America will look a lot more like Europe if high structural unemployment becomes permanent. This article gets it half right:
Now let's drop the other shoe. Another commentator joins the high inflation camp:
Right on, Mark. The Fed would send the economy down the tubes if it raised interest rates to fight inflation, making that 8% unemployment rate look like utopia. Higher joblessness and prices are here to stay. Put these two forces together and you get stagflation. An economy this fragile is extremely susceptible to supply shocks from a sudden jump in commodity prices. Say hello to your new masters in Riyadh and Beijing.
I'm short uncovered calls on SPY, which has mostly worked out fine for the past year.
Americans may have to get used to unemployment greater than 8 percent for the first time since 1983 and an economy that won’t grow much beyond 2 percent as a consequence of the lost confidence in consumer credit that shattered financial
markets.
Now let's drop the other shoe. Another commentator joins the high inflation camp:
The U.S. economy will enter “hyperinflation” because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
Right on, Mark. The Fed would send the economy down the tubes if it raised interest rates to fight inflation, making that 8% unemployment rate look like utopia. Higher joblessness and prices are here to stay. Put these two forces together and you get stagflation. An economy this fragile is extremely susceptible to supply shocks from a sudden jump in commodity prices. Say hello to your new masters in Riyadh and Beijing.
I'm short uncovered calls on SPY, which has mostly worked out fine for the past year.
