Hovers and Hoovers

I thought the following observation was sort of related to my recent posts on CommodityAmerica and InfoAmerica. (This from the FT):

In the past, Chicago acted as the locomotive of its hinterlands “” in Mr Longworth’s words “” buying the Midwest’s farm produce and other raw commodities and then converting them into products. The city was linked umbilically to its surrounding geography and vice versa. Today, it mostly hovers above its hinterlands. But in some ways it is also parasitic on them. Much like the giant sucking sound of London hoovering up the UK’s talent, Chicago takes the best and the brightest from the small towns of America and plugs them into the global economy. Chicago’s success is no longer symbiotic with its rural neighbours. In some ways it comes at their expense.

Hovers and hoovers.  I’m seeing a sci-fi movie with vast circular cities that float 1000 feet up in the air, populated by the elite and with long tubes sucking the resources from below, produced by the lower classes.  Or did H.G. Wells already write that story?

Off topic:  I’m looking for links to Fed officials saying that they were easing policy in late 2012 because of worries about the fiscal cliff.  I recall reading that sort of thing, but can’t find a link.



17 Responses to “Hovers and Hoovers”

  1. Gravatar of Bubble-monger Bubble-monger
    21. June 2015 at 06:17

    – Disagree & Agree. In my opinion the FED also came with QE to help the re-election of Obama.

  2. Gravatar of Ray Lopez Ray Lopez
    21. June 2015 at 06:37

    Wells wrote about a two-class system where the beautiful are served by subterranean ugly people. A film that shows floating cities is the film Elysium (2013) – “In this film wealth inequality, the alienation of the super-rich and class conflict are taken to the extreme: in the year 2154, the very wealthy live on a man-made luxurious space station while the rest of the population resides on a ruined Earth” –the ruined Earth looks like Manila, lol.

  3. Gravatar of Ray Lopez Ray Lopez
    21. June 2015 at 06:54

    Re OT: it’s clear the Fed was implying they would help the economy (never mind they cannot, but their intent was there) due to the fiscal cliff, in 2012. See:


  4. Gravatar of Morgan Warstler Morgan Warstler
    21. June 2015 at 07:21

    I can’t prove it, but it has seemed to me like Matt Drudge use of the word PUMP is linked to any action by the Fed that indicates a conservative definition of well… pump, just occurred.

  5. Gravatar of Billikin Billikin
    21. June 2015 at 07:26

    As for taking the best and brightest from the surrounding populace and plugging them into the global economy, ancient Rome did that sort of thing, didn’t it?

  6. Gravatar of benjamin cole benjamin cole
    21. June 2015 at 07:48

    Sheesh, the truth is, urban America subsidizes rural America.
    I would like to see the Midwest convertef into a huge bison range.

  7. Gravatar of Peter K. Peter K.
    21. June 2015 at 07:49

    Look up Fiscal Cliff on Wikipedia.


    On December 12, 2012, the Federal Reserve announced it would keep short-term interest rates near zero percent in an effort to lower unemployment to 6.5 percent.[13][82] However, when commenting on the upcoming fiscal cliff, Federal Reserve officials “agree that the impact of the bank’s stimulus campaign will be trivial in comparison to the consequences, and the economy will most likely return to recession.”[82]

    82 Appelbaum, Binyamin (December 13, 2012). “Fed Ties Rates To Joblessness; 6.5% Is Target”. The New York Times. p. A1.

    So the Fed doesn’t believe in monetary offset. Nor does the CBO.

  8. Gravatar of Peter K. Peter K.
    21. June 2015 at 07:58

    Keynesian bloggers were just echoing what the big institutions were saying. The fiscal cliff didn’t happen because Obama stared down the Republicans who were bluffing about destroying the economy. So no recession.

  9. Gravatar of ssumner ssumner
    21. June 2015 at 08:02

    Bubblemonger, I think you left that after the wrong post.

    Peter, It looks like you missed my previous post, which addresses the issues you raise. Indeed your comment has nothing to do with this post.

    And the fiscal cliff most certainly did happen, the deficit plunged by $500 billion in 2013, nearly as much as under the fiscal cliff.

  10. Gravatar of Ironman Ironman
    21. June 2015 at 08:06

    ssumner wrote:

    Off topic: I’m looking for links to Fed officials saying that they were easing policy in late 2012 because of worries about the fiscal cliff. I recall reading that sort of thing, but can’t find a link.

    You’ll want to focus in the period from 14 November 2012 to when the Fed announced its decision to expand its QE 3.0 program in December 2012. Here is the background for why 14 November 2012 is the key date for narrowing your search.

    That said, here’s a pretty good indication of the Fed’s mindset at the time:

    Nov. 20 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said that an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth, while failure to avoid the so-called fiscal cliff would pose a “substantial threat” to the recovery.

    “Cooperation and creativity to deliver fiscal clarity –in particular, a plan for resolving the nation’s longer-term budgetary issues without harming the recovery — could help make the new year a very good one for the American economy,” Bernanke said in remarks to the Economic Club of New York at the Marriott Marquis Hotel in Times Square. “The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery.”

    Bernanke’s efforts to bring down 7.9 percent unemployment and spur the three-year expansion with purchases of $40 billion in housing debt each month are being impeded by Congress’s inability to reach agreement to stabilize U.S. outlays and revenues and avoid the so-called fiscal cliff. Bernanke also said Fed policy will remain accommodative until the recovery is on a firmer footing.


    The Fed chief, in his prepared remarks, repeated his warning that over $600 billion in spending cuts and tax increases that could take effect in January could send the economy “toppling back into recession.”

    Other links of interest:

    Fed Says a Number of FOMC Saw Need for Additional QE – 14 November 2012

    Fed Stimulus Likely in 2013 – 28 November 2012

    Hope this helps!

  11. Gravatar of Blue Eyes Blue Eyes
    21. June 2015 at 10:09

    London stands accused of being disconnected from the rest of the UK. However if London stopped sending its tax revenues outside its borders, income tax could be abolished.

    I would say the relationship was more symbiotic than parasitic.

  12. Gravatar of Lorenzo from Oz Lorenzo from Oz
    21. June 2015 at 16:27

    Yes, but Elysium the film works best as a critique of command economies:

    It was normal for cities to be parasitic on their surrounding countryside for most of human history. It is only once you get highly commercial cities (and then industrial ones), that that shifts. (Ironically, Rome was mostly parasitic, Alexandria far more commercial.)

    In a sense literally parasitic, as death rates in cities were higher than birth rates, so unless they received regular population replenishments from rural areas, they declined and disappeared.

  13. Gravatar of ChargerCarl ChargerCarl
    21. June 2015 at 18:12

    All the more reason why Chicago, New York, LA, SF, etc need to be building more housing.

  14. Gravatar of ssumner ssumner
    22. June 2015 at 05:31

    Thanks Ironman, I found monetary offset statements by Evans and also Rosengren.

  15. Gravatar of Brian Donohue Brian Donohue
    22. June 2015 at 07:22

    As a lifelong Chicagoan, I think the quote is accurate. Every year, a new crop of fresh-faced kids from the rural Midwest funnels into Chicago. These people are the salt of the earth, as far as I can tell.

  16. Gravatar of Jason Odegaard Jason Odegaard
    23. June 2015 at 04:55

    Except that the stock of rural Midwest kids dwindles. Few go back, and the schools get smaller. Cities grow larger, rural areas more sparse, but it has been gradually moving this way for at least 100 years.

  17. Gravatar of ssumner ssumner
    23. June 2015 at 16:45

    Brian and Jason, It makes me nostalgic (I’m from Wisconsin.)

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