Inflation: Too Few Goods?
The time-honored cause of inflation is…
“Too much money, chasing too few goods.”
(So, what happens if we make more goods?)
The standard, government-approved solution to inflation says…
Raise interest rates.
Bang. That’s it.
Result: Nobody can borrow, businesses decline, and unemployment rises.
Predictably, there will be less money in circulation.
In other words, inflation stops, because everybody gives up.
They can’t or won’t buy at the current prices.
A Different Look
But what if (right now) we have…
Too much money, chasing too few goods.
…Because we actually have too few goods?
COVID-19 restrictions brought the entire economy to a crawl.
For two years.
Supply chains were totally messed up.
We are still short of products in many areas.
(Cars, gas, and food come to mind.)
So, yes. We have…
Too much money, chasing too few goods.
Apparently, we can’t get rid of politicians.
So money will continue to flow like water.
What if we just made more stuff?
Production Is Growing Fast
Manufacturing is still keeping its nose above water. That’s the most recent “Report On Business” from the Institute For Supply Management (ISM).
But, more importantly, they say Production is “Growing Faster.”
That’s huge good news.
Maybe supply lines are getting cleared up.
Meanwhile, orders are falling, with customer inventories holding steady.
That makes sense.
Buyers are making appropriate adjustments.
They know their End Users are pulling back, because, well, Inflation.
Here’s where it all changes…
Game Changer
Hand-in-hand with inflation comes higher payrolls.
Employers get to choose whether to pay employees less, or maybe fire them, altogether.
This is where we won’t talk about millions of illegal immigrants.
And we won’t talk about companies whose employees are largely invisible.
We won’t talk about any of that.
Instead — and for the first time — end users can effectively side-step increased labor costs by automating.
It isn’t just a matter of buying bigger, faster machines.
We’re now talking about machines that can communicate and learn.
We all knew it was coming.
But this environment is kicking automation into high gear.
No longer does an employer need to tolerate an overpaid, um, person, with poor work habits and a lot of demands.
Now, robotics can very possibly do the same job faster, better, cheaper, and still have the potential to say, “Wow. You’re the best boss ever.”
In six languages.
Robotics Is Setting Records
The Association For Advancing Automation (A3) posted a report on August 30, with the title, “Robot Sales Hit Record High in North America for Third-Straight Quarter.”
That’s, really, all you need to know. I put a link in, so you can read it, while you wait for the next quarterly report, due out in a couple of weeks.
They say the Automotive world (as in car manufacturers) is still the dominant user of robotics and automation. But adoption is growing fast in Food & Consumer Goods and in Life Sciences.
Recruiter’s View
We touched on this subject from the demand side in “Automating A Recovery” (Employers Intelligence).
Automation won’t save obsolete labor, but it will make things a little easier on the way to another position.
I submit that igniting inflation was deliberate and unnecessary.
The solution relies upon…
– Fiscal responsibility
– Faster, cheaper production through automation.
I don’t know how we become responsible.
Useful automation is arriving, now.
-TD