Here’s What Will Drive Inflation Higher

Hint: It’s Not Money-Printing Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] Here’s What Will Drive Inflation Higher - “Long-term demographics have combined with cultural changes and Covid-Lockdown epiphanies to completely re-order America's labor force”… - There aren’t enough skilled workers to replace retiring Boomers… - A revolutionary conclusion… Recommended Link [The Grave Has Already Been Dug]( [Read more here...]( You’d have to be blind not to see that the stock market is completely divorced from the economic reality… We have record unemployment, the millions of jobs lost in the pandemic aren’t coming back, and now Biden and Co. are running up the debt faster than any administration in history… And as the stock market continues to hit new highs… the REAL economy digs itself deeper and deeper into a recession… But you can’t fake a recovery… Which means that the grave has already been dug… And the stock market is just a deadman walking… All it would take is a tiny push to send us spiraling over the edge into the abyss. And on July 19, 2021… THIS Monday… it looks like we just might get it. See why we might be on the verge of the biggest stock market sell-off in history and how you could protect yourself. [Click Here To Learn More]( San Francisco, California July 17, 2021 Editor’s note: Today’s great inflation debate centers on factors such as money supply and government spending. But today, Charles Hugh Smith shows you how changing demographics is a key factor that will drive inflation higher. [Charles Hugh Smith]Dear Reader, America's labor shortage is complex and doesn't lend itself to the simplistic expectations favored by media talking heads. The Wall Street cheerleaders extol the virtues of "getting America back to work" which is Wall-Street-speak for getting back to exploiting workers to maximize corporate profits. Long-term demographics have combined with cultural changes and Covid-Lockdown epiphanies to completely re-order America's labor force beneath the superficial surface of "re-opening." No one post can do justice to such a complex topic, so I'll touch on a few of the many inter-connected (and often mutually reinforcing) dynamics. 1. Boomers are leaving the workforce in droves. The statistics are incomplete but we know that a larger percentage of Boomers have been working longer than previous generations. Now Boomers are leaving the workforce. Some are retiring, i.e. qualifying for pensions and/or Social Security benefits, while many others who have been drawing retirement benefits while they continued working are quitting the workforce. A November 2020 report discusses this reversal: The pace of Boomer retirements has accelerated in the past year: (pewresearch.org). This is 3.2 million more Boomers than the 25.4 million who were retired in the same quarter of 2019. According to the Social Security Administration, around 3.2 million workers signed on for their Social Security retirement benefits in 2019, and around 2.7 million more people qualified for disability benefits or as dependents of retirees or disabled workers. That may not seem like a lot of people out of a workforce of around 160 million. But recall that millions of Boomers have been working into their 60s and 70s. The number of those workers who have retired for good is unknown, but anecdotally, it is consequential. (Social Security reports 178 million people had some income that qualified for Social Security, but around 20 million of these incomes are extremely low: eBay sellers, occasional gig workers, etc. earning a few hundred or few thousand dollars a year. The primary workforce is around 160 million people). Why have they left? Recommended Link [A $7 "Biden Survival" Blueprint?]( [Read more here...]( He's run closed-door meetings at the Pentagon... He's met with the Fed chairman and advised the CIA... And he's been paid a fortune to advise wealth private investors... But right now, he's ready to give away his most valuable piece of investment intelligence, practically for free. Why? "Because," says this ex-high-level insider, "I can't keep this under wraps any longer." "Not with everything that's at stake." [See What He's Uncovered Here]( Not Enough Replacements They're fed up with their line of work, they don't like the way their industry has changed, they're burned out from being "sandwiched" between caring for very elderly parents (80 and older) and supporting their children or grandchildren, and they're tired of working after 50+ years. (I myself have logged 51 years of employment). 2. There aren't enough skilled replacements for experienced hands-on workers who have left the workforce. Here's what the superficial analyses miss: what matters isn't the total number of people seeking jobs or the job openings -- what matters is how many people are able to replace skilled workers who have left the workforce and are willing to work for the wages being offered. In other words, there may be 10 million people available for work but if few have the requisite skills and experience, then 1.5 million openings for welders, pipefitters, crane operators, etc. will go begging, and a bidding war will jack up wages for the scarce qualified workers. Culturally, the push to make every young worker a college graduate has left the nation shorthanded in skilled hands-on tradecraft workers of the sort that actually keep the nation running. If everyone wants to be a celebrity chef, social media influencer, software guru, YouTube star, environmental studies major, RobinHood millionaire speculator, etc., then it's no surprise that there are insufficient experienced replacement workers for the nation's aging workforce of skilled trade workers and technicians. These are the people that keep the power lines, refineries, chemical plants, water treatment facilities, electrical grid, plumbing, etc., functioning — to name just a few of the hundreds of skilled crafts that are losing much of their aging workforce to retirement. There are no 100-day wonders in these fields. It takes years of training and experience to master these trades. Work Is Undergoing a Revolution 3. The pandemic lockdown provided tens of millions of workers with an epiphany about their lives, careers, values and aspirations. This reckoning has overturned many of the assumptions being made about the Gen-X and Millennial workforce. The economy is a self-organizing, emergent system of millions of individual assessments and decisions. On a larger scale, what we see is unprecedented turnover as over 4 million workers are quitting their jobs every month. The reasons are varied — burnout from insane workloads, rage-quitting over intolerable working conditions, absurd demands from Corporate HQ and having had enough of being cussed out by customers, and seeking better opportunities elsewhere. But the bottom line is work in America is undergoing a revolution few want to recognize because it's changing the terms of the exploitation the status quo holds so dear. What YOLO (you only live once) and FIRE (financial independence, retire early) are telling us is that work is often misery in America. The FIRE proponents are saying we don't want to slave away our entire lives to pay debt, enrich billionaires cavorting in self-glorification and over-consume in a waste-is-growth wasteland. By setting the goal of exiting the workforce at 35, they're saying they don't want to work 30 additional years for nothing of any real value. YOLO (you only live once) has many manifestations, but it boils down to "there has to be a better way to live than this." This includes avenues from trying to amass a fortune in daytrading to cobbling together side hustles to building a micro-house and getting by on a fraction of middle-class expenses to starting an enterprise on one's own terms. Keeping YOLO and FIRE inspired workers on the dead-end treadmill of stagnant wages is not going to work. To entice these escapees back to the grinding wheel is going to take much higher pay and levels of employee empowerment Corporate America hasn't the foggiest idea about. Many Americans Are Too Unhealthy to Work 4. America is profoundly unhealthy, diminishing the workforce in ways few dare to consider. Fully 10% of the workforce is on permanent disability. Some are free-riders, of course, but most have real health issues. America's health problems extend from mass addiction to drugs, porn and social media to the physical decay of poor diets and low levels of fitness. To ignore the impact of chronic poor health on the workforce is to cling to an absurdly high level of denial. Bottom line: the workforce is shrinking as poor health sweeps millions into disability or low levels of participation in the economy. Employers will have to raise wages to attract healthy, productive workers. Recommended Link [Billionaire Leaves Crowd In Shock]( [Read more here...]( An audience of a few hundred (including myself) quietly gathered in Washington D.C. a few months back. That’s when the world’s richest man, Elon Musk, took the stage… and shocked the entire room. It all has to do with this image you see on your screen… showing a surprising new discovery he’s made. Not only will this blow you away… it could also transform the American economy forever. [See Elon's Shocking Reveal]( 5. America's economy and society no longer have roles for millions of average workers. In past generations, there were undemanding ‘we just need a warm body’ jobs for people who for whatever reason were not up to being the super-productive, super-motivated worker of Corporate America's dreams. There are few undemanding jobs left in America. Every job is demanding, regardless of pay. Fast-food, hospitality, janitorial, agricultural work — all are highly demanding. Many people simply don't have what it takes to work under unrelenting pressure for 8+ hours a day. Many others are unfit for physically demanding work. The fantasy is that all workers are clay that can be shaped into the ideal worker with sufficient training and motivational rah-rah. The reality is America's family structure has failed in many cases, its educational system has failed in many cases, its War on Drugs has failed and its so-called safety net has failed in many cases. As a result a great many people are incapable of demanding work of the kind every employer now needs. The Pendulum Is Reversing 6. The pendulum of exploitation and wealth/income inequality has reached an extreme that is now reversing. When you push the pendulum to an extreme of inequality, it will swing to the opposite extreme minus a tiny bit of friction. This will lead to types of labor disorder that are currently unthinkable for the mainstream punditry. For example, wildcat strikes at fulfillment centers and Big-Box outlets and the enraged trashing of symbols of Corporate/Financier/Wall Street excess. Add all this up and the conclusion is revolutionary: Great swaths of the American workforce are already on strike or slipping away from the dead-end treadmill. The terms of employment will have to change dramatically, and that will drive inflation higher — or savage corporate profits — take your pick. Few see this now but they'll be forced to recognize it soon enough. If you doubt this, check back in 2025. Regards, Charles Hugh Smith for The Daily Reckoning Editor’s note: Our colleagues dropped an [absolute bombshell on the financial publishing world…]( It’s a simple trade idea that could potentially 40X your money or more in days or weeks in the event of a market crash. And with headlines like this starting to hit the news cycle… [Click here for more...]( -Business Insider No one needs to tell you how valuable something like this could be. In fact, according to our colleagues, this crash won’t wait for a couple of months to get started. [It could be coming in just a matter of days.]( That’s why we’re forwarding this information to you. But you’ll need to see it before the market opens on Monday. Are our colleagues right? You decide for yourself. [>> Click here for details.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Charles Hugh Smith][Charles Hugh Smith]( is an American writer and blogger, and serves as the chief writer for the blog "Of Two Minds". Started in 2005, this site has been listed No. 7 in CNBC's top alternative financial sites, and his commentary is featured on a number of sites including Zerohedge.com, The American Conservative, and Peak Prosperity. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press delivering daily email issues and advertisements. 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