{"id":60493,"date":"2021-11-17T10:41:19","date_gmt":"2021-11-17T15:41:19","guid":{"rendered":"https:\/\/olduvai.ca\/?p=60493"},"modified":"2021-11-17T10:41:19","modified_gmt":"2021-11-17T15:41:19","slug":"how-durable-is-the-potemkin-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=60493","title":{"rendered":"How Durable Is The Potemkin Economy?"},"content":{"rendered":"

How Durable Is The Potemkin Economy?<\/a><\/h3>\n
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\u201cIncreased borrowing must be matched by increased ability to repay. Otherwise, we aren\u2019t expanding the economy \u2013 we\u2019re merely puffing it up.\u201d<\/em>\u00a0\u2013 Henry Alexander of Morgan Guaranty Trust<\/p><\/blockquote>\n

The original Potemkin Village dates to the late 1700s. At that time, Russian Governor Grigory Aleksandrovich Potemkin constructed facades to hide the poor condition of his town from Empress Catherine II.<\/p>\n

Since then, Potemkin Village represents a false construct, physical or narrative, created to hide the actual situation.<\/p>\n

As the pandemic ravaged the economy, the Federal Reserve, White House, and Congress went to work and built a Potemkin economy around the ailing economy.<\/p>\n

As a result, the curb appeal of today\u2019s economic recovery is beautiful. However, when our clients\u2019 wealth is at stake, we understand looks can be deceiving. As such, we prefer to open the front door and explore the real economy. In the long run, it is sustainable economic growth that supports asset prices. In the short run, however, investors may continue to be mesmerized by the Potemkin economy. At some point, any differences between the Potemkin economy and the actual economy will become problematic for investors.<\/p>\n

Selling A Narrative<\/strong><\/p>\n

Narratives of a booming economic recovery can only mislead the public and investors for so long. Toss in robust economic data, and the fa\u00e7ade seems awfully real.<\/p>\n

Consider the following:<\/p>\n

Nominal GDP is now 4.5% above the high-water mark set pre-pandemic. Historically, economic recoveries do not get more \u201cV-shaped!\u201d<\/p>\n

\"Potemkin<\/figure>\n

Retail Sales are running about 12% above its trend of the last ten years. The premium represents nearly five years of growth at the prior trend.<\/p>\n

\"Potemkin<\/figure>\n

CPI and Core CPI (excluding food and energy) are nearly triple their respective growth rates of the last five years.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

How Durable Is The Potemkin Economy? \u201cIncreased borrowing must be matched by increased ability to repay. Otherwise, we aren\u2019t expanding the economy \u2013 we\u2019re merely puffing it up.\u201d\u00a0\u2013 Henry Alexander of Morgan Guaranty Trust The original Potemkin Village dates to the late 1700s. At that time, Russian Governor Grigory Aleksandrovich Potemkin constructed facades to hide […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[15637,14545,11995,15470],"class_list":["post-60493","post","type-post","status-publish","format-standard","hentry","category-economics","tag-michael-lebowitz","tag-narrative-control","tag-potemkin-village","tag-real-investment-advice"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/60493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=60493"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/60493\/revisions"}],"predecessor-version":[{"id":60494,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/60493\/revisions\/60494"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=60493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=60493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=60493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}