Mar 17 • 8M

Welcome to the Twilight Zone

Making sense of the current economic and financial environment

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This segment first appeared in the November 2022 episode of Exploring Atlanta. Please click on the audio player below to listen…

Rodman Edward Serling (December 25, 1924 – June 28, 1975) was an American screenwriter, playwright, television producer, and narrator/on-screen host, best known for his live television dramas of the 1950s and his anthology television series, The Twilight Zone. The episodes are in various genres, including fantasy, science fiction, absurdism, dystopian fiction, suspense, horror, supernatural drama, black comedy, and psychological thriller, often concluding with a macabre or unexpected twist, and usually with a moral. A popular and critical success, it introduced many Americans to common science fiction and fantasy tropes. The first series, shot entirely in black and white, ran on CBS for five seasons from 1959 to 1964.

In the latest episode of the Atlanta Real Estate Report podcast, I share some charts and thoughts about the extraordinary nature of the times we are living in right now. Click on the “Listen Now” button below to access that segment…

Atlanta Real Estate Report by ATLsherpa
Monetary & Fiscal Policy
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“The idea of persistent low rates has wormed its way into everything: investor thinking, market forecasts, inflation expectations, valuation models, leverage ratios, debt ratings, affordability metrics, housing prices and corporate behavior. By truncating downside volatility, forestalling business failures and postponing the day of reckoning, such policies have persuaded investors that risk has gone into hibernation or simply vanished.” — Seth Klarman @ The Baupost Group

Interest rates are rising FASTER than at any other time in U.S. history (click on image)

“Let every man, every corporation, and especially every village, town, and city, every country and state, get out of debt and keep out of debt. It is the debtor that is ruined by hard times.” — Rutherford B. Hayes, 19th POTUS (July 13, 1879)

Total Public Debt as Percent of Gross Domestic Product

“A disconnect between finance and the real world lies at the heart of all great bubbles.” — Edward Chancellor, The Price of Time

According to the Federal Reserve (Fed), U.S. consumer debt is approaching a record-breaking $16 trillion. Critically, the rate of increase in consumer debt for the fourth quarter of 2021 was also the highest seen since 2007.
Since COVID-19 started its spread around the world in 2020, the global economy has been put to the test with supply chain disruptions, price volatility for commodities, challenges in the job market, and declining income from tourism. The World Bank has estimated that almost 97 million people have been pushed into extreme poverty as a result of the pandemic. In order to help with this difficult situation, global governments have had to increase their expenditures to deal with higher healthcare costs, unemployment, food insecurity, and to help businesses to survive. Countries have taken on new debt to provide financial support for these measures, which has resulted in the highest global debt levels in half a century.

“My colleagues and I are strongly committed to bringing inflation back down to our 2-percent goal. We have both the tools that we need and the resolve it will take to restore price stability on behalf of American families and businesses. Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone. In particular, without price stability we will not achieve a sustained period of strong labor market conditions that benefit all.”

Jerome Powell, Federal Reserve, 11.02.22

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