This is what the prelude to stagflation looks like - no job growth, yet prices rising.
If the administration pressures the Federal Reserve into lowering interest rates, say, right before November 2026, then we lock in a stagflationary cycle. An initial stock rally then long-term bond yields rising on inflation fears. A weakening U.S. dollar, and a Federal Reserve that has no tools to fight inflation in the medium-term.
Federal Reserve has no real tools to fight inflation. They can get the buckets out and start bailing but until somebody plugs the whole in the deficit there's a structural problem with the boat.
People love to bring up the gold chart and be like "what happened in the 1970s!". It wasn't ending the gold standard that was the problem. It was the endless deficit spending; if you want to get a handle on inflation you need current demand to match current production.
It isn't the Fed's job to fight economic problems, Congress is responsible to do that. But Congress doesn't want to legislate where they need to. Yes stagflation is the best outcome in the current climate. I don't think we'll have it that good.
Prelude? Have you been asleep for the past 5 years, or 20? We've had plenty of inflation with little/no real growth. Number goes up but jobs/salaries/domestic production goes down. Government consumption goes up year after year.
The oversimplified explanation is that there's a money cycle that lasts ~80-120 years. We're going through the rough part of the cycle right now; and trying to fight it just prolongs it.
Maybe there's also the secondary cluster below that where even lower job opening numbers have the same unemployment rates. I think this graph is less predictive than just showing the relationship without other important data to explain why things like that second cluster below the main line exists.
Basically, with all the job cuts in the last few years, there hasn't been as much unemployment. We are currently heading to the point where even small job cuts have a much larger impact on unemployment.
We saw similar during the great depression, in that people couldn't find full time work, so they did gig jobs, quickly undercutting other laborers until wages cratered and it was a full blown depression. I suspect that gig work, even 1 hour/week is enough to get you out of the unemployed group, but it isn't sufficient and is masking the true labor market and unemployment. And then there is the Federal government firing the statisticians because the numbers coming out don't look good and now we can't trust the numbers. At this point any number you must assume to be majorly inflated from reality. Those made up numbers aren't even good.
>Basically, with all the job cuts in the last few years, there hasn't been as much unemployment. We are currently heading to the point where even small job cuts have a much larger impact on unemployment.
What are you talking about? Unemployment numbers have been gamed for years. Those job cuts from years ago didn't reflect in unemployment because the stats are fake.
>We saw similar during the great depression, in that people couldn't find full time work, so they did gig jobs, quickly undercutting other laborers until wages cratered and it was a full blown depression.
That is the wrong way to look at it. The depression did not result from low wages. Low wages were downstream of other calamities in the economy back then, chiefly a credit bubble and stock market bubble bursting as well as drought conditions and crop failures. Remember the Dust Bowl?
When the economy is suffering, money is (and should be) in short supply. There were naive efforts from the US government to try to set wages high. They even tried destroying food to drive prices up, until the many hungry people in the country became outraged about it. In the end they decided to debase the currency, thus stealing from everyone who had anything under the pretense of solving a problem. They made the problems worse, and probably prolonged the economic misery by years.
AftHurrahWinch|4 months ago
If the administration pressures the Federal Reserve into lowering interest rates, say, right before November 2026, then we lock in a stagflationary cycle. An initial stock rally then long-term bond yields rising on inflation fears. A weakening U.S. dollar, and a Federal Reserve that has no tools to fight inflation in the medium-term.
lesuorac|4 months ago
People love to bring up the gold chart and be like "what happened in the 1970s!". It wasn't ending the gold standard that was the problem. It was the endless deficit spending; if you want to get a handle on inflation you need current demand to match current production.
BizarroLand|4 months ago
Even Arizona Iced Tea had to come off their $0.99 price tag.
Everyone in America is hard-pressed to find anything for sale for at or under $1.00
Minimum wage is still federally $7.25.
How much worse does it actually have to get to be official stagflation?
downrightmike|4 months ago
wakawaka28|4 months ago
unknown|4 months ago
[deleted]
klooney|4 months ago
NomDePlum|4 months ago
gwbas1c|4 months ago
https://economicprinciples.org/
https://www.amazon.com/How-Countries-Go-Broke-Principles-ebo...
The oversimplified explanation is that there's a money cycle that lasts ~80-120 years. We're going through the rough part of the cycle right now; and trying to fight it just prolongs it.
AftHurrahWinch|4 months ago
rtkwe|4 months ago
downrightmike|4 months ago
We saw similar during the great depression, in that people couldn't find full time work, so they did gig jobs, quickly undercutting other laborers until wages cratered and it was a full blown depression. I suspect that gig work, even 1 hour/week is enough to get you out of the unemployed group, but it isn't sufficient and is masking the true labor market and unemployment. And then there is the Federal government firing the statisticians because the numbers coming out don't look good and now we can't trust the numbers. At this point any number you must assume to be majorly inflated from reality. Those made up numbers aren't even good.
wakawaka28|4 months ago
What are you talking about? Unemployment numbers have been gamed for years. Those job cuts from years ago didn't reflect in unemployment because the stats are fake.
>We saw similar during the great depression, in that people couldn't find full time work, so they did gig jobs, quickly undercutting other laborers until wages cratered and it was a full blown depression.
That is the wrong way to look at it. The depression did not result from low wages. Low wages were downstream of other calamities in the economy back then, chiefly a credit bubble and stock market bubble bursting as well as drought conditions and crop failures. Remember the Dust Bowl?
When the economy is suffering, money is (and should be) in short supply. There were naive efforts from the US government to try to set wages high. They even tried destroying food to drive prices up, until the many hungry people in the country became outraged about it. In the end they decided to debase the currency, thus stealing from everyone who had anything under the pretense of solving a problem. They made the problems worse, and probably prolonged the economic misery by years.
lordnacho|4 months ago