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Thursday, January 27, 2022

Or As Homer Would Have Said, "Between A Rock And A Hard Place" -- January 27, 2022

The current economic situation is so fascinating, so incredibly fascinating.

We have really, really, respected, credible "economists" at both ends of the spectrum talking about the current economic situation. At one end, those who think inflation is out of control and that the Fed is not reacting fast enough to contain it; and, at the other end, those who think over-reaction by the Fed will result in things worse than they would otherwise be. 

The "horns of a dilemma." "Between a rock and a hard place."

From wiki

From wiki:

Scylla and Charybdis were mythical sea monsters noted by Homer; Greek mythology sited them on opposite sides of the Strait of Messina between Sicily and Calabria, on the Italian mainland.

Scylla was rationalized as a rock shoal (described as a six-headed sea monster) on the Calabrian side of the strait and Charybdis was a whirlpool off the coast of Sicily.

They were regarded as maritime hazards located close enough to each other that they posed an inescapable threat to passing sailors; avoiding Charybdis meant passing too close to Scylla and vice versa.

According to Homer's account, Odysseus was advised to pass by Scylla and lose only a few sailors, rather than risk the loss of his entire ship in the whirlpool.

Wow, wow, wow. 

I have no dog in this fight. I can't influence anyone to do anything. But it sure is fascinating to watch. Sort of like being on Odysseus' ship in real time. LOL.

For me, this is going to be fascinating to watch. It will be a real credit to Jay Powell if he can navigate the strait.

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Carrying the analogy forward.

As noted:  

Odysseus was advised to pass by Scylla and lose only a few sailors, rather than risk the loss of his entire ship in the whirlpool.

I assume the horns of dilemma in today's environment:

  • raise the Fed rate to 10% overnight and risk (guarantee?) a recession; some suggest we need a recession;
  • go slow and steady, and invite (guarantee?) stagflation;

Cutting to the chase, along with a bunch of other stuff, in either a recession or severe stagflation a lot of folks are going to lose their jobs.

So, it comes down to this, if Homer were writing this today, would he advise Jay Powell to pass by Scylla (slow and steady) and lose only a few sailors, or pass by Charybdis and lose the entire ship?

Nothing new under the sun.

Maybe Leonard Cohen had it exactly right. LOL.

The future: 

The Future, Leonard Cohen

As some are saying, we are going the way of Europe. Except we have oil and are energy independent.

Big difference.

4 comments:

  1. Another big difference is the US doesnt have a Russian Bear knocking at our back door.
    Those nice folks to our north are like cousins and our southern border is a door wide open at the moment.

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    Replies
    1. I've thought about that often. Great comment. Thanks.

      But having said that, most of Germany's (and Europe's) energy problems right now are self-inflicted, and energy problems have led (or made worse) the geo-political environment.

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  2. Was stationed in W Ger. in the 1980's and have followed the politics over time. It has been sad to watch a fairly center/right society allow itself to devolve into the far left cesspool that it is now.
    Self inflicted wounds for sure.

    ReplyDelete
    Replies
    1. I was stationed in Germany for eight years or thereabouts during the same time period and agree with your observations. If I had more time I would expound on why I think this happened, but I am on my way out the door to pick up Sophia.

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