Human creativity is the secret ingredient of capitalism. Entrepreneurs and companies create new products, ideas, and ways of getting things done for the future with the knowledge and capital they have in the present. This process creates wealth as long as they act swiftly. Therefore, you can say that wealth is limited only by creativity and time.
In Andy Kessler’s excellent WSJ editorial this week entitled Wealth is Knowledge, he explains this concept succinctly. Then he points out that these entrepreneurs and companies have been living in a time warp in recent times. This time warp exists because of the low-interest environment that has made investment capital very inexpensive and accessible.
But that’s changing. As interest rates increase, time constraints will become real again. Just about any investment looks good when the alternative is a 1% return on a CD. As base-level rates move up, so will the expectations for quick execution of creative change. Whether you are an investor or an entrepreneur, now is the time to sharpen your pencil.
Those are my thoughts, have a great Thursday!