wages fall, prices rise

[darwinslair]

http://www.nytimes.com/2009/08/05/business/economy/05econ.html?_r=3&partner=rss&emc=rss

historically, if income levels drop, prices do as well because of lower demand.

However, when the government inflates its currency, it doesnt. It does the opposite. You have less money, and to add insult to injury, what you do have doesnt buy as much any more.

Tom

[lorna-organic]

Tom, I've been meaning to tell you (lost track of the original thread) that your prediction regarding plastic money is already becoming true. Walmart announced to employees that they are phasing out paychecks in favor of plastic money. Any employee who does not have direct deposit regarding their salary, will be receiving their salary in the form of a plastic card. Walmart figures that will be about 40% of employees. They have been running a test program in one area, and feel that it is working--plan to implement it across the US.

So far I haven't noticed a big jump in prices this year, except on peanut oil and cigarettes. Though I am still reeling from the huge jump which happened about a year ago, affecting wheat products especially. I buy a lot of dog food. The price went up $2.50 per bag, plus the weight of the bag was lowered by four pounds--double whammy.

[uprooted_kentuckian]

That has been around for years Lorna. It is a very cost effective and safe way to pay employees. It is simply a prepaid debit card. No issues there.

[lorna-organic]

How does one pay, for instance, a mortgage, with a debt card, UK? I can see it working for people who pay bills via computer/Internet/electronic banking. Though I doubt most of the Walmart employees who prefer real paychecks to direct deposit are big on using computers.

[darwinslair]

That has been around for years Lorna. It is a very cost effective and safe way to pay employees. It is simply a prepaid debit card. No issues there.

I can think of an issue, or what is an issue for some, but not everyone.

Cash. It eliminates the face to face private transaction. And if you want to get cash, you have to pay a fee to get it.

Cash is going to go away. Has been going away. There has been a very long concerted effort to get banks to be a middleman in every transaction.

Makes sense. Greatly increases taxable transactions, and every transaction generates a fee for banks, be it check, credit card, or debit card.

Just another way to leech a bit more out of the system.

Tom

[axhandle]

I can think of an issue, or what is an issue for some, but not everyone.

Cash. It eliminates the face to face private transaction. And if you want to get cash, you have to pay a fee to get it.

Cash is going to go away. Has been going away. There has been a very long concerted effort to get banks to be a middleman in every transaction.

Makes sense. Greatly increases taxable transactions, and every transaction generates a fee for banks, be it check, credit card, or debit card.

Just another way to leech a bit more out of the system.

Tom

Have to agree, one of my past credit card entities wouldn't negotiate a pay off,even though their interest rates have more than paid the balance.
And to boot, "it will affect your credit score if you pay it off".

Vultures

Ax

[older than dirt]

If all the transations have to have a government controled third party inviloved the government will iknow what every transation is .

How better to control the people than to be in the middle of every transation.
After all money is electronic money , how long do you think it will be before gold is out lawed again as it was in 1933?
After gold is out lawed will we be throwing our gold into the streets ? Seems I've seen that thought somewhere before :(

[silverseeds]

I can think of an issue, or what is an issue for some, but not everyone.

Cash. It eliminates the face to face private transaction. And if you want to get cash, you have to pay a fee to get it.

Cash is going to go away. Has been going away. There has been a very long concerted effort to get banks to be a middleman in every transaction.

Makes sense. Greatly increases taxable transactions, and every transaction generates a fee for banks, be it check, credit card, or debit card.

Just another way to leech a bit more out of the system.

Tom

I will bet you an ounce of silver, gold and silver coins come back before cash goes completely away, in place of plastic......

[darwinslair]

I will bet you an ounce of silver, gold and silver coins come back before cash goes completely away, in place of plastic......

I dont think so.

Here is why.

right now they are NOT a legal medium of exchange. IF you use gold or silver in a transaction, you are required to sell it for market price, declare it as income (or loss) and they buy whatever item you are purchasing with the proceeds of your sale of it. (and then again pay any applicable taxes for the transaction)

While of course, in bartering, you can exchange anything for another thing, this is not a legal transaction unless you pay taxes, including capitol gains taxes, on whatever the medium of exchange was.

If gold and silver become currency forms in regular transactions again it will be because the government and their taxation system either do not exist, or they are incapable of exerting any enforceable power in local communities.

And with the muscle flexing I am seeing, they are going to exercise more and more power. Not less.

Tom

[older than dirt]

I dont think so.

Here is why.

right now they are NOT a legal medium of exchange. IF you use gold or silver in a transaction, you are required to sell it for market price, declare it as income (or loss) and they buy whatever item you are purchasing with the proceeds of your sale of it. (and then again pay any applicable taxes for the transaction)

While of course, in bartering, you can exchange anything for another thing, this is not a legal transaction unless you pay taxes, including capitol gains taxes, on whatever the medium of exchange was.

If gold and silver become currency forms in regular transactions again it will be because the government and their taxation system either do not exist, or they are incapable of exerting any enforceable power in local communities.

And with the muscle flexing I am seeing, they are going to exercise more and more power. Not less.

Tom

I agree .
The government is broke & will need real money in a few years. FDR confiscted gold in about 1933 no reason obama can't do it again.
Would not suprize me to see the government declare it evil for thouse rich people to have gold & declare it illegal to own or trade gold

[uprooted_kentuckian]

How does one pay, for instance, a mortgage, with a debt card, UK? I can see it working for people who pay bills via computer/Internet/electronic banking. Though I doubt most of the Walmart employees who prefer real paychecks to direct deposit are big on using computers.

They can pull money out at an ATM. I'm not sure why folks wouldn't want direct deposit.

[uprooted_kentuckian]

I will bet you an ounce of silver, gold and silver coins come back before cash goes completely away, in place of plastic......

I'll take that bet.

[uprooted_kentuckian]

I can think of an issue, or what is an issue for some, but not everyone.

Cash. It eliminates the face to face private transaction. And if you want to get cash, you have to pay a fee to get it.

Cash is going to go away. Has been going away. There has been a very long concerted effort to get banks to be a middleman in every transaction.

Makes sense. Greatly increases taxable transactions, and every transaction generates a fee for banks, be it check, credit card, or debit card.

Just another way to leech a bit more out of the system.

Tom

They can still get cash. They have a worse issue if they don't have a bank to cash their checks. There is always a transaction fee, regardless of the medium. Cash is not immune unless of course, you get paid directly in cash.

Whether they get a traditional paycheck or a prepaid debit card, there is a transaction fee. In the direct deposit method, the employee could actually avoid a fee altogether, as the employer pays the transaction fee.

I still haven't heard a convincing issue.

[reavilh]

How does one pay, for instance, a mortgage, with a debt card, UK? I can see it working for people who pay bills via computer/Internet/electronic banking. Though I doubt most of the Walmart employees who prefer real paychecks to direct deposit are big on using computers.

Big problems arise during power outages. Missouri has started paying unemployment benefits through a debit card if you don't have direct deposit. Last winter during a power outage, there was no way for many on unemployment to buy food.


Whether they get a traditional paycheck or a prepaid debit card, there is a transaction fee. In the direct deposit method, the employee could actually avoid a fee altogether, as the employer pays the transaction fee.


Maybe in the bigger cities, but here, I can go to any of the local banks, and cash my check without a fee. The unemployment card even charges a fee ($1.50, iirc) to find out how much is left on it. If you're on unemployment, those fees hurt like crazy.

[tashak]

Aside from power outage issues (which can be big deals in winter seasons for some, hurricane/tornado seasons for others), there is a certain amount of inconvenience and transportation issues with direct deposit for those in rural areas. What if I had direct deposit? Well, first I have to telephone or go on line to see that it indeed was direct deposited. Then I have to drive or get a ride (no public transit here) to the place where it was direct deposited, and then if I want to make small purchases (noncheck, noncredit card) take withdrawn cash to another location, often 20-40 miles in another direction. All the gasoline costs adds up.
Not a big fan of ATMs, which are not abundant outside urban areas, plus the increased potential of robbery at them.
If it is a government check or larger employer business check (not a private party personal check), it is easier with ID just to cash it at a casino where one is known--no fee there either, and safer than an ATM, though one does have to plan to leave the place without leaving one's cash in another type of machine, lol.
This is aside from privacy issues and aside from wondering about the increasing numbers of bank failures.

[RozieDozie]

Here is an issue we ran into with our employees and debit cards when we went to direct deposit and all but forced them to get debit cards instead of a pay check.

There really is no such thing as a 'debit card' only. The debit cards can still be used as a charge/credit card, depending on which button you push, and people who are undisciplined with money can press 'charge' instead of debit. This allows them to overdraw their accounts. The bank, of course, charges them $35.00 each time for the 'overdraft' and it comes out of the next direct deposit. Do that three or four times in a two week period (hey, the bank loooves it when folks do that!) and, before long, some of our employees were paying over $140.00 in overdraft fees per paycheck.

Sure, they were doing it on purpose and the consequence for them was that they had much less money to spend; a good portion was going for overdraft fees. The consequence for the bank was that they were smiling at all the overdraft fees backed by the 'insurance' of the direct deposit.

The consequence for us as an employer was that we saw more tardiness, more call-ins, more unhappy employees who weren't disciplined regarding money and didn't manage their banking well.

Sure, folks should be personally and fiscally responsible with their finances, but the actuality is that some folks who work in industries that don't pay a lot of money have trouble managing their lives and their finances and the banks are thrilled to have all of these new 'customers' and are collecting HUGE fees from folks who cannot resist the overdraft.

To me, banks should issue a debit card ONLY so that when folks run out of money they run out of money and don't go into the hole with usury bank fees. But banks don't and won't; we tried to get them to do it here but it's advantageous to them when people are undisciplined with those cards.

[uprooted_kentuckian]

I don't really understand that Rozie. I sell credit card processing as a part of our business and debit cards, though they can be run as credit, it should still act as a debit on the bank side. Mine certainly does.

Debit cards, particularly prepaid debit cards, are not credit cards and unless there is some sort of overdraft setup on the backend, the bank won't allow overdrafts. I'd have to see the situation because that makes no sense.

[older than dirt]

I have a debit card that is only used for buying stuff on line. Its is a visa. Its a checking acount that the visa card can pull money out of. If the ballance on my account goes below $50.00 they fine the account about 50.00 which leaves you with no money in the bank & a debt to boot.
If some poor sap over draws the last few days before pay day & does not know it I can see him over drawing a second time due to being 50.00 short of where he thought he was. Bad thing to do to people.
My card deactivates if unused for 90 days . Ive had to go to the bank & have mine reactivated several times as I go over 90 days every now & then.

[uprooted_kentuckian]

hmm, sounds more like a prepaid. They are full of fee's, perhaps that is the scenario Rozie was talking about. I understand that, though I don't see why they should do it.

[FAADAN]

I can think of an issue, or what is an issue for some, but not everyone.

Cash. It eliminates the face to face private transaction. And if you want to get cash, you have to pay a fee to get it.

Cash is going to go away. Has been going away. There has been a very long concerted effort to get banks to be a middleman in every transaction.

Makes sense. Greatly increases taxable transactions, and every transaction generates a fee for banks, be it check, credit card, or debit card.

Just another way to leech a bit more out of the system.

Tom

Doing away with cash also gives the IRS a nice record to track. :D

As far as the original post, you ain't seen nothin' yet. You can't print all that money to give away and expect every new dollar to be worth the same as the last. We're headed for another Jimmy Carter era of Malaise. Double digit inflation and double digit interest rates.

[darwinslair]

Doing away with cash also gives the IRS a nice record to track. :D
Double digit inflation and double digit interest rates.


We have the inflation, although it is hidden right now. The fact that they have kept interest rates near 0% has discouraged savings (intentionally) in order to bolster purchases/sales. (no point holding on to your money in a bank, doesnt earn you anything)

Tom