During the pandemic, the federal reserve kept interest rates at record low levels while at the same time the Biden administration printed and spent trillions of dollars via policies that fell in line with Modern Monetary Theory.
“Modern Monetary Theory (MMT) is a heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan, and Canada, which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending.”
The results:
- Inflation is over 7% higher than former President Trump’s last year in office.
- Supply chains remained stressed and prices continued to climb last year.
- Fed officials have abandoned the word transitory
- The administration is scrambling to retool its approach to fighting inflation.
In today’s labor report, there are 11.4 million jobs unfilled, and countless numbers of potential workers who will not take them, as the government is proving welfare and other payment to them instead.
President Joe Biden may think that the economy is strong enough to battle through the storm, but much smarter men than him, disagree vehemently.
Tesla CEO Elon Musk said in an internal company email viewed and reported on by Reuters that he had a “super bad feeling” about the economy and that the electric car giant needed to slash employment by around 10 percent.
The email, which was reportedly titled “pause all hiring worldwide,” was sent on June 2 to Tesla’s top managers.
The message comes after Musk took the work-from-home phenomenon into his crosshairs, telling Tesla executives to get back to the office for a full 40-hour workweek or face the prospect of dismissal.
Musk’s Thursday email expressing reservations about the economy also comes amid signs of cooling in economies around the world, as soaring inflation is driving central banks to course-correct away from pandemic-era easy money policies.
Musk instructed Tesla to “pause all hiring worldwide” and said that the company needs to cut 10% of jobs. Tesla currently has more than 99,000 employees, The New York Times reported.
The message comes two days after Musk said in another email that “remote work is no longer” acceptable at Tesla.
“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he noted, adding that the workplace “must be the main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office in another state.”
Musk is not the only business leader worried about economic calamity.
JPMorgan Chase CEO Jamie Dimon said on Wednesday that his company is bracing itself for a looming economic “hurricane.”
“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.” He added that no one knows if the hurricane is “a minor one or Superstorm Sandy” and said the investment bank would be “very conservative” with its balance sheet.
Many executives believe that inflation poses a salient risk to economic futures. Bridgewater Associates co-CIO Bob Prince, for example, said the economy is “on the cusp of” stagflation during an interview last week at the World Economic Forum.
“The markets are under-discounting the inflation picture,” Prince explained. “The sustainability, the self-reinforcing of the inflation is not discounted. The degree of tightening over time is not discounted.”
Polls indicate that inflation and gas prices are giving consumers pause as they plan for summer spending.
When Echelon Insights, for example, asked consumers whether the higher prices have induced a change of plans or cancellation of family trips, 51% said yes, and 41% said they “changed or canceled activities for my children like camp or extracurricular activities.”
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