How much money companies make—their earnings—is a key factor in analyzing how expensive the stock market is. Depending on what you expect earnings to do in the future, you might decide that the market is either:

1. Very expensive (my own conclusion, based on longer-term valuation measures), or
2. Quite reasonable, if you assume current earnings trends are stable and likely to accelerate.

As I wrote last week, the ties between politics and economics are only growing stronger. Let’s look at some current examples of how the two are intersecting—and what this means for investors.

One of the things holding back the economic recovery recently has been slower-than-expected consumer spending growth. Apparently, consumer spending has been constrained by Americans’ newfound unwillingness to borrow.

I suspect, however, that this is an illusion created by a deeper problem. Consumers have the money—in fact, net worth has recovered to an all-time high—they just aren’t borrowing and spending.

Okay, I admit it. Not only did I get up to check the numbers on the Scotland independence referendum every hour or so last night, but I also spent a few hours earlier in the evening arguing with friends about it. I’ve never been this personally engaged in a foreign political event.

I find it hard to explain why this is, even to myself. I come from a Scots-Irish background, so that may be one reason. Another reason is that I identify with the romantic, hopeful aspirations that drive the independence movement.

The important thing about yesterday’s Federal Reserve statement was—in the words of Sherlock Holmes—the dog that did not bark. The Fed's statement included the “considerable time” language that some, including me, had been obsessing over.

For those of you with lives, perhaps some clarification would help. As the Fed continues to move toward a more normal monetary policy, we're seeing two things:

I am headed to New York today to speak at a conference on liquid alternatives. These types of alternative investments are often thought of as hedge funds for the masses; the idea is to take hedge fund-like strategies and wrap them in mutual funds. Ideally, this makes the expertise and money-making capabilities of all those hedge fund wizards available to mom and dad, so we can all get rich.

For many, the study of economics goes back to the eighteenth-century urtext, The Wealth of Nations, by Scottish economist and philosopher Adam Smith. Notably, Smith and his contemporaries did not study economics, but political economy. At the time, there was no notion that economic behavior could be analyzed separately from its context, the political environment. The different governmental structures made the impact of government on human behavior absolutely impossible to separate—the ties between politics and economics were inextricable. To put it another way, it would be like considering the health of the brain while ignoring that of the heart.

I’ve been listening to satellite radio as I commute to and from the office, coming across songs I haven’t heard in years—and, in some cases, decades—and getting exposed to music I’ve never heard at all. 

One song in particular, “It’s All About the Benjamins,” recently caught my attention. I missed this song in its initial incarnation, but I heard about it during the financial crisis, when it became something of a theme song (at least in my mind) for Benjamin Bernanke’s Federal Reserve intervention. 

I got some thoughtful feedback on my post yesterday about the aftermath of 9/11, and what has been accomplished—or not accomplished—since then. I genuinely appreciate the comments, both for the thought and time that went into them and also as prompts for refining my own thinking.

What many took away from yesterday’s post is that I’m against committing troops. That is partially correct, in that I’m against committing troops without a clearly defined American interest in play, a plan to attain that interest, and an exit strategy thereafter. I don’t think it’s too much to ask that any commitment of lives actually have a specific goal.

Thirteen years ago, on a bright sunny morning, the world changed. A violent, apocalyptic form of Islam shocked America in a way we hadn’t been shocked since Pearl Harbor. Thousands of deaths, trillions of dollars, and more than a decade later, we remember those who died, both in the 9/11 attacks and in the wars that followed.

Today, the top headline is that the President has authorized expanded military action against an army of extremists terrorizing large parts of the Middle East. ISIS, as it is known, has successfully baited the U.S. back into the tar pit.