The Federal Reserve under Greenspan in the 90's made a fatal mistake. He signaled the Federal Reserve moved from stability to helping the economy. Most people see nothing wrong with the Federal Reserve helping the economy. But in a capitalist society, and wanting to avoid government intervention into the public sector, the Federal Reserve should have maintained its disposition. Once he lent a helping hand, politicians and the public switched to view the Fed is the driver of the economy.
This lead to politicians not being accountable for the economy, and to point to the Fed. Stock market, Bond rates, asset processes are suppose to reflect the economy health as signals to politicians. Then Politicians adjust policy and lead the country forward.
Leadership is hard, easier to ask someone else to kick the can. That has landed us to today.
At some point, can kicking won't work. There IS one exception to this view, if the economic model changes. AI has the potential to be so impactful the economic rules I am viewing no longer apply.
Until AI has invaded the economy sufficiently, the older economic model is the guide.
There IS the possibility that the can kicking is sufficient to switch to a newer AI economic model, though I give this a low probability mainly due to multi-front resource constraints.
To me, Ray Dalio is the most articulate of the future view excluding AI rewriting the economic model. And I completely agree we must suffer in the USA and UK economically to force change. This will happen when the fed tries to kick the can, and it can't.
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