Our problem is not money or shortage – of anything.

Our problem is that we are so afraid of the future after 2008/2009 that we have accumulated mountains of cash, lost the desire to produce and are being suffocated by overwhelming regulations, tax burdens and socialistic policies to redistribute wealth.

The President was right about one thing, “a new day has come to America.” However, I am fairly certain after 8 years of these new days, most of his voters did not expect this America.

That’s all for another note however. Today, let’s focus on this:

We are reaping what we sowed.

Plenty of Cash

When a large crowd is afraid of their future, they save money, pay off debt and shiver in the shadows on any bad news.

It only takes a few weeks of normal corrective action to bring an avalanche of bears and black swans.

Years and years ago, long before we got to hear from experts every 38 seconds, a 12% setback in stocks would have caused yawning.

Today, it is the end of the world, repeated over and over again – and more reaping of what we sow.

Check these charts on cash and how it’s underlying reason for existing/accumulating has helped deliver “a sub-par recovery”:

The three charts above show the view of money in our system:

  • Chart 1 shows the demand for money and the fact that it is now well into record high territory. (read: fear) This meshes with every single sentiment indicator seen in recent weeks from advisors to managers, to Wall Street and investor crowds.
  • Chart 2 shows that US bank savings deposits have now crested $8.25 TRILLION. Add this to massive debt reduction and decades low levels of debt cost to monthly income ratios and it sends the same message: everyone is afraid. Not enough are investing in their future production.
  • Chart 3 shows a breakdown in various channels where money now sits.


We sowed fear.

We sowed regulation.

We sowed higher taxes.

We sowed redistribution of wealth.

All of this kills off/caps production and expansion. All of this kills feeling good and looking forward.

We are reaping that result.

The Fix?

It is not the Fed – not interest rates and not negative rates.

It is ALL out of DC and the wreck they have made of our political/fiscal system. We are more divided then ever. How else could we end up with the candidates we have today.

If the Obama legacy is what we are seeing today as the next political guys in the pipeline, well, I’d love to see him call that a success. One cannot bring the “help” Mr. Obama brought to a financial system like ours and expect it to work.

Rewarding unproductive behavior sows what we now see.

Taxing productive behavior gets less of it.

A child knows this…

We have record revenues at government levels.

There is a redistribution needed – but it is more productive to send it back to the community for growth incentives.

Build incentives to create better everything: factories, processes, software, technology, medical tools and functions, energy savings, fuel systems and on and on and on.

We would all be stunned at how quickly our “sub-par recovery” would be erased if the proper fiscal policies were implemented. We have witnessed this before. It was called the Carter years. It did not work then either.

What we are reaping is proven in the data we see. The last thing in the world we should be fearing is running out of stuff.

We have much work to do – but therein lies the massive opportunity ahead.

Going Forward

Stop the whining – and the fear.

We have never been better off – but the rest of the world is hurting a bit. We should be able to continue to slug along, leading the globe as we have done for decades. I have a hunch though that it will not be pretty again until we get the government back out of our lives.

Just my opinion – but an opinion nonetheless.

IF we could see steps made to turn the public focus to fiscal policy, we might very well be shocked at how much more we can accomplish – for everyone interested in building a life.

We will reap better outcomes if we change the direction of what we sow.

We owe it to this great land and we owe it to every citizen of the free world who wants to build a productive future.

After all – we are all in this together.

In Closing

Happy Friday. Red ink is your long-term friend.

We agree with our friends at Calafia:

“Central banks have done all they can. What’s standing in the way of progress are burdensome regulations, high marginal tax rates, intrusive government, subsidies for uneconomical green projects, and fear and uncertainty.

Negative interest rates are a solution for a non-existent problem that undermines the demand for money in a way that might have unwanted and inflationary consequences.”