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> The Great Renegotiation is also a byproduct of inflation. Workers are seeking better pay to keep up with the rising cost of living. Keeping in mind small bus

> The Great Renegotiation is also a byproduct of inflation. Workers are seeking better pay to keep up with the rising cost of living. Keeping in mind small business is collectively the largest employer and contributor to US output... let's remember the coming rate hikes will greatly reduce available cash to small businesses that operate with credit lines, credit card debt or via home equity lines. That is a LOT of US businesses. Now add to this increased input costs due to inflation. Now add increased tax rates. You can also expect lending requirements will tighten. So, it's worth considering the odds of worker prosperity (vs) the odds of a wave of business failures and associated unemployment/underemployment in many (but by no means all) sectors. Personally, I think the Fed & Treasury will continue fiscal stimulus and capitulate hard in the face of a deep recession. More of the same can kicking, and we'll see what seems like prosperity. In reality, it's a delay of an inevitable downturn unless some magical productivity innovation or goods/services advance emerges to rescue the US economy.

whatshisface 5y ago
>In reality, it's a delay of an inevitable downturn unless some magical productivity innovation or goods/services advance emerges to rescue the US economy. That sounds kind of like a plan. Delay until something random happens.
- speed_spread 5y ago
  Unfortunately, War is not that random nor is it magic.
  - whatshisface 5y ago
    Nor is it good for the economy (see: Korea, Vietnam, Iraq, Afganistan, Iraq...).
    - elif 5y ago
      that depends on which metrics you care about.
      - elif 5y ago
        for instance, this chart, of USD as global foreign reserve % You can clearly see the demand induce correlated with vietnam, gulf war, 9/11 invasion https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iun0_jAGaJMM/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/470x-1.png https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iun0_jAGaJM...
scythe 5y ago
>unless some magical productivity innovation or goods/services advance emerges But there has been the development and deployment of a major productivity innovation over the last two years. It's called Zoom. Or WebEx/Teams/Meet/etc. And while it doesn't work for everybody, the fact that tens of millions of people suddenly have experience working and running their business remotely means that if it does work for someone, their efficiency goes up.
- mlac 5y ago
  I think about stagnating innovation, and think that Zoom/Webex focus tends to keep things in the status quo. I’ve just got a feeling that there will be some hidden cost to innovation at large companies (less chance encounters) and a hit to culture (building a good remote culture is really hard) over time. These are not easily quantified, and I’m not sure the costs outweigh the benefits of a remote work force (health and safety, candidate pool, retention, flexibility, etc.). But it may be a trend in 5-10 years where companies with an in-person focus start eroding market share of remote-first established companies.
  - pm90 5y ago
    I think this is kinda wishful thinking, tbh. The labor market was pretty tight before the pandemic and has just become even tighter. Americans are less supportive of permissive immigration policies, birth rates are falling precipitously which means there is no end in sight. So companies which figure out how to do remote right (rather than accept is as a temporary adjustments) will have the edge as they can access a broader labor market (entire NA plus EU, maybe others if they can figure out time zones and outsourcing).
  - tessierashpool 5y ago
    if you switch to Zoom, you don’t need a building. this is an intense and dramatic change to the overhead of a business. your employees might not need a car any more, either. the number one depreciating “asset” in the average person’s life becomes optional. this innovation’s been around in tech for decades, and people have started billion-dollar companies this way. (for example, GitHub was profitable for years before it set up its first physical office.) but it’s not just tech now; it’s finally going mainstream. this is a very big deal.
MithrilTuxedo 5y ago
Aren't small businesses best positioned to adapt to these changes? It's not like they're sitting on piles of cash or other investments that are losing value. If costs go up they'll have to raise prices, just as the prices for what they're buying went up due to rising costs further upstream. I figured the pandemic cleared out most of the small businesses that would have failed within five years anyway (half do). I wouldn't assume the small businesses left would have as much trouble with inflation as larger ones that operate at greater scales with tighter margins.
- pm90 5y ago
  The problem is on the demand side. If consumers spend less (due to higher cost of borrowing), this makes it difficult for smaller businesses to survive or raise prices (while bigger businesses have access to cheap loans/can reduce workforce etc.).
- howmayiannoyyou 5y ago
  > I figured the pandemic cleared out most of the small businesses that would have failed within five years anyway PPP and SBA loans kept these companies alive. The bill hasn't come due yet. This is what people don't understand.
  - thebean11 5y ago
    Aren't PPP loans fully forgivable if you met certain requirements? There shouldn't be any bill for most businesses.
    - polski-g 5y ago
      If you used them for payroll, they were free money.
    - howmayiannoyyou 5y ago
      No, the point is the PPP money kept uncompetitive businesses alive that should have failed. The bill that hasn't come due: their failures.
vsareto 5y ago
I kinda feel like we’re headed for stagflation at this point. I don’t even think we can stimulus our way to temporary reprieve.
Consultant32452 5y ago
The Fed cannot raise interest rates so high that the federal government becomes unable to afford the interest on the debt. I can't predict exactly what is going to happen, but serious shenanigans are a certainty.
- wonderwonder 5y ago
  on a positive note though the IRS now requires that all deposits of $600 or more are reported by the banks ensuring that people like servers and small business owners pay their proper share of taxes. So that should help the government pay the debt. We cant have the poor continuing to not pay their taxes and the rich are too expensive to audit. /s Or at least that's the message I am taking from the current administration that appeared to campaign on the opposite message but what do I know? Edit: I should have made the /s more prominent. This is sarcasm.
  - andrekandre 5y ago
    why should the rich have to pay for everyone else? if its the poor that are getting handouts from the govt they should be the ones that have to pay it back. (so goes the logic)
    - azth 5y ago
      The entire present day financial system is fragile as it is built on illformed principles that we've known for thousands of years were a terrible idea.
  - howmayiannoyyou 5y ago
    > So that should help the government pay the debt. Hahahaha. Hilarious that anyone thinks that debt will be paid down significantly, let alone in full. Pro tip: US debt is here to stay and will get worse long before it gets better - if ever.
wonderwonder 5y ago
like a war...
Cornelius267 5y ago
"Now add increased tax rates." Aren't tax rates on businesses currently lower than they were during the last period of high inflation in the US?

whatshisface 5y ago

>In reality, it's a delay of an inevitable downturn unless some magical productivity innovation or goods/services advance emerges to rescue the US economy. That sounds kind of like a plan. Delay until something random happens.

speed_spread 5y ago
Unfortunately, War is not that random nor is it magic.
- whatshisface 5y ago
  Nor is it good for the economy (see: Korea, Vietnam, Iraq, Afganistan, Iraq...).
  - elif 5y ago
    that depends on which metrics you care about.
    - elif 5y ago
      for instance, this chart, of USD as global foreign reserve % You can clearly see the demand induce correlated with vietnam, gulf war, 9/11 invasion https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iun0_jAGaJMM/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/470x-1.png https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iun0_jAGaJM...

scythe 5y ago

>unless some magical productivity innovation or goods/services advance emerges But there has been the development and deployment of a major productivity innovation over the last two years. It's called Zoom. Or WebEx/Teams/Meet/etc. And while it doesn't work for everybody, the fact that tens of millions of people suddenly have experience working and running their business remotely means that if it does work for someone, their efficiency goes up.

mlac 5y ago
I think about stagnating innovation, and think that Zoom/Webex focus tends to keep things in the status quo. I’ve just got a feeling that there will be some hidden cost to innovation at large companies (less chance encounters) and a hit to culture (building a good remote culture is really hard) over time. These are not easily quantified, and I’m not sure the costs outweigh the benefits of a remote work force (health and safety, candidate pool, retention, flexibility, etc.). But it may be a trend in 5-10 years where companies with an in-person focus start eroding market share of remote-first established companies.
- pm90 5y ago
  I think this is kinda wishful thinking, tbh. The labor market was pretty tight before the pandemic and has just become even tighter. Americans are less supportive of permissive immigration policies, birth rates are falling precipitously which means there is no end in sight. So companies which figure out how to do remote right (rather than accept is as a temporary adjustments) will have the edge as they can access a broader labor market (entire NA plus EU, maybe others if they can figure out time zones and outsourcing).
- tessierashpool 5y ago
  if you switch to Zoom, you don’t need a building. this is an intense and dramatic change to the overhead of a business. your employees might not need a car any more, either. the number one depreciating “asset” in the average person’s life becomes optional. this innovation’s been around in tech for decades, and people have started billion-dollar companies this way. (for example, GitHub was profitable for years before it set up its first physical office.) but it’s not just tech now; it’s finally going mainstream. this is a very big deal.

MithrilTuxedo 5y ago

Aren't small businesses best positioned to adapt to these changes? It's not like they're sitting on piles of cash or other investments that are losing value. If costs go up they'll have to raise prices, just as the prices for what they're buying went up due to rising costs further upstream. I figured the pandemic cleared out most of the small businesses that would have failed within five years anyway (half do). I wouldn't assume the small businesses left would have as much trouble with inflation as larger ones that operate at greater scales with tighter margins.

pm90 5y ago
The problem is on the demand side. If consumers spend less (due to higher cost of borrowing), this makes it difficult for smaller businesses to survive or raise prices (while bigger businesses have access to cheap loans/can reduce workforce etc.).
howmayiannoyyou 5y ago
> I figured the pandemic cleared out most of the small businesses that would have failed within five years anyway PPP and SBA loans kept these companies alive. The bill hasn't come due yet. This is what people don't understand.
- thebean11 5y ago
  Aren't PPP loans fully forgivable if you met certain requirements? There shouldn't be any bill for most businesses.
  - polski-g 5y ago
    If you used them for payroll, they were free money.
  - howmayiannoyyou 5y ago
    No, the point is the PPP money kept uncompetitive businesses alive that should have failed. The bill that hasn't come due: their failures.

vsareto 5y ago

I kinda feel like we’re headed for stagflation at this point. I don’t even think we can stimulus our way to temporary reprieve.

Consultant32452 5y ago

The Fed cannot raise interest rates so high that the federal government becomes unable to afford the interest on the debt. I can't predict exactly what is going to happen, but serious shenanigans are a certainty.

wonderwonder 5y ago
on a positive note though the IRS now requires that all deposits of $600 or more are reported by the banks ensuring that people like servers and small business owners pay their proper share of taxes. So that should help the government pay the debt. We cant have the poor continuing to not pay their taxes and the rich are too expensive to audit. /s Or at least that's the message I am taking from the current administration that appeared to campaign on the opposite message but what do I know? Edit: I should have made the /s more prominent. This is sarcasm.
- andrekandre 5y ago
  why should the rich have to pay for everyone else? if its the poor that are getting handouts from the govt they should be the ones that have to pay it back. (so goes the logic)
  - azth 5y ago
    The entire present day financial system is fragile as it is built on illformed principles that we've known for thousands of years were a terrible idea.
- howmayiannoyyou 5y ago
  > So that should help the government pay the debt. Hahahaha. Hilarious that anyone thinks that debt will be paid down significantly, let alone in full. Pro tip: US debt is here to stay and will get worse long before it gets better - if ever.

wonderwonder 5y ago

like a war...

Cornelius267 5y ago

"Now add increased tax rates." Aren't tax rates on businesses currently lower than they were during the last period of high inflation in the US?