from a new interview I did with NPR this week:
BROWN: And I’m now going to give you my favorite analogy. So a woman is walking through Central Park, and she’s got a dog. What’s a very active kind of dog?
VANEK SMITH: Oh, like a Jack Russell terrier or something like that?
BROWN: Fine. Jack Russell Terrier is great. If you just looked at her, what is she doing? She’s taking normal steps. She’s going in a straight line. She’s walking, you know, upright at a moderate pace – nothing terribly exciting. Then let your eyes pan down a little bit. Look at the dog. The dog is going crazy. It’s chasing birds. It’s digging up clumps of mud. It’s running at trees. It’s peeing all over the place. The dog is the stock market. The woman is the economy. The dog is chasing butterflies, then it’s sniffing itself, you know. So if you’re just watching the dog, you’re not watching the economy. You’re watching the manifestation of hundreds of millions of people’s greed and fear with buying and selling. But you’re not watching an actual representation of how the economy’s doing. So it’s important to understand that, yes, the stock market leads the economy and, to some extent, reflects the economy…
VANEK SMITH: Yeah, they’re connected, like the dog and the…
BROWN: Yeah, the dog’s going walk in the general direction that the woman walks the dog. So the economy and the dog – or the economy the stock market are somewhat connected. But they do not look the same. They do not act the same even if they’re walking in the same direction.
Thanks to Stacey Vanek Smith and my old friend Cardiff Garcia for having me on the Planet Money show this week. My take on the recent market volatility here, embedded below:
You can read a transcript here:
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