September 30, 2023

by David Haggith

The Fed goes to tighten an already tight labor market by ensuring extra of the employees among the many too-few staff we at present have are laid off in an effort to scale back manufacturing that spent a lot of the 12 months decrease than final 12 months’s manufacturing in an effort to decrease costs which are, in good half, too excessive due to product shortages.

If that is smart to you, the Fed is your good friend.

The place we’re going or the place we’re?

And, if you’re a good friend of the Fed, you can be among the many many who consider we aren’t but in a recession, despite the fact that the Chicago Purchasing Managers’ Index (PMI) has by no means been this low with out ALREADY BEING IN a recession:

OK, within the dot-com bust round 2001 we had been a couple of month shy of being within the declared recession when the PMI hit this degree. However all different recessions had been solidly within the crimson as soon as this barometer was this low. Nevertheless, I’ve been barking up this tree all 12 months, and all I’ve to point out for it up to now is a mouthful of bark. So, go forward and consider we’re not already in a recession, regardless of these two quarters of damaging GDP earlier this 12 months in order for you.

And you then’ll be a good friend of the Fed.

Earlier than you do although, even Zero Hedge says this studying “screams recession“:

In 55 years, this degree of Chicago PMI has by no means not didn’t coincide with a recession.

I’m unsure what “by no means not failed” means, however I feel what they actually meant was “a studying this low has by no means didn’t coincide with a recession.” Certainly, the graph reveals the 2 all the time arrive hand-in-hand, even when as soon as recession slipped within the door a shoulder forward of PMI. Not surprisingly, this latest studying was significantly decrease than all twenty-five economists who had been surveyed thought it might be. Economists not often see a recession coming till it’s already half over.

Elon Musk says the Fed should lower charges ‘instantly’ to cease a massively amplified extreme recession:

That does are inclined to occur when you find yourself quickly elevating rates of interest when you find yourself already in a recession. And I see Sven Henrich, whose work I all the time respect and oft’ quote, feels the identical manner in regards to the monitor report of the Fed’s economists in relation to seeing a recession (damaging GDP progress) earlier than it will get right here. He even lays out the explanation I’ve given for making my predictions — as a result of I do know the Fed will say nobody may have seen it coming (“unexpected elements”), so I like to point out prematurely that the elements have been seen.

Even if you’re good friend to the Fed, the Fed isn’t your good friend

The Fed took the governor off the financial engine and ran with the accelerator hammered to the ground via months of this transitory inflation as its momentum was constructing, and now YOU’RE paying the worth for that reckless abandon of sense on daily basis. Now they’re going to do the identical factor with the brakes, hitting them arduous proper after working into the wall. Relating to driving abilities, these guys ought to by no means be allowed wherever close to a automotive, not to mention behind the steering wheel of a eighteen-wheeler.

Don’t fear, although, as a result of the recession they already created shall be as transitory as life itself. You would possibly lose your livelihood, however they are going to definitely hold theirs. They all the time do. No cause the perps ought to pay, nor the monetary pervs who appear to thrive in your ache. It could be humorous watching the Fed attempt to stamp out the flames of inflation with their toes on fireplace, as they clearly are, if not for the truth that they’re carrying your finest footwear. They stole the soles proper off your toes since you pay for there mistake on daily basis, they usually brazenly plan to steal much more whilst you’re wanting. These brazen bankster robbers even announce they’re coming. The don’t break in. They anticipate your authorities to go away the door open for them.

Subsequent time you stroll via the red-meat part of your grocery retailer, simply shut your eyes, flip thrice, faucet your ruby-red slippers and say, “It’s transitory; it’s all transitory.” These are the phrases that acquired us right here; perhaps they’ll get you out. Higher are the percentages, although, that, by the point you open your eyes, the costs shall be greater nonetheless.

Dr. Jerome Powell, nonetheless, assures you you’ll solely really feel a pinch as he applies the treatment and takes us into what he nonetheless says could be a mushy touchdown. By which he means solely some of you’ll have to sacrifice your livelihoods within the job crash that he says is not going to damage as a lot because the pinch of rising inflation is bound to if he doesn’t apply the brakes arduous sufficient to skid into the curve.

Powell’s mushy touchdown promise is premised on the sturdy labor market that assures him the financial system is powerful and resilient and people damaging GDP numbers earlier this 12 months had been however the mirage of a distant desert you’ll by no means know and never the barren panorama of latter-day lockdowns, Covid and/or vaccine deaths and sickness, commerce strains first damaged by commerce wars then shattered into shards by actual battle after which stomped into sand by sanctions.

In the meantime, extra information simply got here out supporting my terribly essential thesis for understanding the financial peril that’s befalling us, which I first stated almost three months ago, which is that the labor market is simply tight as a result of labor died or acquired chronically sick, leaving producers unable to supply on account of lack of productive laborers. That made sense to me, and it seems it does lastly to some others:

Lengthy Covid could also be ‘the following public well being catastrophe’ — with a $3.7 trillion financial influence rivaling the Nice Recession

[There are] hundreds of thousands of Individuals with lengthy Covid, often known as long-haul Covid, post-Covid or post-acute Covid syndrome. Whereas definitions differ, lengthy Covid is, at its core, a power sickness with signs that persist for months or years after a Covid an infection.

As much as 30% of Individuals who get Covid-19 have developed long-haul signs, affecting as many as 23 million Individuals, in line with the U.S. Division of Well being and Human Companies….

Researchers suppose most Individuals have had Covid-19 at this level.

Research counsel subsequent infections increase the probabilities of an “opposed” consequence, together with hospitalization and loss of life. The virus has killed greater than 1 million Individuals so far, and a few 2,000 extra die every week, in line with the Facilities for Illness Management and Prevention.


Whether or not you need to attribute all of these deaths and long-term sicknesses to Covid or to the vaccine or to the results of masks trapping individuals’s personal viral exhalations inside their our bodies or isolation is irrelevant for the aim of this specific dialogue. The purpose right here is, no matter the way it occurred, now we have 1,000,000 deaths in extra of the norm and hundreds of thousands extra people who find themselves ailing chronically. How can anybody not suppose that hundreds of thousands of lifeless and sick in a single nation alone may be contributing to the labor scarcity? May?

In the meantime, the hundreds of thousands who’re too sick to work are nonetheless customers, leaving us wanting merchandise to devour however with lots who need to devour them, assuring continued excessive inflation. So, how is driving extra individuals out of labor going to unravel inflation if it means even decrease manufacturing in an already low-production world with simply as many individuals consuming or practically so? One would suppose the maths can be self-evident; however I can’t get most individuals to consider it.

Lengthy Covid demonstrates that the virus is taking a lingering, pervasive and maybe even extra insidious toll. Medical consultants have referred to as it “the following public well being catastrophe within the making.”

“There are simply giant numbers of individuals affected by this,” stated Dr. Peter Hotez, co-director of the Heart for Vaccine Improvement at Texas Kids’s Hospital and a dean at Baylor Faculty of Medication….

However the tentacles of lengthy Covid attain far past its medical influence: from the labor hole to incapacity advantages, life insurance coverage, family debt, forfeit retirement financial savings and monetary destroy….

All advised, lengthy Covid is a $3.7 trillion drag on the U.S. financial system — about 17% of our nation’s pre-pandemic financial output, stated David Cutler, an economist at Harvard College. The mixture price rivals that of the Nice Recession, Cutler wrote in a July report….

Misplaced earnings and decreased high quality of life are different sinister trickle-down results, which respectively price Individuals $997 billion and $2.2 trillion.

That feels like sufficient injury created to already be in a recession to me. So, the longterm financial crippling of the labor market is beginning to be realized within the numbers. Don’t fear, although: There’s fully zero probability I’ll get credit score for ringing that alarm months in the past, but the Fed will nonetheless let you know in a number of extra months that this was an “unseen issue” that triggered them to err’ in tightening an already tight labor market by shedding extra staff when there are already too few. This isn’t a state of affairs the place extra unemployment helps, however they haven’t figured that out but as a result of …

Nobody may have probably seen this coming!