Friday, October 9, 2020

Fed Chairman Jerome Powell speaks at the NABE Annual Meeting-Couple of Points

Federal Chairman Jerome Powell discusses COVID and its impact on the economy. He reviewed the Federal actions used to minimize impact of the pandemic. There were a couple of things that I pulled out of what he was saying so that I can create my own understanding of how the economy works and whether it will be stronger after the Pandemic. It is believed that we can excel after the Pandemic resides because of increased technological adaptation that leads to real Digital GDP growth.

We might also consider that new technology changes our economic fundamentals rooted in our experience with physical goods. Reality changes when the assumptions change! Thus, what we believed 7 years ago might not be what we believe today and what we believed when many economic theories started are not necessarily what we are going to believe in the future. Thus, economic policy and theory often develop together off of previous knowledge. New radical technologies like widespread use of the Internet and virtual work change the fundamental structures of how we interrelate since the beginning of our species. Our economic systems will change to reflect that new way of life and perceptual reality. 

A few things he said......The highlighted ones are the ones I took extra notice.

-Increased savings

-Goods consumption pre-pandemic levels

-Service consumption is low

-Business investment is on the rise

-Business formation is rebounding. 

-Unemployment is around 7% which is an improvement.

-The pandemic has increased the differences between the haves and have nots.

-If we lag too long we can run into a problem where normal recessionary issues take over. 

-There is a downgrade to long term expectations of society. 

As some readers might know I'm in the process of developing and creating a Theory of Transactional Clusters that hopes to better explain behavior in new economic systems as the information infrastructure builds on top of our previous physical infrastructure to create new possibilities for economic growth. Maybe some day it will adequately explain methods of connecting industries together (virtual and physical), applying pack investing, enhancing local clusters and pushing some industries to the center of the global supply chain.

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