10 replies to this topic

[fib_1618]

(1) the growth happens to be more inflationary than the last decade's,

Yes, growth is accelerating because of the global influence at this time, but as long as productivity continues to keep up with this same growth, this will mute any inflationary forces that will come about (note that I didn't say that they would go away or be non existent, only mute true inflation which is caused by higher wages.) Many of the current areas of inflation are actually being caused by either government regulation, poor decision making with regard to risk aversion, fraud, or the weather (the four constants in life).

(2) there is tremendous pain waiting to be unlocked if the interest rates go higher as a result of it due to the total debt.

As has been proven time and time again, as long as taxes remain low enough were the populace doesn't mind paying their fair share, along with continued productivity growth, this will not only keep global growth manageable (which will keep interest rates at around these same levels), but it will also reduce total debt as long as any additional spending, above and beyond the current levels, is kept in check.

These two need to be balanced before a multi-decade bull market can start.

I believe it would be unreasonable to expect more than a multi year bull market based on the human element in all of this. This same human element also includes times of irrational emotional behavior where "balance" of forethought is seldom considered (housing as an example)

PS. in that sense, I don't think we are too far apart from Mr Dent. I don't think it is a straight up though...

Nothing ever goes "straight up" nor "straight down" and this would include colorful metaphors such as "melt up" or "crash" (though many take these terms way out of context when they read them). I hope you take the time to read the entire report. I found the demographic approach to have a great deal of merit in relation to the current internal condition of the financial markets though I don't use this approach in my own work.

Thanks a lot, it is a girl, now a boy and a girl, I think we're done

Famous last words.

Fib