Dropping unemployment to around 3.7 %
This causes inflation because when the labor pool available is this low, you cannot get the people you need to hire as a company at a good price per hour. So, if you want to attract people to work for you, you either pay them much more or they won't work for you.
It's an employee market at this point. As costs of companies go upwards from higher wages (or they don't have any work force at all) this starts to translate into inflation nationwide where things we buy cost more and more.
This is called "The heating up of they economy" in some ways.
The Fed is trained to act as a Guard Dog to the country's well being and raises interest rates to prevent inflation from causing poor people to starve to death more in this country. When this happens middle Class and wealthy stock market investors (54% of the U.S.) take their money out of the stock market and put it in other investments like Muni Bonds as interest rates rise because they can then make a better return on their money by doing this.
When people take their money out of the stock market then companies have less money to invest plus they are having to pay much more for any employees they hire because it is also an employees market where the employees call the shots a lot.
This prevents Trump from heating up the economy like he wants to beyond where it is and the economy has to cool down. Otherwise, you create a crash of the stock market like October 29th 1929.
So basically, what Trump wants cannot happen beyond where we are now without causing eventually some kind of more permanent chaos like another Great Recession or Great Depression like the last Republican Businessman president Created: Herbert Hoover.
No comments:
Post a Comment