"Raising interest rates puts the burden of fighting inflation on low-wage workers," notes former Labor Secretary Robert Reich. "For once, let's take aim at an actual driver of inflation: corporate profits."
I was listening to Powell answer questions yesterday and many of the questions were complaining about how resilient the economy is and also mutual complaining about how resilient the labor market is. Profits went way up and they're trying to pull the ladder up.
There's just not enough warm bodies to do the labor that the economy demands. Like, this isn't something the Fed can necessarily fix with interest rates, because raising interest rates does nothing to increase the gross supply of labor.
The sectors that are going to get smacked hardest by rising interest rates are, ultimately, FIRE sector shit. Crypto's turned out to be the first big sacrifice to the Fed Gods. But I wouldn't be surprised if the big hedge funds and investment groups are the next to go, simply because there's no way to deliver your 30% APY growth without all the new free money. Real Estate is going to suffer as well, as we won't see big banks with endless cash able to just gobble up huge sections of real estate on credit.
Meanwhile, demand for agriculture and manufacturing is at least as high as its ever been. Arguably more so, as the proletariat aren't reproducing and nobody wants to work outside or in a sweltering factory when global temperatures are rising. We're in a labor crunch and the Fed can't change that, no matter how expensive money gets. Same with service sector work. I don't think its a coincidence that contractions in the labor market are pairing with unionization.
I was listening to Powell answer questions yesterday and many of the questions were complaining about how resilient the economy is and also mutual complaining about how resilient the labor market is. Profits went way up and they're trying to pull the ladder up.
There's just not enough warm bodies to do the labor that the economy demands. Like, this isn't something the Fed can necessarily fix with interest rates, because raising interest rates does nothing to increase the gross supply of labor.
The sectors that are going to get smacked hardest by rising interest rates are, ultimately, FIRE sector shit. Crypto's turned out to be the first big sacrifice to the Fed Gods. But I wouldn't be surprised if the big hedge funds and investment groups are the next to go, simply because there's no way to deliver your 30% APY growth without all the new free money. Real Estate is going to suffer as well, as we won't see big banks with endless cash able to just gobble up huge sections of real estate on credit.
Meanwhile, demand for agriculture and manufacturing is at least as high as its ever been. Arguably more so, as the proletariat aren't reproducing and nobody wants to work outside or in a sweltering factory when global temperatures are rising. We're in a labor crunch and the Fed can't change that, no matter how expensive money gets. Same with service sector work. I don't think its a coincidence that contractions in the labor market are pairing with unionization.