No Easy Path Left
I grew up in Oklahoma, 30 minutes south of Tulsa.
The nearest paved road was 5 miles from my house. The nearest town, surrounded by farms and ranches for miles and miles, had more elevation than population.
In the middle of that town was a little greasy spoon restaurant on the southwest corner of the main intersection. No stop lights…just a four-way stop sign. And every morning, as in most towns like this, local farmers and ranchers loitered there, scattering themselves sparsely on the chrome chairs with green seats that surrounded the six or seven pale-green Formica tables.
The two dining rooms had black and white tile floors, walls of cheap, pressed board paneling painted beige and a door situated diagonally across one corner of the restaurant that dumped patrons right onto the intersecting sidewalks.
At least that’s how I remember it. But what I know for certain was that whole affair was three decades out of date.
I also know that on a wall in the back room hung a framed cartoon drawing of a farmer standing in a freshly plowed field holding an open break-action shotgun with the following words hanging over his head:
“Farming is like trying to commit suicide by shooting yourself in the foot.”
Expect one thing and get another is one thing I took from it. Another is that there’s no easy way out.
Farming is not easy. Hard is the only path available for those that want to make farming work. You either work hard at farming or try something else. To expect an easy way out is a recipe for failure.
Which is true for most things worthwhile in life. Unfortunately, when things get tough, there’s always someone from the government trying to convince you that they can make it easier.
They appeal the “general welfare.” They frame you as a victim. They sucker you with rosy expectations with no real sense of cause and effect.
And after over 10 years of paving a smooth path with easy money, shooting the economy in the foot is the only choice left for the Federal Reserve…
A Tough Row to Hoe for Equities
It’s tempting to think that the economy is strong after this morning’s jobs report.
The BLS reported that the economy added 528,000 jobs in July, the unemployment rate inched lower, and wages continue to press higher.
But strength may not indicate health any more than a body builder juiced up on steroids.
Plus, it’s tough to let this one report sway me into thinking the economy is healthy when firms are announcing major layoffs, the economy shrunk for two quarters straight, and other data from sources far less prone to political manipulation than the BLS point to job losses.
Frankly, the only thing we can say for certain is that the numbers are all over the place. Which likely belies the chaos roiling beneath the surface.
Now, we can debate the true strength or weakness of the economy, but what I know for certain is that the Fed’s trajectory is now entirely clear — no pivot… keep hiking.
The Fed is so far behind the inflation curve, (inflation is pushing up wages which is especially pernicious), that they must shoot the economy in the foot to save it from the inflation they created.
Which is equity suicide. Higher rates not only make tomorrow’s earnings worth less today, but they also choke the spending needed to sustain tomorrow’s earnings.
And as the look of superficial health erodes, the voices crying out for the government to make it easier will grow even louder.
But hard is the only path available.
Think Free. Be Free.
