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6 months agoIt’s not a bubble, it’s much much worse. You only hear of it in whispers among the financial world. It’s stagflation. Japan seen this story before, they call it their lost decade that has been going on for nearly half a century. It’s when you deficit spend like crazy to prop up the economy and that leads to high inflation and stubbornly high costs (IE: Housing). It’s coupled with basically no wage growth and high underemployment. Does any of this sound familiar? It buried Japan, it might bury USA.
Actually it exactly resembles stagflation. It’s one of the reasons I said underemployment and not unemployment. During the 90s, Japan’s inflation rate was around 3% and they couldn’t get it under 2%. Sound familiar?
https://www.in2013dollars.com/japan/inflation/1990#:~:text=The yen had an average inflation rate of,82.953%25 of what it could buy back then.
The other part was low unemployment, but mostly government jobs that didn’t do anything. But it did create historically low unemployment and higher than average labor force participation.
https://mpra.ub.uni-muenchen.de/14332/#:~:text=The ‘lost decade’ in Japan was a period,when it reached a historical maximum of 5.5%25.
What you are seeing is USA doing exactly what Japan did in the 90s, which is have a target inflation rate of 2% that they can’t reach and hiding the high unemployment numbers with underemployment in crappy jobs.
Edit: just look at this rocketing government employment.
https://usafacts.org/reports/2021/government-10-k/part-i/item-1-purpose-and-function-of-our-government-general/employees/#:~:text=As of the dates shown below%2C there were,local government employees%2C of whom 23%25 work part-time.
More than doubled in a decade.