As an intro I will post this piece. Grant's Daily Aug 22: "That’s (FED's balance sheet) down $65 billion from this time last month, and 20.4% below the March 2022 peak. 20% in 2 years. That is pace of normalization. Took few month to build and then decades to unwind. 20% in 2 years." Sounds about right - that's the pace of life. If you cut rates, effect will be felt in a few years.
How do I feel in terms of financial security?
In its August consumer survey, Mizuho found that both low- and high-income Americans alike are trying to get as thrifty as possible, which means eating out less and searching for discounts wherever they can.
I thought in previous post that thrift is coming and similar language in quarterly reports will stay for some quarters to come. Our household's annual income went up roughly twice in the last 5 years (from 6 figures). We were doing ok even before Covid, however, I feel uneasy to order a tap beer for 4-5, while 10 years ago it was 2 and 1 in plenty of places 15 years ago here. I mean normal tap beer. In Tenerife, you could still buy a glass below 2 but it's a different beer. My point is that such a rapid bout of inflation left a deep scar on psyche of 98% of consumers. The process of "frog boiling" (gradual adjustment until the effect will wear out) will take time.
In the background, AI will be eating high earning jobs. Those jobs will have the best ROI to replace first. My feeling is that "universal income" is coming and will be paid by taxing M7. I hope that BRK has nothing to do about it, while M7 should see enormous assault on multiples in the next 5 years. In the next few quarters, there should be a few material (in terms of number of layoffs) stories published. They are coming. Thrift may stay for longer. Internet was a clear enhancer for all, while AI is a replacement for human. Technology and robots replace lower skill jobs, while AI will replace middle skill jobs.
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