Also, the knowledge economy requires workers with very different skills than the industrial age. It places a premium on specialized technical expertise and a capacity for self-directed learning, permitting workers to jump from employer to employer as new technologies create and destroy industries and jobs.

Compared with 25 years ago, consider how many web designers and how few print journalists we have today.

What jobs the economy creates are either in the well-paying knowledge economy or in low-paying areas such as restaurants, residential cleaning services and the produce aisle at Whole Foods (WFM).

Our educational system produces enough great scientific minds, but not nearly enough technically sound folks with an old-fashioned "get-up-and-go" attitude to fill the needs of the new knowledge economy. It still largely graduates too many generalists who expect someone else to provide a desk and paycheck.

A recent college graduate with a major in "global peace studies" working at Starbucks is not really underemployed; rather, he has just borrowed too much to finance a bad investment.

In the first decade of this century, Americans borrowed recklessly to paper over these problems and created a false prosperity, and then got their comeuppance with the financial crisis.

Since 2008, the Federal Reserve has poured more than $3 trillion dollars into financial markets by buying Treasury and mortgage securities and lending to banks at near-zero interest rates. That can't fix the combined consequences of America's lousy trade, energy and educational policies.

History has taught that printing too much money usually fires up inflation, and once ignited, inflation is darn painful to douse.

That has already occurred in prices for assets such as some social-media stocks, commercial real estate and farmland, and now it is spreading more broadly. Since March, consumer price inflation has accelerated and is now about 4%.

Fed Chairwoman Janet Yellen has expressed little appreciation for the structural problems causing unemployment and has denied inflation is much of a problem at all.

Americans should expect the Fed to flail about, recklessly printing money, and brace for a bout with stagflation -- high unemployment, stagnant wages and rising prices.

At the time of publication, the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

TheStreet Ratings team rates STARBUCKS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate STARBUCKS CORP (SBUX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 9.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 9.4% when compared to the same quarter one year prior, going from $390.30 million to $426.90 million.
  • Net operating cash flow has increased to $418.40 million or 37.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.17%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • STARBUCKS CORP has improved earnings per share by 9.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STARBUCKS CORP swung to a loss, reporting -$0.01 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($2.67 versus -$0.01).

Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and a national columnist.

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