Love Story

Economic expansion means never having to say you're sorry.
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Knowing Me Knowing You

JACKSON HOLE, Wyo. -- You're a central banker.

You know this expansion will end just like all the others.

You know you and yours will end up killing it.

You already know you'll end up having to do too much all at once because you didn't do enough when you should have.

And you know you cannot cite an expansion that didn't end that way.

You know full well that the notion that three rate hikes to date are enough to cool the economy is ridiculous.

You know that the idea that not enough time has passed to judge their final impact is sillier still.

You know that the funds rate is currently no higher than it was in August 1998; you know it is not a coincidence that the economy is growing even faster now than it was then.

And you know that in one recent episode it took a 300 basis-point increase in the funds rate (to 6% from 3%), a 214 basis-point increase in bond yields (to 8.08% from 5.94%), and a 237 basis-point increase in mortgage rates (to 9.20% from 6.83%) to chop the economic growth rate to the tune of 1.3 percentage points.

You know that Jim Bianco is right when he points out that come the second day of the year, a whole lot of Americans will be looking at a bathtub full of water, a sport utility full of gas, and a mattress full of cash.

You know that the water and the gas don't much matter, but you're pretty certain that not a whole lot of that money is going back into the bank.

You know the bond market will not do your work for you.

You know that stocks are even happier in the wake of three tightenings than they were following three easings.

And you know they're laughing in your face.

Well?

What do you do?

Pure Morning

You do two things.

The switch to triple-zero means you had to be a

sissy today, but you issue another message a few days into the New Year (and credit for this line of thinking goes to Jim). A formal statement, something through a mouthpiece, whatever. You get out there (provided that we're all still here) and say

Hey. We couldn't be happier that this year thing went down without a hitch. Honestly. We're overjoyed.

We do kinda have some bad news though.

All that pumping we've been doing? At faster and faster rates for a while now?

That's gonna have to stop.

And then, having given fair warning, you finally do something that'll actually be taken seriously. Something you ought to have done seven months prior.

You push through a half-point rate increase when you

meet about a month later.

Epilogue

You're a central banker.

Cupid strikes.

Magic, pure magic, courses through your veins.

You begin to think that maybe, just maybe, this time

is

different.

And then it hits you.

The lover is different.

The words are different.

The locations are different.

And yet the last scene of the last act is the same as it ever was.