Charles Payne

I know it is perverse that the greatest fear on Wall Street is not geopolitical events or corporate earnings but instead it is the idea of Main Street getting a bigger paycheck. Although, it is the stated goal of the Federal Reserve, and the key measure of success for an economy, historically after massive fed intervention, higher wages result in too much money- chasing fewer goods.

It is otherwise known as the textbook definition of inflation. Though none of that cheap money has ever reached paychecks beyond Wall Street.

For some time, there have been rumblings of higher wages to come because of the ever-widening skills gap. Even for non-STEM jobs, finding committed workers who are qualified is a challenge in many industries. There will be a tug- of-war for those types of workers. The biggest incentive in this work/balance era is a larger paycheck.

Obviously, it seems counterintuitive and downright despicable to think higher wages could destroy the economy. In fact, with the Fed printing money, there will always be a cyclical relationship that sees Main Street fortunes boxed in because at some point, too much money will mean sky-high prices and a diminished purchasing power. That is far from the case now. Instead, all of that printed cash is burning a hole in our pockets, buying toxic assets from banks and burning holes in corporate balance sheets.

It is one thing to go through a cycle where wages are lifted through monetary policies, and then there is a period where we all feel better.

Just think- if you still own a home, the price would be higher, although not what you paid originally, unless it was in Manhattan or San Francisco. Your 401k is above the March 2009 lows, all you need in order to make the good times roll is a fatter paycheck… assuming you still have a job? So, how disappointing has it been to get all the other aspects of inflation including higher energy and food bills, but a smaller paycheck.

Food prices are soaring; if the government thinks shifting to a cheaper cut of meat is the answer, they truly the ones that are in a bubble.

I suspect wages can rise now. I also suspect it will be a long period of time before consumers are cocky enough to spend more than they’re making, although at some point, it’s bound to happen.

Trading Mentality


Charles Payne

Charles V. Payne is a regular contributor to the Fox Business and Fox News Networks. He is also the Chief Executive Officer and Principle Analyst of Wall Street Strategies, Inc. (WSSI), founded in 1991 which provides subscription analytical services to both individual and institutional investors.