I live in a small town of Plattsburgh, NY. Like small towns everywhere, we are inundated with the bad news of the world, now available twenty four hours a day from whatever news source aligns with our personal preferences. 

The big news this week for the nation is the continued response of the Fed to counteract both a crisis of confidence in some imprudent banks and the economic crisis of persistent inflation that affects us all, and has spread to many of the Most Developed Countries. As we saw last week, and have been lamenting for the past decade, the Fed’s failure to normalize interest rates have forced banks to place too many low yielding assets on their balance sheet. Then, instead of reacting by exclaiming “hark, I hear the cannon’s roar,” the Fed responded to what should have been a fully-expected bout of inflation with “what the heck is that?” The most rapid increase in interest rates in a couple of generations has caught some banks unprepared and unable to match low yield assets to demands for high yield liabilities. 

I am reassured that the Fed has taken steps to ensure bank liquidity and adjustment without giving up on the inflation fight. But, it causes me to ponder - why do we find ourselves in one crisis after another?

Many of you recall far better than I do the Cold War, Vietnam, Watergate, and the Reagan Era. I certainly well-remember the 1960s revolution, with a recently-departed hippie mom throughout those formative years of draft dodgers in Vancouver, drugs, a modicum of debauchery, but also an optimism that we would soon solve poverty and establish world peace. 

Watergate was a setback as my generation seemed to have become cynical about self-serving politics. Since then, faith in democracy has declined, and that decline seems to have even accelerated, as this week’s graph illustrates.

We held hope that the end of the Cold War with the leveling of the Berlin Wall and the disintegration of the Soviet Union would pay a peace dividend that would allow us to deal effectively with other global problems such as poverty, oppression, and, now, global warming. 

Yet, no such peace dividend has emerged. Instead, we move from crisis to crisis at such a fast rate that one crisis, such as millions of Syrian refugees, the persecution of the Uygher and Rohingya peoples, or the increasing number of people starving. Now, there are more refugees who are persecuted even more brutally, and starvation worldwide is approaching a billion people and continues to rise. We forget about these issues because another crisis takes its place, which then offers refuge for the scoundrels that perpetuate these human rights crimes. 

Reagan won his election on a promise that he would reverse inflation, high interest rates, burgeoning government debt, and economic dysfunction. That critical election year of 1980 was too early for President Carter’s Federal Reserve Chair, Paul Volcker, to demonstrate his harsh anti-inflationary policies were already working. Already by 1980, every central bank had developed tools to be sure they would never again have to face such an inflation and such a Faustian deal of generating a recession to ward off inflation. 

In fact, it was not until the Reagan-inspired deregulation of the 1990s and the excesses and complacency of the early 2000s that we realized our central banks did not have sufficient sophistication as we had thought. 

This fiction of central bank depoliticization and competence was challenged again recently, and explains today’s inflation and banking crisis. I hope we learn from it, and I am reassured that the Fed did not abandon the inflation crisis because the bright and shiny banking crisis reared its ugly head. I lament, though, that had we not further eroded banking supervision by raising the heavy bank scrutiny threshold from $50 billion in deposits to $250 billion in 2018, the $215 billion Silicon Valley Bank might have been better protected. 

These are all issues bigger than me and you. I sit here in Plattsburgh, NY, with a farm just a couple of miles away from Roxham Road, where about a hundred desperate humans every day try to cross into Canada. At midnight Friday night, an agreement between President Biden and Prime Minister Trudeau closed that crossing. Canada promised to instead increase its acceptance of refugees by an amount that will hopefully accommodate the needs of these displaced people. 

It is disconcerting, though, to sit comfortably in Plattsburgh, NY, and know that a hundred desperate people, many of whom escape persecution, and some who simply want the same better life that brought our ancestors to this country, are invisibly crossing through here every day, in the year 2023. It has been three generations since the optimism of the 1960s and the dream of world peace, freedom from poverty and starvation, and trust in democracy and the free market system was supposed to liberate humankind. 

Roxham Road and riots that attempt to overturn antidemocratic regimes worldwide, with despotic leaders on both sides of the political spectrum but nonetheless representing a mutual admiration society, demonstrate that we seem to be going in the wrong direction. Maybe cable news has addicted us to the drama of conflict and crises. Personally, I’d prefer less drama, and a greater consciousness to solve the existential threats of oppression, global warming, aggression, and starvation.