This will be a very short post. You know what is Nairu, the „natural “ rate level of unemployment. Mind the semantics – natural. There is nothing natural in this debt driven civilization cage. It is your and your boss doing.Yor spin doctor work 24/7 to invent this words and concepts and make them nice. You have read here what is the real NAIRU level in this system: it is 60%, including all bullshit jobs, many well paid. Like Public administration, the case of Slovenia, which has risen the number of public administration employees , half of them well paid bullshit jobs, to cite David Graeber,in the last 5 years by more than a quarter, plus the pay rise . Like an avalanche happening now, which also gave the rise of the wages of the public administration in last two years by almost 30%!!! NOt to mention that Slovenia is not the currency issuing State, it is the ECB who is…
On this phenomena , later…
This post will concern one small issue: How the interest rate hikes by the Central Bank will make inflation even more difficult to eradicate. Great Again!
Now, Witchdoctor knows that all this bullshitters , economist paid huge sums and all the spin media , have never owned or had or worked in some economy real sector. They pretend to NOT KNOW that 97% of the money circulating is DEBT. Somebody took a loan to spend, that is the situation. So, a 4% of interest on debt to keep your business working, yes, if you work on the market, means that you have to push your market price for 3 and something percent (%) to get even. And hope you are not driven out of the market, between Scylla and Charybdis- which is the price versus profit.
Not including in this „trifles“ the energy hikes, workforce legitimate claims for bigger wages because of inflation… and the Slovenian govt preparing to raise taxes to fill the budget gap of 30% pay rise of the Public Administration! Maybe it is cheaper to close the business down now than to wait for the bank foreclosing you.
So, the NAIRU or the doing of the Central Banks has to be pushed even higher, which in fact means that the Interest rate of 4% will not be enough to make more people unemployed and so the demand for goods will fall enough, not the enough number of business will close down to lower the demand side to the bottom and to stop people purchasing produced stuff and so the result will be a lowering inflation. If you think how equality enters this equation, you are a fool. It does not, the poor will be more poor or homeless.
EXCEPT: Except if China as a manufacturing planet hub will be willing to make more.and cheaper- the crapification of goods- goods that function for a few months and then go broke into the junkyard of this NAIRU civilization.
EXCEPT: Except that the WEst East SOUTH and NORTH will throw billions and some trillions into the arms race production- the war economy.Which makes jobs, women get more job opportunities, people in working age die on the front, so Nairu works twofold.
AND, The Europaen Stability Pact, YES FOOLS; has excluded the investment into war and military production OUT FROM THE STABILITY PACT. Plus the public administration which keeps and props the Oligarchy will sail on, following the sunshine day, while
The welfare, health and pensions and the people in age to go into trenches will
Celebrate the Stability pact, NAIRU, the Interest Hikes, the new taxes, and the War economy. Drop dead is the motto of this 21st Century collapse.
EXCEPT: except that the demographic boom will slow down.
After a while, as the history trash shows when this bombs are spent and blown and enough people died, the new crisis will come, because the task of shifting the manufacture from military to ordinary is a task for five years of tears, AGAIN and again… Climate crash permitted,
and again, cheers. Then a new post war construction boom will make inflation great again, and again and again… And so we will live happily ever after. Again.
More of this stuff, much more scientific and precise, in Bill Mitchell blog…
Thanks Bill for your work.