“When the Fed taps on the brakes, somebody goes through the windshield”

“When the Fed taps on the brakes, somebody goes through the windshield” means that when the Federal Reserve tightens the money supply (figuratively “tapping” or “slamming” the brakes on the economy), many people suffer economically (figuratively “going through the windshield”). The “driving a car” analogy to “driving the economy” is an old one, without any specific author. The New York (NY) Times editorialized in November 1941: “It is necessary to put the brakes on inflation; but there is such a thing as jamming on the brakes so hard that the passengers go through the windshield.”
 
Former Reagan administration Assistant Treasury Secretary Paul Craig Roberts wrote in 1984: “The administration had no idea that the Federal Reserve was about to slam on the brakes and throw us all through the windshield.”
   
Stan Jonas, managing director at Fimat U.S.A., a broker-dealer in New York, put the expression in its familiar form in the New York (NY) Times in May 2000: “When the Fed begins to put on the brakes, somebody goes through the windshield.”
 
   
7 November 1941, New York (NY) Times, “New Tax Program,” pg. 22:
It is necessary to put the brakes on inflation; but there is such a thing as jamming on the brakes so hard that the passengers go through the windshield.
   
27 April 1969, New York (NY) Times, “The Week in Finance: Weight of Economic Problem Underlined” by Thomas E. Mullaney, pg. F1:
David Grove, economist for the International Business Machines Corporation, expressed a similar view, saying:
 
“Washington has been doing the right things, but it takes time for these programs to work. Once an inflationary process gets under way, it is difficult to control it. We must avoid jamming on the brakes and sending people through the windshield.”
 
11 February 1973, New York (NY) Times, “Monetary Illness Grip Business: Fed’s Chief At Center Of Furor On Interest” by H. Erich Heineman, pg. 165:
On the other hand, too heavy a governmental foot on the economic brakes could send the economy figuratively through the windshield and abort the expansion at a time when—despite record growth in 1972—unemplyment is still at unacceptably high levels.
 
Google Books
U.S. News & World Report
Volume 95
1983
Pg. ?:
“The Fed apparently feels it’s better to tighten modestly now,” says Norman Robertson, economist for Pittsburgh’s Mellon Bank, “than to risk having to slam on the brakes hard later and send everybody through the windshield.”
 
Google Books
The Supply-Side Revolution:
An insider’s account of policymaking in Washington
B: Paul Craig Roberts
Cambridge, MA: Harvard University Press
1984
Pg. 148:
The administration had no idea that the Federal Reserve was about to slam on the brakes and throw us all through the windshield.
   
Google Books
Consequences of the Clinton Victory:
Essays on the first year
By Peter W. Schramm
Ashland, OH: Ashbrook Press
1994
Pg. 18:
A few months into Reagan’s first term, the Federal Reserve slammed on the monetary brakes and the economy went through the windshield.
     
Google Books
Back from the Brink:
The Greenspan years
By Steven K. Beckner
New York, NY: Wiley
1996
Pg. 68:
The Fed has been known to gun the economy’s engines too fast or for too long, leading to inflation. At other times, it has been known to slam on the brakes and throw the economy through the windshield.
   
New York (NY) Times
MARKET WATCH; In Bonds, Worrywarts or the Wise?
By GRETCHEN MORGENSON
Published: May 14, 2000
(...)
’‘The fixed-income market is rightly assigning a higher risk premium to companies now,’’ said Stan Jonas, managing director at Fimat U.S.A., a broker-dealer in New York. He expects the Fed to raise rates on Tuesday, but unlike many economists, he thinks this increase might be the last. The higher rates, he reckons, will set off financial turmoil—perhaps a high-profile failure—forcing the Fed to back off from further rate increases. ‘‘When the Fed begins to put on the brakes, somebody goes through the windshield,’’ he said. ‘‘We just don’t know who it is.’‘
 
14 March 2004, Dallas (TX) Morning News, “Under the crush of debt: Beset by liabilities, corporations have bounced back in last 2 years” by Danielle DiMartino:
The old adage is, “When the Fed taps the brakes, someone goes through the windshield,” Mr Peters quipped.
   
The Decision Maker (Summer 2004)
Pg. 6:
We may witness the old adage, “When the Fed slams on the brakes, someone always goes through the windshield.”
 
Google Books
The Fourth Branch:
The Federal Reserve’s unlikely rise to power and influence
By Bernard Shull
Westport, CT: Praeger Publishers
2005
Pg. 143:
By mid-1981, Reagan administration officials were more than uneasy. “The administration had no idea,” Assistant Treasury Secretary Paul Craig Roberts wrote later, “that the Federal Reserve was about to slam on the brakes and throw us all through the windshield.”
   
The Skeptical Speculator
Tuesday, 11 January 2005
US markets at risk
Morgan Stanley’s Richard Berner and David Greenlaw think that sustained interest rate rises in 2005 will have a greater impact on asset prices than on the economy.
 
The hawkish tilt to the inflation debate in December’s FOMC minutes has raised concerns among market participants that Fed officials will abandon their measured tightening pace and put either risky assets or the economy or both in jeopardy. The time-honored fear, of course, is that when the Fed steps on the brake, someone always goes through the windshield; investors just don’t know who that someone will be this time around…
     
Daily Speculations
9/15/2005
Brazil as a Pilot Fish, by Victor Niederhoffer
(...)
George Zachar Responds:
(...)
I believe it was Stan Jonas who first observed “When the Fed tightens, someone always goes through the windshield”. Let’s hope there’s someone in the ER who speaks Portuguese.
     
I’m Pissed! How About You?
St. Alan (Greenspan) and Mr. “I Can Piss Away All of Our Money”
Tuesday October 25, 2005
It seems that Alan Greenspan is viewed by the media and politicians as a “Can do not wrong Fed Chairman” who knows everything about everything? Now that he is leaving I am sure we will have to endure accolade after accolade until his official departure.
 
Admittedly, Greenspan while Fed chief has done some good things but not recently (the past 5 years).
 
During the stock market bubble (the irrational exuberance era) he stepped on the economic brakes so hard (raising interest rates month after month for over a year) that he through the economy right through the windshield resulting in recession.
 
Storehouse Asset Management, Inc.
Wednesday, May 6, 2009
Light at the end of .....
(...)
But I can’t help but hear in the back of my head the saying, “when the Fed taps on the brakes, somebody goes through the windshield.”
 
The Wall Street Examiner
Thomas
Posted 27 October 2010 - 08:06 PM
As they say, “When the Fed taps the brakes, somebody goes through the windshield.”