Inflation impact on the people’s mood

Typically, finance just pays attention to the profits, revenue growth and shareholder value, but it is really way past time to also pay attention to other factors. We need to broaden to the big picture factors like how inflation could impact people’s moods.

When people can’t buy things and are suffering and are frustrated, they tend to want to tear down everything in order to get change. I once read somewhere that financial distress lowers one’s capability to think critically. In the years since the onset of the pandemic, people have gone crazy and are acting out. The two or three assassination attempts on Trump are probably a good sign of crazed mindset out there.

Typically, the people’s ire is directed towards politicians, but I do believe businesses need to start worrying about people turning on business. We have to look at the overall environment and check on people’s living standards and capabilities to buy basic goods. Shareholders can’t take precedence over middle class, working people or poor.

We are now at the stage where people have voted for total annihilation of our current state of government, or at least it feels that way. The people have voted out Biden/Harris and the economy was part of the stated reason.

Before I move on to what the future may bring with the changing administration, I want to point you to an article “The Real Story of Inflation” that explains what may have caused the current inflation. The three causes mentioned are:

1. A popular explanation was the covid-era stimulus. The author said that this explanation is incorrect.
2. Another one is the rapacious greedflation from big companies, but the author did not find another data to support that contention.
3. The one the author supports is the pandemic supply shock arising from shutting down everything.

Here are a couple of things that I have recently learned that may seriously bring about more inflation or other deleterious economic impact.

1. Deportations may have an inflation impact

I wish I had saved the video, but I recently saw a video that showed a graphic of the economic impact of Harris’ and Trump’s policies. I went out to his website where he has this chart, as well as others, and his accompanying analysis.

The analysis depicts the tremendous deleterious impact of mass deportations. Steve Rattner said the -8.9 GDP decrease is between that of the Great Recession and the Great Depression.

Also note, there are some adverse inflation impacts from deportations.

But a recession worse than the Great Recession is terrifying.

2. Tariffs typically bring about rising prices

Most people don’t really realize that tariffs actually harm the consumer, not the foreign country. I’m not going to explain it because there are plenty of sources out there to explain tariffs. I do want to bring up the Smoot Hawley Act of 1930 that is thought to worsen the Great Depression.

Now, I saw in another video, which again I did not save, an analysis of the possible impact of doing 20% or 60% tariffs. The news host said that economists calculated that such tariffs would increase prices to levels such that the average person would not be able to afford basic goods.

I’m going to repeat that again: the average person would not be able to afford basic goods.

3. AI could wipe out jobs eventually

We don’t know how AI will be used but if we have enough socio/psychopaths who care only about the bottom line, then they will use AI to replace people. It is going to depend on which is the stronger driver: using AI as a complement to human skills or using AI to replace people.

In this day and age with the billionaires ruling the universe, I almost think replacement will be the driving force. I hope I’m wrong, but we could be looking at some really painful unemployment.

4. The DOGE

DOGE stands for the Department of Government Efficiency being run by Elon Musk and Vivek Ramaswamy.

Efficiency typically means layoffs. Remember Mark Zuckerberg’s the Year of Efficiency? He instituted a bunch of layoffs to right size the company for the AI era.

So, efficiency = unemployment.

Laying off a bunch of people from the federal government would mean rising unemployment rate.

There may be a knock-on impact with state and local governments also doing some layoffs.

Combining all of this…

The combination of something worse than a Great Recession and most people being unable to afford basic goods is terrifying. And then layer on the DOGE and AI, we would have cumulative adverse impacts that could rip capitalism apart. People have already turned against government by voting out the establishment represented by Biden/Harris in order to bring about drastic change.

But if the government brings about new economic pain, the people will look elsewhere.

Who has been running the show? The billionaires like Elon Musk and Peter Thiel and big corporations.

When I was doing some thinking about AI back in 2013 or 2014, I did think that AI could potentially bring high unemployment and that the US could look like India with a few oligarchs at the top and a teeming mass of destitute people. You will be either ultra wealthy trying to hold onto your money or desperately poor like those in India.

I thought under those circumstances, capitalism could crack, bringing in chaos. At the end of the chaos, life would be drastically different, but I did not know how. It just would be different, potentially with fewer people (climate change is also involved in this scenario), leading a kind of life we haven’t dreamed of. Someone will figure out, under such pressure, how to live with AI in a way that is fair to all.

But I thought the crack up would take place 50 or 70 years from now.

We may be seeing a crack up way sooner than that.

It’s time to bring back up those Round Table resolutions of 2017 where you stated you will run companies for the benefits of stakeholders rather than just shareholders. Bring it back up and DO something for the benefit of regular working people. Downgrade the primacy of the shareholders.

Recently, someone talked about the French Revolution. If someone is already talking about that, then others are and that’s not good.