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The Fed plans to sharply boost unemployment
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Re: The Fed plans to sharply boost unemployment
#92Earlier quoted context omitted.
Calling it a "race to the bottom" is a bit ironic, when these jobs have been going to the world's poorest people and those in most need of a job.
These jobs allow something like 60-100M households escape poverty every year. That's a good thing for everyone (except the Earth).
At the price of perpetuating bottom dollar exploitive business models that could only exist in the abscensce of strong labor protections, qnd the export of negative externalities to the greater fool.
The wotld as a whole does not benefit from this arrangement.
Re: The Fed plans to sharply boost unemployment
#93Zero direct evidence for the title's claim was provided in the article. All the Fed is doing is to normalize interest rates. Deeply negative real yields (5% or more) are aberrations that history has shown to ultimately lead to catastrophe. Yet talking head and Dem Senator alike are treating rate normalization as financial Armageddon. Somebody tell me how at the very least a 0% real yield on cash is going to kill the…
I can’t see how killing off a bunch of zombie companies surviving on cheap debt is bad for the economy in even the medium term.
Re: The Fed plans to sharply boost unemployment
#94Zero direct evidence for the title's claim was provided in the article. All the Fed is doing is to normalize interest rates. Deeply negative real yields (5% or more) are aberrations that history has shown to ultimately lead to catastrophe. Yet talking head and Dem Senator alike are treating rate normalization as financial Armageddon. Somebody tell me how at the very least a 0% real yield on cash is going to kill the…
Investors have become addicted to easy money, so that outlook is embedded in the whole economy. Perhaps higher yields can produce better investments, since there will be a cost to these loans.
Re: The Fed plans to sharply boost unemployment
#95> Fed Chair Jerome Powell made that amply clear this week when the central bank projected its benchmark rate hitting 4.4% ... ... In plain English, that means unemployment. The Fed forecasts the unemployment rate to rise to 4.4% next year What? The fed is setting benchmark unemployment rates now? That seems unlikely.
I think the 4.4% unemployment projection is from Table 1 of this document:
“Federal Open Market Committee Summary of Economic Projections“ Sept 21, 2022
> Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
https://www.federalreserve.gov/monetarypolicy/files/fomcproj...
Re: The Fed plans to sharply boost unemployment
#96Zero direct evidence for the title's claim was provided in the article. All the Fed is doing is to normalize interest rates. Deeply negative real yields (5% or more) are aberrations that history has shown to ultimately lead to catastrophe. Yet talking head and Dem Senator alike are treating rate normalization as financial Armageddon. Somebody tell me how at the very least a 0% real yield on cash is going to kill the…
I can’t see how killing off a bunch of zombie companies surviving on cheap debt is bad for the economy in even the medium term.
Killing off the zombie companies will drive unemployment rate higher. Good in the longer term, but it won't come without a cost. That's the price we pay for such an extended period of cheap credit.
Re: The Fed plans to sharply boost unemployment
#97> Fed Chair Jerome Powell made that amply clear this week when the central bank projected its benchmark rate hitting 4.4% ... ... In plain English, that means unemployment. The Fed forecasts the unemployment rate to rise to 4.4% next year What? The fed is setting benchmark unemployment rates now? That seems unlikely.
In economics, the Phillips curve is well known. The Phillips curve specifies that there is a short-run tradeoff between unemployment and inflation. Thus, trying to tamp down inflation in the short-run would inevitably increase some unemployment.
Re: The Fed plans to sharply boost unemployment
#98Wage 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...
Wages are too high, because our entire economy is built on the backs of available race to the bottom international labor. Demographics and the security situation is changing this, and the establishment (for better and worse) is absolutely freaking out. The world as we have lived it the past 30 years cannot exist if people doing labor can command a decent wage by USA standards, we’re going to have to recalibrate for a…
Raising wages to a "decent wage by USA standards" is meaningless if you also spark more inflation.
Re: The Fed plans to sharply boost unemployment
#99Inflation is high because demand exceeds supply. You have to reduce demand to match the available supply. Interest rates are the main tool to do that. This is true even if the ultimate cause is supply chain issues.
Why not help with supply issues too?
Re: The Fed plans to sharply boost unemployment
#100Earlier quoted context omitted.
Unemployment is still near record low levels. The Fed isn't firing people - they are correctly raising interest rates to keep up with inflation. There's not much wiggle room for them. If we all want this problem to go away, we should be focusing on improving our own energy independence and energy transportation quickly and ending the war in Ukraine which is disrupting markets and causing economic havoc in Europe.
> If we all want this problem to go away, we should be focusing on ending the war in Ukraine which is disrupting energy markets and causing economic havoc in Europe. If you have contacts in the Kremlin feel free, but otherwise that's an empty idea. There are two ways to do that - Ukraine gives up, which it won't, or Russia does, which it won't. Putin cannot afford to show how weak he is or he might be gone, and Ukrai…
There is a lot of hopium on social media about this right now because we mostly only see the Ukrainian side of this conflict.
The likely outcome to this war is Ukraine losing territory. There is no reasonably likely outcome where Ukraine will liberate ALL of the occupied territories.
Putin will indeed use tactical nukes, or at least demonstrate them, should Ukraine push much further into the occupied land.
...but you are right that little of that is in our hands. Domestically, we need to ramp up energy production. Both in the US and EU.