Alice Arrives!

Alice is here.

 

Fear Tax

The problem is simple: Americans pay a tax every day, in the form of unnecessary security.

People think that the Fed, all-powerful, can make magic, mint money, and solve economic problems at the drop of a hat.

In reality, we "control" a few interest rates, and we influence the system indirectly. A large-scale change, (like rolling back the fear tax) is something we simply can't accomplish.

Fortunately, Americans have traditionally not cared about security because the costs are a negative externality. Within ten years no one will remember *why* we take longer to board an aircraft...and someone might just make the argument we should stop. Americans are a risk-accepting group of people (perhaps a nation of immigrants encourages risk-takers) and the result has been positive so far. The next time you stop to worry about something, just remember that fear costs money.

Push the Pedal

Yes, I know, who couldn't have seen this coming? And who is writing this garbage over at the WaPo?

Fed leaders are starting to grapple with the risk that the recovery could stall altogether and that prices could even begin falling. In a deflationary spiral, like the one experienced by Japan in the 1990s, falling prices lead people to hoard cash, which weakens the economy further, and debts become even more onerous.

 Most Fed leaders have said that is unlikely to happen in the United States. The officials, however, did say after their meeting that the "pace of recovery in output and employment has slowed in recent months." They added that the pace of the expansion "is likely to be more modest in the near term than had been anticipated."

Most Fed leaders? Most Fed leaders? Perhaps the guy writing this isn't an idiot, but who think that we're entering a Japan deflationary style stagnation because of cash hoarding by individuals? (And what editor stuck that drivel in the beginning when the rest of the article is much more nuanced?)


America has the most spend-happy consumers in the world. We use our paychecks, 401ks and our houses to finance purchasing cool toys. Even bankruptcy is on the table if it cleans the slate and lets us purchase again. 


And finally: newsflash! No one over here thinks that our announcements should goose the stock market. Stop creating a fake ruler to measure things by!

New Hires

Most of us work in teams; I manage a small one as well. Imagine if the members of your team started leaving, one by one. It's happened to me frequently: my six person team once was reduced to two people other than me, leaving us under the gun each day. If a person called in sick, we were in trouble.

The solution is simple: get HR to provide more bodies. There comes a time when you've got people lined up...but their start date is in the future, so you're hurting, but the end is in sight.

Then there's the time that the people are ready to start but HR is bungling the paperwork. That's what's going on right now at the Fed.

"But wait, NBK! The Senate is not an HR department! I'm sure they have their reasons..." I can hear you say.

Hmm, not so much:

Diamond received the most opposition of the three Fed nominees in banking committee votes last week. The panel voted 16-7 in favor of Diamond, 17-6 for Yellen and 21-2 for Raskin, Maryland’s commissioner of financial regulation. All of the opposition came from Republican members.

So the Senate overwhelmingly approved them in committee, and moved them to the floor, and then certain members sent them back to the White House.

The Fed is supposed to have 7 people running the show...and they'll be down to 4 in June. I guess we'll just have to "work smarter" over here at The Reserve for now.