The Wave of Deflation & Rising Unemployment

QUESTION: Marty, years ago you did a chart showing the projection for unemployment. I believe I understand what you were projection for the company I work for has been replacing people with technology on a large scale. So we can have rising corporate profits with rising unemployment as technology changes everything. Is there a point when rising unemployment brings down corporate profits for it reduces consumer spending?

Thank you for your consideration

PD

ANSWER: Absolutely. The peak in unemployment during the Great Depression was during the technology shift that was a result of the introduction of the combustion engine. Tractors began to replace farm workers, as agriculture had been 70% of GDP in the mid-19th century, 40% by 1900, and later dropped to 3% by 1980. This technology shift, combined with the Dust Bowl, changed the face of labor dramatically.

Politicians are brain-dead. Hillary claims she will champion equal pay for women and raise the minimum wage to $15. I do not know what planet she is on but such a combination will clearly create a major depression, given we already have this technology shift underway with so many jobs being automated. You park your car, push a button for the ticket, and pay by sticking your card in a machine without ever seeing a person. McDonalds announced its answer to $15 an hour minimum wage – touch-screen cashiers.

The combination of a $15 minimum wage and Obamacare is a lethal injection for the economy. But hey, we elect corrupt lawyers to public office who say what the people want to hear and have no concept of the result if such ideas are implemented.

Tell your children to study computer programming. What will the world be like in 25 years? Will any menial jobs remain?

We are approaching the reality of the movie series “Terminator.” Government is striving to develop robot warriors whose loyalty will never be questioned.

The future will be very much sci-fi. So I am sure someone reading “Twenty Thousand Leagues Under the Sea,” the classic science fiction novel by French writer Jules Verne, never imagined that submarines would really exist one day.

Welcome to the wave of deflation. This trend is already causing people to spend less and save more.