Op-ed views and opinions expressed are solely those of the author.
Everyone has something to say about the Biden Plan and how it might be the cause of runaway inflation.
We don’t see it that way exactly. Yes, we see higher interest rates coming, and yes, we see inflation coming, but this is happening without government spending for the most part in our opinion. Short-term government stimulus like we have recently seen occur is something that is a shot in the arm to an economy, like when you see some dummy spraying lighter fluid on an already burning campfire. It can cause a momentary flash but it doesn’t last long.
Biden’s plan calls for some longer-term spending over a course of several years from what we can tell, but it doesn’t seem to send much money directly to Americans’ pocketbooks. It might be inflationary, but we think it’s really just a way to make a lot of people connected to the administration and their government overlords getting very rich off our tax dollars. The real need for revitalization of our infrastructure makes it all possible optically.
What we observe personally is that inflation is already happening.
Stimulus checks have run their course and the “bump” from that is now fading. The economic numbers are softening in various parts of the economy and labor isn’t racing back to work yet which is causing a problem in productivity and economic growth, frankly. A new injection of $9 trillion would likely cause a more sustained “bump” in the economy but we don’t know where all that money will be spent and if it will be productive for the economy broadly or not. It’s all just talk at this stage. In general, we think that it would be inflationary, it will cause the dollar to get weaker in value, and interest rates will go up. But this will not be the chief cause of a repricing of assets across the board. That is happening right now without any further stimulus or the Biden “$9 trillion” plan.
We have lived in a world with cheap commodity prices for decades* – until now. We are just now beginning to see the dramatic repricing of all assets and commodity prices right down to the beef you buy at the store. What was $5/lb a few years ago is more like $15/lb now. We should know, we’re Carnivore Trading and we buy a lot of meat. We believe we will all be living in a world in which everything costs more going forward, and maybe not by a little, but by a lot.
What does this mean for the regular American?
One major impact is that unless worker pay goes up, workers will, in very real terms, become poorer. Those making $25 an hour in a major city are already barely making it. If the costs of rent, gas, and food double quickly, which they appear to be, then they will need to make $50 an hour just to stay even, but it is unlikely that companies give a person that makes $50,000 a year an immediate raise to $100,000 in pay, right? People will get poorer quickly in a rapid inflation environment. If they don’t act (change jobs to negotiate higher wages), they will have to move to crappier apartments in crappier neighborhoods, buy cheaper food, and sell the SUV and buy a scooter or motorcycle so they don’t have to buy so much gas – which could be $8/gallon. This gap between wage increases and the price of the “stuff we must buy to live and work” is a squeeze on people that could be devastating if something isn’t done and done quickly since prices are moving up very fast now…widening the gap. What took 15 years to double in price will take possibly only 2-3 years in our scenario.
So what should we do?
If you’re a company and you’re making a gazillion dollars a year like Amazon.com, there is no reason why your employees should have to live without proper compensation. You should double their pay. Right Now. You have the money to do it and this would be what “the new capitalism” that is being called for should look like. As the CEO of a major company like Amazon, do you want the government to come in and regulate you into doing the right thing, or do you want your employees to unionize? If you do not do something, trust me, we believe you will face the music either from government regulation or the people, who will unionize and demand it. Either way, you will be forced to pay it. Our suggestion is to pay a decent/good living wage, and then give every employee a yearend bonus based upon the profits of the company, and make it a big number, and pay it out in a check at year-end, not in some “stock option unit” or some other special account that calls for vesting. Give them the cash! So that they can feel it! So that they can buy a decent car, buy decent food, live in a decent neighborhood, and take care of their families. In a good year, your employees should be making 100% to 200% of their annual salary on the bonus alone. In a bad year, it can be small or even nothing. They will understand. But when there is a good year, and they see you in the newspaper buying $50 million pieces of art and building the world’s biggest yacht, they should be getting a massive bonus, too.
If you do this, you can rest assured that none of those employees will ever join a union. Taking really good care of people, which is just the right thing to do, actually does work in real life. I’ve seen it.
DONATE TO BIZPAC REVIEW
Please help us! If you are fed up with letting radical big tech execs, phony fact-checkers, tyrannical liberals and a lying mainstream media have unprecedented power over your news please consider making a donation to BPR to help us fight them. Now is the time. Truth has never been more critical!
- Fed has lost control – crash dead ahead - October 18, 2022
- Market freefall: What moves do I make? - January 22, 2022
- Inflation: Labor costs are about to go way, way up - November 17, 2021
We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the ∨ icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.