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Mark Scheffler column: Economy's history assured of ups and downs

5:12 PM, Mar. 29, 2013  |  Comments
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I hate to say it, but I'm beginning to think that The Post-Crescent is overpaying me to write these guest columnist articles.

I'll let you in on a little secret if you agree not to tell my editors: With the overall U.S. market pretty much being back to where it was both in the fall of 2007 and again in the spring of 2000, I've found that I can just simply repeat what I wrote in previous years. I can also raise the same key economic issues once again.

Here's what I mean: I can just write something like "Watch out - there's a major bubble brewing." In 2000, it was the tech bubble. In 2007 it was the housing bubble, and today it's a bond and stimulus bubble.

Or I can write, "The Federal Reserve is taking extraordinary steps to inject liquidity into the markets." In 2000 they cut interest rates and laid the groundwork to send out "stimulus checks" which gave you your tax refund early. In 2008, the Fed slashed interest rates even more and worked with the Treasury to create the TARP program. Today we're dealing with Q.E. 2, or 3 or 7. Who can keep count?

Seems like history has a way of repeating itself. Well, if not repeating exactly we can probably agree that it can rhyme.

One thing is certain from where I sit: Even though the economy seems to be limping along right now, there's a deeper underlying issue that humanity has never dealt with before - I believe that the world is maturing. The stimulus we've been living through for the past several years has helped to stabilize us.

But now we're grown up, and there's a good possibility that we're as big as we're going to get. The vast majority of physical development that was necessary to sustain us has already been completed, and every bit of development that will occur over the next few generations will just be icing on the proverbial cake.

Don't get me wrong; I'm very conscious of what every politician means when they say "We've got to get our economy growing again." They mean more building, more development, more consumption, which they hope in the end will create more jobs and more consumers to keep the endless cycle going.

But if I'm right and we've entered a phase of a maturating global economy, our 30-year push for more of everything will ultimately be self-defeating. Bigger just isn't always better - better is better. And economic growth is not the same as human growth.

Appleton is a great example: Take a drive north on State 441 starting at the Little Lake Butte des Morts bridge, head west on U.S. 41 past the Fox River Mall area and complete the loop. Along the way, look left and right and consider how much development and expansion has occurred in just the last 30 years or so. When will we have the self-control to say, with gratitude, "That's enough?"

Unfortunately, capitalism has no brake. There's no one at the switch who will turn off the engine when we've reached our destination. There's no one who will raise a checkered flag at the finish line because there just isn't one. Free market capitalism is by far the best system for growing an economy, but it's turning out to be a lousy system for sustaining one.

- Mark Scheffler is the senior portfolio manager and founder of the Appleton Group Wealth Management. He can be reached at mscheffler@ appletongrouponline.com.

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