Uncertainty – Global and American

America is the economic engine of the world.  If we have the sniffles, the world gets pneumonia.

For several years, The Fed has kept its foot firmly on the economic accelerator with Quantitative Easing (QE) buying $85 Billion of American debt each month, a rate of $1 Trillion per year.  While that is reminiscent of a Central or South American tin dictatorship instead of the USA I have called home for 64 years, most questions by economists are centered on how we can have massive deficit spending and QE, but still have painfully slow economic growth and low inflation.

In a normal American economy there are $2 Trillion on the sidelines in the form of money market accounts, savings accounts, etc.  The last time I saw a number was 20 months ago, but at that time the amount of money on the sidelines were $9 Trillion.

The extra $7 Trillion is an enormously important measure of the lack of confidence in the current Administration.  Because of the lack of confidence, investors are sitting on cash, not investing in America.

As a result, The Fed is pushing on a string.  It is an enormous event that The Fed is flooding the market with dollars in an effort to revive the American economy, while anyone that gets dollars is putting them on the sideline.  This condition will last until leadership is elected that actually understands economics and how capitalism can be harnessed to improve peoples’ lives by providing jobs.

Change represents opportunity and risk.  In a global economy, the impact from even a small change can be huge.  But standing still (sitting on cash) can result in the economic equivalent of death.  The question is how to prosper from the changes that occur while minimizing the risk.

The maximum risk is to have your investments in one asset or asset type.  Every portfolio should have some cash or equivalents.  We believe that a really good tract of land is the best long-term investment possible, but it is not best to only have land in your portfolio.

Not every tract of land will benefit to the maximum from what is coming.  Those that buy one of the best tracts of land will benefit most and look brilliant.  Call us.  We would love to help your investment decision look brilliant.