There are many big-time schools of thought. Most have fancy names. My favorite is one nobody writes or talks about — the “Yeah But School of Thought.” We see “yeah but” thinking in lots of places. That includes the Federal Reserve. Don’t go to sleep on me, now. I won’t bore you with dry stuff […]
There are many big-time schools of thought. Most have fancy names. My favorite is one nobody writes or talks about — the “Yeah But School of Thought.”
We see “yeah but” thinking in lots of places. That includes the Federal Reserve. Don’t go to sleep on me, now. I won’t bore you with dry stuff about the dry and stuffy Fed.
The people at the Fed predict where the economy is going. They then raise or lower interest rates. Lots of us keep tabs on what they predict. These are some of the greatest economic thinkers of our times.
When Barack Obama was in the White House, the Fed folks saw rainbows. They kept predicting strong growth. But the economy grew more slowly than they predicted — quarter after quarter and year after year “Yeah, it is disappointing, but just wait.” That is what they told us.
Then Donald Trump moved into the White House. Now, the Fed guys saw gloom. Slow growth had set in the 12 months before Trump. They predicted more of the same. With every move, Trump’s administration made, they basically said “Yeah, it might help, but…”
So they predicted more slow growth. But wait, the economy grew faster than they predicted. Still, they said, “Yeah, that’s nice, but…” So they grudgingly predicted a bit more growth. Next quarter, same thing. The economy grew faster than the Fed predicted. “Yeah, we see the growth, but…” Next quarter, same thing.
Job numbers rose. Unemployment rates fell. People came off the sidelines to go back to work. The number of people on food stamps fell. The number of people who claimed they were disabled and couldn’t work also dropped. The Fed’s reaction: “Yeah, these things look good, but…”
My point is simple. Most of us slip on certain lenses. We see events through those lenses. No matter what happens we stubbornly stick with those lenses. Maybe it’s because we need to save face. Maybe it’s because we are stubborn. Maybe it’s due to our political leanings shading our lenses.
The Fed experts won’t change their lenses. They convinced themselves this country’s economy was doomed to low growth for many years to come. Along comes a president who scoffs at them. A lot of them hate him. This hatred distorts their views. It welds those lenses to their eyes.
A lot of the folks at the Fed cling to the economic policies of the last administration. They believe those were the right policies. They do not believe that opposite policies will work. When those new policies work, they say “Yeah, we see much faster growth, but…” But this can’t last. But this really came from our earlier policies — even though back then we predicted slow growth. But this will lead to inflation. But look at the deficit. Yeah but.
A lot of this is human nature. We all know people whose guiding philosophy is “yeah but.” Yeah, I am feeling good, but I usually get a cold in October. Yeah, the job is going along nicely, but with this outfit, you never know. Yeah, my stocks are way up, but a crash is coming for sure.
Rare are the people who change lenses. Rare are those whose lenses are plain glass. Rare are those who love one political party but will give credit to another party for policies that work.
We have people who grew famous predicting something that never came about. Two years ago, Nobel laureate Paul Krugman predicted absolute immediate doom for our stock market — all because the “hateful” Trump was elected. Krugman damned the Trump tax cuts as a “nothing burger”. Utterly wrong, he was. But he refuses to slip off those lenses. Yeah, things look good, but…
I nominate him, the Fed’s gloomy band of prognosticators, and many others for honorary degrees from Yeah But University. I am certain they will say “Gee, what a nice honor, but…”
From Tom…as in Morgan.
Tom Morgan writes about political, financial, and other subjects from his home in upstate New York. You can write to Tom at tomasinmorgan@yahoo.com, read more of his writing at tomasinmorgan.com, or find him on Facebook.