07-22-2020, 06:17 AM
Zero Hedge is a conspiracy theory website. Please don't post links from it here.
Mick, do you watch the Money GPS on YouTube? If not, it consists of articles from Bloomberg, WSJ, Financial Times, The Economist, the Fed, and other credible data sources. The guy who does it is very anti-Fed and he certainly is glass half-empty, but he reports the truth with credible sources, which is very hard to find as we know, and connect dots well.
In a video yesterday he highlighted a story about how the unemployment rate doesn't even tell the story. We know there is a large number of people who are either underemployed or given up looking that aren't counted in the unemployment rate. This story basically confirmed what you predicted a few months ago. That is, that most employers went to furloughs thinking the crisis would be short-lived and things would get back to normal in a few months. Now they are realizing this isn't the case, and are converting furloughs to layoffs.
But even beyond this is the fact wages are being cut and hours being reduced to adjust to less demand. That demand is down in part due to virus keeping people away from spending, but also - and this is the really concerning part - because those who lost consumer facing jobs as a result, are eroding spending further. This is the start of a cascade that impacts everything. Rents, mortgages, local tax receipts, and also starts having a downstream impact on larger companies that may have avoided layoffs because they expected a quick recovery. Will The Hartford retain its workforce, when so many small and medium sized businesses it insures are shutting down?
So there is the unemployment rate, but it just doesn't begin to illustrate the actual situation in terms of loss of spending power. The fact is Congress has no choice but to act or the system will collapse. It's comical that some think giving people an extra $600/month is a bad idea if it encourages them not to work, when the fundamental reality is money is like oxygen for the economy. If money isn't being spent into economy, it dies. It simply doesn't matter from where it comes at this point. And oh the irony that the Fed can create all this money out of thin air to "create liquidity" for capital markets, but when it comes to the economy as a whole, no such injections are needed. Makes absolutely zero sense and is 100% intellectually dishonest.
Mick, do you watch the Money GPS on YouTube? If not, it consists of articles from Bloomberg, WSJ, Financial Times, The Economist, the Fed, and other credible data sources. The guy who does it is very anti-Fed and he certainly is glass half-empty, but he reports the truth with credible sources, which is very hard to find as we know, and connect dots well.
In a video yesterday he highlighted a story about how the unemployment rate doesn't even tell the story. We know there is a large number of people who are either underemployed or given up looking that aren't counted in the unemployment rate. This story basically confirmed what you predicted a few months ago. That is, that most employers went to furloughs thinking the crisis would be short-lived and things would get back to normal in a few months. Now they are realizing this isn't the case, and are converting furloughs to layoffs.
But even beyond this is the fact wages are being cut and hours being reduced to adjust to less demand. That demand is down in part due to virus keeping people away from spending, but also - and this is the really concerning part - because those who lost consumer facing jobs as a result, are eroding spending further. This is the start of a cascade that impacts everything. Rents, mortgages, local tax receipts, and also starts having a downstream impact on larger companies that may have avoided layoffs because they expected a quick recovery. Will The Hartford retain its workforce, when so many small and medium sized businesses it insures are shutting down?
So there is the unemployment rate, but it just doesn't begin to illustrate the actual situation in terms of loss of spending power. The fact is Congress has no choice but to act or the system will collapse. It's comical that some think giving people an extra $600/month is a bad idea if it encourages them not to work, when the fundamental reality is money is like oxygen for the economy. If money isn't being spent into economy, it dies. It simply doesn't matter from where it comes at this point. And oh the irony that the Fed can create all this money out of thin air to "create liquidity" for capital markets, but when it comes to the economy as a whole, no such injections are needed. Makes absolutely zero sense and is 100% intellectually dishonest.