> it hasn’t hit Amazon pocketbook now, has it? Are they in danger of running out of money? What happened to “people are our most important resource”?
Amazon just had to take out an $8B unsecured loan to be paid back in a year to cover operating and capital expenses. Despite what the government is telling you, things are really bad and about to get a lot worse. The lowest hanging fruit/the least valuable employees get cut first. That's how they stay in business. That's the smart business move unless they can pivot.
Companies can't just borrow and spend anymore they actually have to be sustainable. Amazon gets loans to buy inventory and equipment and pay employees so they can stock their warehouse and then they pay back those loans later after it's sold. If they don't sell that inventory because consumers have no money they still have to make loan payments so it becomes more costly to them over time and if they want to break even they have to raise prices. This is inflation.
The Fed raising interest rates makes borrowing money to do this more expensive so they don't do it or do it less. Money in the economy evaporated in November 2021 with the announcement of Quantitative Tightening and the end of Quantitative Easing. That means getting loans and free money became expensive and private investment in the markets/companies evaporated. This forces inflation to come down because they can't keep borrowing and inflating. They have to stock just what they can easily sell or they find themselves imploding as they can't pay back their loans. Pretty much every industry is going through this, hence all the industries collapsing. You will see a lot of companies that have been struggling go out of business.
Why is this happening? Free money basically. Our government pandered to political interests (voters and cronies) and overspent for decades, kicking the can down the road and we're now at the end of the road.
The US debt to GDP ratio has been over 120% since 2020 which by IMF definition is an economic death spiral. That means the US is underwater, we don't produce enough money as a nation to pay our bills. By 2028 that death spiral will become irreversible, meaning the payments we make on our loans for all that free money --the bailout money, stimulus checks, the entitlements, that omnibus, the inflation reduction act-- will only go to the interest and no longer the principal. That sets us on track to be insolvent by 2042.
Yeah I know, crazy right? But why? Because when this happens all those companies and private investors that poured money into stocks and venture capital can't rely on them for profits so they instead buy government bonds. They don't give as high of a return but it's guaranteed money in a down economy so they do it. The result is the governmnet receives the money they need to pay their bills and all the those living off free money get a reality check and have to live and operate within their means.
And balance is restored to the universe. Unless people try to cash out their bonds and find the government is bankrupt. This is why government spending is bad folks. They manipulate the economy to prop it up and print money until the Ponzi scheme fails. Rinse and repeat or pass a balanced budget amendment and demand our government stop spending money on pointless wars and entitlements that buy them votes or kickbacks. As long as there is government debt, as long as the government exists, the cycle will repeat. We'll just have to wait and see if we survive this time. Where we are at the end of the road is unprecedented. This has been building since we got off the gold standard which is what allowed them to overspend money we don't have.
Historically this is when there's a world war or a collapse of civilization/Dark Age because most nations are in the same boat. Decadence gets the better of us and lack of restraint (dare I say, conservative behavior) leads to this moment in history once more.
Obviously there's more nuance to it than just that, but that's a concise rough summary of what's going on.