Everything I own is sharply lower as apparently American’s gaining employment is something to be feared.
I will try to explain this to you. The reason we have had no inflation before now is because even as the monetary supply rocketed to untold heights, the velocity of money was collapsing. All of the deflationists have been harping on the sound money crowd because they believe they can control employment levels by printing ugly pictures of dead people (which is stupid).
Now that employment is regaining its stride, Americans will have more to spend, and you can probably expect the velocity of money to start picking back up. In fact, if you just bother to look at my new position OMAB, flight volumes are surging to vacation destinations as an example.
We have made much ado about the ever higher levels of debt owed by Americans. Well the numbers aren’t really that bad either. Does an extra $300 of credit card debt on average per year really signify the end times? The debt has almost no carrying cost at the moment; even average citizens can take hold of these zero percent interest rates in one way or another.
The point, good sir or ma’am, is that the monetary supply outstanding is still quite a bit larger than it was five years ago and there is no good strategy to unwind that. Employment numbers picking up are the first stride to wage growth which will usher in the final stretch of the recovery – inflation.
And that inflation will probably get out of hand, because the probability of a perfectly controlled, centrally planned recovery is exactly zero.
Don’t be surprised if commodities experience a second awakening in the not too distant future.
If you enjoy the content at iBankCoin, please follow us on Twitter
When you talk about the velocity of money
do you mean number of financial transactions.
I found the answer:
http://lmgtfy.com/?q=velocity+of+money
Thanks
Mr. Thaler – this is truly a question, not an argument: how will wages increase, with all of these illegal aliens now freely frolicking about and competing against the ham & eggers for employment?
Soon there won’t be enough ham&eggers
to do the work.Will have to open the border
once more.
Well strictly speaking, I think they’re about to be legal aliens, since DOJ is rewriting the books.
Besides that, it’s not like there is this sort of ethereal labor blocks out in the world, and you can collect any of them that you like to assemble a set.
Different jobs require different skillsets, and the trend has broadly been one of increased specialization. I don’t really think immigrants compete against US citizens all that much for jobs. Probably outside of manual labor, the next closest point of competition is healthcare with physicians or maybe something like engineering where foreign students come to the US, receive training, then decide to just stick around.
And that’s hardly a problem, this country has operated like that for a very long time.
As two general themes I am seeing; specific businesses are having trouble filling specific vacancies (I need someone who knows A, B, and C and I can’t find them) and broadly the reduction of active job hunters should mean slack labor supply is in the process of tightening.
Still more, keep in mind illegal immigrants account for, as best as we can surmise, is probably less than 5% of the total population. The type of influx you would need to see to just overwhelm US job markets would be astounding. Border states would need to just completely surrender to the Open Border movement, and I just don’t see that ever happening.
Thank you for the thoughtful reply. Truly wanted to read your thoughts.
Your really sharp Mr. Cain
merci
I realize that here, inflation is as defined by policy makers.
For “the folks” reduction in purchasing power of a dollar has been trucking along quite nicely the entire time, thank you.
I just got back from the grocery store. They’ve completed the conversion of a standard bag of potato chips to about 8 oz.
I see the “family size” is now downsized to about 10 oz, and the former family size is now branded as “party size” at about 15 oz.
I heard some lady say to her companion “everything is so small and thin”.
Credit card rates are near record highs iirc
As measured how?
specialized skill set and experience is great if you have it, and should allow those to profit nicely. I imagine the “real” labor pool is smaller since the college grads of ’07-’11 were essentially a lost generation. They had no entry level to jump into, so 5-8 years later they don’t have the normal skills/experience.
I suspect this is a major overstatement of the realities at hand. Colleges have been expanding “unemployable” degrees, but not at the expense of the standard ones. Yeah the percentage of nonsense is growing, but we’re probably producing more trained professionals out of the old fields than we were.
The blue collar crowd now have college degrees and debt to go with that entry level job. But the white collar world still exists just like it did before.
Whoa, nicely said, “blue collar” college degrees. I’ve seen a fair amount of that and I couldn’t put a finger on it, there it is.
I graduate in 2012 and can assure you that year can be included in the wrong generation
Also, I did some research and my credit card comment was in error. I must have been thinking of something else. Credit card rates are near lows nominally but around highs when measured with respect to inflation.
Lost, not wrong
Yea I hear Japan is picking up escape velocity as inflation accelerates and the economy ‘improves’… well according to the published numbers… not so much according to what the CEOs are saying… or the architects of Abenomics.
How many segments on CNBC do we need on using your car for a collateral backed loan (LOL as if a car were collateral) and using said loan to buy stocks (no I’m not making this up, its a real segment) for it to be super Boolish?