The Flinchum File

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Reasons To Sleep

Let’s see . . . the stock is way down, the economy is suffering, both inflation and interest rates are soaring, the world is sinking into debt, a deranged world leader is threatening to use nukes, and the news media relentlessly reports wars and other pleasantries. Who can sleep with all that happening?  You should!

One reason I don’t lose sleep that, earlier this year, I noted there is more than one variety of inflation and recession.  I didn’t expect and still don’t expect inflation will be the long, severe inflation of the 1970/80’s.  Likewise, I didn’t expect and still don’t expect the inevitable recession to be long and severe like the 2008/9 Great Recession.  I still believe the Fed will both crush inflation sooner than expected and will throw us into a recession that is less severe than feared.

Another reason is that I know the stock market heralds the economy.  The stock market goes down before the economy and goes back up before the economy goes up.

Another reason I sleep well is that inflation is already decreasing.  Market prices for many commodities are already dropping, such as lumber, copper, oil, corn, gold, etc.  International shipping rates are also collapsing.  Yes, there is concern that we may flip from inflation into deflation, but that means interest rates will decrease more quickly.  Unfortunately, the nature of economic reports is backward-looking.

Another reason is that we have never before entered a recession with such a low unemployment rate.  The current unemployment rate could easily double and still be far less than 2008/9 unemployment rate.

Another reason is that Modern Monetary Theory has postponed the “day of reckoning” on our national debt for a long, long time.  Nobody knows how long . . . but long!

Another reason is my confidence in the old, gray men supporting Putin will realize their best political/economic interests . . . and personal safety . . . will improve with a different Russian leader.  Hail, Caesar!

Another reason I sleep well is that I limit my exposure to news one day every week . . . discipline, 007!  You should too!

And, by the way, remember the worst month in the stock market is October historically, and second worse month is September.  This too shall pass!