Big Truths

Episode 153 of The Far Middle delves into "Big Truths," a contrasting theme to the prior episode's focus on "Little Lies." Leading off, Nick presents a few hard truths on the economics of professional sports for the installment’s sports dedication. Those truths include the challenge of becoming a professional athlete, and for the elite few that make it to the highest level of their respective sport, it’s a sad truth that many face financial struggles post-retirement. Shifting from sports, the next big truth centers on how different asset classes perform over time versus the inflation benchmark. “That's a crucial question because the objective of investing is to achieve a rate of return that exceeds inflation over your investment horizon,” says Nick. “If your return exceeds inflation, you've enjoyed a real rate of return, and your portfolio grew in value.” What’s been the best major investment class outperforming inflation over a 20-year investment horizon the past nearly hundred years? The answer may surprise you. From investment trends, Nick examines recent data and projections from the Congressional Budget Office (CBO) regarding the depressing financial health of our federal government. “By the early 2030s, the CBO is estimating that all, as in 100 percent, of federal government revenues are going to be consumed by two things, entitlements and interest on the federal debt,” explains Nick. Presuming the CBO is correct, Nick discusses the country’s options to avoid the big financial truth that spells trouble ahead. Nick continues the theme of big truths as he draws a connection to President Biden’s low approval ratings juxtaposed to his job creation performance since taking office. “When it comes to payroll growth since inauguration, and after those 1,000 days plus in office, Biden is tracking quite well versus his post-World War II predecessors,” says Nick. “In fact, only two presidents saw a bigger percent increase in payroll growth than Biden.” But despite the payroll growth, Nick suggests it’s simply been the economy rebounding to pre-pandemic numbers. “Maybe the American public realizes that big truth more than we give it credit for, which would explain President Biden's abysmal approval ratings,” says Nick. In closing, Nick highlights big songs about truth from two awesome groups, The Police and Depeche Mode. Take a break from enjoying the silence, and enjoy episode 153!