 Hello, and welcome to another episode of the Minor Issues Podcast. I'm Mark Thornton at the Mises Institute. Well, there has long been a talk about an economic recession hitting the United States. Really, for more than a year. Recently, however, that talk of recession has turned to one of a soft landing. So we saw recently the Bank of America scrapping its recession forecast based on the Federal Reserve. So we're seeing big mainstream banks back off of their recession calls. The Fed is no longer forecasting a recession, saying that everything is really great. And the line that we're seeing in the economy seems to be drawing very thin between that of recession and that of a soft landing. Increasingly fine line. Here at the Minor Issues Podcast, over a long period of time, we've heard talk of soft landings going back for decades. So there's plenty of talk of soft landings, but as we're going to see, soft landings themselves don't happen that often. So the question for this episode is, do we get a soft landing or a hard landing? Or will it even be the hope for crash landing in the economy? Recession or correction in mainstream economics is defined as two straight quarters of a decline in GDP as a result of the Fed raising interest rates. Austrians, on the other hand, look at an economic correction or recession. And the important consideration is really cleaning out or cleansing the economy of its male investments. That is investments that were induced into production as a result of artificially low interest rates. So with the mainstream Fed view of either a soft landing or a recession, if you don't get any correction or cleansing, or if you just don't get very much of it, that's not necessarily good for the economy. And as a matter of fact, it can lead to a piling on overoptimistic view of the economy developing, moving forward under Fed leadership. So if you really want to cleanse all of the bad investments out of the economy, and if you want to get labor back in a stable equilibrium situation, the soft landing doesn't get it. There's not many cases where talk of soft landing turned into soft landing. People talked about it excessively in 1989, and we did not get the soft landing. People talked about a soft landing excessively in the year 2000, and we didn't get it then either. And of course, in 2007, there was an enormous amount of talk about soft landing and avoiding the recession. And of course, that ended up in the great financial crisis. Now, recently, Chairman Powell has said, well, you know, there are examples of this. There's the 1994-95 situation with Allen Greenspan. That's really the only acknowledged soft landing. Chairman Powell at the Fed has suggested that 1965, 1984, and the recession of 2020 were all examples of this soft landing. But those are in disputes. Those are periods in which minor cleansing happened, and there were major headwinds in the economy that really outweighed anything the Fed was doing at the time. The reasons I'm on the lookout for a crash landing in the economy are many. We have a situation with a weak economy, and yet housing prices are very high despite historic unaffordability for consumers. We have 10 million job openings in the economy, ultra-low unemployment rates. We've experienced negative interest rates and negative oil prices in the recent past, and currently government is spending and borrowing totally out of control. We have world monetary chaos. And of course, we have the aborted economic crisis of 2020 due to the COVID government extravaganza. And all of that is in addition to what the Fed did with zero interest rates, quantitative easing to the moon, and so forth. So I'm on the lookout for a crash landing in the economy. Before you do anything else, I suggest that you check out the Human Action podcast a couple of weekends ago where Bob Murphy and Jonathan Newman discussed this possibility of a soft landing economy in sort of intricate Austrian detail. I'm not going to justify my watch for a crisis here because I've really been talking about all this stuff in the Minor Issues podcast. I've been writing about it from 2022 at least, and many, many other Austrian economists have been writing about topics that touch on this issue on Mises.org. There are plenty of mail investments in the economy, including all of the typical areas like housing, commercial real estate, banking and finance, insurance and pensions, streaming services, and a lot of other things that have sort of propped up the market, including artificial intelligence and the great Apple company and the big tech players and so on. So there are plenty of mail investments that I see out there. And in terms of the inverted yield curve, it's been inverted. It's getting a little bit less inverted recently. And there was a lot of talk about it at one time when it first became inverted, but that talk is completely dropped off so that people are talking much more about a soft landing in the economy. But I would point out that most inverted yield curves that result in recessions are actually soft landings themselves where the inversion comes down and just goes negative a little bit, then bounces back up. The economy goes into recession and life goes on. In this case, it's unusual in that the inversion became negative quite a while ago. It became significantly inverted and has remained so. And the only other time I can tell where that has occurred was in the late 1970s when the yield curve inverted in 1978. It inverted significantly. It bounced back up. It bounced back down. And there was a long period of significant inversion in the yield curve. And of course, we ended up with an economic depression of the early 1980s with very, very high unemployment above 10% and very, very high inflation and excess of 10%. And of course, interest rates went up to almost 20%. So the experience that we're in right now, the best historical example dates back to the late 1970s, one of the worst economic episodes in American history.