The Coming Fed Reflation

We are past the point in the current historical trajectory where we will see a revival of solid economic growth for everyone anytime soon. [Gilder's Daily Prophecy] January 06, 2023 [WEBSITE]( | [UNSUBSCRIBE]( CIA-based timing tool now available to everyday Americans What you’re about to see might sound unbelievable, but it’s 100% based on facts… my connections a controversial government insider… and my work at the CIA. I am putting the finishing touches on our new CIA-based timing tool and I want to make sure you don’t miss your opportunity to give it a “test-run”. But don't hestitate - [click here for all the details.]( The Coming Fed Reflation [Jeffery Tucker] JEFFREY TUCKER Dear Reader, They did it again! The new labor data is out and it was once again trumpeted as wonderful news. Do you suppose that anyone really believes this nonsense anymore? I doubt it. The grim reality is that the low unemployment numbers are a complete ruse. So is the supposed “job creation” which is really just second and third jobs. Plus even by that standard, the pace of job growth is slowing, which is why a private newsletter circulated by The Wall Street Journal says that we should take all rosy reports of job growth “with a grain of salt.” [chart] Meanwhile, we have lower labor participation now than we had in 1978. We are nowhere near pre-pandemic levels and nowhere near replacing the lost economic growth. How can we account for this grim reality? It’s the parents with young kids who used to have stable lives but cannot find child care, cannot afford a private school, and have turned to homeschooling. At the same time, they await the fateful decision about whether even to attempt to use the public schools for which their taxes are already paying. It is also about many people stretching out unemployment and disability benefits as long as possible. Many young people have just moved home and convinced mom and dad that they are working on becoming TikTok influencers. It’s also about people just dropping out of the system and choosing to indulge in their substance abuse problems rather than preparing for the future. I’ll say it again: the labor problem has to be understood with disaggregated methods. There are plenty of jobs out there. Within a few square miles of my living quarters, there are hundreds of jobs available in food service, shelf stocking, driving, car repair, retail of all sorts, and many other positions besides. The Haute bourgeoisie doesn’t want these jobs. They paid $150K for a piece of paper that says they are educated and expect a solid do-nothing, six-figure job to be given to them as a matter of right. They cannot adjust to the reality that it is not going to happen. The hardest thing in the world for people is to downgrade their class expectations. So long as they have a roof over their heads (thanks Dad), weed to vape, and liquor to ingest, they will pass the time just slumming it. Did “Sleepy Joe” Purposely Sign the Dollar’s Death Warrant? [Click here to learn more]( This is the scenario we’ve been fearing… Instead of President Trump… We’ve got “Sleepy Joe” Biden behind the wheel. And now, a [sinister move that Biden just made]( could TORPEDO the U.S. dollar once and for all. In fact, thanks to this one move… Your dollars could be made worthless, or even CONFISCATED. Do NOT get caught off guard. [Click here to discover 4 EASY STEPS you can take to protect your wealth NOW](. Tech Layoffs Let’s see how long that lasts. Meanwhile, in the tech sector, layoffs are growing. All the most luxurious companies are purging 10-15% of their workforce. That’s just for starters. They will all go the way of Twitter as they start to realize that four out of five of their employees are useless for the whole point of the operation: to make profits. What seems now like capillary cuts are going to end in a bloodbath for this sector. Even companies like Salesforce are slashing payrolls. They start at the higher ends: management and HR. To deal with the PR fallout, these companies are spending billions in severance packages just to get the monkey of high labor costs off their backs. The reason is inauspicious. The fake growth of these companies was entirely subsidized by 15 years of zero-percent interest rates. It’s a classic Austrian-style cycle: loose money created a whole sector of unsustainable investments. The pandemic controls did their best to drive consumption but that could only last so long. Now that the Covid hysteria is over, these companies are facing reality. The Fed is now driving the financial sector toward interest rates with a positive rate of return in an effort to crush inflation. The money and capital out there seeking a return in fancy-pants digital applications will soon find that it can earn money in bond-based safety. The drying up of the venture money in digital fripperies will continue to be devastating. And then what happens to inflation? We are already seeing it. Housing prices are coming down. Rents are coming down. Natural gas is coming down. Same with cars and durable goods. They will settle back, even as consumer goods like food and utilities continue to rise. And check out alcohol and tobacco! These have not risen that much in the great inflation but now they are on the move at the same time as housing and transport crash. The point is that these trends will drag down the overall rate of inflation to what seems to be a manageable level. This is precisely what happened in the mid-1970s. The Fed seemed to have won the battle. The Great Reflation But then there will be another problem, and we’ll see it hit hard later this year. The economy will be solidly in recession headed toward depression, with housing underwater and tens of millions of Americans screaming that they are unable to pay their bills as layoffs in professional services intensify. The Fed will be under massive pressure to reflate: to use its monetary powers to dig the U.S. out of the economic pit. It’s a serious question as to whether the Fed will be able to resist. My best guess is not. And the reason has to do with two forms of stability fear: financial and political. Financially, the banks could find themselves faced with a liquidity problem from holding too much bad debt even as the restless masses will get ever more angry. What happens if the Fed relents and starts another campaign of quantitative easing? It will be like 1977-1980 all over again, and we’ll be pushing double digits or higher. It could be following the 2024 presidential election. Let’s say the president is Ron DeSantis. He will inherit a real beast: an inflation depression. I would like to believe that DeSantis will hold out and not allow price controls but I’m not confident. If there is anything we’ve learned over these last few years, when events get out of control, political will is worth almost nothing at all. Everyone gives in. Conditions right now are setting up the DeSantis administration to be a complete failure, sadly. He might come into office with every intention of gutting the administrative state, cutting taxes, inspiring the country toward new optimism, and otherwise stopping the amazing disaster in DC. But he will be distracted by a much larger problem that will go beyond anything we saw even in the 1930s. This Is Your Opportunity For young people today, there are huge opportunities out there. Think differently. Don’t go the usual path. Be creative. Show up, work hard, cut expenses, stay off the booze, and save money. There are also opportunities in other countries. For those who are willing to buck the trend and reject digital addictions and demoralization temptations, they can build good lives. So too for investors. Panic is never the way. Patience and awareness can work wonders. Frugality, attention to detail, avoiding the fashionable baloney pumped out by the business press, and knowledge of economic forces can all combine to make for survival and even thriving. Sadly, we are past the point in the current historical trajectory where we will see a revival of solid economic growth for everyone anytime soon. Fixing that is years away if it ever gets fixed. It’s tragic because the potential for explosive economic growth and widening prosperity for everyone is there. But it will require ending the war on fossil fuels, cutting taxes, gutting the bureaucracies, and untangling the private sector from statist control. Even if none of that happens, living a good life is still possible for those who can see through the fog. When the central bank digital currency comes along, and it will, you will certainly want to be in a position to secede from it as much as possible. Regards, [Jeffrey Tucker] Jeffrey Tucker Over 62 And Collect Social Security? Take Action Immediately! [Click here to learn more]( [If you’re over the age of 62 and currently collect Social Security, you need to prepare now](. Because Biden has given our country the worst inflation in decades – and many warn things will only get worse from here. Worse yet, the Social Security check you receive now may not keep pace with inflation… [Which is why, if you don’t act now, you could fall behind in the months ahead](. Is your retirement at immediate risk? [Click here now to get the simple, step-by-step actions to survive inflation](. 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