In my love for my Bronx Bombers and a new baseball season, I give you my title story. Sadly, the subject matter is our economy. Last year, we told you that our economy is in a stealth recession. No one in the media follows our blog, and thus, the term and truth is not common knowledge. A quick recap.
Stagflation...
...is when inflation outpaces your individual standard of living like our present economy. One cannot make ends meet or slowly limits your future options. In the corporate world, it means inflation is higher than your projected assets and liabilities. You may not be able to meet your financial obligations or your future options are cancelled. This is the location of family households. This is the picture corporations see.
The scorecard reads: 1) low savings, 2) record-high debt, 3) record-high credit card use and debt, 4) even with the recent upswing in wages, it never reached the livable wage level and 5) the economy is slowing.
These aspects point to delinquencies, repossessions and evictions. Our team is losing. Poor outlook.
Enter the Fed
These crooks only had hope in late 2021 that inflation would be a one-time, quick hit. They did nothing. When they could not ignore it anymore (2022) they stated their hope in one word to describe inflation, "transitory." No one calls them out except in these types of blogs. We are now the "writing on the subway walls."
At that same time, employers found it difficult to get workers after COVID. In a sad, ironic twist, the Fed decided to fight inflation by hiking interest rates. Eventually, this will slow the economy as they make money expensive. Do they ever admit their mistake of making money cheap? Sorry, we already stated that no one calls them out.
Fed= now, a fireman, before the arsonist.
This change in money borrowing will result in layoffs. Small businesses will get another crushing blow. They were hit by imports and then, the pandemic. Higher rates and inflation will cause consumers to pullback on spending. Small business is dying a death of a thousand cuts. In late 2023, going out of business signs will be everywhere from main street to the last malls. It is not just the Fed, government does not protect workers or our economy. Stagflation will be the final nail to retail, to zombie firms, to a lower standard of living.
In baseball, if your starting pitcher doesn't have it, you bring in the relief pitcher. In economic terms, it means unemployment. Studies show that for every 2% reduction in inflation, unemployment rises by 3.6%. The last reading at 6% implies that unemployment will reach 10.8% to get to 2% inflation. Remember this formula!
Behind the Curtain
Last month, job growth was stated to be 266,000 jobs, but unemployment ticked up to 3.6%. Didn't you find that difficult to understand? What is really means is this. It takes 150,000 to move the needle. What is not expressed by the media is we lost many more jobs that were created. You can do the math.
Back to the sad twist of fate. By slowing the economy, jobs will become scarce. Employers problem? Solved. This will mean lower wages once again. This will result in another tick lower to our standard of living. We already know what that means: crime, homelessness, food banks and protest. People won't be working, they will be protesting. Do you know what happens after the protest stage? Civil unrest. They do not understand our problems start with the Fed. They grow with outsourcing. Our relief pitcher has an ERA of 6. It looks like a long season with a thinking of reality, "Maybe next year?" In economic terms, put tariffs on all imports! And, the most important, cut out the cancer, End the Fed! Peace.
