(Cost of) Money makes world go around

Business cycles are like roller coasters. Sometimes it’s up, sometimes it’s down, sometimes power loss makes the darn thing stop.

The key thing is to make certain the economy and your business never go entirely off the rails. Carnage results, which is worse than downs or even a stall, much worse than ups. Ups, however, when they get out of hand have downsides in they feed into boom/bust boomerangs that worsen cycle impacts on commerce and individual firms. Roller coaster rides should thrill but avoid a heart-stopping chill or deathly spill,

Fear and greed aren’t friends of commerce. Whether you’re investing in financial markets or doing business the avoid fear/greed rule applies. As many businesses fail from expanding too quickly when undercapitalized as from mismanagement of other kinds. But timidity that inhibits risk taking is no friend of commercial ventures either.

Coming out of nearly a decade of economic hell followed by malaise, we’re now nearing the end of ultra-cheap capital. Yet rates won’t spike overnight. Rates will remain below historic levels. The cost of money will slowly grow more expensive. But the Federal Reserve, nicknamed the Fed, must move at a snail’s pace or upset a fragile equilibrium and blow up its own already overblown balance sheet.

What should Carson City area business people, business wannabes or investors comprehend from that? The cycle is turning. The past five to seven years most of us worked as if we were in an abyss called fear. The next five to seven — barring a worldwide geopolitical, market-smashing event — will put us back on the road toward greed as cost of money ascends and some inflation returns.

Fear and greed are enemies. They can make the economy seem like an out-of-control roller coaster, so bets too big or too small make no sense at all. Bottom line: watch the Fed. Heed the words of James A. Garfield, 20th president of the United States, who put it this way in the 19th century: “Whoever controls the volume of money in any country is absolute master of all industry and commerce.”

Now, as they used to say on Monty Python’s Flying Circus, for something completely different.

Marshall Goldy of Gardnerville in a published Friday letter to the Appeal editor said last Sunday’s Scene In Passing column by your scrivener, in the letter writer’s words, “suggests officeholders shouldn’t be held accountable to their constituents.” I did no such thing. Normally I ignore such stuff, but one quote from said column last Sunday shows Marshall either can’t read or has limited comprehension. For the first time in my career, I quote myself:

“Aspiring leaders seek votes to take on the task of leading, not following like sheep the mandates of one vocal group or another. If you don’t like where officials lead you, turn ‘em out. You hire them and you can fire them. But you don’t own them.”

Firing is the ultimate accountability. I suggested nothing like what the letter writer said, nor would I ever. What I suggested was leaders who spend days, weeks, months and years on issues of complexity must take all informed opinions — including their own — into account before acting. If you don’t like it, think they lied to you or just don’t like ‘em, vote against them. It’s your right and duty to cast your vote based on your own informed opinion.

As always, I thank Marshall and all my readers for their attention. If I didn’t have readers, I wouldn’t have this job. All I ask is you read carefully, and all I’m doing is trying to promote thinking.

John Barrette covers Carson City government and business. He can be reached at jbarrette@nevadaappeal.com.


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