The Slippery Slope of Hope(lessness)

The following chart shows personal current transfer receipts divided by government current receipts.


Click to enlarge.

On Basilisk Station (David Weber, Copyright © 1994)

"Oh, that’s a wonderful idea!" Frankel snarled. "Those BLS increases are all that’s keeping the mob in check! They supported the wars to support their standard of living, and if we don’t—"

No worries! That quote comes from a book of science fiction. All governments appearing in this work are fictitious. I'm sure that any resemblance to real governments is purely coincidental.

Check out the last three data points at the trough of the long-term channel.

2000:Q1: Good times!
2007:Q2: Better times!
2013:Q2: Best times!

Other than 2000 and 2007, perhaps there has never been a better time to swing for the fences? The stock market only goes up again! What could possibly go wrong? It is possible that the 2013:Q2 data point isn't the actual bottom. I can say this though. First, we bounced off of it. Second, if I exclude the 2013:Q2 data point (which I have tested) then the channel changes insignificantly. Put another way, that's where the channel seems to want to go anyway.

This is not investment advice. It's a chart, some possibly meaningless trend lines, and a potential warning. No crystal ball here. I'm just trying to point out a risk that you won't hear on CNBC. That said, it is a risk that I'm not willing to embrace. I've been "risk off" since 2004 and intend to stay that way permanently. In hindsight, I have no complaints so far.

On Basilisk Station is a favorite book of mine. It is free to download on the Kindle. The second book, Honor of the Queen, is also free to download. I received a Kindle for Christmas. I have no idea how I ever lived without it (especially now that my comfortable reading distance isn't what it once was). The Kindle is one reason I have been posting a bit less lately. (Another reason is that I'm also working very diligently on my New Year's resolution.)

I know what you must be thinking. Free is fine and dandy but how much is it going to cost to download a complete collection of H.P. Lovecraft (my favorite author)? 99 cents. Infinitely more expensive! Right? Just keep telling yourself that the cost per word isn't all that hyperinflationary. That's how I'm planning to do it once I get over the sticker shock anyway. Don't forget to factor in the savings from not driving to the mall to pick it up. That helps too (perhaps not so much for mall employees, but that's a story for a different post).

What an odd economy we have. I've often said that the best things in life are free or nearly free (once basic necessities are covered anyway). Free and/or 99 cents certainly qualifies.

Source Data:
St. Louis Fed: Custom Chart