Behind the Curve

In this week’s episode of the Plutonomix Podcast, Barnaby suggests how the Fed – after remaining “On Hold” at 5 ½% since June 2023 – may be “Behind the Curve.”  He explains the role the “Phillips Curve” and (now) the “Sahm Rule” have played in the Fed's decision-making process since the 70’s, even though things have changed since Paul Volcker was appointed Fed Chair in 1979. He ends with a reminder how we often base our decisions on False Assumptions -- and how the way we define and react to “Risk” (when seeking to calculate an Expected Rate of Return, years into the future) will make all the difference. TIMESTAMPS (01:35) The “Sahm Rule” (02:35) An Exception to the Rule? (03:43) The Rise in the Unemployment Rate: Supply & Demand (04:45) Comparisons to the 1981-82 Recession and The Phillips Curve (07:35) Volcker versus Draghi: Doing Whatever It Takes (08:35) The Fed as “Lender of Last Resort” (10:35) Our Mission -- and defining what “Risk” Truly means   RESOURCES What I Think I Know by Barnaby Levin The Illusion of Knowledge by Howard Marks Closing Technique of the Week: The Ben Franklin Close CNBC: The Fed has not made a compelling case for taming inflation by crushing demand, says Judy Shelton Contact Barnaby