The Fed plans to sharply boost unemployment • Hacker News Board

Re: The Fed plans to sharply boost unemployment

#41

Post by ethbr0 » Sun, Sep 25, 2022, 3:10 PM UTC

socialismisok wrote: post #16

Reducing power of workers in favor of capital is deeply disappointing to me. The idea that we'd want to increase unemployment rather than have everyone working is frustrating. "But wages are too high!" Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? The most profitable businesses can pay the wages for workers, and the least profitable ones can't hire? Why do we need som…

The only justification for this is preventing a self-perpetuating inflationary feedback cycle. Wage increases increase COGS, which increases prices, which leads to demands for wage increases.

Once that gets going (encoded in labor contracts and expectations), it's very hard and even more painful to break.

Whether that's what we're seeing now... or it's temporary supply side impacts... economists for more data than I can argue over.

Re: The Fed plans to sharply boost unemployment

#42

Post by socialismisok » Sun, Sep 25, 2022, 3:12 PM UTC

Victerius wrote: post #35

socialismisok wrote: post #16

Reducing power of workers in favor of capital is deeply disappointing to me. The idea that we'd want to increase unemployment rather than have everyone working is frustrating. "But wages are too high!" Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? The most profitable businesses can pay the wages for workers, and the least profitable ones can't hire? Why do we need som…

- Full employment - Low inflation - High wages Pick two.

Wages aren't the only input to inflation. It's not axiomatic that these three cannot be met simultaneously.

Re: The Fed plans to sharply boost unemployment

#43

Post by nine_zeros » Sun, Sep 25, 2022, 3:12 PM UTC

The CPI number is high because rents are high. Every other measure of CPI has dropped. But housing prices and rents just won't budge.

This is a battle between the fed and sticky rent-seeking homeowners. Everyone else is a pawn. Our healthcare, livelihoods and families are mere collateral damage.

Re: The Fed plans to sharply boost unemployment

#44

Post by xutopia » Sun, Sep 25, 2022, 3:13 PM UTC

This is deleterious beyond just economics. Put people out of a job and they go sick, die more frequently and have a general unpleasant time.

None of these folks are willing to look at how profits are at record high... take money out of the richest hands and redistribute. The cards are stacked against the common people and asking the non-wealthy to take the brunt of the hit here is a cash grab by the elite who aren't doing their part.

Re: The Fed plans to sharply boost unemployment

#45

Post by deburo » Sun, Sep 25, 2022, 3:13 PM UTC

socialismisok wrote: post #16

Reducing power of workers in favor of capital is deeply disappointing to me. The idea that we'd want to increase unemployment rather than have everyone working is frustrating. "But wages are too high!" Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? The most profitable businesses can pay the wages for workers, and the least profitable ones can't hire? Why do we need som…

You must be underestimating the negative effect high long-term inflation has on a society. Labor doesn’t gain leverage, it loses a lot of buying power.

Re: The Fed plans to sharply boost unemployment

#46

Post by Ericson2314 » Sun, Sep 25, 2022, 3:14 PM UTC

refurb wrote: post #11

mjhay wrote: post #5

Wage growth has not been keeping up with inflation, and may even be damping it. The steady chorus of claims that wages are too high strikes me as consent-manufacturing by capital. https://www.epi.org/blog/wage-growth-has-been-dampening-infl... https://insurancenewsnet.com/oarticle/inflation-continues-to...

Everybody wants to control inflation until it's time to suppress wage growth. The Bank of Canada even came right and out said that employers should definitely not raise wages quickly. https://www.theglobeandmail.com/business/article-wage-negoti...

No the wise ones realize the very framing of "inflation" is bad. One has to look at which specific prices are rising, and production input output graphs.

Re: The Fed plans to sharply boost unemployment

#47

Post by ethbr0 » Sun, Sep 25, 2022, 3:14 PM UTC

ajackfox wrote: post #8

For basically my entire adult life, at the macro level capital investments have basically been free for corporations. While I have an idea of will happen based on historical data, it will certainly be ‘interesting’ to experience it first hand. :/

It's healthy in that it causes unproductive firms to go bankrupt.

It's painful in that unproductive firms are no longer handing out free money to employees and customers.

Looking at the market of companies today, especially in the tech space, IMHO ten years or so of fiscal prudence would be really healthy.

The only downside is that Apple, Amazon, Google, and Microsoft would weather it and come out more relatively dominant.

Re: The Fed plans to sharply boost unemployment

#48

Post by socialismisok » Sun, Sep 25, 2022, 3:14 PM UTC

jibe wrote: post #34

socialismisok wrote: post #16

Reducing power of workers in favor of capital is deeply disappointing to me. The idea that we'd want to increase unemployment rather than have everyone working is frustrating. "But wages are too high!" Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? The most profitable businesses can pay the wages for workers, and the least profitable ones can't hire? Why do we need som…

Labor isn’t gaining power now, or else you’d see wages gains greater than inflation. Labor is losing to inflation.

It's gained some ground with movements like the $15 now movement in Seattle.

It can be the case it has gained but gained unevenly.

Re: The Fed plans to sharply boost unemployment

#49

Post by socialismisok » Sun, Sep 25, 2022, 3:16 PM UTC

deburo wrote: post #45

socialismisok wrote: post #16

Reducing power of workers in favor of capital is deeply disappointing to me. The idea that we'd want to increase unemployment rather than have everyone working is frustrating. "But wages are too high!" Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? The most profitable businesses can pay the wages for workers, and the least profitable ones can't hire? Why do we need som…

You must be underestimating the negative effect high long-term inflation has on a society. Labor doesn’t gain leverage, it loses a lot of buying power.

Not at all. I'm saying we have many levers to control inflation, worker power is only one.

Re: The Fed plans to sharply boost unemployment

#50

Post by DisjointedHunt » Sun, Sep 25, 2022, 3:17 PM UTC

Let's break this down. . .the most significant contributor to inflation over the past year has been fuel prices and availability. This leads to reverberations through the economy, such as:

- Increased freight and transport costs, everything that moves from source to destination becomes expensive.

- Most importantly, food and raw material powering all the products we buy as daily expenditures have a significant fuel cost.

The Fed has only one weapon, the flow of funds into the economy. It controls this through the Fed rate as well as instruments under its gambit which give it immense power to purchase assets.

In short, this is not the job of the fed. We have a molecules crisis thanks to war and supply chain issues combined with stupid energy security decisions.