When it comes to the people I want to hear talk about today's economic world, Mohamed El-Erian is about the top of the list. He's a very intelligent, well established investor who tells it pretty much as it is. Right now, in this October 22, 2021 Bloomberg interview, he says the signs are telling him, inflation (rising prices) is heading up, and will keep going up for quite a while.
The Fed (the Federal Reserve, the non-government entity that is the U.S. central bank, and creates our money) has been saying this inflation is "transitory," for a few months, meaning they didn't think it would last long. But inflation has stuck around, and it's getting worse.
"Inflation is the number one issue facing investors."
To calm inflation down, The Fed can raise interest rates that banks charge each other for short term loans. When they do that, all other interest rates go up as well, in a ripple effect. But that would mean the cheap, easy money that Wall Street has been relying on since September 2019 (Google "Repo Market Crisis"), is ending. And that would make stock prices drop, big time.
So The Fed is stuck, If they do nothing, inflation keeps getting higher, and most everything you buy keeps going up in price, maybe a little, maybe a lot. If The Fed "slams on the brakes" as El-Erian says in this interview, that means raising interest rates 1/4 % or 1/2 %, and stock prices react and go down. It looks like The Fed is going to let prices soar, and then raise interest rate too late (sometime next year, say March to August, most likely), and then stocks drop faster and harder. That's if they haven't tanked already for some other reason, like the fact they are crazy high to start with.
In any case, for normal, real world, working people, prices are going to keep going up, for many months, maybe a couple of years or more. Get used to it. Welcome to the (not so) Wonderful World of Inflation. And even better stagflation. That's a stagnant, lackluster economy, with rising prices at the same time.
This video about automation an globalization replacing human jobs is now over 5 years old. I was the taxi driver in this clip who lost his job to new technology, before Uber and Lyft. I known what this feels like. I also put this video in a blog post in June 2017. I've been writing about the "crazy times ahead," for over 4 years now, trying to give a few people a heads up. Now it's October 2021, is it crazy enough for you yet? I hope not, it's going to get A LOT crazier.
I've been writing about a major economic downturn, and crazy period of massive cultural, businessm and political change that I've seen coming, since at least mid-2017. The Big Freakin' Transition is one of the main underlying causes, but not the only one. Here are a bunch (but not all) of my blog posts from mid 2017 to late 2019, all pre-Covid era, on the economic downturn and massive period of change we are now two years into (with lots more to come). This first one is my personal favorite blog post title:
A whole lot of facts about rural poverty in America- August 2017 Ideas for small towns and rural areas struggling right now- August 2017 You'll notice "TV/Film studios" on this list. Right now in 2021, with the popularity of streaming, they TV/ movie industry can't build sound stages to shoot TV and movies fast enough, there are at least 6-7 major projects nationwide, most $100 million projects or more, across the country, right now. Told ya so, people).
Larry Kudlow's wishful thinking- January 2018 (This is the first post where I mentioned the stock market crash I saw coming- it took a bit longer than I thought to happen, but the Dow dropped 10,000+ points in 2020)
Great Recession II: Trump's Dump- has begun- April 2018- OK, I was a little ahead of the curve on this one. Just for the record, the Dow peaked on January 26th, 2018, and was basically flat until October 2020, which is when The Fed began pumping billions into the Repo Market to prop up the banking system. It is STILL being propped up by newly created money, and THAT'S WHAT it causing this crazy inflation (which will get A LOT higher next year).
A video for businesses and civic leaders who hate the internet, social media, and obscure bloggers who get more page views than their websites- April 2018 Not surprisingly, looking back, a bunch of guys with baseball bats came out to the tent where I was living (in central NC) about two weeks later and threatened to "kick my tent in a teach me a lesson I should have learned a long time ago," if I didn't stop blogging. My response was, "Hoke hey, it's a good day to die... go for it." Not the response they expected. After much deliberation on their part, they just left. That blog, which had about 35,000 page views then, has over 128,000 now. What can I say, The South is still The South. Free Speech bitches. It's in the Constitution.
Economic Rehab revisited- November 2018 My favorite quote in this little post is "... because former Fed Chair Janet Yellen said that they've figured out how to never have recessions again."
My stock market predictions for 2019- December 2018 I was wrong. I was over a year early, and didn't think The Fed would lower interest rates to near zero. Even so, none of the markets dropped to these levels, because they had all gone up considerably before the 2020 crash. Lowering interest rates how The Fed propped up stocks in mid to late 2019. The they started throwing a ton of money (by 2019 standards, not 2021 standards) into the banking system because of the Repo Market crisis.
The economic collapse of our lifetimes will happen this month- October 2019 I wrote this post after looking up "Repo Markets." The Repo Market had just seized about 10 days earlier, The Fed was saying they would have the mess taken care of in a few days, when I wrote this. It is now two years and three weeks later. Last night, 10/20/2021 The Fed loaned the banks $1.493 TRILLION in assets, overnight, in reverse repo operations. The U.S. banking system had to borrow nearly $1,500,000,000,000 last night, to stay in business for a couple more days. This is STILL happening every other night, on average.
The Phoenix Great Recession- October 2019- No one was ready to hear the phrase "great depression" then, so I used the word "recession." At the time, October 2019, conventional wisdom was that there might be a minor recession in late 2020 or early 2021. Maybe. Guess what, they were wrong.
