Posted by: nickgerlich | May 10, 2008

It Does A Body Good

You may very well hate me for what I am going to say. It isn’t a popular thought, but I believe it anyway. So I’ll go ahead and say it.

Recession is not a bad word, and often can do an economy good.

RecessionI know…if you lose your job, recession is terrible. I agree with that 100%. I never want to go there, and I have complete sympathy for those who do suffer this indignity (like the 260,000 people this year who have lost their jobs). But recession is a predictable and, I will argue, often necessary component of a free-market economy.

Nothing can go on forever, and a Dow that keeps on increasing without end will reflect only inflated expectations. In order to get that new tree in your back yard to grow nicely, it must be pruned and shaped. And that is exactly the purpose that a recession performs. The Tree of Dow is in economic winter, and has been pruned nearly 10% since its peak. But it will awaken again to yet another spring.

It should be remembered that not everyone does badly in a recession. Wal-Mart is doing quite nicely, thank you, during this economic slump. When the economy soars, Wal-Mart does well. When it sours, it does even better. The May 2008 issue of Inc. Magazine highlights an impressive number of businesses that started during a recession, and prospered because of it, primarily because they created products and businesses that could weather the economy, and met basic needs.

You see, it is during economic hard times that we are forced to discern the difference between needs and wants. While the personal cutbacks can be severe and discomforting, it is good for us to jettison the folly and frivolous in favor of the necessary. Eating at home…cutting back on unnecessary purchases…saving money…driving older vehicles…vacationing in-state rather than internationally…all can help put us back on sure footing.

And just like the tree that is pruned, it will grow stronger limbs able to support more weight. In a strange kind of way, perhaps a little dose of economic reality is the glass of milk we all need to be a little more fiscally responsible.

Just remember to wipe that white mustache.

Dr “Lactose Tolerant” Gerlich

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