The Return of Inflation Market Commentary – March 15th, 2021

Inflation is not dead. It is not gone. It has not been tamed. I know it seems like it, especially after the past few decades which generated in many an “inflation-complacency” that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.

When the Fed boosted the Monetary Base by more than $3 trillion dollars during Quantitative Easing 1, 2 & 3, and the federal budget moved to a huge deficit, gold and silver commercials proliferated. So did predictions of a collapsing dollar. But inflation never came. Since the end of the 2008-09 financial panic, the Consumer Price Index has increased by an average of just 1.7% per year, falling short of the Fed’s 2% target.

During the 2020 COVID-induced round of Fed money printing, instead of using QE to put reserves in the banking system, the Fed financed government programs to fund loans to businesses and direct payments to individuals. As a result, the money supply as measured by M2 has grown 26.3% in the past year, the fastest annual growth I can find in US history, and roughly double the pace of M2 growth the US experienced during the 1970s.

According to those who believe in Modern Monetary Theory – (which isn’t all that modern, btw), and is just vaguely a theory – the US can increase real output enough to absorb it. In other words, they say that while inflation is “too much money chasing too few goods” – they expect the output of goods to increase enough to keep inflation low.

I find this impossible to believe. In fact, I think many are living in denial. Inflation is already on the rise. In the past six months, the Consumer Price Index is up 3.6% at an annual rate and if it rises a modest 0.2% per month between January and May, it will be up 3.4% over 12 months. Part of this is because COVID shutdowns led to weak inflation in early 2020, but I expect inflation to move higher in 2021.

But, in addition to M2 growth, incomes and savings have increased, while production has not. Demand is exceeding supply. All personal income combined – wages & salaries, employee benefits, small business income, rents, interest, dividends, and transfer payments – was up 6.3% in 2020 versus 2019. Total after-tax income was up 7.2% in 2020, the most for any year since 2000.

Combined, Americans saved about $2.9 trillion in 2020, more than doubling the previous record high of $1.2 trillion in 2018. As of the third quarter of 2020, the amount Americans held in checking accounts, savings accounts, time deposits, and money market funds was up $2.8 trillion from the year prior. Add another $1.9 trillion in federal government stimulus spending (borrowing from the future, to spend today) and the US is awash in cash.

Unfortunately, in spite of a strong recovery in output, industrial production is 3.3% below pre-COVID levels, while real GDP is 2.5% below. In other words, demand is OK, it is supply that’s still hurting – a perfect recipe for inflation.

All this money printing threatens to eventually create a sugar high in equities. We aren’t there yet, but markets are floating on a sea of new money. Inflation hedges (real estate, commodities, materials companies) will do well. Traditional fixed income (long-term bonds) is at risk. The return of inflation is a very real threat to the long-term health of the US economy, and something you will hear me talking about more in the months ahead..

Integrated Financial Group

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:
1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) Inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

    • Retirement Planning For Business Owners & Executives
    • Woman’s Unique Financial Planning Needs
    • Professional Athletes
    • Investment/Asset Allocation Advice
    • Estate Planning
    • Risk Management
    • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the Five Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com
Website | kevingarrettifg.com

 

Reading – Stephen H. Dawson, DSL

“A capacity, and taste, for reading gives access to whatever has already been discovered by others.” Abraham Lincoln

Dr. Stephen H Dawson

I do not know why the Steven Spielberg film skipped over the assassination event of Abraham Lincoln. I am not a huge fan of Daniel Day-Lewis’s work, nor do I have anything against him. I believe Day-Lewis portrayed Lincoln with excellence. Lincoln shared in this film he studied the work of Euclid in his Elements writings. I think, but I do not know, that both Spielberg and Day-Lewis were attempting to make the point that understanding their work required the audience to do some supporting reading on their own to grasp the magnitude of the story presented in the film. This postulate of mine brings me to the topic for our time together this week. Specifically, making good on my commitment to you to discuss how diversity, inclusion, and what Chesterton talked about with the human species will help you get out of the circumstances hindering your strategic planning work.

I shared last week about the need to look should one want to see. I looked over some of Euclid’s Elements recently, remembering how they helped structure my thoughts years ago when I first studied mathematics. Mathematics helped me learn how to read. I needed the means to get through spelling, grammar, and punctuation learning obstacles to accomplish writing assignments of the materials I read. I was able to approach the skill of outlining what I read more effectively, as I had a formula for how to accomplish the outlining. It led me to help me read more effectively. The simplicity of logic apart from rhetoric found in mathematics helped me understand better how to form my messages to convince readers my points were valid, doing so with either reduced or no conflict. I enjoy conversing, but I enjoy writing more than public speaking. Both have proven to me I need to plan what I communicate by being sure of what I have read in my life.

I also shared last week realizing strategy work is not progressing as desired means either your people do not have the time to do the work, or they do not have the skills to do the work. This condition, at its root, is an organizational design problem. No credible leader will ever find they are in this position. A successful leader knows their people, their abilities, their conditions, and operates their organization accordingly. Spielberg’s success in his film work tells me he is a successful leader in film work. I view Lincoln as a successful leader of a nation. I am convinced without reservation that reading is a critical success factor for staying out of the mess I identified as the cause of strategy work not progressing as desired.

WHAT READING?

Reading can occur in many different forms, such as letters, numbers, symbols, colors, or hand and arm signals. Effective reading involves not only considering a text in the original language but also translations of the text. Euclid’s Elements is the second most published book in history. Consider reading this text in another language to see how it reads to you. Consider also the value of a translation that is not literal but paraphrased.

Take the daily newspaper and look at any topic from different writers. The reporting on the same topic will often vary widely. Take some time and read how the Wall Street Journal article and the Financial Times article regarding the McKinsey leader’s recent dismissal differ. Think about bias and diversity as you read these articles. How did each writer look to help their reader understand what has happened with McKinsey’s performance as of late? Does either of these articles help you want to change your staffing choices? My point is you will see quickly how learning can continue on any topic and how miscommunications can occur from what seemed to be a clear and understood text.

HOW MUCH READING?

Kate Northrup wrote about the viability of planning when the future is unclear. She gets into the topic of strategy. She implied reading is required to accomplish her recommendations. I am of the position that reading should be perpetual. There is no shortage today of material to read. There is a distinct decline in the credibility, meaningfulness, and associated value in most of the material available to read today.

I did an Internet search for images of reading. All of the images I found involved only people looking at physical books. Looking at a computer screen is called viewing. So, there is a belief growing in our society that reading can only occur in books. I disagree with this claim. The definition I provided of reading did not include reading expressions on a person’s face. I can view an expression, but I do not know for certain there is a message attached to an expression. Hence, it is best to keep reading to letters, numbers, symbols, and colors that can be referenced later when you need to come back to them. I equate reading a book with viewing letters, numbers, symbols, and colors on a computer screen. The answer to how much reading you need to do is this: whenever you have enough proof to know you have the facts to do what you need to do.

I have shopped exclusively at Men’s Wearhouse for suits, shirts, and ties since 1999. They impress me with their overall experience. The people both in the stores and on their telephones who have helped me over the years sometimes have my skin color and gender; other times they do not. I care about getting the suits, shirts, and ties that I need and want more than I care about a particular skin color or gender helping me. Their industry has suffered from the cutback on social outings and workplace gatherings last year. They went into bankruptcy in 2020 and are emerging through restructuring. They have an idea to help increase their sales by doing measurements of a customer’s body dimensions by scanning, matching these measurements with inventory, and deciding how to serve their customers best. It is an impressive undertaking. Imagine how much reading they had to accomplish to come up with this system. Then, imagine how much they have invested in this system. They, as a company, are at the point of either growing much more or dying. I cannot imagine their debtors would have approved their restructuring plan to include this new system without sufficient credible belief the plan will return a suitable profit. The Men’s Wearhouse story is an example of how much reading is necessary to run your organization effectively.

AM I SURE?

I believe, based on the espoused morality of my worldview found in my ethics, there is never a valid reason to be either rude or disrespectful. Seattle Mariners chief executive Kevin Mather resigned recently due to disparaging remarks he made about player English skills. His career-ending event could also mean Mather is finished as a leader. I have two good friends, both in their thirties, who are illiterate. One is a carpenter, the other a welder. They struggle to have enough income. They are both happy, each with a small family. They both want to learn to read. You are looking to now restructure your organization with those who have the skills you need to do the work you need to accomplish. Do you want to have a literate person who you have to terminate or an illiterate person who does a great job for you? I am of the position you need literate members in your organization, and you do not need problems. How can you differentiate when a literate person will make an unpreferred choice such as Mather did, or that an illiterate person can make preferred choices?

I do not have the skills to operate heavy equipment. Do you want me to come near your house operating either a bulldozer or an excavator until I gain such skills? Do you want me to sit atop the running equipment and read the owner’s manual as I figure out how to use the heavy equipment near your house?

Heavy Equipment

WIND UP

Your acting on your realization you need to alter your organization members who have neither the time nor the skill to do their assigned work is too late to accomplish this repair with discretion. You must take corrective action in public light to achieve the necessary changes. The terms diversity and inclusion, terms I have yet to define to you, are what you look to address to alter your organization effectively. The only way and I mean the o-n-l-y way, to go through this process effectively is first to understand the topic of evil. I also need to define the term evil to you from my understanding of it. Succeeding in making these people change is not about removing or adding more of skin color or gender. Do you want anyone who does evil as a part of your organization? Do you care about their skin color or gender if they have the skills you need to do the work you need to be accomplished? Do you have the means to measure the skills your people claim to possess? Are you, in the espoused morality of your worldview found in your ethics, able to prove you both need and want your people to have the skills they need to do the work you need to accomplish more than you desire for skin color or gender headcounts in your organization?

Deriving Definitions

Next week, we will begin to tear apart the fabric comprising the terms diversityinclusion, and evil as an exercise in research. This week, I encourage you to spend time contemplating how much you care about skin color and gender in comparison to relevant skills you need your people to have to do the work you need to be accomplished.

So, I ask you: where do you want to go? I hope your answer is to develop the plans necessary to accomplish the strategy you know you need to achieve to arrive at your desired destination. If this is the case, then let’s get to work. If not, then I wish you the best of everything.

I hope we will see each other here next week. Email me if you need to talk before then.

Dr. Stephen H. Dawson, DSL

Executive Strategy Consultant

Stephen Dawson, DSL

Stephen Dawson is an executive consultant of technology and business strategy, serving significant international organizations by providing leadership consulting, strategic planning, and executive communications. He has more than thirty years of service and consulting experience in delivering successful international business development and program management outcomes in the US and SE Asia. His weekly column, “Where Do You Want To Go?,” appears on Thursdays.

Dr. Dawson has served in the technology, banking, and hospitality industries. He is a noted strategic planning visionary. His pursuit of music has been matched with his efforts to lead by service to followers. He holds the clear understanding a leader without followers is a person taking a long walk alone.

Stephen has lived his life in the eastern United States, visiting most of the United States and several countries. He is a graduate of the Regent University School of Business & Leadership. Contact him at service@shdawson.com.

Thank you for visiting our blog.

 

Jim Weber, Managing Partner – ITB Partners

Jim Weber – Managing Partner,  ITB Partners

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Looking

Men differ LITTLE on what things they will call EVIL. They differ GREATLY on what evil they will call EXCUSABLE.” G. K. Chesterton

Stephen Dawson, DSL

We only see if we look. We only look by choice. We may glance at or skim through what we read, but neither of these actions results in seeing.

G. K. Chesterton made a point about humanity in his observation of men and how they differ. I understand that Chesterton uses the term man in his statement as mankind, the human species. I interpret one of his unstated points as this: a little evil brings great inexcusability. I wonder what a lot of evil would bring. I choose not to look for more evil. Chesterton did not make it clear what evil is and is not. I wonder how many people today care to look into what he meant.

I got new eyeglasses last year, the kind that reminds me I am not a kid who did not need eyeglasses. They look good on me. I see better with them. I do not like to wear them. I only wear them when necessary. Additionally, I am unable to discern evil with them.

I shared last week about being scared. I used this condition in the context of you being unsure of the strategy you propose to plan. We were going to talk next time about making people changes to your strategy work. Let’s have this talk now.

Making changes to the work assigned to your followers, your people means one of two things. Either they do not have the time to do the work, or they do not have the skills to do the work. If they are not interested in the work of their role, then that is another matter. It is part of my work to help my customers discern between these conditions. We look at the facts, then we call it for what it is. Many of my customers are afraid they will be calling their people evil when their people do not get their assigned work completed. A common term used today is optics. It is a subjective term. It is a horrible term, from what I see. Facts are facts. They are absolute. Nothing absolute needs perspective to understand the fact. We need to understand the repercussions of facts to know their value, and those repercussions require various perspectives to comprehend the complexities of their collective impact. Facts are not subjective. Hence, the difficulty in assessing the people productivity part of strategy work.

LOOKING

Looking at anything displeasing can be difficult. Looking at evil, for me, is displeasing. I cannot say a person is evil, as I do not believe it is possible. I can say their actions are or are not evil. I make this determination based on the espoused morality of my worldview found in my ethics. Meaning, my definition of evil is not necessarily the same as anyone else’s. I do not consider evil when I look at the research. I look for facts. Helping my customers do the same involves many prior discussions to learn their abilities, perspectives, and positions to comprehend their research abilities. It is not a quick look, a glance, or a skim of the research we accomplish to evaluate either the facts of their strategy or the work of their people to plan their strategy. It is a series of discussions.

No alt text provided for this image

SEEING

Seeing an opinion unsupported by facts, to me, is a form of evil. I am allowing the person to share their opinions with me to convince me without relevant supporting evidence. Sure, there are times when this scenario is necessary for my best interests. HEY STEPHEN, GET DOWN! I confess that hearing these words, regardless of vocal tone, would at least put my head down. I would, once I am sure it is safe to raise up again, either thank them or ask them why they told me to get down. This simple example is to help you see how much time you could be wasting looking at work accomplished by your people but not seeing enough value from it. The intentional circular effort I shared about last week is what I am describing here. If you do not see value in your people’s work, then you either have a communication problem or a worker skills problem. I set aside the possibility of a worker not having time to do their assigned work because you already took care of that problem earlier…didn’t you? I cannot imagine you would have miscommunicated with your workers, as you have a written plan to accomplish work assignments…don’t you? Did you talk with them, or did you send them an emoji hoping they understood what you intended to say to them?

What is your intended message?

INTERPRETING

If your people have the time and skills to do their assigned work, then the work will be accomplished as planned. If your strategy work is not progressing as communicated in your plan, then you have a people problem. It is not a technology problem. If it were, then you are executing the wrong plan. It is not a workplace problem. If it were, then you are executing the wrong plan. I could go on presenting examples here, but Pilita Clark explains it pretty well.

So, we have a people problem. Is it their fault they do not have the technology they need? Is it their fault they do not have the workplace they need? No, these are your problems as their leader. Perhaps they do not have the skills to use the technology. Perhaps they cannot get to the workplace. These are their problems. They will have to solve them to remain employed with you. It is not a matter of evil versus good, fair versus unfair, or happy versus sad. They are the facts you face while attempting to complete your strategy work. If the work must be accomplished, and your workers cannot complete the work as planned, then you must get other workers assigned to the strategy you need to have planned.

I tell you, from the position of both a professor and as a management consultant, the problem I just described to you is widespread today. We have not prepared today’s students with enough skills to do the work in many roles involving strategy development. We have provided them pieces of education in the form of shorter degree program course durations with the expectation they will assemble these skills effectively into pertinent credentials. An outcome of these conditions over the past three decades is a student’s inability to absorb the lesson material deep enough to achieve the transformational experience of education. This change occurred about the time microcomputers showed up in commonality. There is a direct connection between increased access to learning and learning deficiency caused by information overload. It is a realization of analysis paralysis. Meaning, many degree programs in the past few decades do not have enough analysis instruction contained within them. Those who experienced high achievement did so outside of a single degree path. See if the article by Tomas Chamorro-Premuzic and Becky Frankiewicz rings a bell with you for how you look at your workers’ circumstances. I recommend you get to the point of interpreting it.

Next week, we will begin to talk about how diversity, inclusion, and what Chesterton talked about with the human species will help you get out of the circumstances hindering your strategic planning work. Specifically, how to go about staffing your organization to do the work you need to be accomplished. We will approach the balance of emotion and logic by considerations of needs and wants.

So, I ask you: where do you want to go? I hope your answer is to develop the plans necessary to accomplish the strategy you know you need to achieve to arrive at your desired destination. If this is the case, then let’s get to work. If not, then I wish you the best of everything.

I hope we will see each other here next week. Email me if you need to talk before then.

Dr. Stephen H. Dawson, DSL

Executive Strategy Consultant

Stephen Dawson is an executive consultant of technology and business strategy, serving significant international organizations by providing leadership consulting, strategic planning, and executive communications. He has more than thirty years of service and consulting experience in delivering successful international business development and program management outcomes in the US and SE Asia. His weekly column, “Where Do You Want To Go?,” appears on Thursdays.

Dr. Dawson has served in the technology, banking, and hospitality industries. He is a noted strategic planning visionary. His pursuit of music has been matched with his efforts to lead by service to followers. He holds the clear understanding a leader without followers is a person taking a long walk alone.

Stephen has lived his life in the eastern United States, visiting most of the United States and several countries. He is a graduate of the Regent University School of Business & Leadership. Contact him at service@shdawson.com.

Thank you for visiting our blog.

 

Jim Weber, Managing Partner – ITB Partners

Jim Weber – Managing Partner,  ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.