How To Buck the Fundamental Transformation of the Economy

How To Buck the Fundamental Transformation of the Economy

By | December 3, 2014 at 9:10 pm | No comments | More To Explore

How To Buck the Fundamental Transformation of the Economy

The official headline unemployment rate continues to fall. This month it was announced that it fell to 5.8%, the lowest since 2008. Does that mean the economy is really getting better? They say a picture is worth a thousand words. In this case, it’s worth more.

tjaden pic

In one graph, you can see one of the fundamental transformations that has occurred in the US economy during the last ten years.

After the .com bubble and bust at the turn of the millennium, the Federal Reserve embarked on a low interest rate/easy money policy that continues to this day. During that period, the labor force participation rate for those aged 25-54 has steadily declined, while the rate for those 55 and over has risen dramatically.  What does this say about Fed policy’s impact on human behavior?  As it turns out, a lot.

  1. Low interest rates have a major impact on those close to retirement age. As they seek to shift their investments to the safety of fixed rate assets, they find those assets now generate very little income.
  2. Currency devaluation by global central banks has driven up the price of necessities such as food and energy. This is devastating to those on fixed incomes such as pension plans and Social Security.

With retirement income stagnating or falling, and the true cost of living rising, many who had left the workforce are reentering it. Those who were planning to retire are holding on to their jobs longer. This has impacted the labor force in two significant ways:

  1. There is a new source of competition for entry level/part time jobs from those re-entering the workforce.
  2. Openings for higher paying jobs are being delayed as those nearing retirement choose to remain in the workforce longer.

This is a fundamental shift in the psychology of the workforce that is not likely to be reversed anytime soon.  Low rates and currency devaluations are entrenched in monetary policy and the world’s central banks have no practical exit strategy.

What does this mean to you?

  • Understand that it is our monetary system that is driving these changes. Until our system is altered, the world will continue to see savings destroyed and a rising cost of living.
  • Millions of people have been forced to dramatically alter their plans for the future. This is one way our monetary system enslaves and controls people.
  • Position yourself to compete for jobs that will continue to be created as we move through the robolution. This will help you remain free from the effects of change due to bad money.
  • Help educate others. What your friends and loved ones don’t know can cause them to make uninformed decisions that may not turn out well.

The purpose of becoming informed is so that you can take meaningful action. Use this bit of information as another point of reference to position yourself to move through the coming years with confidence, and to be a source of stability to those around you.

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