We dominate the world. Our gross domestic product is 25% higher than China’s, with just one-fourth as many people. Half the world’s cloud data centers are located right here. Scaled software lets us adjust to change faster than any economic rival.
Most of the time, these adjustments are minor. Some of us are retiring and want trips. Others are just entering the workforce. Some of us are saving for homes, while others are eating out or seeing shows.
The last two years have been different. We’ve all been doing the same thing. We were all locked inside during the worst of the pandemic fear. We all opened-up together, then we all sought to take trips together. Now we’re all watching a war together.
The result has been a series of economic “crises” that are really anything but. When shortages exist, the most efficient way to ration them is through price. Too many jobs? Give people raises. Not enough refining capacity? Raise the price of gas.
Yet the stock market has reacted to every one of these predictable changes like it’s the end of the world. Buy Zoom! No, sell Zoom! Double order everything! Put it on sale!
Policy makers are responding to the market, not the economy. Throw money out the window and drop interest rates to zero! Now pull it all back and raise interest rates to the Moon!
This is not a Republican or Democrat thing. The same lack of reflection is seen throughout the political system, and throughout the economic system. Stock analysts see only the next quarter. Political analysts see only the next election. Both are often wrong.
My portfolio has taken losses this year. But I’m going to get most of them back. I may be 67 but time is still my friend, because I have plenty of cash to get through.
I don’t think I’m unusual. That’s causing the latest panic. OMG, people still have money so they’re not rushing the job centers! Companies that can’t find cheap help are complaining, even though that lack of help is a sign of economic strength.
Outside the U.S., the fast, wrenching changes of the last few years have caused havoc. China’s economy is going nowhere fast. The same with India. The Middle East is fine, but just two years ago it was flat on its back. Russia has been exiled from the global economy, which has an impact on commodity prices, but the adjustments are now mainly complete.
I hate to go all 1980s on y’all but relax. The economy is not the problem. Inflation is not the problem. Unemployment is not the problem.
The problem is panic. It’s conservatives turning to fascism, and liberals cowering before them. We saw this in the 1860s and again in the 1940s. It’s not unusual for there to be a delayed response to fast-moving events. Keep your head in the markets and keep your head as democracy adjusts to the threat.