Not all of it. Some of what we’re seeing isn’t weird in the slightest. It was, in fact entirely predictable. If you create trillions of us dollars out of nothing, US dollars are going to be worth less. Much less. This is called inflation, and we’re suffering through it right now. Inflation, very simply, is the result of too much money in the system. If you have too much of something, its value falls. Supply and demand. Remember?
This is what’s causing the rise in real estate prices and of Bitcoin, and of other assets that investors run to when they no longer trust the country’s currency. Why can’t you afford a house right now? Simple. Because Washington printed too much money. No one should be surprised by this. It’s a cycle as old as money itself. Political leaders devalue the currency for short-term gain. In the end, this leads to long-term collapse. Debasing the coinage, that’s what they used to call it. For example, by the middle of the third century, the Roman Daenerys the silver coin was only about two percent actual silver. The rest of it was just junk. Within a few years, not incidentally, the entire Roman Empire blew up, and the barbarians took over.
But it wasn’t just the Romans who did this. Every government devalues its currency at some point. They do it because it’s irresistible. You can’t not do it. If you do it, you get free money and you don’t have to raise taxes. It seems like a great idea, but in the end, every government pays the price for doing this, or more precisely, its citizens do.
So the current inflation, horrible as it is, is hardly unexpected. You really have to be a Fed chairman not to have seen it coming. What’s confusing as hell is our labor market. The unemployment rate is higher than it was before COVID. Not a ton, but some. That means fewer people have jobs than did two years ago. Labor force participation, meanwhile, a slightly different measurement is way down, and that means fewer people are working or even looking for jobs. So that’s the picture on one side of the labor market.
And yet, this is the truly bizarre part, we are simultaneously experiencing a serious labor shortage, so we have a shortage of labor and a glut of labor simultaneously. In some places, businesses have shut down because they can’t find employees, as you well know if you live here. So again, at the very same moment, we have both too many workers and also too few workers. That does not make sense. How can that possibly be happening?
And again, we’re going to be honest and tell you we’re not entirely sure how it’s happening. No one is entirely sure, but we can tell you it’s definitely not natural. This is not how markets are supposed to work. This is not a good sign. If you are running the country and you were a responsible person, you’d be very concerned about a trend like this. But our leaders don’t seem especially concerned.
Consider Lisa Cook. She’s a professor of economics at Michigan State University. Cook has advised Joe Biden in economic policy. She’s now considered a shoo-in for an appointment to the Federal Reserve Board. So soon, Lisa Cook will be one of the people in charge of fixing this mess. How is she going to do at that job? Well, the early signs are not especially promising.
Not long ago, Cook and other faculty members at Michigan State got an email from their school. Quote “Our residential dining halls could use your help,” it read. Turns out food service staff weren’t showing up to work. Why? Well, partly because of the economic policies that the White House had enacted on the advice of Lisa Cook. As a result of that, the cafeterias desperately needed faculty to pitch in and help to feed people. The most basic job of all. And yet, as far as we know, Lisa Cook, despite her perfectly suited last name, did not help. She stayed home.
Now, in case you think we’re singling out Lisa Cook, to be fair, a lot of people are staying home these days, not pitching in. The number of Americans who have jobs has dropped by nearly five million people since February of last year. Now, none of these people, according to the government assessment, is looking for a new job. Why? Lots of reasons. Some of them have retired. Others have moved on to work that is difficult for the government to keep track of. That’s not always a bad thing. If you’ve left a soul-crushing job at Citibank to tend to an organic apple orchard, kind of hard to see how that’s a net loss for society. In fact, we probably should be celebrating that. Good for you.
The problem is with all the rest. Some large percentage of able-bodied Americans have just decided to stop working at all. Now, in the long run, this is a big change, it’s not good for the national character, for example, healthy societies value work. They believe it confers dignity and meaning. But in the short term, as an economic matter, this is killing small businesses.
REPORTER: There’s a driver shortage in this country and it’s not just hitting the transport of goods. School bus drivers are in short supply too
REPORTER: At Nugget Market, the manager works the register to cover short staffing – a fact of life in so many businesses.
REPORTER: Some Walgreen’s Pharmacy drive-throughs like this one in Green Bay have been blocked off recently. Signs posted on the window say they don’t have enough staff.
REPORTER: Certain job sectors like retail, restaurants and hospitality are understaffed no matter how you slice it // STORE OWNER: The government has incentivized people not to work so it’s really tough to get people to work and then when they’re here, to stay on longer than six months
So why is this happening? And again, the signs of it are everywhere. There’s no room service in your hotel in case you haven’t noticed, and that’s just the least of it.
Well, one of the reasons this is happening is because the government put out some really destructive policies. Here’s Fox’s Will Cain to explain.
Cain: So this is the sign you had upfront, Cathy, when we came in. Don’t know if you guys can see that, “We’re short-staffed. Please be patient with the staff that did show up. No one wants to work anymore. They would rather draw unemployment.” Is that true?
Business owner: Oh, that’s true. That’s so true. I’m so tired of all of it. Quit giving all this unemployment. They’re getting unemployment, they’re getting the stimulus. Why work? They make a lot of money. They’re quitting just so they can get unemployment.
So you never hear anybody on TV say that. But if you’re around people with what we used to call working–class jobs, you hear it all the time. You hear it a lot and people are mad about it.
At the International House of Pancakes in Wasilla, Alaska — not always possible to get pigs in a blanket. Why? Here’s the message posted on its front door: “Due to the fact that Biden gave out way too much free money and nobody wants to work anymore, we are forced to reduce our hours during the week.”
So there is some truth in this. At times, over the past two years, some people were making much more from government unemployment benefits than they had been making in the jobs that they left. One analysis found that thanks to the so-called CARES Act, restaurant workers nearly doubled their weekly pay when they became unemployed. The government was literally making it more lucrative for people not to work and stay at home. That is the definition of insanity.
Not only do policies like that wreck our economy and close IHOP, there’s an obvious moral cost to them. What’s the message the government is sending here? The message is you’d have to be an idiot to work. So you’ve got to wonder what damage that message has done to this country’s attitudes about work.
Well, here’s one measure of that damage potentially. Supplemental unemployment benefits ended this fall. They were so clearly nuts, and yet a lot of people didn’t go back to work. In fact, even more Americans quit their jobs. One recent poll found that 73% of Americans are thinking about quitting right now. And again, this isn’t all bad. This stuff is very complex, and we want to be honest some jobs aren’t worth having. We wish people would quit. It’d be great to see a mass exodus of, say, chief diversity officers from America’s corporations and liberal arts colleges. They can all learn to do tub and tile work. We would be far better off as a country if they did. We hope they will.
And also, we must be honest, people who do want to work, it’s a shrinking number, but some do, and there’s very good news for them. Wages are up dramatically, particularly at the bottom end. Some fast-food workers are making eighteen bucks an hour plus signing bonuses, and that seems like something to celebrate. But of course, no one in Washington is celebrating. This is a victory for Americans who don’t have college degrees. And that means a defeat for them.