Landing Airplanes

If you follow the news, you’ve likely read about the problems at Newark Liberty International Airport, which without being alarmist, is kind of alarming (Denver had a similar issue this month as well). When I worked in operations at BMO a long time ago, we used to describe our work as “landing airplanes”: if things went well, no one noticed, but if things went badly, suddenly everyone wanted to know how to reach you.

The problems at Newark have been attributed to FAA neglect, poor congressional funding, DOGE, and some theories about Starlink trying to get a piece of the telecommunications pie. Readers can go down that rabbit hole themselves, but my point is this: if the current administration is intent on cutting staffing and service levels at the FAA and across the US government and its agencies, does this include the Fed, Treasury and its payment systems? There have been some interesting essays and interviews on this topic, by Nathan Tankus, and Bloomberg’s Odd Lots, for example. The volume of transactions flowing through the US payments system extends well beyond Treasury investments, interest payments and redemptions. FX swaps are a critical means for other countries to obtain US dollars in order to buy goods, invest in US assets, and to obtain funding.

Now imagine the impact of these market actors losing communication with the equivalent of the control tower. Not only will it cause havoc as people try to figure out if they got their money, but it also will materially decrease confidence in those US systems, forcing them to seek other systems. The latter impact is more hazardous for the US, and for the global economy. Just like when we’re getting ready to land, buckle up everyone.