What To Expect, As We Transition From Recession to New Economy

People who lived through The Great Depression kept a "Depression mentality" their entire lives. They stored and hoarded, they were debt averse, they squeezed the last drop from every tube, repaired rather than replaced anything that might be patched together and made to limp along just a little further. Such thrift is not necessarily a bad thing, and our modern society could benefit from a little more of it. This kind of thrift taken to extremes, however, represents some inner, emotional scarring. It speaks of fear. In business a certain level of prudent paranoia, of considering worst-case scenarios, and intelligent scheming to avoid them or insuring against them is necessary, just as it is in ordinary life. If you choose to build a home at the ocean in an area at reoccurring risk of storms, even hurricanes, then you are foolish and irresponsible if you do not equip that home with storm shutters, perhaps a power generator, and do not buy appropriate insurance. But when this rises to the level of outright fear, it is unhealthy and harmful. If, for example, you went your whole life without ever even visiting the great beaches to see and experience the oceans out of fear of the possibility of hurricane, you accept rule of fear. If you time your vacation to Florida or the Caribbean to avoid high hurricane season, you're prudent.

You should be prudent about money. You can't afford to be fearful about money. The recent years' recession instilled new fears about money in a lot of people too young to have any experience with anything but a booming, expanding economy. Other, older people had let that experience fade to distant memory, but had all their old fears reignited.

Incidentally, as point of comparison, during the Depression over 9,000 banks failed, unemployment topped 25%, there were long "bread lines," and hundreds of thousands roamed the countryside homeless, itinerants in search of any work of any duration. During this most recent recession, the lines to buy the latest iPod or video game were long, not the bread lines. This time around, the destruction of the American economy has been greatly exaggerated. I'd further add that the tactic the media relies on to attract its wealth is by mushrooming and magnifying every news event into Crisis. This is how they attract viewers, listeners, and readers, which is what they sell to advertisers - just as the carnival barker of old hollered about the horrific three-headed sea monster or giant King Kong-like creature inside the tent, to draw curious customers and take their quarters. Don't mistake most of what you see and hear in broadcast media these days as "news." It's nothing of the sort.

As we move into the post-recession New Economy, many new kinds of opportunities will present themselves, a great deal of temporarily idle and sidelined wealth will be liberated and begin moving about again with renewed vigor, and ultimately some sectors will again be affected by what Alan Greenspan dubbed "irrational exuberance" and "bubbles" will build and burst. Wealth will be attracted by many, retained and sustained by only some. So it has always been. So it always will be. You can never afford to fear this, nor should you let yourself be irrationally carried away by it.

To prosper in The New Economy, you must combine the never-changing principles and forces governing the movement of money with rational thought, reasoned optimism, creative vision, sound and timely strategy, and aggressive opportunism. Learn whatever lessons you can about prudent behavior from recent events. But do not learn fear.