During these crazy times we're living in, it's hard not to think back to Billy Joel's 1989 hit song "We Didn't Start the Fire" - which chronicled a series of major political, social, and cultural events throughout the 1950s, 60s, 70s, and 80s that seemed to suggest a "world on fire" by the time 1989 rolled around.
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What would Billy have thought if he had wrote this song in 2022 instead of 1989? If nothing else, the 2020s version would lend credence to the idea that the fires have always been burning, probably since the world's been turning (and certainly plenty more since 1989). And no, we didn't start them all. But there's one fire we did start - some time back in the early 2000s, and then with lots of extra gas poured on after the 2008 financial crisis... and now, here we are in 2022, trying to fight it - while knowing that we did in fact light it.
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It was the Fed’s own experiments that helped create all this national debt in the first place. The Fed did so through an experimental program called quantitative easing, or QE. The importance of QE can’t be overstated. Under this program, the Fed created about 9 trillion new dollars between 2008 and today. (To put that in perspective, the Fed created only about $1 trillion in its first 95 years of existence. So it has printed 900 years’ worth of money in a little over 10 years, when measured against its historic rate.) All that money was injected straight into the Wall Street banking system, pumping up the very markets, like stocks and bonds, that are now threatened by the Fed’s tightening.
CHRISTOPHER LEONARD, POLITICO.COM
Here in Doowopolis, many of our original historic "Doo Wop Motels" - and all their expression of working and middle-class hopes & dreams - were lost to this "fire" back in the 2000s; the fire of inflation through years of artificially low interest rates, artificially high asset prices, excessive levels of borrowing & debt, and the devaluation of earned income, savings, and capital by those who work hard for a living (particularly if in service to their own communities), all enabled by excessive money creation by central banks, that is.
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In practice, this meant the "benching" of legitimate small-business entrepreneurs with legitimate (albeit limited) capital in hand, legitimate business plans drafted up (in consultation with legitimate accountants looking at legitimate P&L projections) and legitimate ambitions to help revitalize their local communities by operating legitimate, income-producing, job-creating businesses - and instead, sending onto the field a team of reckless borrowers enabled with nearly-free (i.e. un-earned) "Fed" money in hand and little genuine concern for their community beyond its ability to provide the land on which to build their speculative real estate "trading" game of beat-the-clock condo building & flipping (which would eventually collapse & default) on the very ground where an entire tourism & lodging industry once operated.
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It's a fire that wiped out not just what the original builders of Doowopolis left behind (i.e. the original Doo Wop Motels built in the 1950s & 60s), but the very spirit of Doo Wop that a whole new generation was poised to bring into the 21st-century (the community-oriented Doo Wop revival, restoration, and redevelopment vision of the late 1990s - which was originally intended to empower independent small-business owners to re-invent the historic motel industry) through big dreams, hard work, and genuine entrepreneurship (if enabled by market interest rates, stable asset prices, and a legitimate focus on cash flows, that is). Now that more people have begun to wake up to the need to fight the fire that has been raging on for almost two decades now, our feeling is, it's going to take a lot more than just a few Fed interest rate hikes to to do it (although it's a step in the right direction...)
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Bringing back that old-fashioned spirit of working & middle-class optimism, creativity, ingenuity, and community-focused entrepreneurship? It's definitely worth fighting for, and it's a fire worth (re)starting - that is, the one that burns within; the one that ignites passion inside us; the one that leverages our hard work & big dreams to build a better, brighter future for everyone involved - not just the ones for whom "free money" is handed out at both the highest & lowest levels of society.
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In the meantime, for a refresher on where we are, and how we got here - and what led to the demise of the "first generation" of Doo Wop (but hopefully not the last?) - the below article by Christopher Leonard for Politico is a good place to start...
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Read the full article on Politico:
The Fed Is Getting Even Tougher on Inflation. Here’s What To Watch First. (and how the Fed helped create much of the volatility)
https://www.politico.com/news/magazine/2022/09/20/fed-inflation-powell-debt-00057606