In February of this year the S&P 500 closed above 2,100 for the first time in history. If you bought the S&P 500 same index on January 1st of last year you would have made 12% by the time you rang in the new year and if you had listened to Warren Buffet when he wrote his op-ed titled “Buy American. I am” in October of 2008, you would have more than doubled your money by now. It is safe to say that we have left the Great Recession behind and good times are ahead, but in 2006 many were saying the same thing. The market has a way of fooling even the brightest minds in Washington and on Wall Street, and it has made that fact clear countless times in the past. The only thing we can do is to pay attention and be prepared to take action if crisis occurs.
The best way to prepare ourselves is to learn from past mistakes. Every economic environment is unique in its own ways but there are also always similarities. Right now the Federal Reserve is dealing with the low interest rates created by the subprime mortgage crisis recover efforts. Now that the financial markets have recovered it is time to change our mindset from recovery to sustainability. The financial crisis hurt everyone, but the recovery left low and middle-income individuals behind as the income inequality gap continued to grow. In order to achieve a truly sustainable economy the Federal Reserve needs to stop giving Wall Street preferential treatment and help the masses. Now that quantitative easing is over, the Federal Reserve needs to use its monetary stimulus powers to create real wage growth on Main Street. At the same time, regulatory measures need to be taken to keep history from repeating itself in the form of another government bailout. Americans deserve to believe in the American Dream, and it is time to take steps to make that happen.