On September 4, 1998, then-Federal Reserve Chairman Dr. Alan Greenspan asked and answered a simple question.

The question was, “Is there a new economy?”

Consider the date.

At that time, the world was beginning to embrace the internet.

In fact, from the date Mr. Greenspan made his speech until the top of the market in March 2000, the Nasdaq gained 207%.

That period birthed and boosted companies that would go on to become multibillion-dollar giants, today’s handful of trillion-dollar companies, and a few infamous flops too.

What was Greenspan‘s response to the question of a “new economy?”

Simply put, “No,” it wasn’t.

The kneejerk reaction to his claim could be ridicule. After all, what the heck was he thinking? Of course there was a new economy, right?

Except Greenspan was right. It wasn’t really a “new economy.”

And the way he built the case to support his argument also applies to the AI “new economy” today.

We’ll explain what we mean below. First, let’s check in on how the markets performed today…

Market Data

The S&P 500 closed up 0.3% to end the day at 4,378.38… the Nasdaq gained 0.9%, to close at 13,639.86.

For individual stocks, Microsoft closed up 1.1% to $360.53… Apple ended higher by 1.5% at $181.82… and Tesla ended the day at $222.18, a 1.3% gain.

In commodities, West Texas Intermediate crude oil trades at $77.51… gold is $1,975.40 per troy ounce… and bitcoin is $35,706.84.

Dollar Collapse

One quick thing. Then we promise we’ll get back to our story. First, we need to remind you about Teeka Tiwari’s special event tomorrow night, November 8, at 8 p.m. E.T.

He’s revealing the details behind what he calls the Final Collapse.

We won’t go into all that here. Teeka will take you through it tomorrow night. What you need to know now is that Teeka believes this could be the most important announcement of his career.

It revolves around the collapse of the dollar, and the havoc this will wreak on its purchasing power for everyday Americans.

To make sure you don’t miss Teeka’s important message, go here now to register.

And now, back to our story…

We Can’t Criticize Alan Greenspan for This View

In 1998, Chairman Greenspan claimed the U.S. wasn’t entering a “new economy.” That was amid the dawn of the internet.

But Greenspan’s overall point was right.

His view was that the economy is constantly changing. And over time, small incremental changes may show up as a seemingly large “new economy”-level shift. But it isn’t.

Greenspan cared less about the things that change and more about the one factor that stays the same – human psychology.

In his 1998 speech, Greenspan went on to say:

The same enthusiasms and fears that gripped our forebears are, in every way, visible in the generations now actively participating in the American economy. Human actions are always rooted in a forecast of the consequences of these actions.

When the future becomes sufficiently clouded, people eschew actions and disengage from previous commitments. To be sure, the degree of risk aversion differs from person to person, but judging the way prices behave in today’s markets compared with those of a century or more ago, one is hard-pressed to find significant differences.

The way we evaluate assets, and the way changes in those values affect our economy, do not appear to be coming out of a set of rules that is different from the one that garnered the actions of our forebears.

(By the way, we like this free-market Greenspan, rather than the interest-rate-manipulating and economy-manipulating Greenspan.)

Greenspan’s comments aren’t only important purely from an investment perspective.

They also matter from the human and social perspective.

Here’s why…

The Compression of Learning

Coincidentally, the subject of today’s “new economy” came up in conversation with our tech and growth expert, Colin Tedards.

Colin was at Legacy Research HQ yesterday (and for much of this week) for business meetings.

Colin’s take is that changes to the economy – a “new economy” based on AI innovation – will only bring positives for American workers. In a way, it’s simply the next productivity boom since the internet’s rapid global telecommunications network was introduced.

As he explains it, the development and integration of AI will help overcome one of the biggest fears of AI.

That is, the fear AI will destroy jobs and put everyone out of work.

Colin argues the opposite. He says that AI will help make the transition of workers from one skill and industry to another much easier.

Instead of workers needing to take weeks, months, or years to retrain and learn new skills… AI will turn years into months, months into weeks, and weeks into days.

It will mean the complete time compression of learning.

And, by the way, it’s not just for retraining existing workers in the workplace… but for younger people entering the workplace too.

Thanks to the rise of automation, AI will also mean fewer and fewer dirty and dangerous manual labor roles.

But that won’t throw manual laborers on the scrap heap. It will become easier and easier for them to learn new skills and get new jobs.

The training… the “unlearning” of old things and mastering new ones is often the biggest barrier for people who lose jobs to new technology.

And it’s been that way since the Industrial Revolution. But if new technology can help with that process too, it shows how little there is to fear.

Think about it this way. While AI has made a big splash over the past year, it’s not a new idea. The concept of AI has actually been around longer than the internet.

The origins of AI development go as far back as the 1950s and 1960s. It’s just that it’s only now that AI has made it into a form that people can understand and use for themselves.

They understand its application in self-driving car technology. They’ve seen AI-generated artworks. They’ve used or been exposed to AI-assisted customer service technology like chatbots.

AI is no longer something intangible or incomprehensible. People can see it and use it, much like the rollout of the internet in the 1990s.

Whether AI is a “new economy” technology or the ongoing evolution of the existing economy is open to debate. Although it doesn’t really matter.

It is what it is, and despite the fearmongering, it’s likely to have more positive effects on people’s lives than negative.

Now, we admit that what happens in the real world doesn’t always match what goes on in the financial world. And that’s critical to understand when looking at AI-related investments today.

Greenspan noted that in his 1998 speech. Commenting about the difficulty of making future market predictions, he said:

On occasion, this very difficulty leads to less-disciplined evaluations, which foster price volatility and, in some cases, what we term market bubbles – that is, asset values inflated more on the expectations that others will pay higher prices than on a knowledgeable judgment of true value.

Put simply, just because an investment trend may get ahead of itself doesn’t mean it’s not valid.

We Can’t Guarantee Success, But There Will Be Success

In the same way the dot-com boom and bust didn’t mean the internet was a bad idea… Or the multiple bitcoin booms and busts since its inception don’t mean bitcoin, blockchain, and cryptocurrencies are bad ideas either.

The bottom line is that whether or not you define AI as part of the “new economy,” it will result in change.

And that change will be overwhelmingly positive… both to the real economy and to the financial markets and investments. It will mean big and small trends from which existing and new companies will be able to exploit various markets.

The end result will be more growth, more innovation, and greater prosperity for American investors and consumers.

Not to mention more opportunities for those who will see their current jobs disappear… and take on new roles.

Sure, it’s easy to be skeptical and fearful about new technology. But history shows us that it’s a net positive for the economy and people overall.

For investors, there will be many opportunities too. That won’t guarantee success. As with any investment trend, there will be winners and losers.

And different parts of that trend will have their own boom and bust moments too. (By the way, Colin breaks the AI trend into three parts: hardware, software, and everywhere – we’ll share more details on what he means by all that in the weeks ahead.)

But the short story is, the “new economy” innovation of AI will be no different from any other big trend. It won’t change human nature. But understanding the role it plays can mean investors have the chance to win from the AI trend.

Like Colin Tedards, we look forward to witnessing AI’s progress.

Unconnected Dots

Our main task at The Daily Cut is to try to “connect the dots.” That is, we help you figure out what events are about, what makes them important, their consequences, and what it all means for you.

But sometimes, we see the individual “dots,” but can’t yet figure out how they connect to anything. Maybe they never will connect to anything.

Regardless, if those unconnected dots feel as though they could be important, we’ll mention them here. And we’ll let you draw your own conclusions.

Today’s unconnected dots…

  • The following isn’t a new story. It actually comes from a Pew Research Center paper from 2010. But it is an ongoing trend. We believe it will have a major economic impact over the next few decades.

    The 2010 Pew report noted:

    The multi-generational American family household is staging a comeback – driven in part by the job losses and home foreclosures of recent years but more so by demographic changes that have been gathering steam for decades.

    As of 2008, a record 49 million Americans, or 16.1% of the total U.S. population, lived in a family household that contained at least two adult generations or a grandparent and at least one other generation…

    We have more thoughts on this and will share them with you soon.

More Markets

Today’s top gaining ETFs…

  • First Trust Brazil AlphaDEX Fund +2.2%

  • ProShares Ultra QQQ +1.9%

  • Invesco Dorsey Wright Technology Momentum ETF +1.8%

  • Invesco Dorsey Wright Healthcare Momentum ETF +1.8%

  • Siren Nasdaq NexGen Economy ETF +1.5%

Today’s biggest losing ETFs…

  • Invesco Energy Exploration & Production ETF -2.7%

  • iShares U.S. Oil & Gas Exploration & Production ETF -2.7%

  • First Trust Nasdaq Oil & Gas ETF -2.5%

  • iShares MSCI Global Metals & Mining Producers ETF -2.4%

  • Vanguard Energy Index Fund -2.4%


If you have any questions or comments for our experts here at Legacy Research, we’d love to hear from you.

Write to us at [email protected] and just type “Daily Cut mailbag” in the subject line.



Kris Sayce
Editor, The Daily Cut