Wealth Building for Pigs

Today we close our eyes, tilt back our head, and breathe deeply.  Not only do we breathe in oxygen…we breathe in something more: Perspective.

We’ve never gutted a hog around here.  But, from what we gather, it’s a bloody mess.  Nonetheless, starring at and contemplating a ham and egg breakfast plate we find a thorough lesson on commitment.

You may’ve heard this little allegory before.  When it comes to a ham and egg breakfast, the chicken’s involved in providing for the breakfast.  It provides the eggs.  But the pig’s fully committed to it.  The pig must perish to provide the ham.

Naturally, this extended metaphor offers many rich insights.  For most endeavors there are chickens who are involved and pigs who are fully committed.  To a large extent, whether we like it or not, when it comes to schlepping and scratching for wealth, we must be pigs.

Just being involved won’t produce the desired results.  Full commitment is requisite to overcome the many obstacles hindering one’s progress.  Here’s what we mean…

Market Distortion

When it comes to obstacles, the flexible currency we all must use courtesy of the Federal Reserve is, by far, the most difficult to overcome.  Make no mistake, the Federal Reserve’s main objective is mass money debasement.  Debt expansion is its ultimate goal.

Unfortunately, the effects of these policies, though obvious, are hardly predictable.  Asset prices inflate over time.  But their long term price inflation is punctuated by brief, yet destructive episodes of price deflation.

The casual observer has no idea what’s going on.  For whatever reason, it hasn’t dawned on them that things don’t add up the way they should.  They are chickens…and are not fully committed to building wealth.

They see prices rise and believe market forces of supply and demand are at work.  While they may be partially right, what they are really observing are hardly free market forces at all.  Rather, like a fun house mirror, they are the effects of distorted market forces.

The casual observer hears a sound bite of Fed Chair Janet Yellon’s testimony to Congress on Wednesday and believes the Fed can somehow manage the economy to their liking.  “The recent flattening in housing activity could prove more protracted than currently expected,” said Yellen.  Perhaps her next action will be to try and fix it…with more credit.

Yellon, no doubt, is also a Chicken.  While she may be committed to inflating the economy, she doesn’t do it with her own money.  Instead, she does it with your money…money you haven’t yet earned.

Wealth Building for Pigs

The yield on the Ten Year Treasury note fell below 2.6 percent this week.  What does this mean?  Is the economy cooling off?

Quite frankly, we don’t know.  The distortions are too great.  But unlike the casual observer we are aware something underhanded is at work.

What could be driving down the cost of borrowing and driving up the cost of Treasuries at the very moment financial risks are showing up in droves?  Are stocks a good investment?  Are bonds a good investment?  As far as we can tell, at this moment in time…no.  But what do we really know.

“The absurd is the essential concept and the first truth,” said French Nobel Prize winning philosopher Albert Camus.

This notion crystalizes how markets must be observed these days.  Not free or efficient…but full of fraud and folderol.  For us pigs we must always proceed with caution, skepticism, and full commitment if we want to have a chance at not punching the time card late into our golden years.

Though we can’t demand success…nor can we guarantee it.  By golly, we can certainly do what’s needed to earn it.  After that, we’ll be happy with what we get…plus a little bit more.

Sincerely,

MN Gordon
for Economic Prism

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