economic post

One of my favourite fields of study happens to be economics. While this blog has not much to do with economics, I just read a really interesting piece from the NY Times about the "Fed-Ex economy." While it deals with micro-recessions and the like, one of the most important point that I was able to get out of it is the fact that instead of adjusting production capacity to deal with demand and supply, modern economies are using shipping/transportation to deal with these fluctuations, which in the long-run produces a much more stable economy.

"It had been a busy day for Georgia businesses, and FedEx's regular nightly flights from Atlanta to the company's Memphis hub were overbooked with packages. So the local crew made a call to a sprawling, low-slung room here at headquarters, where people hunch over computer screens showing weather maps and flight plans, and asked for help from the five empty FedEx jets that roam over the United States every night.The recent birth of that small fleet, at a multimillion-dollar price tag, explains a lot about how the nation's economy has become so much more resilient. Think of it as the FedEx economy, a system that constantly recalibrates itself to cope with surprises. The United States has endured an almost biblical series of calamities in recent years - wars, hurricanes, financial scandals, soaring oil prices and rising interest rates - but the economy keeps chugging along at an annual growth rate of roughly 3 percent.

It has been able to do so with the help of technology that allows businesses to react ever more quickly to changes. But with little notice, those reactions have also created a new feature of the business cycle: the micro-recession."

And a more critical piece of info about the Federal Reserve chairman consulting Frederick W. Smith Fed-Ex's Chief Executive Officer on federal exchange rates policy changes.

"....Mr. Greenspan uses the company's vast reach to check in on the economy.
"He always asks, 'We still O.K.?' " said Mr. Smith, a part-owner of the team whose stadium suite abuts the one Mr. Greenspan uses.

More formally, Federal Reserve staff members rely on FedEx and the nearly six million packages it delivers every day for real-time data that helps set interest rate policy."

Full text version of the article here.