Raising minimum wage will help the current status of the US' economy

Right off the bat we are going to have to agree to disagree about Keynesian economics if you are a believer in Jean- Baptiste Say theory of economics we are just not going to see eye to eye. Yes, the Federal Reserve is thinking about raising interest rates, but according to The Economist The Fed may be jumping the gun. It states: "Yet raising rates is risky. Despite low unemployment, wage growth has so far been modest. That suggests that wage-driven inflation may yet be some way off—and America's labour market may still be some way away from "maximum employment". The Fed has been over-optimistic about inflation before; it found itself repeatedly restarting its asset-purchase programmes after inflation failed to rise to and stay near target when purchases were curtailed. The move toward Fed tightening has also destabilised global markets, squeezing emerging economies, putting downward pressure on commodity prices and pushing up the dollar; rate rises may therefore ensure that the factors which have been dragging down inflation are not in fact one-off events. But what really ought to give the Fed pause is the asymmetry of the risks it faces. If it waits too long to raise rates then inflation could rise to 3% or 4%. But inflation which temporarily rises that high is not a major threat to the American economy, and the Fed has unlimited capacity to raise rates to rein in price increases” (. http://www.economist.com...) Also the Keynesian theories are may be considered more when the Economy stimulus is poor but it only takes something like a spike in the interest rate to spook the consumers and have them start saving their money instead of spending it hurting the Economy. “Just look at the Great Depression, Keynes said. The first problem was that people created lots of products they were unable to sell in the short run. The second problem: when they did manage to sell some, they didn’t “get rid of the money” but stashed much it away in banks or even mattresses. ” (. http://www.pbs.org...) Meaning that the economy is at risk of recession at any point. Yes you may say by people putting their money in the banks is a good thing and it will be loaned out again, but remember we already have 1.5 trillion dollars on deposit not being loaned out at all right now. With higher interest rates people will not be inclined to take out loans and the 1.5 trillion dollars grows to an even greater number. But on the other hand and people obtain a higher MW they are putting more money into banks and spending money on wants not needs making a more stimulated economy. “While 29 states and the District of Columbia currently have a minimum wage higher than the federal minimum, increasing the federal minimum wage will boost the earnings for nearly 38 million low-wage workers nationwide. That includes workers in those states already earning above the current federal minimum. Raising the federal minimum wage is an important part of strengthening the economy. A raise for minimum wage earners will put more money in more families' pockets, which will be spent on goods and services, stimulating economic growth locally and nationally. ” (. http://www.dol.gov...) Again I have to go back to my point of Inflation. What I meant is after the MW is raised the economy cannot react by changing the prices of cost of services to match the jump in MW. This means the cost of benefits stays the same and there would be no need to cut hours. I did not just mean the Fed controlling the supply of money to avoid fiscal drag. But if the MW was raised the supply of money to the Fed would increase through people being moved up into new tax brackets and more taxes taken from income taxes. If we don’t experience any inflation on the money changing the fed is able to stimulate that money into social securities and welfare, which gives people more trust that the American Economy is doing good. As it stands right now many people who are now entering the work force are hesitant if they are even going to be able to collect social security checks when it is time for them to retire. Yes by not allowing inflation by the fed it will slowly start a fiscal drag, but if the Government were to put inflation on a freeze and tell the public when inflation would be back in play it would allow people to start saving money and work their way into better social classes. The people however that decide to spend it while they have the money will realize like teenagers do now a days if you want to keep their way of living they will have to continue to work even after the freeze on inflation to keep their cost of living. “Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs. ” (. http://www.dol.gov...) When the government takes off the freeze they will be able to fix the fiscal drag. Also your statement to people loosing their jobs to machinery and small business forced to close. The US Department of Labor states, “A July 2015surveyfound that 3 out of 5 small business owners with employees support a gradual increase in the minimum wage to $12. The survey reports that small business owners say an increase "would immediately put more money in the pocket of low-wage workers who will then spend the money on things like housing, food, and gas. This boost in demand for goods and services will help stimulate the economy and help create opportunities. " (. http://www.dol.gov...) It also states “In aletterto President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, "In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front. " (. http://www.dol.gov...) Also if people’s jobs were starting to be replaced by machinery there would an entirely new job market for the people to go into. So it will also be stimulating the job economy. And to your very last point “shouldn't we just raise all tax rates to 100% and have government provide for us all? ” I say that’s an absurd statement we are the United States of America and we are a country that prides our self in freedom of choice and success, and having money allows someone to do what he or she want and by having the government provide for us it takes the illusion of success away. We don’t need the Government providing for us all.