,
8 tweets,
2 min read
Read on Twitter
It's important to understand the current expansion started Nov 9th, 2016. There were two expansions not separates by a "recession" but by an inflection point. One expansion was due to free money(QE, 0% interest rates), false narratives and government intervention.
The other expansion that started after the Nov 9th, 2016 inflection point is based on cheap energy, less regulation, lower taxes, tariffs and less internal government intervention.
Why is this distinction important? It is important for a couple reasons. The biggest reason is it's needed to understand the economy. The cycle stage u are in gives many insights. An economy in a 10 year expansion reacts differently from one in a 2.5 year expansion.
It handles shocks differently, demand reacts differently, supply, inventories, capex, etc. People (consumer confidence, spending, saving rates), CEOs and traders react and plan differently depending on the length of expansion.
"Experts" make predictions based on the stage they think we are in(this is why most have been very wrong for the last 2.5 years). Predictions like when a recession will hit or the amount of jobs created depend to a large part on where the "experts" think we are in the expansion.
The political ramifications are important too because policy decisions are made on what people think created the expansion. Was it free money or deregulation? Tax cuts or government intervention into the economy?
As the Democrat debate showed its not just policy decisions impacted but actual election results that can be impacted. So many things can and are impacted by where people see the expansion stage.
Too sum this up, while technically the expansion is the longest since 1850s, from a practical POV the inflection point created by the Trump election created a new, different expansion and for all intents and purposes the expansion started in 2009 ended on Nov 9th, 2016.
