The opposite of the Goldilocks economy is where no matter what is done, nothing is right. Raising rates to infinity will not print more commodities. But continued easy money will underwrite even more price-spirals as people start to hoard what is hard to come by.The oatmeal analogy still works well here.
In our darker version, Goldilocks comes home and that last bowl of quaker instant oatmeal is both too hot (inflation) and too cold (recession). How can that be? How can parts of the economy be too hot, while other parts are too cold? A cold bowl of oatmeal was nuked but not stirred. That is how.
Ever put a bowl of oatmeal in the microwave? When you try to eat it there are mouth-burning hot spots? Yet other parts are still cold? That is the opposite of Goldilocks’ perfect porridge. It is too hot and too cold simultaneously.
If the Goldilocks economy was perfect porridge where inflation was shrinking even while rates were dropping, then what is the opposite of that economically? It is inflation raging even while rates are going up. That is where we are now.
The Opposite of Hedonics
Look at your expenses. What you need is in demand and unobtainable. What you don’t is cheap and worthless to you. Goods, services, jobs, and “opportunities”. All are bifurcated along have and have not lines2. All are exacerbated by government reactions to previous manipulations gone bad. Today’s Russian Oil Embargo is the 1970s Iran Oil Embargo. etcetera etcetera.
If this were run-of-the-mill stagflation we should see it dissipate as the economy cycles and re-syncs. But it is not. It is a potentially permanent situation in no small part triggered by sanctions and the resulting bifurcation of global raw materials into a Russian / non-Russian split. Just like the Iranian Oil embargo did. Now, as back in the 1970’s, our stagflation is facilitated and possibly cemented by global governmental policies.
Chronic, rare, stagflation is the economic opposite of the so-called Goldilocks economy. Let’s give it a name. We call it: the Anti-Goldilocks Economy, or Structural Stagflation
Structural Stagflation
Structural stagflation a very rare type of endless chronic stagflation that is only seen generationally. What you have is a cold economy with hot inflation. This happens from time to time organically. But when you have kicked the can of normal self-clearing market cycles down the road for a generation, and you have implemented policies to restrict the flow of goods you don’t have enough of; you do not get relief from it. You get structural stagflation.
Structural stagflation is a byproduct of government interventionist errors (like embargoes, sanctions, and fragmenting trade) compounding a normal cycle. The last one we had was in the 1970’s and it wiped out a generation of middle- class Americans. It doesn’t matter how much better that new plasma picture is or how many neat things a refrigerator does now, you don’t need a new one. You need electricity.
You look hungry, let's have some breakfast for dinner!
#longAmerica
yes, despite those leading us
This is as uplifting as any chapter at any point in any piece of Ayn Rand. Succinct, educational, just a whisker of sardonicism, and total descent.
I approve this literary call-out of "you think it can't get worse? hold on".
So . . . virus/supply chain, sanction/doesn't matter if you could get it shipped, and the 70's born generation of 0.4 quality education.
OK then, buy a gun, or a rope for the living room rafter, got it, thanks.
it is getting worse. thanks friend