How does the US economy work?


Shane Parrish discusses the dynamics of the U.S. economy by focusing on economic cycles and their implications. One of the key points he explores is how these cycles are influenced by government actions, particularly the independence and decisions of the Federal Reserve. Howard Marks, speaking with Shane Parrish, highlights the example of Paul Volcker from the 1980s, whose actions as Fed Chairman were crucial in controlling rampant inflation in the U.S. despite political pressures. Marks also notes that economic cycles often result from excesses created by human enthusiasm, which necessitate later corrections, typically resulting in an overshoot to the downside 1.

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Economic Cycles

Howard explains the impact of inflation on the economic cycle and the importance of Fed independence. He also highlights the role of excesses committed by people in causing economic cycles.

The Knowledge Project

Howard Marks | The Knowledge Project #53