Why Massive Unemployment Is Still Coming

While the recent economic news might have some believing we have turned the corner, the reality is that massive unemployment is not a thing of the past. In fact, things look far worse than people realise.

Video Transcription About Massive Unemployment

So there's been a lot of talk about not going to recession and perhaps we'll avoid a recession, or perhaps it'll be a very mild recession, or, you know, these are things. And I think one of the interesting things that we need to consider is, what is the purpose of the Bank of England, the Reserve Bank of Australia, Canada, you know, whatever country, you know, the Fed, and that sort of thing. And really, it's a two fold mandate, if you like, which the first mandate is that they need to maintain price stability.


Okay, so we've heard lots about of inflation, inflation when it's running rabbit, which is pretty much that's not maintaining price stability. So most of the central banking institutions have failed at that. And the reason they failed on that is a whole reason why it was failing reasons, not for this video. The second one is to maintain full employment if you like. Okay, so what we have gotten now is the issue that inflation is running rampant. We've got really good employment, so they're successful on the employment front, but failing on the prices front.

So one of the reasons why I think prime rate interest rates may keep going up. Or they won't go up that much further, but they'll stay around for a long time is they need to get, I guess, less people employed. Okay? Look, it's great having full employment, but the problem is, if you've got inflation, you need to destroy the employment. Because while people are in jobs, they spend money, they have confidence and that sort of thing.

So therefore, that pushes the prices up. Okay, so the key here, and I think what we're going to see is we're going to see a period of prolonged interest rates, because what they want to do is destroy a bit of the employment so that we keep the prices down, they can bring those prices down, because look as much as they want, you know, governments need to have inflation to pay to effectively negate the effect of the additional debt. Okay. However, if they have too long, they've been stretched for too long, too high.

It's very expensive governments, so government debts gonna go stupid. So it's really that sort of catch 22 situation we've got now. So what are they going to do? Well, you know, the, there's not a lot they really tend to, they're kind of in this situation where if they push too hard, then we fall off the face of the earth, which means deflation, stagflation, those sort of things.

Okay. So the gotta try. And it's like, for you guys that have driven manual cars. They've got to try and get the accelerator and the clutch working in the right amount. So we take off slowly. Okay. And that really is the challenge that we face right now. The only way I think they can do that is by destroying the job market, which brings the prices back down, which brings the inflation down, which means they're now succeeding in that 2% target, which most developed countries are aiming for.

So yeah, suddenly think about guys. All right, any questions put in the comment? You know, we'd love to have chat in there. Alright, see you guys. Bye.


Brett Alegre-Wood
March 8, 2023

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