The future has arrived, yet it does not resemble the exciting visions we once imagined. One major letdown of the 21st century has been the absence of flying cars—an idea often touted as the hallmark of a futuristic society.
This frustration was aptly captured by PayPal co-founder Peter Thiel, who lamented, “We wanted flying cars, instead we got 140 characters.” His remark alludes to Twitter’s character limit, a stark contrast to the dreams of technological advancement.
Indeed, Twitter serves as a second-rate substitute for flying cars, often dumbing down meaningful conversation. Rather than encouraging thoughtful discourse, it fosters
trivial exchanges from Congress members and even the President.
But there is hope on the horizon. The concept of the flying car is becoming a reality with the introduction of the IFO—or Identified Flying Object—which is a proposed two-seat drone resembling a UFO. It offers more than just the thrill of flight; it’s equipped with safety features. If the eight battery-powered electric rotary engines lose power, the cockpit can detach, deploying a parachute to safely guide passengers to the ground.
Interestingly, the IFO concept isn’t entirely novel. Enthusiasts have been developing and test-flying similar contraptions for years, though these experimental flights likely lack insurance.
So what’s the point of it all?
Financial Psychopaths
The point is that soon you’ll enjoy the luxury of tweeting from a flying car. Does life get any better?
Of course, it depends on personal preferences. Some people may prefer enjoying a hot dog and a soda at a baseball game, while others might cherish reading a Dickens novel in a secluded mountain cabin.
Ultimately, it comes down to choices and individual preferences. However, in today’s financial landscape, shaped by intricate engineering, certain choices are severely penalized. Hard work, saving diligently, and being financially responsible have become virtues that face significant obstacles in this environment.
The Federal Reserve has maintained a policy of declining interest rates for over 35 years, leaving savers with negligible returns on their investments. Meanwhile, heavily leveraged individuals are the ones profiting, as they can borrow substantial amounts to invest in assets—like stocks, bonds, and real estate—and refinance continuously at increasingly lower rates. To make matters even more advantageous, they can rely on the Fed to elevate asset prices, providing a safety net whenever needed.
Failure to Launch
Since December 15, the Federal Reserve has raised the federal funds rate twice, each time by 25 basis points—a move not seen for over a decade. What are the credit markets indicating about these changes?
Surprisingly, the yield on the 10-Year Treasury note has not risen; rather, it has dropped—from 2.58 percent on December 15 to 2.42 percent as of the last market close.
What could this mean? Are the Fed’s actions yet again misguided? The stagnant yields could be another sign that despite numerous attempts to rejuvenate the economy post-Great Recession, it has once again experienced a failure to launch.
Time will tell. However, the commercial credit market has begun to make its concerns known. According to The Telegraph:
“One key measure of US corporate borrowing is falling at the fastest rate since the onset of the Lehman Brothers crisis. Money supply growth in the US has also slowed considerably. These monetary and credit signals often serve as leading indicators for the real economy.
“Data from the US Federal Reserve indicates that the $2 trillion market for commercial and industrial loans peaked in December. This sector has seen a sharp decline as lenders tighten credit, especially for non-residential properties, dropping at an annual rate of 5.4 percent—a decline not observed since December 2008.
“The broader $9 trillion market for loans and leases has not shrunk as dramatically, but it is still contracting at a rate of 1.6 percent on a three-month basis. ‘Corporate lending has ground to a halt, and I am stunned that the Fed is attempting to raise rates. They have committed a significant error,’ said Patrick Perret-Green of AdMacro.”
Indeed, the Federal Reserve has a history of making sizable miscalculations. The underlying issue remains that centrally planning the price of credit is inherently flawed. Yet the Fed, under Janet Yellen and her colleagues, seems determined to pursue this path, further distorting the economic landscape.
Their strategy appears to involve fixing their mistakes with larger ones. When the credit market inevitably faces turmoil, they are likely to respond with equally misguided solutions.
In conclusion, while the prospect of flying cars may eventually become a reality, the underlying financial systems continue to struggle with convoluted policies and harmful repercussions for the average citizen.
Sincerely,
MN Gordon
for Economic Prism
