To: Maurice Winn who wrote (8314 ) 1/31/2022 10:23:30 AM From: elmatador Read Replies (1) | Respond to Hi MQ! Inflation is caused by lack of labor The current upsurge in inflation is not transitory or to be dismissed as an outgrowth of idiosyncratic COVID-19-related developments. It is widespread, persistent, and reinforced by wage pressures stemming from an unprecedentedly sharp tightening of the US labor market. Under these circumstances, the Fed’s continued refusal to change course would have been an epic policy blunder. https://www.project-syndicate.org/commentary/federal-reserve-mad-scramble-to-control-inflation-by-stephen-s-roach-2022-01 They tried your solution, pay more for labor, but it caused inflation. Outsource? Everything that could be outsourced, as there was not enough labor, already has been. Now those things that cannot be outsourced like truck drivers, Diesel mechanics, crane operators, hamburger flippers, are causing supply chains disruptions and food inflation (see please my previous post on fast food). One cannot outsource the oil change or hair cuts. These funny robots are not being rolled out... And with those myriad of moving parts those robots will need, lots of greasing, cleaning. retightening of screws, software upgrades, ou get the picture The authoer says: But recognizing the problem is only the first step toward solving it. And solving it will not be easy. Joe Biden $1.9 trillion projects? Were will they get the pole climbers from? Trench diggers? Cable layers Excavator operators? Need ots of arms and legs... Consider the math: The inflation rate as measured by the Consumer Price Index reached 7% in December 2021. With the nominal federal funds rate effectively at zero, that translates into a real funds rate (the preferred metric for assessing the efficacy of monetary policy) of -7%.
