Good News: The BEST Is Yet To Come

Good news: the best is yet to come for the United States.  And I mean it.  I watched / read the information at “Worst is Yet to Come”: Americans’ Standard of Living Permanently Changed and let’s just say that I respectfully, vehemently disagree with the headline’s premise.  In the link, you’ll see Howard Davidowitz say that:

• Things are really bad…I agree with that
• Americans are responding by spending less, and on specific needs rather than aspirational purposes…I agree with that

But a permanent change in the standard of living…I think not.  Companies and consumers are pulling back, yes, but this is simply an ugly trough in a business cycle.  We will come back up.  A combination of loose monetary policy and fiscal stimulus may help, but most importantly, the natural business cycle will do its part. 

Overleveraged companies will go out of business.  Dinosaur companies may go away.  Schumpeter’s creative destruction will take its toll.  But other companies with great balance sheets and vision will use this opportunity to innovate on their own.  Or they’ll buy smaller companies with innovative technology, and they’ll race to leverage it.  And somewhere out there as I type this, there are inventors and entrepreneurs with passion and vision, and they will reap enormous profits when their game-changers spring to life.  Somewhere out there, there are laid off individuals whose talent had been wasting away in a bureaucracy.  They might never have left the perceived security of a large corporation on their own, but now they’ll take on the challenge of unemployment by following their passions and creating something fabulous.  Some will fail, but some will sow the seeds of the next great wave of growth.  

In ’73-’74, the S&P went through a horrendous period.  Inflation was ugly, to the point that President Ford resorted to wearing a Whip Inflation Now button.  Then came the Carter “malaise” including the so-called misery index and stagflation.  Then in the early ’80s, Volcker broke the back of inflation by tightening the money supply, but the cost of doing so was the brutal, deep ’81-’82 recession.  Many figured that the death knell of the free market was tolling.  But no, instead we witnessed a growth resurgence in America.  Well-run large companies prospered and a new wave of small companies became behemoths over time.  Innovation flourished ushering in the personal computer age followed shortly thereafter by the web. 

No, we simply won’t be down forever.  The beauty of a market economy is that it is based on the human spirit which always craves something better.  Clever investment and innovation today will be rewarded.  It will pave the way for the next stage of growth.  And we will all benefit.  Our standard of living will be improved by things we can’t even conceive of.  Twenty years ago, I couldn’t have imagined I’d be tapping this out on a laptop (what’s a laptop?), communicating to you via a blog (what’s a blog?), and publicizing my new entry via a social network (what’s a social network?).  Twenty years ago, those things would have basically been a pipe dream, but incredible vision made them a reality.  Those kinds of visions will continue wherever the human mind and human spirit are active, and we’ll all benefit from it.  

So we might not recover instantly, but recover we will.  I guarantee it!  Our standard of living will rise to still higher heights, and our best days remain in front of us.  The BEST is yet to come!