The asset holder views a good economy as one where she has the ability to bring good collateral to a prime broker, borrow at a prime rate, and spend the borrowed money on stuff while keeping hope alive that the value of the collateral she brings to the bank or the exchange survives a margin call.
Meanwhile, the non-asset holder/wage earner/end-user maintains herself at a level where the currency she is paid in is just enough to pay rent on the property the asset holder owns; the interest (via income taxes) on the government bonds the asset holder owns; and the prices for the goods and services generated by the capital held by the asset owner.
The government has an interest in maintaining the symbiotic relationship between asset owner and non-asset owner. Government actors have managed to obfuscate the true meaning of “economy” by getting the non-asset holder to view the economy in terms of a bunch of macro-aggregates or statistics.
“The economy is hot because 256,000 people got jobs.” “Oh, the economy is great because only 4.1% of the workforce is unemployed versus 9% before the cerveza bug in 2019.” “Wow. Things are great because prices only went up 2.7% this year versus 2.4% last year.” “Things must be better because the Federal Reserve decreased interest rates.” Boo-yah …
In reality, we don’t approach our economic lives in aggregates. Yes, we are aware of how the labor markets, money markets, food markets, etc., are pricing things, but some of us are mindful that if one part of the equation is not doing well it does not mean that the other side is not. Sometimes there is an “equal sign”, a “less than sign”, or a “greater than sign” in the mathematical relationship. Most relationships, financial, romantic, economic, or otherwise, tend to lack balance or are unequal.
Someone across the street is doing well. The question is, how do we become that someone who is doing well? This question becomes poignant for consumers who rely on wages and own no income earning assets. They may look at government as responsible for creating an environment that protects wage earners by providing incentives for businesses to provide jobs.
The 2024 presidential elections were seen by some as a referendum on the Biden-Harris administration’s ability not just to create jobs but to give ear to lower- and middle-income workers’ concerns about elevated consumer prices and the inability of wages to keep up with these prices.
But as we witness the creation of and reliance on gig and freelance work, increased layoffs in the tech sector relative to job increases in non-producing industries such as government and healthcare, and the increasing gap between the wealth of asset holders versus non-asset holders, is it time to turn our backs on the government’s messaging on jobs and the health of the economy?
Alton Drew
12 January 2025
If you are in need of a legal or political risk assessment regarding your trading environment, reach out to me on LinkedIn or email me at altondrew@altondrew.com to make an appointment. The hourly fee is $175 per hour.
DISCLAIMER: I am not a financial adviser. These blog posts are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase.
Lawyers Write the Bets. Bankers Sell the Bets. 