To Get Poor Is Glorious
‘You can’t always get what you want.’
-The Rolling Stones
‘I can’t believe it, there’s no mustard in the shops’, said Elizabeth this morning.
‘Huh? No moutarde…en France?’, I replied.
‘I don’t know…but the shopkeeper told me that since the government outlawed pesticides…and with the higher price of fuel…they can’t afford to make mustard anymore.’
The explanation wasn’t very satisfying. But a lot of things don’t add up.
Here’s another voice from the elite Davos Summit, from CNBC:
‘Dutch Prime Minister Mark Rutte told CNBC on Wednesday that “you cannot help everyone so…we in the West will be a bit poorer because of the high inflation, the high energy costs.”
‘Inflation hit 9.6% in the Netherlands in April, according to the Dutch statistics body CBS.
‘Speaking at the World Economic Forum in Davos, Switzerland, Rutte told Steve Sedgewick that the Dutch government would help people on lower and lower-middle class incomes with their rising energy bills.
‘However, he added that “you cannot help everyone so … we in the West will be a bit poorer because of the high inflation, the high energy costs.”’
Inflation and high energy costs didn’t rise on their own. They were pushed up by public policies — shutdowns, war, and money-printing. But don’t fret; poverty will be good for you. From The Hill: ‘Is the spike in gas prices good for America?’:
‘…in the long run, an inflated price for gasoline is, I would argue, good for the environment. It may encourage people to take carpools to work, to bicycle and walk more. This will improve health and welfare.
‘The price spike may further spur the development of battery-driven cars. Both Ford and General Motors have said they will be manufacturing all-electric fleets by 2030. I never thought I would live to see the day.’
Hallelujah…we won’t have any mustard. And we’ll all be poorer. But in a good way.
Beginning to buckle
As expected, those once-sturdy legs of the American middle class — jobs (for earnings) and houses (for net wealth) — are beginning to buckle. From MarketWatch:
‘Sales of new homes in the U.S. fell in April for the fourth month in a row to the lowest level since the pandemic owing to high prices and soaring mortgage rates.
‘New sales slowed to a 591,000 annual rate from 709,000 in the prior month, the government said Tuesday.’
Mortgage rates have nearly doubled in the last six months. And house prices are much higher. So fewer people can afford to buy.
Also, many homeowners have locked-in mortgages at the lowest rates in history. They’re lucky. But they can’t afford to sell!
Fewer new home sales mean fewer commissions for real estate agents, less money for movers, fewer remodelling jobs for builders, and less work for the people who make refrigerators, carpets, beds, and all of the other items people want when they buy a new house.
Altogether, it means fewer jobs, less income, a smaller GDP, and more poverty.
And here comes even more good news from 24/7 Wall St:
‘The microchip shortage that has battered the industry prompted Toyota to say it will cut global manufacturing by 100,0000 down to 850,000. That will affect company earnings and the financial health of dealers, and it may push consumers to put off new car purchases for months, if not years.
‘Two years ago, it was unimaginable that a global car company would cut production.’
And Business Insider: ‘A wave of layoffs is sweeping the US’:
‘Lately, we’ve been kvetching about the plight of the working class. Who will bear the brunt of the coming stagflation? Who will lose their jobs? Who will have to change their summer vacation plans? Who will switch from sirloin to hamburger?’
No room for error
Will President Biden announce that he’s going to fire a few empty suits? Will the Fed cull its 400-plus PhD economists…perhaps those that told us that inflation would not go to more than 2% this year? Or how about the generals who botched a 20-year war in Afghanistan? Or Dr Anthony Fauci…whose plan for dealing with COVID-19 turned out to be medically ineffective and economically catastrophic, or any of the two million other federal employees — some more useless than others?
Alas, as you go down the socio-economic escalator, the pain rises. At the top, people can flub trillion-dollar programs and still live well (Ben Bernanke…who probably did more damage than any Fed chief other than Jerome Powell…is still quoted in the press as an authority on the economy!)…but at the bottom, there’s no room for error.
Higher prices and joblessness…are problems for the working class, not the elite.
But now we know. These are good things. We’ll make less and consume less. We’ll put on our sweaters with holes in the elbows and turn down our thermostats. We’ll go into our supermarkets, find the shelves half-empty, and we’ll be happy. We’ll listen to our elites — speaking to us from Davos and Aspen — and nod our heads in agreement.
‘To get poor is glorious’, they’ll tell us.
And we’ll save the planet.
Or…at least we’ll save the elite.
For The Daily Reckoning Australia