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Inflation…a word that is usually associated with the Bank of Canada or other monetary regulator. Inflation is much more, and is responsible for most of our economic problems that have, and are continuing to wreak havoc on our world.

This article is prompted by the fact that Tiger Woods will be returning to professional golf tomorrow. You may well ask, what has this got to do with inflation? My answer is that professional sport has, for many years, been a great example of social inflation. I can only comment on the sports scene during my lifetime, it’s quite conceivable that many more examples existed before then.

During the early 60’s, the sport of boxing, heavyweight boxing, to be more precise, was graced with the presence of Cassius Clay, later to become Mohammed Ali. Without a doubt, he was an amazing athlete, with speed & moves only previously seen in much lighter weight divisions. He was, as a boxer, nothing short of brilliant. Unfortunately, this was not his only attribute,  he had a mouth to match! and would taunt his opponents and predict the round in which he would knock them out. This was, in my time, a first…I had always believed that sport was something special without animosity and  respect for the competition, Clay changed all that and started us on the road to what we now call “the business of sport”. His behavior attracted much attention around the world and boxing garnered many new fans, exploding into a major world sports attraction. Heavyweight boxing grew at a phenomenal pace for more than 30 years, until the last major draw, Mike Tyson, was eliminated. Presently, boxing is no longer a major draw, because there are no longer controversial participants to attract the fans that are only interested in controversy and not boxing alone, plainly put, not fans at all.

This same scenario has been played out many times in many sports. Hockey with “The Great One Wayne Gretsky”, traded to Los Angeles, solely for the purpose of attracting US fans to the sport of ice hockey. Tennis, was, in the 70’s & 80’s booming, mainly because of the antics of Connors, McEnroe etc. attracting so called fans whose only interest was controversy. All professional sports have been “inflated” by the addition of personality driven fans rather than real fans of the sport.

If you now apply this to Wall St, and other market place casino’s, it’s quite clear how inflation flooded the investment community. The big attraction was about getting rich. If you substitute investors with fans, you will see that the market place got inflated with unqualified people. The Dow Jones Industrial Index, grew at an incredible rate over the past 30 years or so, based mainly on speculative flavour of the month models. My point is, that the growth was no different to the growth in pro sports, unsustainable without real fans or in the case of Wall St, real value.

Feb 24/09

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