The US Economy Sitting On The Threshold Of A New Golden Age: Part Two

In part one of this multipart series on the US economy I offered the following basic opinion: The majority of the positive aspects underpinning the US economy are being mostly ignored by mainstream media in favor of the smaller, but more titillating, negative aspects. Consequently, I believe that many Americans, and since this is an investing blog, many investors, are holding a much more negative view of the strength of the American economy than is warranted. I offer massive outflows from equity funds into Treasury bonds as evidence supporting my thesis.

However, the more important message I am attempting to convey with this series of articles is that America has entered the beginning of what will become a New Golden Age of economic growth and prosperity. So as to be perfectly clear, with this second message I am taking the role of the reporter. Although my opinion is certainly intertwined and aligned, I am not the source of the message. Instead, I'm simply reporting information from other, I believe, credible sources that are clearly being mostly excluded and neglected by mainstream media. Important information for every investor in America to know goes almost unreported. I will cite the sources as I report their messages.

My Opinions First

This section will express my personal views on economics and freedom. For clarification and color, I will write a paragraph articulating my personal views and follow it with a supporting quote or quotes from my favorite economist of all time, Nobel prize-winning economist Milton Friedman.

I believe that the foundation supporting the thesis for a New Golden Age is the nature of our society coupled with our economic system. Both of these factors create an opportunity for progress and growth that is unequaled in the history of mankind. In my opinion, nothing unleashes the enormous potential of people more than a free-market economy operating in a free society. Mankind’s DNA is hardwired to feather its own nest. With the freedom to do so, we willingly work long hours, and will make enormous sacrifices for our families and our own futures. But more importantly, freedom and the profit motive inspire us to better our world as we better ourselves.

“The world runs on individuals pursuing their self interests. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way.”― Milton Friedman
 
“Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions. So also did political freedom in the golden age of Greece and in the early days of the Roman era.” ― Milton Friedman
 
To be clear, I am a fiscal conservative that believes in the benefit and benevolence of free markets. However, I would be considered a liberal regarding my deep desire to see the plight of the common man and the downtrodden vastly improved. I want food, shelter, quality healthcare, education and a high standard of living for every human being on the planet. Frankly, I also believe that so-called conservatives and liberals alike all want the same benefits for humanity. Our differences are not with want we want for mankind, but rather with how we might best achieve our equally shared goals.
 
“The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.” ― Milton Friedman
 
Therefore, the reason I embrace fiscally conservative values and free markets is because I strongly believe, and recognize, that they are the only means that are capable of providing humanity what it needs. My reasoning is based on what I believe are the undeniable facts that the only economic laws that work, or could possibly be expected to work, are ones based on the immutable laws of nature. Supply and demand is not a law invented by man, it is a law based on and functioning on the natural needs, desires and psychological behaviors of mankind. Natural economic laws work, because at their root, they function as people function.
 
“A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.”― Milton Friedman

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Additionally, I believe that free markets are the most benevolent economic force possible. Not because free markets have a conscience, but rather because they don’t. The market’s DNA is designed to encounter and, as efficiently as possible, rebalance and fix any imbalances that manifest. When left alone to its own magnificently capable devices, it accomplishes this while naturally causing the least amount of pain and suffering possible. When interfered with, the problems either grow bigger, are prolonged, or most often both. History is replete with evidence that supports my argument.
 
“So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.” ― Milton Friedman
 
“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” ― Milton Friedman
 
This leads me to express my opinion on the role of Government regarding economic policy and stimulus. I emphatically believe that the Government needs to stay out of interfering with the natural forces of free markets to the maximum extent possible. Now let me be clear; I do not necessarily feel that Government has bad intentions or that all politicians are evil tyrants. For the most part, they are likely caring people with good intentions and a strong desire to be helpful. My problem is that I believe they do not realize the damage their actions really do. They see a problem and immediately offer to fix it, and their constituents demand that they act, and that they act now.
 
“The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the "rule of the game" and as an umpire to interpret and enforce the rules decided on.” ― Milton Friedman
 
“Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.” ― Milton Friedman
 
Consequently, promises that can’t be kept are made to a voting populous that finds catharsis in seeing policies enacted. This is in spite of the fact that they don’t and can’t work, and cause unnecessary and prolonged damage to our economic health and well being. All of this simply because Government, and its constituency, refuses to trust the best and most benevolent economic system that has ever existed on earth. The one and only system that has raised the standard of living on the planet to its highest level in history, while every social experiment that attempts to control economic activity has failed miserably.
 
“One of the great mistakes is to judge policies and programs by their intentions rather than their results.” ― Milton Friedman
 
“There is still a tendency to regard any existing government intervention as desirable, to attribute all evils to the market, and to evaluate new proposals for government control in their ideal form, as they might work if run by able, disinterested men free from the pressure of special interest groups.”

― Milton Friedman
 
To conclude this section of my personal views I offer that our free-market economic system operating in a still mostly free society, has produced an incubator of great, and even unbelievable ideas, that will allow us to eventually solve our greatest problems and lead us into a future golden age of prosperity and growth. This fertile environment has spawned technological advances that are growing exponentially. But most importantly, investments already made in the installation and transition phase (http://www.sciencemag.org Disclosure:

  Long CLX, CSCO, GOOG, MSFT and ORCL at the time of writing.
 
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

Written By: Chuck Carnevale