Friday, September 18, 2015

If Janet Yellen Was an Air Traffic Controller

Captain: Tower, we've lost an engine of air speed and altitude growth. Over.

Tower: Captain, don't panic. I have a dual mandate to keep you safe. Over.

Captain: Our air speed has fallen and our altitude is falling. Over.

Tower: I need you to drop your nose to increase your air speed. Over.

Captain: Understood. Air speed picking up nicely. Altitude falling rapidly. Over.

Tower: I need you to raise the nose to increase your altitude. Over.

Captain: Understood. Altitude leveling off now. Air speed falling rapidly. Over.

Tower: I need you to drop your nose again to avoid the stall. You also need to raise the nose to maintain your altitude. Over.

Captain: Understood. Tower, the stick broke off. I think I may have applied too much leverage attempting to comply with your instructions. Over.

Tower: No, you are fine. There can never be too much leverage. There is no reason to blame the tower for your excessive risk taking. Nobody could have seen this coming. You are still well positioned for a "soft" landing. Over.

Captain: Understood. We're spiraling to the ground now. It's almost over. Ov...

In all seriousness, there are 7 million fewer unemployed than there were 5 years ago. Growth has been pathetic given how much of a tailwind that should have been.

There are only 8 million unemployed left. What's going to happen to growth once the tailwinds are gone? You'd have to be an extreme optimist to think there are more than a few years left before some sort of landing "unexpectedly" appears. Based on the speed we're approaching the ground, you'd have to be an eternal optimist to think the landing is guaranteed to be soft, or even likely. Sigh.


mab said...

It's the Goldilocks eCONomy! Not Oveur Dunn, Not Unger Dunn!!!!

Everything is fine. By the way, is there anyone on board that knows how to fly a plane?

Stagflationary Mark said...


I'd answer your question but it is Top Secret.

Things change, people change, hairstyles change, interest rates fluctuate. - Hillary Flammond

Okay, maybe not all interest rates. Some get stuck at zero for extended periods, lol. Sigh.

Troy said...

The demographics are tricky.

The first hump gave us the 1970s thru 1990s + 60M jobs, only interrupted by the Volcker attempt at stopping the inevitable societal leveraging up as the boomers hit their 20s and 30s, going from debt-free children to the typical wage slaves paying on their borrowings.

The bb echo is peaking now, and it's a big cohort. We've got 20 years of expansion ahead if the late 20th century is any model.

Plus we've got 80M boomers just hitting their retirement, raining money on the economy as they liquidate their savings and entitlements. Median boomer is 60 so we've still got 20+ years of this, too.

The only unsustainable thing in this picture is the current debt leverage, but that's suppressed thanks to the ZIRP. ZIRP introduces issues with public pensions being underfunded, but that's just a revenue issue.

Stagflationary Mark said...


Plus we've got 80M boomers just hitting their retirement, raining money on the economy as they liquidate their savings and entitlements.

If 80M boomers liquidate risky assets as I have done as a boomer, then I really don't think the party's exit door is going to be nearly big enough.

Time will tell.

Stagflationary Mark said...

Further, I don't think the median baby boomer is in fantastic financial shape. The vast wealth doesn't seem to be spread around all that evenly. Many of the richest may continue to hoard as the poorest continue to scramble for scraps. Sigh.

Troy said...

shows full-time workers has yet to recover to 2008 levels.

Mfg, construction, info, all down.

Moving away from an honest widget-making economy to a human services -- health & education -- one.

But that's OK. Wealth is the state of being well, after all. One more thing that is perhaps unsustainable is our big-ass trade deficit and ever-deepening NIIP, $7T in the red and going.

If we had to pay our way in the world like Greece or Spain, there'd be colossal dislocations.

Stagflationary Mark said...

Higher education seems broken. Much of what I learned in college was wortth it to me (especially math and physics), but much of it I could have learned in online only classes.

There's one thing online only classes should not be, and that is expensive. I could have easily earned a minor in math simply by having one of the best math professors in the country teach online math classes for the entire country. He/she could be paid very well and it would still be extremely cheap thanks to the massive scale.

That might not work for everyone of course, but everyone should not be getting math minors. Those who "need" to ask a lot of questions to understand the material would probably be better served by picking a different career.

There's no valid reason why most higher education should cost so much now or in the future.