LETTER FROM THE EDITOR
midst of a bull stampede, the marketplace’s careful research and thoughtful analysis are abandoned. The guiding force becomes luck. To put it another way, investment has gone Vegas. It’s as if the mob came and took your money manager away and installed slot machines in his place. The payout has been pretty good – so far. But Bugsy Siegel didn’t open The Flamingo Hotel on the Strip in order to enrich you. The kids have no idea that wealth comes from the bottom up. Wealth is not distributed, wealth is made. And the process of making it is called work. Work consists in taking something of lower economic value (a shovel) and using it to create something of higher economic value (a ditch for the Keystone XL pipeline). Money has become not only chancy, but notional. Money used to be a physical bankroll or a book of checks (and balances) that was added to soon after goods or services were rendered and was subtracted from, with careful counting, for goods or services received. You always knew how much you had – an amount known as “not enough.” Now, money is a computer code embedded by incomprehensible means in a microchip or a password key. It goes away without so much
However, there’s just enough truth in that thought to further muddle free market understanding. The government has been having quite an office Christmas party, handing out the cheap champagne of artificially low interest rates. These do stimulate the economy – but in a way that’s probably going to produce a bastard of an economic situation in the future. (A situation Millennials and members of Generation Z have no experience with. For someone born in 1989, that “stagflation” illegitimate brat of the 1970s is as distant in time as the Great Depression is to me.) And permanent low interest rates teach youngsters the exact opposite of common sense: There’s no upside to saving and no downside to borrowing. If you save, you gain no return from it... Your money isn’t working. It’s the shovel on the 10th floor of a Manhattan apartment building. And if you borrow... Well, borrowing is renting money. What if someone told you that you could live rent-free in a 10th floor apartment overlooking Central Park? Yes, someday the landlord is going to come and change the locks. But that’s a long- term problem. People aren’t always good at seeing long-term problems, especially if those people haven’t been alive for a long time. Many other social and financial eggbeaters have stirred mixed-up thinking about markets... The bull market has run for so long that it seems to be all bull... The market part has been left behind and forgotten. In the
American Consequences
American Co s quences
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