Yesterday, I walked in the ruins of a Roman city. At one point, I sat in the corner of a home dating back to the first century. When I was sitting there, I closed my eyes and tried to imagine how different life was then. The thought crossed my mind that in many ways, it was different, but in other ways, it was not. The “dad’ in the family got out of bed and went to work. The “mom” raised the children, cleaned, and cooked (okay so mom is a little different today). The kids played, raised Cain, and got in trouble. The family did what it needed to do to get through each day in the best way possible. How different is that from today?
In those same ruins, I walked the commercial center of the city. I could see in my mind’s eye all the vendors on the street, but what was not visible to me were the money players behind the stalls, the people making the deals to line up new trade, to bring in the caravans of new goods, to sell and distribute those goods for the vendors to resell. I wondered what financial levers they pulled to get that new trade, to keep commerce alive. I speculated about what they did when things headed south economically. Then it hit me. Like the Roman family, the money players did what they had to do to get through each day in the best way possible. Well, for that city, I guess nothing worked because it is in ruins, but for other cities such as Rome or Madrid, whatever they did and have been doing has worked for thousands of years. In the end, money finds a way to grow – always has and it always will.
How can anyone believe the economy is really improving when the only thing holding the economy up is the unprecedented liquidity and zero interest rate by the Fed? As far as I know, this massive global liquidity is the first in the history of mankind.
The reader’s question is thoughtfully provocative, and it turns me back to my thoughts above …
The US Federal Reserve, the European Central Bank, the Chinese government all do what they need to do to keep commerce alive. Because this time is different from any other in history, the steps taken to keep global commerce alive are unprecedented. The reader is technically correct – these actions are “the first in the history of mankind.”
As to the specific question, though, the reader is missing the central and essential point – global commerce is factually improving. It is not an illusion, as he suggests. Global commerce is on the mend, and as it continues to gets stronger, the factors he mentions will gradually change – the Fed, the ECB, and the Chinese government will withdraw liquidity and interest rates will rise, but they will do it in such a way as to not choke off commerce, hopefully. Given that all three have an interest in working more or less together for the good of the global economy, I believe they will pull it off.
Roman business people used liquidity and interest rates 2,000 years ago as financial tools. Thus, the idea of excessive liquidity and low rates to energize commerce is not new; it is just much bigger and more sophisticated today, but so is the world. What is the same, though, is that in every era, people in power use the brightest minds to figure out how to keep the economic machine running. That is what is going on in our time, and just because it is unprecedented, that does not mean it will not work. I for one trust the brightest minds we have today. I for one believe the money players believe it will work, meaning global commerce will happen. And in the end, that is all we need – belief that it will work. Ultimately, perception is reality.
My advice to the reader is this: reject fearing the unknown. Instead, embrace the possibilities of what might be. If you have not embraced the possibilities thus far, and you were afraid instead, you have missed out making your money grow, big time.
Trade in the day – Invest in your life …
