The policy errors of the last two decades have led us to where we are now. The belief by both Congress and The Fed that "any threat to asset prices must be immediately counteracted with more credit emission" drove the reaction to 9/11, to the 2008 housing blow-up and to *****. All three were serious errors and all three led to even larger bubbles each time, with this last one we are now in a historical bubble across basically all asset classes.
When such a bubble is in something like tech stocks its bad for the owners of said shares when it blows up in addition to all the higher-end retailers and such who were feasting on all the jet-setting "newly rich" (on paper) but when the same occurs in houses it screws a huge percentage of ordinary Americans. When it extends to everything it screws..... everyone.
And here we are.
Ejecting illegal immigrants has two large economic impacts: It decreases employment immediately however at the same time it also decreases competition for housing. This in turn if left alone (not met with another policy mistake) tends to raise wages and lower housing prices. Both of those are good for the ordinary American but bad for the asset-holding classes, especially at the upper end of the economic spectrum where those assets are concentrated.
More-seriously however is the likely impact on the pipeline of people who start at the bottom and can progress in their skill. If you cut that off by replacing them all with a computer ten years later most of the highly-skilled persons in that field do not exist. Nobody's thinking of this risk but it is very real, never mind that said person you displace has to have a way to make a living.
What do you propose as the means for those people to earn a living as the cost of real estate, power and water -- all primary inputs to everything, are driven higher in price by AI data center demand while 50% of those in technology today lose their jobs?
"None of this matters; buy NVidia!" -- uh huh.
Who's gonna buy things in this computational utopia -- goods and services -- and with what job and at what wage will they earn the money to do so?
I smell smoke, and I suspect Powell does as well. Trump's latest appointment to The Fed cares not for anyone but he who appointed him; we've seen plenty of this among all agencies over the last 20 years, but Jackson on the Supreme Court and this dude on The Fed are the two most-egregious examples of being put in a position because their boss has an ideology to advance with neither of the appointments having anything to do with their capacity to so much as think their way out of a wet paper bag nor even the mental firepower to recognize that what they're advocating for is both unsustainable and will directly lead to a monstrous economic and/or social dislocation.
This is how crashes -- and social dislocations -- occur.
You are here.
Prepare accordingly.
