things don't always work the way they are supposed to
I'm convinced that if you were to lose your current source of income, you could come to Europe and live a stable life by drawing caricatures of people around famous sights.
"The paper found that businesses don’t really think about interest rates when they make various investment decisions, but rather they think about demand."
Indeed, so true!🤘🏽
Once again, Kyla's thoughts should be required reading for all of us who have some degree of literacy (inclusive of those very few literate members that reside in the Senate and House of Representative). It is quite the epiphany to me that so much hides in construction employment. Thanks for another terrific clearer view into the fog Kyla.
I feel seen in your artwork...I have always felt ashamed that I can only make stick figures so I just never really tried drawing. I feel inspired!
Yo kyla, all about the savings account but Public.com is NOT a good rep....
they just sell wrapped T bonds but charge .6% a year really meaning savings at 4.7%
Another fantastic article, Kyla!
You tackle a lot of things here. Tim DiMuzio recently said similar things about businesses and interest rates. Though instead of "demand" he says it's just a cost passed onto customers. When businesses are hiking prices, and workers are demanding better wages, banks want in on the action too and a rate hike is a solid excuse. Johnathan Nitzan and others have found that inflation is cyclical and interest rates don't regulate it (makes sense if it's just a cost of doing business). Turkey atually dropped rates to control inflation and that "worked" (though if inflation is cyclical then any policy "works"). But back to Powell and Unemployment. It boggles my mind that employment is part of the Universal Declaration of Human Rights, and yet we don't consider a 2% increase in unemployment a mass human rights violation.
Today's data release did put a different perspective on the issue of unemployment measure. More jobs added than forecast, unemployment went up due to more people returning to the labor force. Thus, both situations can be true - no recessions, higher unemployment.
As always, thanks, Kyla! :-)
I've got the impression the graphic is to mean that if a company wants to generate long-term returns (past 10 yrs) its products and/or services need to become important to people and at best ingrained in culture (like, say, Coca Cola). So it's less about people peopling. They people most at the first step, sentiment change.
Unrelated to that: perhaps you've already covered that and I missed, but I'm very curious why the Fed is watching the stock market so closely. So after some of the past rate hikes the market was doing fine or rising, and then one Fed official would say sth. along the lines of: "I think the markets haven't got the memo. We are hiking here and they'd better come down." But really, why should the Fed care at all about what the market does or does not? Because as you wrote in this very newsletter: the stock market is not the economy. To me their fretting about the stock market moving up or down almost appears like an admission, like the Fed would be saying: "All we are doing is a psy-op and we gauge the success of our psy-op by the market's reaction."
Is the FED's work to avoid a hard landing going to be like pulling off a Band-Aid slowly over years? Perhaps we'll pull on it so slowly that we are still in repair mode when the next crisis demanding stimulus overwhelms us? What do you think?
There is another aspect of the labor issue that nobody wants to talk about but Powell understands.....the issue of so many of the people who ARE receiving salaries are still NOT really working ....there are so many people doing the dead minimum they have to in order to get by, and still so many people "telecommuting" who dont work at all half the time....
This is what happens after 12 long years of easy money .....everybody gets used to easy credit and easy profits on the stock market so they think they dont have to work anymore.....many in fact have never really had to work....
And this is why we have train wrecks and major airline cancellation disasters and why our roads and highways and bridges are a mess, the crime rate is rising, drugs are off the charts, and even the measured productivity rate (which is mostly an exercise in fantasy) is falling.
And the only way to fix that is to fire a lot of slovenly workers, let them experience hunger and the fear of not knowing what the future holds for them, cut welfare and food stamps and all the other free government give-aways, and let them start choosing to provide real services to other people even if they dont agree with their politics, or else face starvation, disease and homelessness.
Its coming. Powell has nothing to lose by cracking the whip, and he understands why it is needed.
All this talk in the market about rate cuts, its just not going ton happen, not ever.....we are leaving QE and going back to reality......
So how is it supposed to work? You increase interest rates, so businesses stop investing and expanding, so jobs dry up, so demand decreases, so inflation decreases? If that is the rough case then why do they look at jobs vs total income? If there are 150 million people working in the US and 2 million + loose their jobs paying less than 50K a year (round down to 1%) that would probably be something like a loss of less than .5% of income? So how does that workout?