The mark of a good political cartoon is often its use of hyperbole to make a (relevant) point.. This, not so much.
The situation of the FED is somewhat akin to trying to land an airliner by banging on the flaps with a sledgehammer, but that is the way Volcker did it so..
The market is reacting to this idiotic system which, since at least Bretton Woods, all other central banks are chained to.
The problem this time is that no amount of rate rise can cool the labor market if labor participation remains low – and, given low participation, the original supply side inflation post pandemic cannot be resolved short of knocking the real economy (as opposed to the crypto / remote work / ship to home economy) back to pandemic levels, hence the high volatility in equities..
Keep in mind that even in restaurant/hospitality addressing labor participation is not merely a matter of paying workers some arbitrary number – it is also a matter of selling goods and services that people are going to buy at volumes that allow for our mythical return from the pandemic.. $50 hamburgers probably won’t cut it.. Worse, in the rest of the real (non virtual / remote) economy digital transformation infrastructure issues will require highly trained workers, who, even with the recent blip of tech layoffs, are in vanishingly short supply (and NOT going to be trained in community colleges anytime soon)
Personally I love the remote economy, but the implications of CBD class A office vacancy, restaurants structurally under break-even, acceleration of retail rot, etc are very, VERY real.
Capitalism and I do not have the same interests, but I do understand why the market is sh!tting itself.. These are some very real – and very serious – structural issues.
October 01, 2016