Probably need a 20% reduction in earnings to get enough of an inducement to lay off enough workers t

Feb 06, 2023
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Probably need a 20% reduction in earnings to get enough of an inducement to lay off enough workers to push the unemployment rate up enough to bring down wages to bring down inflation - Bob Prince

So far corporate profits are doing fine and they're looking for more workers.

There's still a lot of nominal demand.

Now spending is being financed by income which is being financed by spending (unlike a couple years ago when spending was financed by money printing).

A return to the boom-bust cycle. Like the 70s, not like the last 10 years. Will likely be an iterative process over several years.

The most obvious bubbles have been popped. But there's an earning bubble, a profits bubble, that was inflated by the printing of money. Still to come.

Historically to get 2-3% increase in unemployment rate you need a 20% drop in earnings.
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<div>Probably need a 20% reduction in earnings to get enough of an inducement to lay off enough workers to push the unemployment rate up enough to bring down wages to bring down inflation - Bob Prince</div><div><br></div><div>So far corporate profits are doing fine and they're looking for more workers. <br></div><div><br></div><div>There's still a lot of nominal demand. <br></div><div><br></div><div>Now spending is being financed by income which is being financed by spending (unlike a couple years ago when spending was financed by money printing). <br></div><div><br></div><div>A return to the boom-bust cycle. Like the 70s, not like the last 10 years. Will likely be an iterative process over several years. <br></div><div><br></div><div>The most obvious bubbles have been popped. But there's an earning bubble, a profits bubble, that was inflated by the printing of money. Still to come. <br></div><div><br></div><div>Historically to get 2-3% increase in unemployment rate you need a 20% drop in earnings. <br></div>
Probably need a 20% reduction in earnings to get enough of an inducement to lay off enough workers to push the unemployment rate up enough to bring down wages to bring down inflation - Bob Prince

So far corporate profits are doing fine and they're looking for more workers.

There's still a lot of nominal demand.

Now spending is being financed by income which is being financed by spending (unlike a couple years ago when spending was financed by money printing).

A return to the boom-bust cycle. Like the 70s, not like the last 10 years. Will likely be an iterative process over several years.

The most obvious bubbles have been popped. But there's an earning bubble, a profits bubble, that was inflated by the printing of money. Still to come.

Historically to get 2-3% increase in unemployment rate you need a 20% drop in earnings.

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