Peak central bank tightening was reiterated by Fed chair Powell’s forecast of three interest rate cuts this year in his latest March meeting. 

There are now unmistakable signs that inflation could remain higher for longer as escalating wars in Europe and the Middle East disrupt global supplies of essential commodities. Wage growth pressures, from the private sector having to raise wages to compete for skills in short supply or industrial action, could also be a tailwind on the inflation rate. 

However, the phenomenon of wage inflation is unlikely with the current trend of rising job losses. 

So far, in 2024, over 34,000 employees have been laid off among more than 140 tech companies, according to layoffs.

Peak Central Bank Tightening
post COVID-19 world - Unemployment

“the phenomenon of wage inflation is unlikely with the current trend of rising job losses”

WIN INVESTING

The AI automation technology wave could also be weakening wage growth. According to a report of 750 businesses, 37% say the technology will replace workers in 2023. 

Meanwhile, 44% report that there will be layoffs in 2024, resulting from AI efficiency.

Goldman Sachs estimates that 300 million jobs could be lost or diminished due to this fast-growing technology within a decade. 

A future machine workforce, where humans have no bargaining power, could mean falling wage inflation and peak central bank tightening

Rising prices are unlikely to come from higher wages or buoyant demand. Rising prices could come from supply shocks. 

AI - job loses

“44% report that there will be layoffs in 2024, resulting from AI efficiency”

WIN INVESTING

Structural job losses through fourth-revolution technologies and crushing interest rates, average mortgages and car loan payments are nearly 50% higher, which could result in a sharp drop in household discretionary spending. 

Demand for aspirational luxury goods brands has collapsed.

“There is a world-order battle underway, where the collective East is battling to break free from the Western US-centric polar world claws” – Win Investing

The Fed’s peak central bank tightening could be a tale of two stories of deflation, the falling price of non-essentials and the persistent high price of essentials

Moreover, the outcome of WW3, the potential dethroning of the king dollar, could crush the Empire and its colonies into a hyperinflationary depression, similar to post-German WW2.

The reverse could be true if the Empire retains its hegemony, but that means enforcing the status quo global rules of the game, keeping the dollar on the throne. 

There is a world-order battle underway, where the collective East is battling to break free from the Western US-centric polar world claws.

In Africa, the Nigerians energized with a dream of fair trade and Russian arms are chasing out their former colonial French masters. 

In Europe, Russia is conquering back its agrarian land and logistic hub, Ukraine. Macron’s troops will fill already overcrowded graveyards.

In the Middle East, Houthis Red Sea drone attacks on the merchant navy continue, despite UK US multi-billion dollar Navy patrols.    

WW3 “higher ground” has taken to the stars with fully integrated satellite-guided missile systems.

Select a warhead, and the operator can blow up a truck 500 miles away, incinerate a 300-man platoon or even render a city to rubble. 

Digital automation and drones are changing the rules of the game and flipping the economics of war on its head.

Several thousand-dollar drones can convert a multimillion-dollar tank to scrap metal.         

We could be nowhere near peak central bank tightening if hundreds of billions of dollars are being created to finance losing the war and if capital flows out of US treasuries.

Win Investing - Newsletter signup logo

Want the latest investor news as it happens?

Subscribe to our Investors Newsletter

You have Successfully Subscribed!

Pin It on Pinterest

Share This

Share This

Share this post with your friends!