The Pomp Letter - Operation Job Destruction Is Underway
To investors, The Federal Reserve is tasked with fostering “the stability, integrity, and efficiency of the nation's monetary, financial, and payment systems so as to promote optimal macroeconomic performance.” That is a lot of complex jargon to explain a simple concept — the Fed manages the country’s monetary system. This management is expressed through Congress’ dual mandate to the Fed: (1) maintain stable prices and (2) pursue maximum employment. It is obvious that the Fed has failed miserably at the stable prices mandate over the last three years. We saw inflation peak at 40+ year highs and the average American consumer is paying significantly higher prices for staple goods. Additionally, this failure on price stability creates significant problems for businesses that now struggle with the ever-changing nature of their input costs. The inflation challenges have been well covered, but what about the employment mandate? If we go back to January 2020, the unemployment rate was sitting at a historic low of 3.6%. The pandemic, and ensuing government-mandated lock-downs, created an explosion of layoffs and unemployment claims. At one point, there were 6.6 million new unemployment claims per week. This led to the unemployment rate spiking to just under 15% by April 2020 — to put the severity of the spike in perspective, this increase in unemployment over a 60 day period outpaced the entire increase in unemployment over the first 18 months of the Great Depression. Not a great situation. Thankfully, the Federal Reserve’s monetary policy decisions, coupled with fiscal policy and an ensuing historic economic rally, led to an impressive recovery in employment data. We currently sit at a 50+ year low of 3.4% unemployment in the United States, which is even better than the 3.6% we had achieved right before the pandemic era began. This accomplishment will be viewed as a win by everyone except the central bank. Their theory is that a strong labor market, where unemployment is low, leads to higher inflation. If that sounds weird, here is Nik Popli’s explanation from a recent TIME article:
Remember, the Fed’s dual mandate is stable prices and maximum employment. They are failing at stable prices, but achieving maximum employment at a level not seen in decades. Unfortunately, the Fed is going to erode progress on the employment side in order to get the inflation under control. This is the tightrope act that is required from central banks who are tasked with overseeing a complex economic machine. Don’t forget one important detail though…... Subscribe to The Pomp Letter to read the rest.Become a paying subscriber of The Pomp Letter to get access to this post and other subscriber-only content. A subscription gets you:
|
Key phrases
Older messages
Free Markets, Regulation, Charlie Munger, and Bitcoin
Wednesday, February 8, 2023
Listen now (6 min) | Charlie Munger wants to ban bitcoin, but is that a good idea?
Podcast app setup
Wednesday, February 8, 2023
Open this on your phone and click the button below: Add to podcast app
Bitcoin Fundamentals Keep Getting Stronger
Tuesday, February 7, 2023
Listen now (5 min) | A breakdown of bitcoin's fundamentals.
Meditations by Marcus Aurelius
Monday, February 6, 2023
Listen now (16 min) | Pomp's notes on Meditations by Marcus Aurelius
The Puppeteer of Markets
Friday, February 3, 2023
Listen now (5 min) | Central banks have a lot in common with Geppetto & Pinocchio.
You Might Also Like
"Notes" of An Elder
Friday, March 29, 2024
Everyone has something to teach you if you are humble enough to learn.
TikTokification 🎶
Friday, March 29, 2024
LinkedIn is joining the dance.
The Home Depot rebrands its retail media network in pitch for ad dollars
Friday, March 29, 2024
The Home Depot hosted its inaugural InFront, a play on the television industry's UpFronts or NewFronts, digital media's answer to the upfronts, for its retail media offering. March 29, 2024 The
Caliplay dispute eclipses Playtech’s progress
Friday, March 29, 2024
Playtech earnings review, 888's US B2C sale, sector leaders take bad news hit +More ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Overcoming ads blindness
Friday, March 29, 2024
Today's hack Why not switching from usual ads to converting your audience into email subscribers in exchange for rewards? What are you willing to see more in banner ads? 1. Sales pitches. 2. Brands
Ambani, Adani join hands in power move
Friday, March 29, 2024
Also in today's edition: India's auto export weakness; No one wants CXOs ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
It's Time to Unlock the Vault
Friday, March 29, 2024
The ability to shortcut your way to profits is finally here View in browser ClickBank Hand holding a microphone You need to know this, There is an opportunity to shortcut your way to profits as an
🔍 Ryan Trahan & Joyride's Launch Playbook
Friday, March 29, 2024
What they did. How they did it. And what to learn from it.
Help Micronesian Seminar
Friday, March 29, 2024
Weekender #43 ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
🎙️ New Episode of The Dime Todd Harrison: Chewing Through Noise in The Cannabis Industry with a Focus on Catalysts
Thursday, March 28, 2024
Listen here 🎙️ Todd Harrison: Chewing Through Noise in The Cannabis Industry with a Focus on Catalysts Imagine this: warm, sunny Florida. Rescheduling has just been announced, and you're eager