While all the doom and gloomers are running into their bunkers to snuggle with their bars of gold the real visionaries of the future are licking their lips in the current environment. With interest rates close to 0% and commodities plummeting to 20 year lows the current environment is presenting itself as one of the truly incredible periods to be a builder. It’s almost as if the financial markets and non-financial asset markets are screaming – BUILD SOMETHING, ANYTHING!
A few years ago I wrote a piece about how the US government should implement 3 no-brainer policies, but that they wouldn’t because Washington has become totally dysfunctional and erroneously convinced that it has no money. The nice thing about being the government in the most productive economy in the world is that you don’t have the budget constraint that most private firms have. That is, you don’t “run out of money” like private sector entities do. You can inflate that currency to smithereens, but unless the computers stop working and the printing press shuts down then you can’t run out of money.
In the last 5 years we’ve clearly seen the “high inflation” myths blown to shreds. It’s true – the US government could have afforded to run a much larger stimulus program than it did (as I said many times). And here we sit today with the US government staring down deflation still and not remotely close to a solvency problem of any type.
The markets are screaming for someone to build something. Yes, there will be many savvy private sector firms who view this current environment as an incredible investment opportunity. But the government should also be thinking the same thing. The current market environment has created a beautiful countercyclical opportunity for those who have the courage and vision to take advantage of it.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.