...why doesn't it feel like we're in a societal sweet spot?
Maximus once said that death smiles at us all and all we can do is smile back. The same can be said for the modern day financial fray.
The mainstream media will have us believe that life has never been better for industrial America. The Dow Jones is at all-time highs, interest rates are low, inflation remains in check and earnings are trending in a positive direction.
So why doesn't it feel like we're in a societal sweet spot?
I speak to alotta folks around the globe. Many are in finance, others are not. All seem to think that it now takes thrice the effort to make half the pay.
Yes, there are plenty of "haves," those who skew the demand for luxury items and trophy homes. And there are the "have nots," on the other side of our societal barbell, who have seemingly drifted from our collective conscious.
In between, where the middle class once existed, the meat of America is struggling to find its way to the right side of the fork.
There is a word for coincident inflation in things we need-healthcare, energy and education-and deflation in things we want; be it plasmas, cell phones or laptops. It's called stagflation. While that assertion will raise eyebrows in academic circles, it's a concept that will become all too familiar with time. And rest assured, by the time you see it on the front page of tomorrow's paper, it'll already be baked into the marketplace.
Webster's defines stagflation as an inflationary period accompanied by rising unemployment and a lack of growth in consumer demand and business activity. And that, on the surface, would seem to be a far cry from our current condition.
But this is a concept that should be quite familiar to readers of Minyanville. We've spoken about it at length as we've edged along the road to unlimited equity devotion. And it remains very much in play, albeit not in the conventional sense.
To understand where we are, we must understand how we got here. There's a distinct difference between legitimate economic growth and debt induced demand. That DNA won't show itself in the flickering ticks, but it continues to manifest in every day life.
To be sure, stocks don't lie. And while we can point to the dollar and argue that, in absolute terms, the S&P is flat since the back of the bubble, that's not really the point. Putting aside globalization and pretending, for a second, that the world reserve currency doesn't matter, we need only to take the temperature of the folks around us to get a read on the state of affairs.
I'm not smart enough to offer when the elasticity of debt will reach a tipping point. And I'm most certainly in the camp of making hay while the sun shines. For and with my money, however, I'm content to weight my holdings towards gold (as an alternative currency play) while reminding myself that opportunities are made up easier than losses.
These are historic times as we edge our way through the mindset of immediate gratification. It's not enough to know the evolution; we must also put our finger on why and when. That, above all else, is why a trusted community of complementary skill-sets is so very important. And it is why, on December 1st, we'll tap the acumen of some of the smartest "haves" I know to avoid the next generation of "have nots."
With strength and honor.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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