Mark Blyth

That's the labor market story we spoke about before. This is Larry Summers. You might remember, he said, we need to have 7% unemployment for two years to cure the inflation, this sort of stuff. And what he's thinking is, OK, this is maybe started by too much government money. But the problem is, you've got a really tight labor market. And people are going to start to expect price increases.

That's the labor market story we spoke about before. This is Larry Summers. You might remember, he said, we need to have 7% unemployment for two years to cure the inflation, this sort of stuff. And what he's thinking is, OK, this is maybe started by too much government money. But the problem is, you've got a really tight labor market. And people are going to start to expect price increases.

That's the labor market story we spoke about before. This is Larry Summers. You might remember, he said, we need to have 7% unemployment for two years to cure the inflation, this sort of stuff. And what he's thinking is, OK, this is maybe started by too much government money. But the problem is, you've got a really tight labor market. And people are going to start to expect price increases.

So you're going to get wage increases. And then you're going to get that spiral. And we're back in the 70s. And we know the only way to break that is to push interest rates up. That's what we learned from Paul Volcker, right?

So you're going to get wage increases. And then you're going to get that spiral. And we're back in the 70s. And we know the only way to break that is to push interest rates up. That's what we learned from Paul Volcker, right?

So you're going to get wage increases. And then you're going to get that spiral. And we're back in the 70s. And we know the only way to break that is to push interest rates up. That's what we learned from Paul Volcker, right?

And so they have an expectation that prices will go up. So therefore they need to have more wages to compensate. And you get that kind of two of them pushing up together.

And so they have an expectation that prices will go up. So therefore they need to have more wages to compensate. And you get that kind of two of them pushing up together.

And so they have an expectation that prices will go up. So therefore they need to have more wages to compensate. And you get that kind of two of them pushing up together.

Exactly, which leads us to number three, which is the story about greedy corporations. So the story that then comes out is, yeah, but maybe the government spent too much money. That's your ignition, right? And then maybe people start to say, things are getting too expensive relative to my income. I need a pay rise. Totally reasonable, right?

Exactly, which leads us to number three, which is the story about greedy corporations. So the story that then comes out is, yeah, but maybe the government spent too much money. That's your ignition, right? And then maybe people start to say, things are getting too expensive relative to my income. I need a pay rise. Totally reasonable, right?

Exactly, which leads us to number three, which is the story about greedy corporations. So the story that then comes out is, yeah, but maybe the government spent too much money. That's your ignition, right? And then maybe people start to say, things are getting too expensive relative to my income. I need a pay rise. Totally reasonable, right?

But then what happens is big corporations, particularly the ones that have a lot of market power, like there's basically two companies that do all the chicken in the United States, this sort of stuff, right? They can absorb those costs and they can pass them on to the consumer to protect their profits. That's why prices rise. We get that. But then they go a little bit further.

But then what happens is big corporations, particularly the ones that have a lot of market power, like there's basically two companies that do all the chicken in the United States, this sort of stuff, right? They can absorb those costs and they can pass them on to the consumer to protect their profits. That's why prices rise. We get that. But then they go a little bit further.

But then what happens is big corporations, particularly the ones that have a lot of market power, like there's basically two companies that do all the chicken in the United States, this sort of stuff, right? They can absorb those costs and they can pass them on to the consumer to protect their profits. That's why prices rise. We get that. But then they go a little bit further.

Then they actually push on their profit margins.

Then they actually push on their profit margins.

Then they actually push on their profit margins.

And then they make super profits. And that's why eggs cost much more than they did. That's why beef cost much more than they did. It's all these concentrated markets. And then they don't push it back down. That's why things don't go back down. So whether that's right or wrong, that's story number three.

And then they make super profits. And that's why eggs cost much more than they did. That's why beef cost much more than they did. It's all these concentrated markets. And then they don't push it back down. That's why things don't go back down. So whether that's right or wrong, that's story number three.