When Tools Stop Working

Demand Is Booming

Running It Hot

Bipartisan Failure

Easy Money

New York and Dallas

Because I believe in the division of labor, I rarely use hand tools today. In the ‘80s and ‘90s, I had two 4 x 8 pegboards on my garage wall full of tools along with my large Craftsman toolbox. I had the right tool for every job around the car, house, and yard. I worked on the plumbing, electricity, built rooms, and flooring. My current friends might not believe it, but I was quite handy back then. It was almost a bit of a fetish.

Now, I know others can wield them more efficiently and I’m pleased to let them do so. My tools of choice today are my computers, iPad, and phone. I am much more productive with my current tools than trying to fix a light switch.

The right tool in the right hands can do miracles. However, it gets more complicated when you want to work on the markets and the economy. Hammers work because nails don’t unpredictably reshape themselves. The economy does. Fiscal and monetary authorities must rely on tools that don’t work consistently and may not work at all. As we’ll discuss today, this is a big part of our current dilemma.

We’d all like to think it has an easy explanation and a quick solution. Readers tell me all the time: “John, the problem is really ______.” Unfortunately, it’s not one problem. We face a swirling mess of different problems, interacting in ways we don’t fully understand. We do have some clues, though. It now looks more and more like August/September marked some kind of turning point. Economic data has weakened considerably since then.