CERF Blog

We have used this space repeatedly over the past several years to criticize Federal Reserve policy and the significant impacts that it is having on the U.S. economy. As we wrote in June of 2017, “U.S. monetary policy is among the greatest of internal risks to U.S. economic growth.” And in December of 2018, “Extraordinary… Read more

John Bogle died earlier this year at the age of 89.  According to legendary investor Warren Buffett, Bogle created more wealth for investors than anyone else in history.  A few years ago, I wrote an essay about John Bogle and the company he founded – Vanguard.  Here is a brief excerpt John C. (Jack) Bogle… Read more

One of the top performing companies for the past fifty-plus years has been Berkshire Hathaway (stock symbol BRKA), managed the entire time by Chairman and CEO Warren Buffett.  BRKA is a holding company with wholly owned stakes in operating companies (for example, See’s Candies) and stock investments in other public companies (for example, Wells Fargo… Read more

According to founder and CEO Jeff Bezos, the long-term future for Amazon is that it will fail one day. In one sense, this statement is not remarkable.  Nothing is forever.  Eventually, every company will fail (except, maybe, too-big-to-fail banks).  But I wonder what this says about the buy and hold investment strategy.  After all, if… Read more

Previously published in the 2018 Quarter 4 US Economic Forecast – December 19, 2019 For years, we have been telling anyone who will listen that extraordinary policy experimentation undertaken by the Federal Reserve during the darkest days of the financial crisis remains a major impediment to robust economic growth for the nation. Facing economic meltdown… Read more

The January 4 Federal Reserve Chairs Joint Interview panel at the largest and most prestigious economics conference in the country was a standing room only affair with a massive media presence.  I got there fifteen minutes early and almost did not get a seat.  New York Times senior economics correspondent Neil Irwin provided an early… Read more

Late on a Sunday night in September of 2008 the third largest investment bank in the US, Lehman Brothers filed for bankruptcy.  The filing followed failed efforts to find a buyer for the company, an equity investor, or to convince the Federal Reserve to extend credit.  The immediate cause was a “run” by private creditors… Read more

My last few essays have focused on the 10% upper tail of the wealth or income distribution.    People generally acknowledge that the top ten percent are doing great.  Perhaps this is true by definition.  If they were doing poorly, they would not be in the top 10%!  What about the other 90%?  Let’s start with… Read more

I’ve argued in the past that wealth acquisition is a good thing (provided it does not arise from theft or fraud).  There are several reasons for this.  The most obvious is that spectacular wealth generally arises from spectacular success of an entrepreneurial venture, which almost by definition means the creation of some great new product… Read more

The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They’re both wrong. -Economist, David Wildasin[1]   It has been accurately noted in a number of different contexts that economists don’t agree on much. Consider the example of the Obama Administration’s nearly 1 trillion dollar… Read more

Reprinted from our December 2017 Publication To our great surprise, the Republican legislature appears close to passing tax reform. As recently as the previous forecast publication, we argued that the probability of such reform was low and rapidly vanishing along with healthcare reform. We noted, at the time, that Republicans lack the political skill (or… Read more

Stock market prices fell 12% during the first week of February.  This comes after a rally of 25% during the previous thirteen months (all percentages based on movements in the S&P500 stock index). Naturally, this is of concern to investors.  But it is not necessarily a big deal.  In fact, it could be a good… Read more

The Federal Reserve quarterly Flow of Funds report shows that Household sector net worth (value of assets less liabilities) reached nearly $100 trillion in 2017, more than five times GDP.  Economic theory has a difficult time in explaining why households have accumulated this much wealth.  According to the Life Cycle Consumption Model, people save during… Read more

Ray Dalio is the founder of Bridgewater Partners (BWP), the largest hedge fund in the world.  He has recently published a book Principles in which he describes the work and life principles that have contributed to Bridgewater’s success.  The primary goal since the firm’s inception in 1975 was to be an “idea meritocracy” based on… Read more

Written by Matthew Fienup and Dan Hamilton The Bureau of Economic Analysis just released its Ventura County GDP data for 2016. Accompanying the 2016 number are revisions to GDP estimates for 2015 and 2014. The data on Ventura County economic activity was a punch to the gut for the entire CERF team. Ventura County’s economy… Read more