Price gouging policies being proposed by lady US Presidential Candidate - sort of unfair and contradictory to govt actions

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In the battle for US Presidency, and lady candidate is proposing an anti gouging law that would punish retailers from profiting from price increases during inflation.  Why punish the trader when the govt:

     1.  Has increased interest rate from the Federal Reserve.   The trader has no choice but to pass on the cost

     2.  The printing of too much money naturally causes the price of goods to rise because of oversupply of money.  More money vs goods means higher price of good.

These price increases are the results of govt actions, not by traders.  Traders know that higher prices result in lower sales, and lower margin.

Certainly this is populist policy and very likely to win votes.  The Philippine geniues might copy this.

More thinking should be made in this proposed policy if ever the candidate wins

P750 minimum wage can fuel further inflation

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Inquirer - Petition for P750 minimum wage

We all need more money in the midst of inflation   But for the petition P750..00 minimum wage being petitioned several questions must be raised:

1.  Where will companies get this?   Simply add this to their cost of goods of sold and further jack up prices. ?  Consumers will end up getting less for the high wages?

2.  Can companies afford this increase in costs in the midst of inflation and recession?   The govt is increasing interest rates so that companies will not borrow, thus causing them to close and lay off employees   Cutting off jobs is a cruel way to solve inflation?

3.  More PHP in circulation will fuel more inflation    More php currency fuels inflation.   

This is going to be hard    We save on our expenses raise our food   WE have to go on survivalist mode

All ready slum areas are in areas like USA, Europe   We are thankful we still have jobs   Let us not push our fiscal resources to the limit.

Grant of inflationary allowance of P50,000 to employees of a Legislative Body

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Everybody is now envious.   They say sana all.

Zubiri raises the inflationary allowance to P50k

Congratulations Senate Pres.     However this sets a precedent to which everybody may not be prepared to handle and/or implement.  The august body can do this maybe they have a large budget and large liquidity

If others in the govt follow suit, how much is needed?  Billions or trillions?  Where do they get the money

The labor groups are too quick that the private sector must follow suit.   How does this happen if all are hurt by inflation.  ie that many businesses are in precarious position too?   All of us suffering.

Also more money in circulation does not mean that the ayuda will help ease inflation but fuel this more as more PHP will be in circulation.

How do you treat an economic ailment?    Purge the patient, limit input, or give more inputs:    IV fluid

Vitamins.      Remember IMF/WB imposed belt tightening -   revenue generation and frugality programs to guide us on the way to recovery.  But modern approach has been like an MD treating patients in the ER.  Resuscitate.   But what if everybody is in this together.  If liquidity crisis is worldwide, and if the debt crisis too much liquidity was behind all of this?

Where does the world get all the money?   Who will save the banking system?  Even the venerable banks are suffering (CSB JP Morgan?

Counter inflationary measures for every one

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How to navigate inflation

Cause of inflation - more money supply, deficit spending not greedy producers or traders

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We often have attributed inflation (increase in prices) to atrocious activities of traders and businessmen.   Businessmen are always aware of their long term viability and must always keep an eye on their competitors so they  can not just increase prices

Blame it on more money supply:    ayuda, stimulus package, more loans, more money being printed  

What really is inflation? How inflation affects govt and civilization

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Every generation needs a revolution - an entrepreneurial revolution

This series should be understood from where the author is coming from.  He is promoting gold and silver as the real and only money.

1   Episode 1.    Money vs Currency

     It all began in Egypt where currency started.   But it was not yet money because gold which they used then lacked one characteristic:    being divisible

    1.   Both money and currency share same characteristics:

         Portable (you can have in your wallet unlike in trading wherein you bring large commoditiies with             you

        Divisible     you can divide it into units for ease of counting

        Fungible      it is of similar value as the next currency

        Durable        cant be destroyed by moth or elements

        But money has one distinct characteristic that of being store of value   God and silver has distinction of storing value through the years.    It is valuable then 5,000 years ago and valuable now

    2.  Fiat currency  since 1945, after Bretton Woods agreement, govt preferred fiat currnecy, ie currency that are just paper money created by mere faith (fiat in govt) but does not backed up by real

value.  

        Money before in US, are depository receipt for gold and could be exchanged for gold coins.

        Nixon declared in 1970s henceforth, USA will no longer allow redemption of gold by US

        dollar holders

   3.  Money is not preferred because supply of precious metals and govt cant go in to deficit spending

        Currency is unlimited because centra banks can print more money or can increase money supply

        through some other means like:

   4   Increase in money in circulation, ayuda, subsidy, Quantitative Easing.   They all mean the same-

        increasing currency in circulation

   5.  All fiat currency all ended up in zero.  Bad news for all holding on to paper money

   6  Inflation is not a result of some strange mechanism or strange economic phenomenon.   It simply means that there is more more currency in circulation and thisi takes away the stored value in your

currency.  If you decrease the currency supply there is deflation.   If you decrease the value in the currency which happens when govt does it without your consent, Maloney terms is as theft

  7.  Inflation is not being felt much in USA because it is being exported world wide through trade and

       international employment.  But when nation sees through that the US dollar is worthless, all the

       dollars will go back to US and cause hyperinflation

  8.  In a decade most world currencieis;  US Russia, China have gone up by as much as 18x

2.   Episode 4 - Inflation the biggest scam in history by Mike Maloney

      See example of how currency is created as in US

    1  US treasury issues bonds - IOU  and sells this bond throug

div>

    2. Federal Reserve writes a check, using only accounting entries.  

        It is an IOU (but an unfounded)  - currency is created  They are merely exchanging IOUS

        Currency is created like magic (but the check is unfunded)  It is really an entry of numbers

   3.  Federal Reserve sends the check to various govt  agencies to pay for wages,, for war, and other

        govt activities

  4   The workers and other payees deposit the money in banks

  5.  More currency is created by banks lending through fractional lending  Say 10% reserve the bank

        can lend and create 10X the initial deposit.   This lending multiplies the currency further

        90% of all currency is created in the bank lending

       Take note that the currency is created from zero mere exchange of  IOU

 6.   More currency creates inflation

 7    The income tax law was created (constitution was amended ) to support the bonds  The income tax is to pay the interest on the bond.   We have to pay tax to support the currency system.  

 8.  The Federal Reserve is a private entity that pays its stockholder 6% dividend

 9.  The the debt limit law is a contradiction.   There is always a debt for every $ borrowed.   

       Thus for a $ of principal, there is another debt (2x).  If we pay the principal, the currency is 

       is destroyed.  The whole system collapses.

 10.  The whole system requires more debt to support the currency.   The whole thing continues

       the interest

      The US system only supports silver deposit

     Mike accuses the US banks the Federal Reserve of fraud, Ponzi scheme, legalized theft.  of stealing      value from the citizens.   

Can higher interest BSP lending rates arrest inflation

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This post watched the interview at PTV with Managing Director Toni Lambino Managing Director  of BSP for strategic communication.  Topics discussed were the interest rate increased and the new polymer 1,000 peso bill.

Really will the rising prices be solved by the interest rate increase?  Well may be partially.  The interest rate increase will slow down the money supply growth and or siphon off exces liquidity in the system.  Well this will work to curb large ticket items purchases, cap ex, and speculation on foreign currency,   This will not do much about

   1.   Expensive petroleum products from the middle east of US supplier

   2.   Supply pressure due to high fuel costs, supply chain problems

   3.   Low productivity

   4.  High input costs for say agriculture products

   5.  Commuting costs.

It safe to say that the increase of interest rate MAY help arrest increase of prices.   

This is really a big problem for consumer confronted by high commuting cost, price of basic commodities

food and agri products.  

They say that petroleum products decreased in prices because of higher interest rate by US Fed.  It may work well for macro in US whose goal is to come up with financial products to soak up US dollars elsewhere floating in the world  If that was not to happy, US can become a center of hyper infflation

Did BBM victory in election cause Peso freefall

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In one of the soc media post. it was alleged that BBM victory did the Peso in.   The Peso now at P55 = USD has become one of the worst performing currencies in the region.  It was alleged that many heads

of Western countries do not trust BBM's abilities and hence are divesting from the Philippines

But Western countries sent delegation to BBMs oath taking today.

A strong dollar, not  a weak peso is not the cause of peso freefall. The critic must have made all his analyses wrong tried to scam the readers  US Fed has to raise interest due to raging inflation.  

From business inquirer; dollar to peso sat P54.7 = USD 12

A devalued peso: means OFW get more bucks from their remittances.    We get more foreign investment

Exporters get more.   The devaluation is not entirely bad for the country.  Although importation of raw materials and capital goods become more exspenasive

After Covid difficulties, we are confronted with higher prices (inflation)

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YT - Impending price increases

This week, the masses are facing a new round of big time fuel prices for diesel as much as P6.30  - P6.60/per liter.  With no fare increase in sight, the jeepney drivers are complaining.

The increase of prices cover:     pan de sal, meat products, condiments, other bread products.    The price increases are caused by increase in cost of inputs:     transportation, the Ukraine Russia war, adjustment in GP.   All ready certain businessmen are getting bad vibes about business in USA like Jamie Dimon of JP Morgan, and Ellon Musk of Tesla (who called for cuts in staffing and hiring)

What are some of the solution to the fuel price increase:

1.  Appeal by drivers to those who do not pay their fare, or do not pay the right amount;

2.  Request by driver to operators to reduce boundary from P500. to P450.  (a 10% decrease)

3.  Elimination of  excise taxes.  It looks like a no go option because the govt will lose about P200 billion

     in revenues.  A huge loss

May be this is the right time to fast and be fit:

1.  Walk do not ride;

2.   Reduce food intake

3.   Look for alternatives for your present food choices

Minimum wage or living wage

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The rising prices wakens the  giant of wage increases.   But raising wages raises a vicious cycle of increase of prices that fuels more inflation and  is self defeating.

Minimum wage  is not equal to living wage.   Husband and wife may be working together or they can economize or hustle for more income

We get various proposals like P200 per day, and some quarters being discussed at CNN at this hour is about  P500.00 per day.  That may be possible for government who depend on taxes may be able to afford this. But SMEs who can are just recovering  and who constitute the bulk of employers can ill afford this.

(by Rep. Raymond Mendoza)

This is a difficult problem to handle 

How does the reported 6% inflation rate really look out there in the market?

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Rizal Philippines
August 24, 2018

What does the report of 6% inflation rate really mean in the market place.  Does it mean that the prime commodities rose by P6 on the average for a P100 good.  May be.

But the reality that bites is that it is not.  The price increases are much higher than that. Say galunggong from P70 to P140 per kg;   gasoline from P20 when fare was  P8 to more than P40 per liter now. Rice used to be P20 per kg to more than P40.  Can the average consumer wage earner keep up.

No wonder talks are ripe for a round of wage increases after we just gave one.   Hmmmp what happened to the theory that by increasing the threshold  of income tax for wage earners, there will be more money to spend.  Yes for the price increases due to excise taxes imposed on gas and others to recover the loss from
tax exemption.  Mali ata....By being political ie favoring the wage  earner by raising tax exemption level, you hurt them harder by excise tax.

Sen Bam was right in asking everyone to reconsider the TRAIN law.  It is a mistake

Countless difficulties emerging in the 2 year old government being run by imperial Mindanao

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August 10, 2018

What has the leadership from imperial Mindanao wrought upon the Philippines?

Many difficulties and  disappointment:

1. Rising prices (inflation) brought upon by TRAIN law;

2. Rift in and weakening of the ruling party that brought the  top leadership to power

3. Emerging economic concern regarding the change in the form of government

1.  Prices of some essential commodities and services shot up due to excise taxes on fuel and some consumer goods brought about unprecedented increase prices. While the makers of the TRAIN law assured every one that price increase would be minimal,  it is not.   When cost of transporting goods and people goes up, a lot of price goes up.  So the BSP has to react further by raising interest  rates to rein in inflation causing financing costs to go up further putting pressure to raise price of goods.  After previous managers of past administration have tried to put the sound economic environment in place for growth, the same was put into
shambles.

2.  Lately there has been a squabble in the leadership of  legislative body; the head of Congress (who is from Mindanao was replaced by somebody from Luzon, a former President charged with numerous counts of plunder. (the freedom of whom was made possible by the support of the latter in the formers race to the top)  The grip of the top guy on the govt may be weakening

While the change in the power of legislature has been alleged to be upon the instigation of the family member, in a smart move, probably to strengthen hold on power, a new party was made which drew a lot of applicants.  Of late, there is perceived rift, and factions emerging in the ruling party that brought the current head of state to power

3.  And lately no less than the most senior of the economic manager (from Mindanao even) has expressed concern about the  fiscal provision of the proposed charter change (federalism) that  it would cause huge
budget deficit and which will downgrade the  Philippines credit rating thus again increasing cost of borrowing money from world capital market.   The economic managers were reported to shut up but that does not hide the  big problem later on.From PDI - Economic managers cite risk of charter change proposal

From Rappler - Criticism by PhD Candidate in Economics vs Bayanihan Federalism and Rise Up

The drafters of charter change are now rebuking the  DOF finance for speaking now vs the draft in Senate hearing... because allegedly, the latter was consulted on the draft before submitting the  same to the President.   Does it matter that as an after thought, the hard realities were recongized

Many of the populace are victims suckers to political experiments that were purported to bring more benefits to the people and  lessen poverty as promised.  But are these political changes really good for all?  One wonders if indeed they are.  If within the cabinet, there  are very serious doubts, what will be consequence to the nation 5 or 10 years hence. A typical case of fire and then aim. Only leadership from Mindanao can do that....

Declining oil prices not good for the economy after all

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Philippines April 13, 2016

MIT - can deflation be prevented?

Deflation a threat to investors?

The plunging oil prices may be good for consumers: those who use gasoline and diesel fuel (like in fuel thirsty country like US)  But not good for the oil producers.  It has created difficulties and hardship for oil drillers rig makers, employees of oil companies, lenders to oil industry.  No investments are being made in oil production.  It has affected not only those in the industry but outside the industry.  It has also created downward spiral elsewhere in the economy.

In the ME a number of OFWs who work in the oil related industries are being sent home.   So this has affected consumer behavior as well.  Many consumers are buying less.  Economist say this is deflationary which is worrisome.  Prices will continue to plunge contracting the economy and leaving in its tailspin an economy in recession.

Deflation raises real value of debt and makes it harder to service.   It is a threat to investors.  For many central banks, the lower limits of low low interest rate has been reached.  (Why Japan now has negative interest rate?)

In most countries recession is tame, or no longer poses a threat.

Countries with floating currency like Japan and US can counter this with printing more money.   Easier said than done.


Do you agree?