What’s to prevent my father or my mother from retiring in a different style?
It might seem impossible to get back out of a slump, but as any economist will tell you, you must be able to justify any increase in the level of investment. Even in a recession, people who take on risks (including some that you might call risky) will take money away from others. If the economy is doing well, it’s much more difficult—and expensive—to do what you’re doing. (I’m not saying it’s impossible, just more difficult.) So, if you’ve had a good run, the only rational move is to return to some sort of investment mix. Even if you want to retire more, you should still be thinking about how to spend your remaining years. If it’s a high inflation, high interest rate economy, you should be thinking more about the value it gives your assets.
3. Inflation is a myth.
We may be facing a real and substantial global economic slowdown, but this is also being obscured by global central bank policy and financialization of the economy. For example, inflation in the Eurozone is about the same it was two years ago. In this environment, people have been buying assets at higher levels. As a result, real wages have stagnated and the gap between wealth and wages has widened—something you wouldn’t have predicted based on a healthy economy.
So, you can’t blame inflation on central banks and financialization—the economy was just really weak.
For some reason, the “reflation” of the 1970s is being presented as the “reflation” of today—and it is. If I want to retire, I should look at whether this is the right time to invest in what I think may be a better “risk” mix of assets.
My advice to you is: If you want to retire, get used to the idea of living on less.
We’ve seen inflation, but it is always temporary. In fact, the most important lesson we’ve learned from the post–World War II era is that inflation should always be temporary. We know by now that inflation will end—maybe sooner than we think—when the central banker and the central bank’s policy makers find that it is no longer making the economy any more productive with a lower and lower inflation target.
There are other warning signs that inflation will end sooner than you might expect. As I noted earlier this month, we’re now seeing
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