I was watching CNBC the other day while I was eating breakfast. Yes, it’s soap opera. But the Squawk Box segment usually has interesting guests, and although the trio of hosts do have set-piece roles, they often (every once in a while, in the case of JK) have interesting stuff to say. …and there’s the crawl.

The head (someone high up, anyway) of a NY trading firm was on the other day to tout a charity event. He was asked about interest rates and gave the consensus answer: +0.75% for the Fed Funds rate this month, followed by +0.50% and +0.25%, and then there’s a pause. Followup questions suggested that although the speaker was aware that bad stuff had happened in the 1970s and that the current situation was somewhat similar, that exhausted his fund of knowledge.

I began to wonder how old the speaker was. Let’s say he’s 55 now. That would mean he was 12 when Paul Volcker took over as head of the Fed in 1979. If he’s 65, he would have been a new recruit at a brokerage firm, getting coffee for veterans as he began to learn the trade.

In either case–and basically the situation would be the same for just about everyone now on Wall Street–he would have no practical experience, gained by having lived through it as an adult, of the inflation of the 1970s. Any accounts he might have read would have been filtered through the eyes of academic economists, who were obsessed at the time with building gigantic computer models for predicting domestic GDP, and had little time for the particulars, like the trends in commodity prices or the struggle for growth among firms and industries. It wasn’t until Michael Porter popularized the work of these “lesser,” microeconomic, minds (Competitive Strategy, 1980) and made a fortune doing so, that microeconomics began to be taken seriously in the academic world.

more tomorrow