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The Fed plans to sharply boost unemployment

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Re: The Fed plans to sharply boost unemployment

#211

Post by socialismisok »

ShredKazoo wrote: post #154
socialismisok wrote: post #49

Earlier quoted context omitted.

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

What levers would you use? In the article Powell says: >"I wish there were a painless way to do that," Powell said. "There isn't." Maybe you should email him your idea. Also, I don't think it is accurate to say that the Fed sees worker power as a "lever" to control inflation. Their "lever" is interest rates. The problem is that hiking rates has the unintended side effect of increasing unemployment, in addition to fig…

Despite your patronizing post, I'm going to give this a response.

We could attack the issue from the supply side - invest in production where there are bottlenecks (increasing supply of desirable goods), removing the profit motive by nationalizing some industries (for instance we could nationalize portions of the energy sector or transportation sector.)

Alternatively, we could use tight price controls on industrial inputs. This, in turn, would result in a slightly less efficient market, but a reduced inflation.

In fact, some have suggested that this inflation is not particularly demand side driven. Read this: https://www.frbsf.org/economic-research/publications/economi...

You'll also note that they 3 are obvious supply side problems associated with the current inflation - the war in Ukraine, COVID, to name some big ones.

Maybe you'd like a resource that looks longer term. Wage growth has not been a significant driver of the current inflation: https://www.epi.org/blog/wage-growth-has-been-dampening-infl...

Don't assume that someone who disagrees with your position is uneducated or less knowledgeable than you. I might not agree with you on economic policy (I'm sure you'll tell me nationalization is crazy talk) but just because we value different things is no reason to be patronizing.

Re: The Fed plans to sharply boost unemployment

#212

Post by socialismisok »

bm3719 wrote: post #85
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…

> Shouldn't the folks who believe in markets as a force for good want wages to be set by markets? They do, but what's that have to do with the Fed? The Federal Reserve is arguably one of the largest central planner entities in existence in the US (which as a mixed economy, not a free market one, has many).

It's an indirect impact of Fed policy. Low rates means low unemployment means higher wages. The reverse is true too, raise rates, wages go down.

Re: The Fed plans to sharply boost unemployment

#213

Post by socialismisok »

ethbr0 wrote: post #41
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…

Price increases could be offset by a number of adjustments to other inputs to COGS. Reducing CEO pay, nationalizing health care (so it's no longer an employer cost), price controls on material inputs, reducing profit margins, increasing production efficiency, etc.

Yes, wages are a cost. But raising wages aren't a guarantee of price increases.

Re: The Fed plans to sharply boost unemployment

#214

Post by sofixa »

koheripbal wrote: post #100
sofixa wrote: post #82

Earlier quoted context omitted.

> 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…

> There is no reasonably likely outcome where Ukraine will liberate ALL of the occupied territories.

Of course there is. The Russian army is a disaster reminding of their WWI performances, so it being defeated until they're out of Ukraine isn't unreasonable.

> Putin will indeed use tactical nukes, or at least demonstrate them, should Ukraine push much further into the occupied land.

Nobody should pretend to understand what Putin will do. He has subverted expectations many times. I hope Macron, Truss and Biden have explicitly made it clear to him that any sort of nukes are the red line that must not be crossed. That's the message i heard, i hope he has too and is not desperate enough to start a nuclear war to save his ass.

Re: The Fed plans to sharply boost unemployment

#216

Post by _kbh_ »

koheripbal wrote: post #100
sofixa wrote: post #82

Earlier quoted context omitted.

> 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…

> Putin will indeed use tactical nukes, or at least demonstrate them, should Ukraine push much further into the occupied land.

Any use of nukes will lead to an overwhelming (likely conventional) response from Ukraines allies, unless Russia wants to lose the war faster they should really stay away from silly stunts like using nukes.

Re: The Fed plans to sharply boost unemployment

#217

Post by lithos »

VirusNewbie wrote: post #190
pgwhalen wrote: post #141

Earlier quoted context omitted.

> Congress and the Fed caused the M1 money supply to 5X in just a period of two years. Oft-repeated, but incorrect. The way M1 is calculated was changed in 2020, and the apples to apples comparison is actually a little bit less than 2X. https://fred.stlouisfed.org/series/M1SL

fucking lol. 2X!!!!!! That's still unfathomable. We're lucky everything didn't double in price.

Not really inflation happens where the cash flows. And very little of that cash flowed into normal markets.

On the other hand you can point you can look at the stock market still increasing/staying level in COVID, to figure out where inflation hit first. (Markets up in a lockdown, sounds impossible).

Right now inflation is hitting low end markets through that cash finally hitting normal markets with the wealthy trying to hedge with land/properties, and wage increases.

Re: The Fed plans to sharply boost unemployment

#218

Post by prepend »

edmundsauto wrote: post #143
prepend wrote: post #106

Earlier quoted context omitted.

> That's because automation turns labor into property. That means the owners of property, capitalists, benefit. I think customers also benefit. If a janitor costs $100/day and that’s automated away to a robot with $20/day costs that $80 will be passed on to the customer (just like every other technology innovation).

Potentially; another possible outcome is that $60 is passed to ownership and $20 passed to consumers. Companies these days are pretty aware of how price conscious their customers are - they aren't going to lower pricing based on cost unless there is strong reason to (competition is the only one I can think of... but it looks to me like companies compete less these days due to a variety of factors, including brand loy…

That’s possible but due to the great invisible hands that created an opportunity for competition to come in with a lower price. There are many factors so it really depends.

But automation has really benefitted customers through lower prices and higher quality so it’s hard to expect that these robots would result in owners pocketing the savings over previous robots.

Re: The Fed plans to sharply boost unemployment

#219

Post by uup »

lithos wrote: post #217
VirusNewbie wrote: post #190

Earlier quoted context omitted.

fucking lol. 2X!!!!!! That's still unfathomable. We're lucky everything didn't double in price.

Not really inflation happens where the cash flows. And very little of that cash flowed into normal markets. On the other hand you can point you can look at the stock market still increasing/staying level in COVID, to figure out where inflation hit first. (Markets up in a lockdown, sounds impossible). Right now inflation is hitting low end markets through that cash finally hitting normal markets with the wealthy tryin…

A lot of money did end up in normal markets. There is a lot of data for this. For instance, the Fed offers something called a reverse repo facility that allows institutions to deposit money overnight at the Fed. This is typically leveraged by money market funds. Over the course of the pandemic, the amount of reverse repo operations grew from 0 to over $2T.

A lot of the expansion was done via Covid stimulus, which put money directly into the hands of businesses and individuals. Unsurprisingly, people spent this money on all types of stuff, including equities and real estate.

Re: The Fed plans to sharply boost unemployment

#220

Post by speakfreely »

slenk wrote: post #115
starkd wrote: post #96

Earlier quoted context omitted.

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.

Zombie company to me sounds like a shell company with one or two people - that is not going to spike unemployment. Unless I don't understand what a zombie company is

That's not what they're talking about. They're talking about companies that are inherently unprofitable or barely profitable but hire huge sales or marketing teams to drive revenue growth, which enables them to seek cheap debt and venture capital to keep the music playing. These companies employ hundreds, thousands, maybe tens of thousands of sales people, marketers, and all the HR/security/facilities/IT staff that support them.

Killing zombie companies will be devastating to all these people.

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