Stimulate This: Immovable Object (Entitlement) Meets Unstoppable Force (Boomer Deflation)

The problem with our society and economy really comes down to three things: entitlement, entitlement, entitlement.

You see, the wealth game is over and our standard of living has seen its greatest day. It will not increase from here -- it won't even stay the same. The sooner we can come to grips this with as a nation, the better. Only our sense of entitlement stands in the way.

For the past 25 years our incredible economic prosperity and resulting wealth creation was driven by the surge of the Baby Boomers. The Boomers are the greatest ponzi scheme of all time. They have moved through our economy like a rat through a snake, resulting in too much infrastructure and astronomical asset prices that haven't correlated with underlying economic fundamentals for years. Like every bubble, people thought this growth was going to persist forever. Irrational exuberance at its best.

But Americans feel as if they are entitled to wealth and a resulting ever improving standard of living. The problem is that wealth is a residual function of economic growth and capital allocation. You can't create wealth out of thin air, particularly when you are reliant upon external capital to support it (and your consumption). As a general rule as it relates to stimulus, anything the government does to directly support wealth (e.g. buying mortgages or preventing foreclosures), will be throwing good money after bad. It's a classic case of the tail wagging the dog.

"Stimulus" should be directed toward fixing the structural anomalies that have emerged in our economy. Financial services have become a huge unproductive bubble in our economy driven by the equity bull market, ridiculous concept of retirement (to be addressed in another post) and the financing of assets (which have mistakenly been assumed to always go up in price). The government needs to help transition people that leave financial services into other parts of our economy that will drive real economic growth (and wealth) in the future. Trying to keep the finance game going will also wrongly entice people to try and stay in the game.

Wealth creation through assets and investments will only resume once our infrastructure and asset prices have reset to a post-Boomer equilibrium and a new demographic group starts to pressure our infrastructure. This should happen somewhere after 2020. Until then, expect deflation and plenty of it.

Just One Ride

That's all it took to restoke the cycling fires inside me. I'm really excited to explore the North Shore of Long Island by bike this year. Further, I'm amped up to find a big touring trip. I really don't know where, when, how or for how long it might be, but I'm very open to the idea and am doing some exploring on the subject.

Until then.

First Tracks

I did my first Long Island ride today and I have to say that I was pleasantly surprised.

I live on the South Shore of Long Island, where riding is virtually impossible. I joined the LIBC, which does rides on the North Shore each Saturday and Sunday from the Westbury High School parking lot. Westbury High School is a 15-20 minute drive from my house -- a bit of a bummer to have to drive your car to go ride your bike but at least I finally get some use out of the bike rack I purchased.

LIBC has cue sheets listed on the site. I polled a few members and asked for a good mid-week training ride and they suggested two. I picked the shorter one.

I arrived a Westbury High School and was immediately a bit intimidated by the looks of the student body. I pulled into the faculty lot and asked a teacher if she thought they'd mind if they park there. She said it should be okay. As I was preparing my bike I saw a security guard approaching me. He said "great day for a ride -- great idea" and kept walking. I rode up to his car and confirmed it was okay for me to park there. He gave me the thumbs up.

The ride was supposed to be 32 miles but I had to cut it short bc I understimated what time it gets dark -- I did a total of 21 miles. Even with cruddy winter conditions I could see the beauty of the ride. Some of the houses I passed were unbelievable. The car traffic wasn't too bad either. Similar to some spots in NJ it seemed like the cars were used to seeing cyclists in the area so they were rather patient.

I probably won't be able to ride again for a while bc the weather is looking cold and I have a bunch of trips coming up. However, the outlook for riding on LI just took a big turn up.