“that the government bonds are safer in terms of risk because the government guarantees the payment”

true, that’s why our government are in debts because it guarantee payments to bond holders even if the projects did not result to positive outcome,revenue,profit,or excess. we have a budget deficit. when revenue cannot service the debts payable ( due or maturing) then the government can issue more bonds ( debt financing) to cover payments. When bonds are sold , it is added as cash to Cash flow statement but will become liability in our balance sheet. When liabilities exceeds assets, you know what’s going to happen.

when our government keeps issuing more bonds or in layman’s term ( print more money) , this will increase the money supply and will result to Inflation.

If we can print no more money due to risk of inflation, the government will have a tendendy to borrow using assets as collateral. Spratley deal may be relevant to why we borrowed money from China.

That’s why a push for financial transparency is very crucial or else ,we filipinos will be burried in debts.

shalim, rather than simply mentioning the ‘shifting of curves‘, you would have to explain how that would help your point.

You are out of touch with the background of the Hyperwage which, as I understand it to be, is to increase the purchasing power of the workers. – Shalim

I agree with the goal of increasing the purchasing power of workers but the basis has to be solid and not on some cranky idea. We already have traditional neoclassical economic theory as well as some competing heterodox economic theories that can be used to justify the increase in the purchasing power of workers. These have the benefit of standing on more solid ground than Hyperwage.

The ten-fold is simply one reference figure that illustrates the principle.. – Shalim

As in medicine, the dosage matters. Taking ten tablets can have a different effect to two. That’s why we cannot simply take any reference figure and assume the effects will be the same. At the very least, we have to run it through a model (or at the very least thought experiments based on clearly stated economic principles and assumptions).

If ten-fold, is not for you. Puede na doubleee lang muna? 100% increase (2x)? – Shalim

Again, we have to run that through economic models to determine the possible effects.

That is not so. The prices don’t double during Xmas because the laptops would then be P60T (from P30T, 2x).

This would be a ridiculous double than the world market price for that model is worth only P30T in Singapore or Taiwan or USA.

Which is the basis of all your debate with homegirl and cat above.

Your analysis of what is happening during Xmas double wage is wrong. That’s why Homegirl and Cat couldn’t imagine a P300T laptop.

As you can see CVJ, your blind faith in supply and demand can kill you (that if you double the purchasing power, you will double the demand, therefore your double the selling prices.)

This is a wrong logic.

Have you heard of shifting of curves? You assume that the prices move along the same curve. You are not aware that in many cases the curves themselves changes.

You cannot just rely on your two semesters of economics to explain the real world of economics.

Read Manolo’s column again. Since HKG wages for janitor is say 8x than Filipino janitor, then since our rice is P32, the price of rice in HKG shuld be 32×8 = i dont know how much that is… (P256/kg i think)

yet the price of rice in HKG is just P37 to P40 per kilo… not P256/kg.

Pagisipan mo yan CVJ.

Regarding your point that ten-fold is untenable. You are out of touch with the background of the Hyperwage which, as I understand it to be, is to increase the purchasing power of the workers. The ten-fold is simply one reference figure that illustrates the principle.

If ten-fold, is not for you. Puede na doubleee lang muna? 100% increase (2x)?

quote from CVJ:
“Shalim, during December, the prices don’t double because the retailers have already stocked up for the expected increase in consumer demand (due to the Christmas bonus). This is a different scenario from the tenfold increase in salaries without a corresponding increase in production capacity.”

baka lang you might be interested in a discussion of hyperwage by a hyperwage proponent:

http://streetstrategist.weblogs.us/hyperwage-theory/

(napakahaba lang nga – up to part 33!)

baka makatulong lang sa discussion nyo

Perhaps i owe you (and Ca t, and homegirl) a further clarification on the 400:1 (among other things) so i’ll line that up for a future blog entry (in my own blog) one of these days when time permits. I’ll let you know when that’s done.

You want more examples? Every Dec, the entire labor payroll costs of the companies are doubled!!!!! Does that result in “doubling” of prices of goods and services?????????

1:1 ba ang correspondence?

Think beyond the tip of your nose. That’s why I said, homegirl has driven home a point.

But let’s move on. It’s no use arguing with a person who does not understand the rules of deduction and induction.

‘Cat’ is right, some assumptions have to be based on reality. The 1:400 scenario of CVJ was not based on reality. – Shalim

There seems to be a confusion on what constitutes an assumption. In the above, the 400:1 exchange rate is not the assumption, it’s the result given certain assumptions. In this case, the assumption (which reflects reality btw) from where the result derives is this – laptops are imported [aka dollars are needed to import laptops into the Philippines].

It is a well known principle in economics that if you hold productivity constant, and if there is no excess production capacity, there is a positive correspondence between wages and the prices of goods. This is because demand outstrips the capacity to produce and you have more money chasing after fewer products.

What the author of Hyperwage is contending is that the ratio is closer to 10:1 (ratio of wage increase to price increase) rather than 1:1 because he believes there is a limit to hyperinflation for third world countries. Our experience during the last days of the Japanese occupation does not bear this out.

‘Cat’ is right, some assumptions have to be based on reality. The 1:400 scenario of CVJ was not based on reality.

I heard that GOCC’s pay their janitors or similar positions more than P20,000 already (like GSIS). Is this true?