenue during downturns. It does so mostly because of the volatility of high earners' incomes. During periods of economic growth, their incomes rise sharply and they pay increasingly higher taxes. But because much of high earners' income stems from volatile sources, such as capital gains, dividends, business income, and bonuses, their incomes fall just as sharply during economic downturns as they rose during good economic times and they have less income to be taxed.

Unless Congress suddenly develops spending restraint, increasing the progressivity of the tax code will only amplify the volatility of revenue fluctuations and increase future deficits. When revenue increases, mostly from high earners, during periods of economic growth, spending would increase because Congress cannot resist spending additional money. But, as history shows, when economic growth slows and revenues fall, Congress does not cut back on its spending largesse. Larger deficits would occur because the gap between spending and revenue would grow compared to previous recessionary periods.

Even if Congress ignores the long-term implications of more volatility and decides to close the deficits by raising taxes instead of borrowing as it is doing currently, it still cannot do it just by taxing more of high earners' income. Congress would have to decide to raise top rates to levels most Americans would consider confiscatory. In 2006, the latest year of available data, there was $2.2 trillion of taxable income for taxpayers earning more than $200,000. Assuming the amount of income at that level is similar this year, Congress would need to tax 80 percent of that income in order to close the projected $1.8 trillion deficit. Tax rates at such levels would significantly decrease economic activity and taxpayers would likely avoid or evade paying them so the revenue gains would likely never materialize.

Who Pays the Largest Chunk of Taxes?

Myth 2: The rich do not pay their fair share.

Truth: The top 20 percent of income earners pay almost all federal taxes.

The top 20 percent of all income earners pay a substantial majority of all federal taxes. According to the Congressional Budget Office (CBO), in 2006, the latest year of available data, the top 20 percent of income earners paid almost 70 percent of all federal taxes. This share was 4 percent higher than in 2000, before the 2001 and 2003 tax cuts.

When only looking at income taxes, the share of the top 20 percent increases even further. In 2006, the top 20 percent paid 86.3 percent of all income taxes. This was an increase of 6 percent from 2000.

Myth 3: The income tax code favors the rich and well-connected.

Truth: The bottom 50 percent of income earners pay almost no income taxes and the poor and middle-income earners benefit greatly from the tax code.

This widely propagated myth has found its way to the White House Web site's tax page: "For too long, the U.S. tax code has benefited the wealthy and well-connected at the expense of the vast majority of Americans."

As shown in myth number 2, the top 20 percent pay almost 70 percent of all federal taxes and over 86 percent of all income taxes. It is hard to see how the rich benefit from a tax code they pay almost exclusively.

The bottom 40 percent of all income earners benefit greatly from the income tax code. In fact, they actually pay negative income tax rates because refundable credits, such as the Child Tax Credit and the Earned Income Tax Credit (EITC), wipe out their tax liability and pay out more money to them than they ever paid in.

Because of refundable credits, a family of four in the bottom 20 percent of income earners paid an effective income tax rate of -6.6 percent in 2006. As a result, such a family received $1,300 through the tax code. A family of four in the second-lowest 20 percent of income earners paid an effective tax rate of -0.8 percent and received $408 of income through the tax code.

The stimulus bill created a new refundable credit and expanded three others. This will further reduce the income tax burden of low-income earners, to the extent they can pay less, and increase the income they receive through the tax code.

The income tax burden of low-income earners has trended down for years. In 2006, the bottom 50 percent of all income tax filers paid only 2.99 percent of all income taxes. This was down 57 percent from 1980 levels, when the bottom 50 percent paid 7 percent.

Altogether, historical trends and the recent tax policies in the stimulus likely mean that when the data for recent years is released, the bottom 50 percent of all taxpayers will have paid no income taxes whatsoever.

Myth 4: It is all right to raise tax rates on the rich-- they can afford it.

Truth: Just because someone can afford to pay higher taxes does not mean he should be forced to do so.

The faulty principle of "ability to pay" holds that those who earn more should pay proportionally more taxes because they can afford to do so. Such thinking can be a slippery slope because, technically, virtually anyone can afford to pay more taxes. The ability-to-pay principle has no grounding in economics, as it relies on a completely subjective judgment of fairness.

The tax code should collect revenue in the least economically damaging way possible. Raising rates on the rich damages economic growth because it reduces the incentives to work, save, invest, and accept economic risk--the ingredients necessary for economic growth.

Raising taxes on the rich hurts workers at all income levels--especially low- and middle-income earners. The rich are the most likely to invest. Their investment allows new businesses to get off the ground or existing businesses to expand. This creates new jobs and raises wages for Americans at all income levels. Taxing more of their income transfers money to Congress that they could otherwise have invested. This means the economy forgoes new jobs and higher wages that the investment would have created for less effective government spending.

There is a tax code that can collect more from the high earners than from the lower earners without being a barrier to economic growth: Under a flat tax, a taxpayer who earns 100 percent more than another taxpayer pays 100 percent more taxes, but faces no disincentive to earn more since he will pay the same rate on every additional dollar earned.

The Economic Impact of Higher Tax Rates

Myth 5: Higher tax rates in the 1990s did not hurt economic growth, so it is all right to raise them to those levels again.

Truth: High tax rates in the 1990s were a contributing factor to the 2001 recession and returning to those rates will damage the already severely weakened economy.

The economy boomed during the 1990s for a number of reasons. One key factor was an advance in information technology. Computers, cell phones, the Internet, and other technological advances made businesses more efficient. This increased profits and wages and created numerous new jobs.

The 1997 tax cut that lowered tax rates on dividends and capital gains from 28 to 20 percent was also a major factor helping fuel the economic growth of this period. It strengthened the already strong gains from the technology boom. The impressive growth of the S&P 500 index after its passage is testimony to that fact. In the year before the tax cut, the S&P 500 index increased by 22 percent. In the following year, it increased by more than 40 percent.

The economic benefits of the technological advances and lower taxes on investment were strong enough to overcome the negative impact of the higher income tax rates and the economy exhibited impressive growth--initially. Even though the economy overcame high income tax rates temporarily, it was not strong enough to resist their negative pull forever:

A contributing factor to the 2001 recession was the oppressively high levels of federal tax extracted from the economy. In the 40 years prior to 2000, federal tax receipts averaged about 18.2 percent of gross domestic product (GDP). In 1998 and 1999, the tax share stood at 20.0 percent, and in 2000, it shot up to tie the previous record of 20.9 percent set in 1944.

Taxes were high because the top income tax rates were 39.6 percent and 36 percent--the same rates President Obama and Congress now target.

The economy is in a much more precarious position now than it was in the 1990s. In June 2009 alone the economy lost 467,000 jobs. With no new innovations like those that created economic growth in the 1990s on the horizon to jump-start growth today, the economy simply cannot afford tax policies that will destroy more jobs and make it more difficult for the economy to recover.

Myth 6: The 2001 and 2003 tax cuts did not generate strong economic growth.

Truth: The tax cuts generated strong economic growth.

The 2001 and 2003 tax cuts generated strong economic growth. The 2003 cuts, however, were more effective at creating economic growth because Congress designed them expressly for that purpose. They worked better because they increased the incentives to generate new income by accelerating the phase-in of the 2001 reduction in marginal income tax rates, and by reducing rates on capital gains and dividends, lowering the cost of capital which is critical for economic recovery and growth.

Lower income tax rates generally promote growth, but since the 2001 cuts were phased in over several years, they did not kick in quickly enough to change the behavior of workers, businesses, and investors to help boost the ailing economy, so growth remained sluggish. The 2001 cuts also increased the Child Tax Credit from $500 to $1,000 a child. Although a large tax cut from a revenue perspective, the increase in the Child Tax Credit did nothing to increase growth-promoting incentives. Recognizing that the slow phase-in of rate reductions was not generating economic growth, Congress accelerated the rate reductions to increase the incentives to work, save, and invest during the 2003 cuts.

The 2003 tax cuts also lowered rates on capital gains and dividends, generating strong growth by decreasing the cost of capital, which caused investment to increase. More investment meant that more money was available for start-up capital for new businesses and for existing businesses to expand operations and add new jobs. The rate cuts on capital gains and dividends also unlocked capital trapped in investments that paid lower returns than otherwise could have been earned if the tax did not exist. This generated economic growth by allowing capital to flow freely to its most efficient use.

The increased incentives to save and invest, coupled with an acceleration of the cuts on marginal income tax rates, were a major reason economic growth picked up steam almost immediately after the 2003 tax cuts:

The passage of [the 2003 tax cuts] started a different story. In the first quarter of that year, real GDP grew at a pedestrian 1.2 percent. In the second quarter, during which [the 2003 cuts were] signed into law, economic growth jumped to 3.5 percent, the fastest growth since the previous decade. In the third quarter, the rate of growth jumped again to an astounding 7.5 percent.

Unfortunately, President Obama and Congress plan to increase the income tax rates and taxes on capital gains and dividends. This would reverse the beneficial effects of the 2001 and 2003 cuts and further slow economic growth during this severe recession.

Myth 7: Raising the top two income tax rates will not negatively impact small businesses because only 2 percent of them pay rates at that level.

Truth: Raising the top two income tax rates will negatively impact almost three-fourths of all economic activity created by small businesses.

Small businesses are a vital component of the economy. They create jobs for millions of Americans and are a major factor driving economic growth.

Evaluating tax policy on the number of small businesses that pay the top two rates is not the proper way to determine the impact of raising those rates. What is important is how much small-business income is subject to the top two rates. This measures the extent to which the top two rates affect the economic activity that small businesses create.

Using this more accurate metric, it is clear that the top two rates have an enormous impact on small businesses. According to the Treasury Department, 72 percent of small business income is subject to those rates.

The amount of small business income subject to the top two rates is high in relation to the number of businesses that pay the rates because these businesses are the most successful. As a result they employ the most people and generate the most economic activity.

Raising rates on these successful businesses would damage the economy at any time, but doing so now will only cost more people their jobs. Highly successful small businesses faced with higher tax rates will cut back on plans to expand, hire fewer workers, and lower wages for current workers at a time when the economy desperately needs them to expand and create more jobs.

Higher rates also discourage would-be entrepreneurs from entering the market.[19] This will negatively affect long-term economic growth because businesses that otherwise would have been created and added jobs to the economy will never get off the starting blocks.

Conclusion

The many arguments used by proponents of higher taxes ignore basic economic facts and distort the positive benefits of the 2001 and 2003 tax cuts.

The truth is that the 2001 and 2003 tax cuts were a major factor behind robust economic growth between 2003 and 2007. Undoing those tax cuts now for any taxpayers would inflict unnecessary damage to a struggling economy and needlessly cost many more Americans their jobs.

Adding additional higher surtaxes on high earners to fund a government takeover of the health care system would only do more damage to the economy and lead to more lost jobs and lower economic growth.

Instead of imposing these economy-injuring tax hikes, Congress should close budget deficits and spur economic growth by:

Anyone who can read and understand that, already knows it, and anyone that can not, will not believe it.

I agree

Soros hits the point, which is of course obvious from US money printing craze...
Structural reforms are the only way - QE makes it more difficult and pricier to later implemented those structural reforms.
For example, those reforms should bring here in US the true capitalism back, instead of the crony capitalism which has become rampent in the last 15 years.....


@PA King - Wrong thread for your point, I would say. However, if you think that RBA will reduce rates, now that CAD did it, I would say that is a wrong assumption (that did however brought down AUD and NZD to mutli-year lows). Reducing rates would bring the housing prices in the big AUS cities to even higher levels of the already high ones. Also, even with the huge oil prices drop Diary products picked up inflation there.
Finally, FED will not raise rates before mid of the year (if even then), though it will be interesting to see how they word their statement to prevent dollar loses on Wednesday.

What Taxing the Rich Does to the Budget

Myth 1: Raising taxes on the rich will close budget deficits.

Truth: Increasing the progressivity of the income tax code by raising the top two rates will not close the deficit. In fact, it will lead to more revenue volatility, which will lead to larger future deficits.

Way to go Forextrapain, it is about time someone laid out the real facts about taxes and the rich. I am on here everyday and it constantly amazes me how many bitter comments there are about the rich, especially on a forex trading site, one of the most capitalistic ways to make a living that there is.

Yeah, I have raised the same question. If someone is trading Forex for any other reason than to gain wealth, what would that be? If they are just playing it as a game, why not play Facebook games, or Playstation? It would be just as exciting, without the risk of capital.

I agree, good comment, although I guess some people trade as more of a hobby. Not me though I am trading to change my life and my families life. I fully intend to be one of those rich bastards that some people dislike so much. The bottom line is if you don't like your position in life - change it.

I only see it from traderathome. Every chance he gets he spouts some ridiculous nonsense. Forextrapain is almost as bad.

Its because people don't have any system to trade...they see the price going down, so they keep clicking longs and hope eventually all the longs will pay off. Thats not trading...in trading, if you are opening a long, you know why you open it, you know what your target it and most importantly, you know where your system fails and where to close the trade. Trading without StopLoss, you can just upload the money to the broker and leave it there.

This comment makes no sense. Maybe you should go back and read my comments. I have never said anything negative about rich people, or if you feel that the facts are inaccurate, please fill us in on why.

without reading the above lengthy theses, Soros founded the "open society institute". read all about it.

You say that middle class will disappear. It already has.

Correct solution for all these problems with economy all over the world is a simple solution - Increase minimum wage by 50%. It can bring 2% inflation that everyone is crying about. Government revenues also will increase because poor can not escape paying all the due taxes and rich one do not want to pay more taxes anyway.

I was in Walmart today and I could not walk thru the store. Why? Decrease in everyone's gas bill has put extra bucks in poor people's pockets which they are spending because they have to. They need so many things for their family that now they able to buy some of that. If you give 50 million to a guy who already has 999 millions, what is he going to spend on. He already got much more than he can use.

If you increase min. wage by 50% from one to another, 90% of all businesses would fire everyone on minimum wage and get illegal workers who would work for even less. Or they would simply go bankrupt. What the government should do is to stop bothering businesses with stupid rules and restrictions, it should only watch the fairness of the game, but not interract.

That is the argument rich people use to fight increase in min. wage. How about using all these bailout money to give subsidy on a sliding scale to the small businesses. Rich people should not forget that they need workers who can support their families and afford to give their children education etc.

Euro trying for parity,I like that but there's no way that in the state of affairs those guys are in across the pond that parity is even close to being fair value.Looking for 10% below that now,maybe even less than that.USD is King Dollar,stay short for the year.The Republicans control both Houses,tax reform and tax cuts,deficit reductions and infrastructure,you name it,in my opinion these guys could really open up the economy because the world is depending on them to do it now.

I wouldn't say they would high illegals, if they are smart, and may even not fire their minimum wage workers, but the cost of doing business would go up, and adjustments would have to be made. It is a fact that most retailers, for example, work on a 20% - 30% profit margin. Now, with such a small profit margin, and the overhead of running a business, something would have to give, especially if working in margins where time is critical. For instance, grocery store chains have produce, bread, and dairy products, just to name a few, that they have to deliver by a certain date or it becomes a negative right off. To compete, they also have to keep prices as low as they can to remain viable in the market. If the government comes along and demands that the chain raises it's employee's pay, then someone has to pay for this increase, those being the customers. The profit margins are already low enough that a hit on increased payroll could send some companies into rocky territory. If cuts and price hikes can not be made to offset the new accounts payable, then the company may have to go under, thus all those employees that were so happy about their new pay raise, now find themselves unemployed. Now there are those that would say that the CEO was greedy for closing his business, but when the bullet hits the bone, no company is in business to provide jobs, they are strictly there to make a profit. To do it for any other reason defies any source of logic. When those profits are dwindled, so are the jobs. That is why I tell all my employees that if they want a raise, it's a simple procedure, no matter what position they have, or which company they work for, just present to your supervisor why you feel you deserve a raise, and how your daily actions benefit the bottom line. If they can accomplish this, the raise is highly considered, but on a yearly basis, most minimum wage workers are more likely to get fired for being nonproductive or incompetent than to ever receive a raise. From experience, most minimum wage employees are in their positions because they could care less about bettering themselves. The few that do usually strive, and succeed, to move up in the company to better positions. Pushing buttons on a cash register is not a skill, it is a task, but a buyer or manager, that has daily responsibilities to keep operations running, and profitable, should be rewarded more for their performance, as their actions make or break a company. Then there is the CEO, CFO, accountants, and marketing personnel. The skills they all have acquired, and their benefits to the company can be very hard to manage. For example, an excellent accountant can save or make a company millions, sometimes just in one year. He is a valued employee. The problem is keeping him. Accountants and CEOs are very hard to keep because there is so much demand for good ones, that sometimes a company will put themselves close to harm's way to keep them. So, anyone really thinking it's a good idea to "give" more to the lowest on the chain of production, doesn't understand how a business operates, and could be facing a rude awakening if they get their way. For those screaming for higher minimum wages, be careful what you ask for, because you may get it, though it may only be for one day short of unemployment. Quit worrying about the minimum one can make, and start trying to achieve the max. If any excuse follows that effort, then it may not be anyone else who is to blame, just the person in the mirror. If the government has to demand standards be raised to meet ones expectations of success, then maybe ones standards for success were too low to begin with.

Instead of fighting for higher minimum wages, why isn't that effort put to raising personal initiative to excel past a minimum wage job? Minimum wage jobs were never designed to be a career, just a chance to build a work history and reputation to add with further education for the future.

Most businesses are owned by the middle class, well, at least thats how it should be in a healthy economy. Thats what the US was 20-30 years ago, now you need to start a business elsewhere, sadly. But you don't need to be rich to start a business...so the rich have nothing to do with it. Try running a business and then imagine that from one day to another your costs go up 20% out of nothing, just because some government official wanted to show some activity.

HAHA. You are 100% correct. My first business venture was two KFC restaurants. Each made an average of $5000 a week gross profit. After payroll, supplies, utilities, etc, I prayed that there were no issues with the fryers, bathrooms, or anything that would slam me into a bad week. Once, lightning struck the drive thru sign, and I literally got sick to my stomach when I got the bill. LOL. I hadn't been in business but two months, and most of my personal capital was tied up in the purchase of the businesses. To get someone, on the spot, in the middle of the night, to come out and fix something as simple as an illuminated sign with a speaker box, is almost as bad to a poor schmuck owner as a root canal. Add in a few events of vandalism cleanup, employee theft, credit card fraud from customers, and the list goes on, and you would swear that a dog catcher has a pie in the sky job.

I understand that, I have been running businesses my whole life, in several countries and people with a 8/5 job will never understand how it is. For them every business owner is a millionaire who doesn't do anything all day, just driving around in his Lambo and stressing his employees for fun. But there are so many things to watch and worry about, its a 24/7 job, you don't get to rest even when you sleep. Seriously, I wish they would want to switch roles sometimes.

And thats why I hate bureaucracy, when the government wants to be too involved with too many bullshit rules and restrictions. It feels like they want to get everyone to close their businesses except the few big corporations, because the middle class business owners are dying out quick.

Yeah, but it's not just the little guys anymore. Look at the profit losses McDonalds has taken. Remember Circuit City, Sam Solomon, Hostess (before reopening by non union owners), and the list goes on and on. Everyone likes to beat up on WalMart, but what they fail to realize is that you can't have that many full time employees, low prices, and government mandated healthcare. It just doesn't work. So, instead of raising more than the minimum amount of prices they had to, they cut back to mostly part time workers, and who can blame them? If they had kept everyone on full time, with the outrageous government healthcare, which is terrible for a business owner, (I now have 100 more part time workers than two years ago), and instead past the added costs on to the customer, these same ones crying now, would be crying more when they realize how much their prices were raised. We have two local companies, within a 5 mile radius of my home, that have gone out of business because the workers went on strike to stay on full time, so they could keep their healthcare, yet when the owner gave in, the customers went away because of the price hike on products. SMH. So, no one won except the Democrats who want total cradle to grave dependency on the government.

I am happy to see a healthy discussion going. All I want to say is that somehow if all these trillions that went to bail out wall street and other speculative businesses where they produce nothing, went to help working class people including small business owners, middle class in US will come back roaring. America became so powerful and rich in past, only because of a very healthy middle class. Even richest people benefit from a strong middle class. It is only saddening to see that middle class is disappearing very fast. I am a first generation immigrant myself and when I came here in 1967, I saw that average American was able to get a new car every 3 years. I do not see that any more. It simply means that living standard is going down every day no matter what metrics you use. Something has to be done to reverse that.

How about increasing minimum wage by 10% every year for next 5 years?

Great words. Thanks.

The best thing that could ever happen to minimum wage is to outlaw it. Let the market decide. If a person feels they are worth $2 an hour picking fruit, then so be it. If someone is trying to hire for $2 an hour, and can't find workers, they will either up the wage, or do the job themselves. Why do we need a government to hold the hands of people who are only looking for a minimum wage job? If a person is over the age of 18, and looking for a minimum wage job, there is more to fix in that equation than the wage they are paid. Somewhere in their past someone failed to teach them how life works, or they listened but didn't feel it important to try to accomplish more out of life. Where in God's green earth is there any minimum wage position that is worth over $10 an hour? Cashier at McDonalds? Car washer at the Bubble Stop? Floor sweep at the grocery store? These are jobs intended for kids, while in high school, to gain a sense of responsibility, and extra cash. Anyone thinking that a minimum wage job should pay better has no sense of what's wrong with the picture. There are no rocket scientists making minimum wage, and there will never enough money made by a minimum wage job to support a family. It's not supposed to be. Every time the minimum wage is raised, then those above minimum wage lose income from their paychecks in the form of artificial inflation, meaning that the same things you bought before the raise, now cost more. Arguments can be made, but that is a fact of business. No business can afford to take a financial hit without passing the cost on to the consumer. That is why major department stores hire stop loss associates. Simple shoplifting and theft cost millions in the US every year, and the people who pay for it is the honest customer. No company opens up for pride and charity, but to make a profit. Even GoodWill knows this. Catering to the lowest denominator does nothing to advance the workforce. It just rewards unmotivated and low skilled workers to do the same, or less for more. If you want to close the gap between the rich and the poor, close the gap between the lazy, whining, complainers, that feels that they are owed, and the ones that get up everyday with a mission and purpose to better themselves. As long as there is government handouts and government mandated wages, there will be those that never aspire to be anything meaningful in this world, other than to moan and complain about the rich. Give a man a fish, feed him for a day. Get him hooked on minimum wage jobs, welfare and food stamps, feed him for life.

I like your idea. So how about minimum with an addition of age bracket? i.e. for example: up to 30 years old: min wage of $10/hour. above 50 years old : min wage of $10/hour. 30-50 years old : min wage $15/ hour.

Agree on Artificial inflation. Disagree on Lost income. How do you explain the rich gets richer, the poor get poorer? So, the above minimum wage get raised more, that's the fact. That's why raising min wage will not get the poor richer, instead they get poorer. The same logic goes for oil and gas prices hike.

Inflation, real or artificial, always get the poor become poorer, and the rich richer. Because the rich always get more benefit from inflation. That's the fact. The myth of the poor gets benefit from inflation is debunked.

That means you will get more poor people because of inflation. Also businesses don't like uncertainties. Uncertainties mean businesses have to save to offset its effect.

I will try to address both of your concerns at once. First, a 30 - 50 year old looking to make minimum wage has bigger problems in life than wages. Either through poor decisions, or failing to get an education, or learn a trade, something went terribly wrong, and it's not any companies responsibility to be concerned with his historic failures. That is the bottom line. The main concern of any business owner or management is productivity and profits. That is how a business works, point blank. Minimum wage does nothing to promote a healthy economy. Nothing. Like I asked before, what minimum wage job offers any service that should be required to pay over $10 an hour? None. Take an average McDonalds restaurant. At any given time, there are no less than a dozen employees in the average store. Let's just say each one makes $15 an hour. $15 X 12 employees = $180 per hour, just for those employees payroll. How many burgers, fries, and apple pies would you have to sell to justify that much overhead? Now, throw in some other necessities like insurance, utilities, maintenance, supplies, products, advertising, etc. It all adds up, which is why McDonalds, and many other companies are struggling with profit losses at the moment. Now, throw in a mandated government healthcare program which cost more than double what the private insurance was costing, and now more profit is loss. What do you do? Cut staff? Raise prices? Something has to give somewhere, and this is only the tip of the iceberg of owning and running a small business. Let me put it this way. I own a couple of trucking companies. One was based in Newark, NJ. It's only mission is to deliver US Mail on daily runs to Buffalo, NY, Washington, DC, and Ontario, Canada. There were a few local runs, but you get the drift. Now, last year, I hired two new drivers who were looking for work after their employer went under. About 2 months after they were hired, it came to my attention that my drivers were seeking advice, and a vote, from a local union to come in and negotiate contracts for my drivers. This was to take place on a Tuesday. My accountant strongly warned me of the negative forces that could be used by a union, and that the company, because of freight rates, fuel prices, and benefits, was already working on a thin profit margin. So, on Monday morning, I sent out Qualcamm messages to all my drivers informing them that a yes vote for the union could be bad for not only the company's interest, but of their own. Tuesday came, and the union rep informed me, the man who owned the company, bought and paid for it's creation, that they would share with me the demands of the union. Two weeks later, that list arrived. After going over it, meeting with the rep, and my drivers, and upon seeing that there was no room for wiggle, the decision was made. All of my rolling assets were moved to a southern based trucking company of mine, all other assets were liquidated, and the doors were closed behind the last employee to leave. This was not a decision I took easily, as I had a great operation with some very dependable employees, but for a business to run in the red, from outside demands, is not a good professional practice or smart personal choice. There was just no room for that kind of action. This is a real life scenario that I had to endure because of the greed of a few to start the ball rolling to demand more than what could be afforded. When people speak of evil rich CEOs what they don't realize is that that is not the rule, but the exception. I had drivers that made more in their two week paycheck, than I took home. So, when someone demands that more should be given, one must be sure there is more to give, or all may be lost.

As for your second comment, again I state that minimum wage jobs are not intended, nor were they ever, to lead to riches. Anyone thinking that working a minimum wage job while trying to raise a family is an acceptable or smart practice, is very much mistaken, and should have thought about that first. The poor can't get rich by demanding more, but by producing more. Example. If I go to a farmer, and this farmer offers me $60 a day to pick 10 bushels of peanuts, and I do it, then that is the minimum requirement to get paid, and I should never have the nerve to ask for a raise. However, if I go to work each day, give no trouble, and pick 14 bushels a day, then I would hope that my efforts would be rewarded when I ask for that raise. If not, then maybe my services aren't appreciated, and I need to search elsewhere for some place they will be. To make the minimum only requires doing the minimum, and that is the problem with minimum wage jobs, they are just minimum, there is nothing lower. If you are offered a job to flip 1500 hamburgers a day for $8 an hour, and you agree to this job, you only have two options. Try to advance your education inside or outside of the company to get promoted, or leave for a better job. That's it. Nothing more. Now, what the minimum wage crowd is saying is, yes, we agreed to work for this wage, and do the minimum to get it, however, now we want more than was agreed, and instead of us going out and doing better for ourselves, we'll just demand that you do better by us, but we offer nothing more to the deal. We want $15 an hour for the same 1500 burgers flipped. More money, with no more effort given to the employer. Frankly, anyone pull that crap with me, well, they would be looking for a new job, as would be the case with any smart business owner. But see, that is how the government works. They feel that if something feels good, and gets votes, then it is a want. After a while, when the employers don't knuckle under, then it becomes a right, meaning the government now feels you owe those whining minimum workers more. When that fails to produce, then it becomes law. You must now pay all these people more money for the same amount of work, or be penalized. Well, that's how it works, and some will get the new minimum wage, where others will lose there job. A 24 hour service station may not be able to afford to pay for three 8 hour shifts anymore, so 33% of his employees are laid off, and the store is now open for 16 hours a day. All the employees got the new raise, but only 66% will get to keep and benefit from it. There is only one way for the poor to become rich, and that is either through hard work and determination, or "build a better mouse trap". The more you offer society, the more they offer you, but it doesn't come from being lazy or playing the whoa is me, I'm poor, card. It comes from hard work and innovation. If the government demands higher wages for workers, but has no way to offset the demands with tangible currency, then those demands could be wrought with doom for not only the employees of a small, and some large, companies, but for the owners, vendors, distributors, etc. The fact is personal responsibility trumps all else in life. If one is aware of his/her situation, and doesn't care to better it on their own, then who has the right to demand they be taken care of by others? There are no slaves in America. Those that want to work, take jobs, and those that don't , sit back and cry foul, but the bottom line is no one forces anyone to take a minimum wage job, and when the job is taken, it should only be a temporary situation until the next move up is made. Everyone has the right to life, liberty, and the PURSUIT of happiness, yet the government forgets that word PURSUIT, except when it is in pursuit of the "rich" CEOs to force them to do more for the "middle class". No one in their right mind associates "middle class" with minimum wage jobs. Only a moron would do that.

I wish. As the owner of two small airline companies, and four trucking companies, just to mention my transportation interests, I strongly disagree. If you would like to see what inflation does to the transportation industry, go to a local truck stop and ask random drivers how many of their buddies were laid of in the last 7 years because of high fuel prices causing business cutbacks or closures. The results may be shocking.

I wish there were a like button. Thanks for taking the time to write it and to educate us about running a business. And my sympathy for your lost. Well, your experience is different from mine. My apology, to make such a silly statement in my last comment. I should say it is from my experience that the rich gets more from inflation. And you have given your reason to refute my wrong statement. I appreciate it.

Now, as to why I say from my experience the rich gets more from inflation, I will give the reason below. What I experience is quite different from yours. The business model is different so the result should be different. Instead of a service company, it's about distribution companies.

Big businesses have more information than small businesses. That alone is an advantage. If there is minimum wage or oil/gas hikes, our Government will announce about it. But big businesses already have the information that is hidden from public. So, along with the hikes, Big businesses already project their sales what sale price of their products will be on some day after the hikes. They pass this information to distributors, and offer them to stock up their products before the sale price hike. So, the distributors can make some profit from inflation. The more the distributors stock up, the more they gain and in turn the big businesses gain more. I hope you understand it from my brief description.

So, I think we cannot compare an apple with an orange. So sorry to lead to some wrong conclusion.

Well, I have no problem with millionaires. I live in a city with a high percentage of millionaires, and I know lots of people who are millionaires, & quite good people, too.

I'll just try to address a few things you may or may not have mentioned.

Someone earning $200K isn't necessarily a high net worth individual, at least, not where I live. I think you're including part of the middle class in your top 20%.

Tax code or not, there is not doubt that the wealthy have benefited disproportionately during the post 2008 QE programs.

To us less than wealthy, those outsized bonuses at the failed investment banks still rankles.

The increasing gap between the rich & the rest of us has skyrocketed since Bernanke started his first QE program. in fact, the top 1% owns 48% of all wealth & by 2016 is predicted to own more than half the total wealth.

With its QE's the FED used lower rates & buying bonds to force money into equities which benefits primarily the rich, since the retail investor hasn't been that plentiful since the dotcom crash.

What many didn't lose in that debacle, they lost during the RE crash of 2008.

When the financial bust came, & with it layoffs & foreclosures & wrecked credit, the unemployed who had savings left were often forced to spend their savings on living expenses.

This does bear on the tax situation you were describing because that lower 20% & rising is below the poverty level. When the rich are doing so well & the rest of us are suffering, their justification for not paying more in taxes wears pretty thin. ;^)

That unemployment rate at 5.6% is partially driven by a lowered participation rate & jiggered numbers.

Many are still underemployed or getting a lower wage than before the crash of 2008.

So, all those tax benefits you so glowingly describe doesn't mean much to those living below the poverty level, & your exemption for the rich from contributing to the good of society according to their means does not seem as justified to them.

They might agree more with George Soros & Warren buffet or Bill Gates, that the super rich are actually under taxed. ;^)

Your remarks may be concerning only the rich, not the super rich, which would make a bit more sense.

Salaries, adjusted for inflation, in general for the average worker, as you probably know, have hardly increased for several decades, while the number of millionaires in the U.S. in 2014 is currently at an all time high of 9.6 million.

Even the number of billionaires in the U.S. is 403, with China next with only 89, followed by Russia with 62.

The volatility argument sounds like a study from academia to justify the wealth of the alumni of an Ivy League university. Most academic studies from academia are skewed to reflect well on the rich, who are their major contributors. Noam Chomsky is an obvious exception. ;^)

The very wealthy, that I've known, & I've known quite a few, have income that is not as volatile as you describe. Perhaps, you're thinking of people who actively manage businesses that wax & wane with the business cycles, instead of those who simply invest, or hire money managers.

The ones I'm familiar with usually have excellent money managers, are not fools (some are CPA's that worked at top levels of some of the largest U.S. international corporations), so they look for lower returns and lower volatility.

Peter Lynch had annual returns of over 30% for 11 years, the Mad Hedge Fund Trader, has had annual returns of about 40% with low volatility for the last few years, & there are others as well. I'll have to charge you if you want their names. ;^)

So I really have a hard time buying the harm done by taxing the rich, but Martin Armstrong would agree with you, I think. The machinations of the politicians & central bankers already create volatility whether tax rates are low or high anyway.

At my age I'm headed in a different direction. If I were rich, I'd try to help some of the many who need it, like Karen the super trader, who has 300 mio under management:

https://www.youtube.com/watch?v=586eEoOL_i4

& here's what she does with her money, Just Hope International:

https://www.justhopeinternational.org/

What sort of charity work do you do, by the way?

If you'd like to make a donation, it's tax deductible! ;^)

Trade well!

Good post, you're a sound bloke and no mistake.

Christ on a bike..talk about tldr. Almost makes you nostalgic for that Nigerian bag of wind who used to plague this section, the reason so many fukced off FF.

Great civilized debate!

I was not proposing increase in minimum wage to help the poor so much. Rather I see it as a solution to bring back America to it past glory. So many people think if someone does not have education, he must be lazy or brainless. A compassionate person may think that the guy who did not get education could be for many other reasons, like family's financial condition where one has to go to work to support family.

Powerful ones throughout the history of mankind have exploited less powerful. That is the human nature. But to have a mindset to destroy someone helpless reminds me of someone who had the same mindset.

If someone did a study on minimum wage workers, I think it will be found that no one works for minimum wage all their life. Most of them will get more education at night or weekends and move to a better position. No one wants to work for a minimum wage. Today two people working at minimum wage can not afford to rent an apartment and two cars and health insurance. Every human being wants to do better but sometimes you are trapped in a situation where you can not escape.

Americans are the most generous people in the world. (total of American charity has always been higher that charity of entire world put together, in in the worst years like 2008 and 2009). Why can't we be generous to our own people and help the helpless.

I do not endorse unions but why do you think they were made lawful? Rich ones exploited poor workers.

By the way, in my entire extended family, no one has ever worked at a minimum wage.

The commentator is making obviously ill-informed remarks that shows that he's just been bobbing his head & looking attentive instead of paying attention to what George is trying to say.

It's pretty simple, really. Low rates & a massive injection of hot money into the bond market will drive down yields, forcing capital into assets (stocks) that are owned primarily by the wealthy, & driving up their prices, creating asset bubbles. Wages will remain low due to competition.

Since there is nothing we can do about it, perhaps we should pay attention to this part:

"..."The sheer size of the massive injection and the duration, and so on, will have undoubtedly an effect...If I were still active in the business I could see some fairly substantial moves coming and financial stability can create dislocations and turmoil from time to time."

I wonder if he didn't mean "...financial instability..." instead of stability?

Either way it looks like a long trend followed by a crash. Good for the trader unless the currency devalues rapidly. Make the money & getting out in time is the name of the game.

Good luck to all!

Why not? Look, it's this simple; if you're only able to stay in business, or operate a business because you exploit your workforce then you have no right to be in business. Let businesses like that die. If you can't (or won't) pay a wage that offers dignity in the job then die, quickly.

Secondly, if a company makes 3 billion a year and exploits its work force, but could pay all their employees a decent and dignified wage, whilst reining in excessive board room pay and benefits and still make 1 billion, don't ya think that firm should be sharing out its gross profits more ethically and equitably?



I was not proposing increase in minimum wage to help the poor so much. Rather I see it as a solution to bring back America to it past glory. So many people think if someone does not have education, he must be lazy or brainless. A compassionate person may think that the guy who did not get education could be for many other reasons, like family's financial condition where one has to go to work to support family.

I couldn't agree more.

I don't think that is so simple. If you wipe out those businesses, who will hire workers. I think there is a threshold for business to survive. Below that it dies. The question is what amount of big and small businesses are allowed to be alive, even if they are in the red. You have to keep things in balance.

I agree. "Sir, it's as easy for a man not to have been at school & know something as it is for a man to have been at school & know nothing." ~ Tom Jones, the movie

[quote=frx_trader;8021846...The question is what amount of big and small businesses are allowed to be alive, even if they are in the red. You have to keep things in balance.[/quote]

I agree. Balance is the answer, something that Westerners often don't appreciate. When balance goes, it opens the door for corruption.

The checks & balances in the U.S. political system has been upset by FDR agreeing to a bill to limit the presidential term without limiting the terms congress can serve. This shifted the power to the congress where the persistence allows corrupt power structure to form.

Career politicians are the bane of the political system, & a country run almost exclusively by lawyers is dysfunctional by definition. ;^)

If all government employs, politicians & judges were limited to 2 four year terms, much of the corruption would be greatly reduced.

I'll repeat, any business that only makes a business by exploiting its workforce should be out of business. Who will hire? Those who pay well and treat their employees correctly.

That's the case I couldn't think of US returning to glory. Wish I am wrong.

No you are correct on a lot of points, and wrong on some others.

LMAO! Where do you draw the line? How much damage do you want to do to society? Do we really need more cheap crap from China? Come to California, the land where beggars really can be choosers. See how well that works out. Should we put everyone in tent cities outside the factories where they work for $2 per hour? Let them rot in the streets because they cannot afford outrageously overpriced medical care because the doctors are still paying off their student loans? Let's just eliminate the CDC while we're at it. What a waste that is!

Please just stop now before you make a fool of yourself. I hate when conservative idiots make me look like a liberal jackass because their arguments are just as dumb as the fools on the other side of the aisle. Immigration, minimum wage, and other stupid arguments never change because you guys argue the same nonsensical points for decades. Meanwhile, the world goes on without you. Wake up.

What is the purpose of copy-pasting a 6 years old article from here : http://www.heritage.org/research/reports/2009/08/seven-myths-about-taxing-the-rich ? That article completely ignores the QE (since it had no idea of the effects the QE will have in the future).

Someone told : nonsense. Nonsense it stays after 6 years and will remain nonsense in the next 1000 years