The Age of Envy or of Dissatisfaction?

Monthly Market Commentary: January 1, 2020

According to Lawrence W. Reed, Envy Is the Root of Many Modern Evils - Universally condemned, envy is nonetheless widely practiced.

Reed: “To dislike a person because of the color of his skin is racism. To scorn someone because of her same-sex preference is homophobia. To disdain for reasons of gender is sexism. To frown upon people because of their foreign origins is xenophobia. Such manifestations of bigotry, to a person of peace, tolerance, and logic, are shameful and indefensible.
But suppose you despise and seek to punish an entire class of people because they’re rich or successful. Is that bigotry, or is that the foundation of a political campaign? Sadly, it’s both. Frequently. Listen to presidential 'debates' carefully, and you’ll easily see a very different perspective with regard to the rich. Income bigotry is on full and proud display. Candidates don’t define 'the rich' precisely, but they do hope that you’ll think you’re not among them. You’re supposed to be the victim of the rich so the politician can be your savior. The demagogue doesn’t say he wants to sift the good rich from the bad rich and treat them accordingly. He wants to go after them all, just for their richness.”

MF: I also understand that envy is a favourite rhetorical device of politicians who demonize “the rich” and vie for people’s vote and affection, and count on their ignorance and myopia. However, I need to add one important point. The reason demonizing the rich resonates with so many voters is not just because of “envy” but also because of a sense of fairness and justice among ordinary people. These people shake their heads in disbelief when they hear about how much wealthier the rich have become over the last 30 years, when at the same time, they themselves are struggling and falling behind economically.

Therefore, find it quite ironic that Neel Kashkari, President of the Minneapolis Federal Reserve, recently opined that, "monetary policy can play the kind of redistribution role once thought to be the preserve of elected officials." Correct, but as Rabobank's Michael Every opined, "the Fed can redistribute wealth but that redistribution has been from the poor and middle-class to the rich, not the other way around."

I believe that, against the expectations of most investors, food and consumer price inflation could pick up at some point in the future and create some stress in financial asset markets, as it would likely push interest rates higher and depress bond prices.
I agree with former German Bundesbank President Karl Otto Pöhl who opined that, “Inflation is like toothpaste. Once it's out you can hardly get it back in again.”

I wish all my readers and their families a successful New Year, and especially good health. I also thank my readers for their loyalty and for their interesting comments.

“Life's tragedy is that we get old too soon and wise too late”
(Benjamin Franklin).

With kind regards
Yours sincerely
Marc Faber

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