Legendary John C. Bogle says . . .

Legendary investor John C. Bogle, founder and former chairman of the Vanguard Group, gave his verdict on the state of the markets Saturday, urging Americans to put their faith in “economics” rather than “emotions.”

Asked by CNN’s Michael Smerconish about why the disconnect exists between today’s strong markets and the unstable political climate, the 87-year-old Bogle said the answer is simple.  “I think the answer to that is it’s driven by near-term hopes for big budget cuts and big tax cuts, particularly corporate tax cuts, which will automatically raise corporate earnings, and the market likes that.”  He emphasized, “I don’t think presidents can control the economy. “

“They may think they can,” Bogle continued, “And if it does well, believe me, they will take the credit.”  But if the economy does badly, he said, it will become “someone else’s fault.  “I’ve never seen a president take the blame for a recession,” he noted wryly.

“Our founding fathers created a republic, where the people that knew more, could help more, had more of a public spirit, were better educated, were the ones that were elected to fill those various posts and various competitions,” he explained.

“Now it’s more like a democracy, where the people speak. And sometimes that can be very unfortunate.”  A good example of this, he explained, was the Brexit vote.  “I think the price will be paid for decades, if not even longer,” he added.
The gap between the rich and poor in the United States also troubles him, Bogle offered, telling Smerconish that wealth inequality is, in the long run, “bad for our economy and society.”
But, despite this, he insisted that he still believes in capitalism.  “It is the best way to run an economy,” he explained, even if it does demand a “free-market system that bestows its blessings very unevenly.”

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