FedEx CEO says he expects the economy to enter a ‘worldwide recession’
PUBLISHED THU, SEP 15 20226:38 PM EDTUPDATED THU, SEP 15 20228:25 PM EDT
FedEx CEO Raj Subramaniam told CNBC’s Jim Cramer on Thursday that he believes a recession is impending for the global economy.
The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter.
As we have been telling you for months (years, actually), Jerome Powell will fail to stop inflation and instead will cause a recession or depression. There are two reasons.
- He has no idea what causes and what cures inflations, and
- He doesn’t have the tools, even if he knew.
So, today he, in essence, is using a chainsaw to slice the wedding cake and applying leeches to cure anemia. And then, when the chainsaw and the leeches make things worse, what will Powell do? He will use a bigger chainsaw and apply more leeches.
As I predicted, his interest rate increases have failed to end inflation. So, what will he do? He will raise interest rates again, and again, of course. (The definition of insanity is doing the same thing over and over again and expecting a different result.)
He refuses to learn from failure.
The primary reason why prices — any prices — rise is scarcity. It would be quite rare for overall prices to rise because consumers suddenly have more money in their pockets and are spending more on everything.
When something prevents the supply any one product (other than oil) from growing we have an increase in that product’s price. To cause inflation — a general increase in prices — a general restriction in supply is required. (Oil is a special case because it has universal use.)
And that general supply restriction was provided by COVID.,which caused so many supply disruptions that recovery is difficult. And to some degree, pandemic still is with us.
Our recovery from covid is delayed COVID partly because the GOP didn’t want us to recover. They denied the need for masking, and vaxing, so they continued to spread the disease.
They wanted to be able to complain about Biden and the Dems.
Not that the Dems are completely innocent. They still join the GOP in promulgating the false notion that federal deficit spending causes inflation.
Not only does federal deficit spending not cause inflation, but targeted deficit spending, to acquire and distribute scarce goods and services, is the only government solution to inflation.
Powell thinks consumer demand is causing inflation.. He wants to force consumers to demand less by making borrowing more expensive. But demand less what? Should we demand less oil? Less food? Less housing? Fewer cars?
If he fails to quell demand, which is likely, inflation will continue. If he succeeds in reducing demand we will have a recession, for that is exactly what a recession is: Lack of demand.
In short, Powell is trying to fight inflation by causing a recession. Stagflation next? Then depression?
Inflations are caused by shortages. PERIOD. The only way to cure inflation is to cure the shortages.
Today, we face many shortages ranging from oil to food, computer chips, lumber, paper, and the entire supply chain including shipping containers, port facilities, and labor.
Some of the foods in short supply (and therefore experiencing price increases) are: meat, poultry, dairy, eggs, and many vegatables. Will interest rate increases cure those shortages? Of course not.
Will interest rate increases cure the oil, food, computer chip, lumber, paper, supply chain, shipping container, port facility, and labor shortages?
The whole Powell concept is based on ignorance.
Interest rate increases will exacerbate shortages by making production more difficult. Businesses will be less likely to borrow for upgrading machinery or hiring more and better quality labor.
As a result, production will not grow sufficiently, and that means more shortages.
It will be the “leeches-to-cure-anemia” situation, where the supposed solution makes the problem even worse.
Eventually, inflation will end, but not because of Powell (who will claim credit). Inflation will end because businesses will catch up and begin to produce more, sell more, and ship more.
Meanwhile, we’ll have to suffer through sky-high interest rates, continual nonsense from Congress and Powell, ever more inflation, and excuses for cutting benefits to the not-rich. (There still will be plenty of tax benefits for the rich. Deficit worries don’t apply to them.)
The GOP is hopeless. It has become a nut factory. But, perhaps I will live to see the day when the Dems begin to understand that federal deficits are beneficial because they add growth dollars to the economy. They also add scarcity-fighting — i.e. inflation fighting — dollars to the economy.
Congress does the bidding of the very rich, who want the wealth Gap to grow. The pols promulgate the Big Lie that federal finances are like personal finances, and debt is bad.
So, we will continue to lurch from one recession to the next, with the occasional depression thrown in for flavor.
And as for the public ever understanding, don’t make me laugh. Seventy million people saw what Trump did for 4 years, then voted for him. That tells you all you need to know about the intelligence of the public.
Come to think of it, the insanity of providing the same truths, time and again, and expecting a different result applies to me, too. I’ve been ready to quit for several years, but then I think of the world my grandchildren will endure, and hope springs eternal.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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