The labor market, trust, quiet quitting, and Fed moves
Incredible content as always! FYI the Zoltan link at the top of your article is broken.
there's just so much confusion, isn't it Kyla?
there's a saying: change is the only constant, after experiencing everything that's happening around us, i'd like to alter it a little:
change & confusion are the only constant
i seriously support & appreciate what fed is trying to do (genuine work) but sometimes no matter how much effort you put, the outcome is not meaningful & fed is going in that direction in large parts. its basically solving a problem (unique in many ways) with tools that have been the same (monetary policy).
in such times, when an institute like fed is unable to solve the kind of crisis we're in, it hits credibility & leads to immense distrust in an increasingly unstable world, im incapable of diving into the specifics of human value etc but we'll float through it, just a matter of time
this is not the end (it might seem like apparently) but losing guard at this moment essentially lets nihilism cloud & it hits the long-term worldview which is not healthy
Again, Kyla, your piece has been a guiding material to navigate an apparently complex & confused state of the world, with a dose of optimism!
Just my informed conjecture here but...it’s possible that the Fed’s rate hikes aren’t registering in the job market because rates are well below the threshold of what many consider “high”. Interest payments for businesses that borrow just don’t represent that high of a cost as a percentage of total expenses. Our current rates were last this high in, what, the mid-2000s? That wasn’t a high-rate environment.
So, good chance this is a “threshold” sort of situation where the Fed can raise rates without much issue until they get to a certain level, after which each increase does actually cause some pain.
Such a thoughtful and clear article, Kyla. 🙏🙏🙏
Fed isn’t the problem - inflation is. This is all still fundamentals, very basic macroeconomics. Government spending and irrational Executive agency government policy is what got us here. The worse outcome is to not raise rates. The Fed will do what it can to reduce inflation, but none of this will end until 2024.
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One thing: Zoltan's 4 "R"s is all about internal work. The US appears to be in "start fires globally" mode. How many times have you heard Brian Deese say "you think our economy is bad, you should see the other guys!". And even Potus Biden has been quoted saying the same thing. Even the press secretary said the same on the Sunday morning "news" shows. I don't get the feeling that internal aims are what it's all about. I think it's more WAR: degrade "the other guy". That will take up the budget.