With political gridlock, a recovery sputtering even as it enters its fourth year and no serious proposals on the table for reining in the budget deficit (to say nothing of spending, which is the real problem), it is easy to remain pessimistic about America’s long-term investment prospects.
Not since the dark days of the Carter administration, with gasoline rationing, stagnant growth, rampant inflation and an emasculated foreign policy, has the national mood been so dour.
And therein rests the irony. The late 1970s were a turning point for the American economy. Supply-side policies adopted in those years led to an explosion of growth, production and entrepreneurship.
A similar fate awaits America in the near future. Unlike the Reagan decade and subsequent boom, this prosperity will occur in spite of, not because of, policy in Washington.
There are three megatrends that will be an engine of growth and prosperity for decades to come. I’ll discuss each one in more detail in a future commentary, but here is a summary of them:
• The reduced cost of energy. Tired of talk about “running out of oil,” “peak oil,” “peak cheap oil” and “peak domestic cheap oil” ad nauseum? The new paradigm should be “Peek? OIL!”
Every day we drill a nail (and a well) into M. King Hubbert’s discredited analyses. Oil production in the United States is up 40 percent in the last few years; natural gas production is nearly double its 1985 level. At the same time, energy use per capita and per unit of gross domestic product has been falling for decades. The result? We are seeing a burst in manufacturing output and employment in this country.
Still to come: natural gas-fueled trucks, slashing transportation costs and improving American competitiveness here and internationally. No thanks to our Department of Energy or environmentalist frackophobes in the Democrat Party.
• Longer and more productive life spans. Medical technologies like robotic surgery and artificial limbs have already reduced costs and enabled senior citizens to lead more dignified lives. As breakthroughs in genomics, cancer vaccines, bioengineered organs and improved nutrition pour out of the world’s laboratories and farms, living into our second century, or even beyond, will become commonplace.
In spite of a “thank you!” from Congress in the form of taxes on medical devices, and howls of “Frankenfood” from Berkeley to Brussels, progress in these vital areas surges onward. Think of the economic ramifications! Will we really need social security at age 62 if we are healthy until 150? Will we cram education into our 25years if we live for 20 decades or more? Imagine investment horizons spanning a century from the time citizens begin to put money aside into IRAs and tax-deferred accounts!
• The shifts of U.S. economic and military focus from Europe to Asia. Gen. Douglas McArthur must be smiling. This Korean War maestro saw the need for such a change seven decades ago. Europe has become politically, militarily and economically vapid. Unable to manage consequences of a single currency. Unable to mount a strike in Libya without American ammunition. Unable to confront Mediterranean states with lavish retirement benefits, while Germans work until their 70s.
Instead we are finally aligning ourselves with the teeming billions (yes, with a ‘b’) of Asia and its tigers in Korea, China, India and, yes, even Japan. No thanks to the Eurowannabees among our Washington elites.
For farsighted investors, numerous mutual funds or exchange-traded funds are available to enable you to get in on the ground floor of these megatrends.
You can profit as private-sector innovation runs roughshod over President Barack Obama and his legions of naysayers in Congress and the mainstream media.
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