The Fed’s Failure: New Home Sales Back to 1960s Levels
A problem with most humans is that we’re really bad at letting go of what happened yesterday. So too with nations. When estimating potential threats, it’s easy for leaders to adapt to whatever happened in the latest conflict, developing their military accordingly.
Think of the U.S. after World War II. We built up land forces across Europe to guard against an invasion by the U.S.S.R. Later on in Vietnam we dove into jungle warfare, where tanks and mass forces were less useful. We were set up to fight the last war, not the next one.
In our economy we do the same thing. We develop economic policies and responses that work great, as long as history repeats. When things stray from the script, we run into problems.
For six long years, the Fed has been fighting the last war.
