The United States economy has but one solution to escape the tightening grip of a wage-price spiral: more layoffs.

Unemployment must rise, potentially by another two to three percentage points, for there to be hope the cycle can be broken, according to a former Walmart executive, or the alternative is out-of-control inflation that will hurt every single American.

“It’s crazy right now,” said Bill Simon, former CEO of the retailer’s core U.S. operations from 2010 to 2014, speaking on Fox & Friends Weekend. “We’re stuck in this loop of wage inflation, product inflation, cost inflation and…that cycle keeps going.”

Simon described the recent wave of layoffs, which started in the tech industry before slowly expanding outward, as little more than the unfortunate by-product of the Fed hiking interest rates—“necessary medicine” for an overheating economy, according to Simon.

The ex–Walmart executive cited his own former employer as a prime example of inflation building up in the pipeline, after the brick-and-mortar retailer raised its minimum wage by 17% to $14 an hour.

What Walmart pays its staff is of national relevance, since the company with a nearly $400 billion market cap employs 1.7 million people across the U.S., more than any other company in the country.

Other recent deals were even more egregious, Simon warned. This cornucopia of pay increases has subsequently offset downward pricing pressures from the recent wave of layoffs that might have otherwise acted as a circuit breaker.

Simon said nothing was therefore more crucial in 2023 than ending the positive feedback loop of higher prices feeding higher pay demands that then result in even higher prices and hence keep the cycle going.

Wall Street no longer fears the Fed

“We have to get this inflation under control. Another year of high single-digit, low double-digit inflation and we’re going to be in a world of hurt,” he said, “because inflation hurts 100% of the population—a recession might hurt 2% to 3% that have lost their job.”

The stark comments clash greatly with the renewed bullish animal spirits on Wall Street, which already appears to have moved on from last year’s number-one topic in the belief that the Fed has successfully stuffed the inflation genie back into its bottle. More and more market participants believe growing deflationary headwinds will force Fed Chair Jay Powell to pivot to an easing bias in the course of 2023, which should boost equity valuations.

Consequently, ever since December drew to a close, investors have been piling back into the “risk-on” trades, those that favored the most speculative growth stocks prior to last year’s Fed rate-hike program.

Electric vehicle manufacturer Tesla, for example, has already gained two-thirds in value since the start of this year. And while that may sound impressive, it pales in comparison with the share performance of Michael Saylor’s MicroStrategy: The company that essentially trades as a levered bet on the spot price of Bitcoin has surged 78% so far this month. Even Cathie Wood’s ARK Innovation exchange-traded fund enjoyed a 33% year-to-date surge after slumping to five-year lows.

By comparison, the Nasdaq Composite, a broader index of tech names, is up just 12%, while the more defensively minded S&P 500 has gained only 6% owing to weak performance from megacaps like JPMorgan.

Much more evidence of the prevailing macroeconomic outlook and trends in consumer and producer prices could come this week, however. Not only does earnings season kick into high gear with Meta, Apple, Alphabet, and Amazon all publishing results, but Powell is set to brief reporters on Wednesday, when he is expected to hike rates by 25 basis points.

This story was originally featured on Fortune.com

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