by Charles Hugh-Smith of OfTwoMinds blog,
If we understand the simple dynamics of value creation, total compensation costs and the cost-basis of doing business (general overhead), then we understand why employment isn’t coming back in the U.S.
It is impossible to understand job creation without understanding value creation and labor/overhead costs. People hire other people when their labor creates more value than it costs to hire them.
When labor costs are high, the value created [...]
Wall Street Journal
January 3, 2013
For years now, economists like Paul Krugman have been criticizing countries in Europe for engaging in too much austerity during the downturn — that is, enacting tax increases and spending cuts while their economies were still weak.
But after this week’s fiscal cliff deal, the United States is now on pace to engage in about as much fiscal consolidation in 2013 as many European nations have been [...]
How big would America’s “debt crisis” be if we looked not merely at (largely artificial) financial costs, but at real economic — social, human, natural, personal, emotional, and more — costs? You probably don’t want to know.
But grit your teeth and let’s do a quick back-of-the-envelope calculation just for fun.
To begin with, America’s gross public debt as a percentage of its GDP is around 98ish (aka, its [...]
By Joe Light
Last week, Real Time Economics took a look at a Labor Department report that compared occupational pay across 77 metro areas. Many readers rightly pointed out that that Labor Department doesn’t adjust pay for cost of living.
See the interactive map of wage disparity.
So though New Yorkers earned $1.14 for every dollar that an average U.S. worker earned, that $1.14 probably bought less in that metro than [...]
by Charles Hugh Smith from Of Two Minds
Gold As a Hedge: A Back-of-the-Envelope Calculation
How much gold would an individual investor need as a hedge against the total depreciation of fiat currencies? Here is a back-of-the-envelope calculation.
My view that gold is a prudent hedge is well-established in my archives. For example, from 2006: Gifts and Gold (December 9, 2006) (promoting the idea of giving gold as a gift):