Night fishing, policy makers, and the law of unintended consequences
This weekend I took the family to the lake. This was a new lake for me, I’d heard a lot about it and now I was ready to enjoy it. Fishing was my primary goal…I was going to fish until I couldn’t make one more cast. I’d go out three or four times each day. The last trip of the day was always the most peaceful, it was made after the kids were down for the night and the lake was empty and dark. I’d slip away from the dock around 10 PM and I’d just go find a place to fish, kill the motor, and enjoy the absolute solitude of fishing under the stars.
This time of year the nights are getting cool so there really aren’t many bugs to contend with. Pickwick Lake is a deep and picturesque river-lake that is surrounded by the high forested hills and rocky cliff faces of Tennessee, Mississippi, and Alabama. I stood on the casting deck of my boat alone in the cool night air, bathed in the light of a full moon, gently bobbing on the smooth blue-black surface of this deep lake, and I was in awe of the stars set against the crest line of the hills that surrounded me. Cast after cast I made toward the bank. My goal of relaxing was slowly but surely materializing. Each cast washed away a bit of stress...I was no longer thinking about work, the house, the yard, the FDIC, the Fed, nothing. About the time I was hitting my rhythm with the casts I noticed something out of the corner of my eye in the silvery moon-lit darkness to my right. I looked over and it was a BAT coming straight at my face!
Well it seems that the aforementioned “lack of bugs” this time of year that I find so pleasing is a sign that other things are happening as well. Each time I cast I take a small lure on the end of my line and I whip it behind me and then launch it through the air as far as I can. I then retrieve it and do this all over again. To me it’s a fun and relaxing thing. To a bat that isn’t getting enough to eat it looks a whole lot like an easy meal…and this chow bell was ringing loud and often.
That bat dive-bombed my head until I quit fishing. I had to put the pole down and go somewhere else. I don’t know that it takes a lot in the way of explaining to relay to you how un-nerving it is to have a huge bat dive-bombing your face at midnight…under a full moon…when you’re out in the middle of nowhere. I don’t mind bats in general…I spend a lot of time outdoors and they don’t bother me in the slightest. However…this was the first time I’ve had a huge bat dive so close to my head that I could hear his wings beating the air in rapid fire style. Up until that point I’d never considered how fast their wings move…let me tell you it’s quick. This might be one of those few times when it’s a good thing that there is nobody around for miles to hear you scream as I have an image to uphold.
My perfect plan for relaxation ran smack into the law of unintended consequences. My casting lures at night signaled to the bat that there was food near my head…big easy to catch food and it wasn’t leaving until it got some.
Monetary and fiscal policy in uncharted waters
This morning I was reliving my trip and I realized that there are some similarities between night fishing on a new lake and conducting monetary and fiscal policy in this environment. Night fishing a new lake is a difficult proposition. You are in unfamiliar waters, you can’t see any of the navigation aids, you can’t see the shore, nor any hazards that may lie in front of you, you are almost blind…so you have to slow down and do things in a more cautious manner. Even then…when you know you need to exercise more caution things can still go wrong…and they may not be the things that were on your list of potential problems.
My list of concerns for fishing were short but serious and included other boats running without navigation lights, an unforeseen obstacle in the dark water, and being unable to see the shoreline as I approach to cast. It was a short but manageable list and I had a plan to deal with each of these. The unintended consequence that I simply did not anticipate was that my lure would show up to echo-locating bats as a big fat juicy meal at a time when such things were lacking. Despite all of my planning and risk management steps my own actions ultimately caused the majority of my problems.
Those conducting monetary and fiscal policy are night fishing right now. The economy is in uncharted waters, there are plenty of hazards to worry about, policy makers have to move cautiously, and the actions they take will carry consequences to places beyond the immediately obvious.
There is no shortage of problems to contend with in our current lackluster economy; high unemployment, a terrible housing market, a highly leveraged consumer, state governments beginning to run into trouble, GSE’s that are still bleeding money, and the list goes on. Many of these problems do not have easy solutions. We’ve spent a lot of money thus far trying to fix these problems…but to date we’ve not seen much progress. Thus is the nature of the beast in a massive deleveraging process. The consumer has spent years worth of future earnings…now they have to try to pay it back in a time when their income is declining or disappearing. This will take some time to right itself.
In the absence of consumer spending (which has historically been 2/3’s of GDP) we get a more inefficient replacement in the form of government spending. There has been no shortage of this type of spending. This money has been thrown far and wide in an effort to stimulate the economy. We’ve had the first time home buyers program (twice), the cash for clunkers program, several extensions of unemployment benefits…you name it…we’ve spent it.
As I see the government casting money out this-way-and-that, I can’t help but wonder…where is the bat? Where is the unintended consequence of our actions? I could come up with a whole list of potential issues...but in the end the problem may come out of nowhere as suddenly as my echo-locating friend on the lake. Until then I guess we’ll keep casting.
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