Should You Lose Your Job (Through No Fault of Your Own)? It’s Complicated

Originally posted on Quora November 3, 2022

Should the Wall Street Banksters lose their equity? Of course not, they should be bailed out immediately; they’re too big too fail. Should you lose your job? Maybe, it’s for the good of the economy. Like the other 3 monopolies of capitalism, who pays and who profits are completely different classes of people.

Forbes: Does the Fed Want You to Lose Your Job? It's Complicated.

As I mentioned in How The Federal Reserve is an Instrument of Class Repression, one of the fundamental assumptions underpinning the Fed’s overnight rate hikes is that despite record inflation in commodity markets, consumer goods and rent (the largest cost incurred by both low-income workers and small businesses) wages are “too high” and the working class has had it too good for too long. It’s time for the finance capitalists to assert their god given authority over the unwashed masses and create a larger labor surplus (i.e. unemployment) to suppress wage growth. While they can’t increase unemployment and suppress wages directly, they can increase the cost of borrowing for business and diminish aggregate demand creating the conditions for higher unemployment.

The Fed said in minutes released Wednesday “a softening in the labor market would be needed to ease upward pressures on wages and prices,” adding the “transition toward a softer labor market would be accompanied by an increase in the unemployment rate,” part of the central bank’s recap of a September meeting during which it approved a 75-basis-point interest rate hike.

6%. That’s how high unemployment needs to be to tame inflation, Clinton-era Treasury Secretary Larry Summers said Thursday, a more than 70% increase from its current rate.

That’s almost 10 million people put out of work and uncertain of how they’ll make ends meet based on an unproven assumption. As I mentioned earlier, saying we need more jobless people to keep consumer prices at a reasonable level makes as much sense as saying we need more homeless people to keep rents at a reasonable level. When the Phillip’s Curve was first postulated in 1960 the “natural rate of unemployment” was 8% and has been an object of speculation ever since because it’s based on correlational data, over a twenty five-year period, from one country that has not been corroborated across the world or multiple generations since.

And since reported inflation data lags unemployment data by at least 11 months even a 1:1 coincidence would be specious at best.