The Entire Global Economy Now Hinges on One Thing
As I write these words we are now only hours away from The Most Important Event Ever to Happen in the History of the Global Economy. Investors are bracing themselves. Markets are anticipating. Journalists are spilling Olympic sized swimming pools of ink on writing headlineafter headline after headline after headline after headline after headline about this, the deciding economic event of our time.
If only this math actually added up.
No, the great event is not the announcement of the discovery of free energy. Or a major new technological breakthrough that will revolutionize industry and increase productivity. Or even an innovative new theory for how to pull us from the brink of the global derivative black hole collapse. It’s something entirely more ordinary: words.
That’s right, with just a few magic words uttered at today’s meeting of the Economic Club of New York, Fed chair Janet Yellen will cause entire markets to rise or fall. A single declarative sentence could strike down a small country. An effusive adjective could cause an entire industry to boom, a disparaging remark could cause that same industry to collapse. A rising intonation, an arched eyebrow, a significant pause, even a semi-colon could be the difference between rags and riches for millions of workers around the world.
Just imagine what she could do with a dangling participle.
Sound ridiculous? It is. Yet nevertheless this is the situation we’ve arrived at.
As I’ve noted before time and time again in this column, we have entered the “New Normal” where fundamentals do not matter at all, only perception. Do you believe the Fed has solved the market meltdown of ’08? Then they have solved it. Do you believe the skyrocketing debt and geyser of excess liquidity created in the last decade are not a problem? Then they are not a problem.
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