“You want me to wake up at four in the morning to call you in sick tomorrow?”

“Well, yeah. I’ve got to skip school so I can judge at the Crisco pie-making contest in Orlando. It’s FREE pie, dad!”

I was having this conversation with my 18-year-old son. I was in Mexico, speaking at the Sovereign Society’s Total Wealth Symposium and he needed my help.

So, what did I do?

Before I answer, let me build my defense here…

The Rational Man Theory that mainstream economists advocate says that people, when faced with a choice, will do what’s right for themselves. In other words, each consumer will make a rational decision when faced with a tradeoff about their situation.

Really? I beg to differ.


Take money market accounts for example. They are a great idea, right? I imagine most everybody reading this has money in a money market account.

And you’re getting slaughtered, aren’t you?

Your money market accounts earn nothing. In fact, it earns a good 1.5% less than inflation.

Now, the Rational Man Theory says you should take all your money out of your money market accounts and go buy stuff. But you’re not doing that, are you? Why not? Because, the reality is, we’re really an irrational species.

We do stupid things all the time, like keeping our cash in our underperforming money market accounts… or rushing into the markets at the peak of a boom… or waking up at 4 a.m. in a Mexican hotel to call a Tampa school principal (yes, I did it)…

There is definitely a better way to understand the economy and what happens. Quite simply: Understand what drives people.

What motivates you to take out your credit card or cash and actually do something with it?

What motivates you to buy a bigger house, take out a bigger mortgage and leverage yourself to your eyeballs?

What motivates you to make irrational decisions?

Thanks to our 20 years of research into demographic trends and consumer spending, we have the answer to those questions. It’s our children.

Children make us do stupid things.

They push us to make irrational decisions. Admittedly, those decisions are occasionally rational, but mostly not. These irrational decisions influence how we spend our money.

And because, generationally speaking, we follow predictable spending patterns as we age, this knowledge becomes useful. For example, when a generation reaches the age and stage of life where they have children, you’ll notice a boom in baby furniture. When those kids go off to school, you’ll see a boom in stationary supplies. When they’re about 14 years old, you’ll see a boom in the potato chip industry. That’s us, as parents, buying tons of chips for our ravenous kids.

This tells us something about the years ahead…

The biggest generation in America – the Baby Boomers – is now solidly in the empty-nester stage of life. They’re past the time in life where their children are driving them to make irrational decisions. At this point, their children are still out hunting for a partner with which to repeat the whole cycle for themselves.

Now the parents are on to the next financial stage, which is saving every last nickel for retirement, hence the reason no one is busy pulling money out of money market accounts, no matter how little they pay!

The lesson for all of us watching these trends unfold is not to expect a boom in consumer spending just around the corner, no matter how hard the Fed tries to pull on this rope, or how much the press gabs about the recovery.

Be suspect of the markets because, as the last several months have shown, they are based on the smoke and mirrors of the Fed printing, not a lasting, dynamic recovery driven by consumption. For that to happen, we’d have to see millions of people making what the Fed and the government tell us are rational economic decisions… which isn’t going to happen.

We’re smarter than that.



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Rodney Johnson
Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.