Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Where the World Is Going in 2020

Economics / Global Economy Jan 03, 2020 - 04:32 PM GMT

By: Patrick_Watson

Economics We all want to know the future. Unfortunately, the future isn’t talking. It’s just coming, like it or not.

We can, however, make educated forecasts. I think John Mauldin is broadly correct: the future is bright, but we’ll go through darkness first.

In fact, many of us are already in pretty dark situations, “left behind” in a supposedly thriving economy. We’re told there is no inflation even as the real cost of living rises ever higher.

Where is it leading us? To answer that, we have to think about how we got here.



America Alone

In his recent "Inflationary Angst" letter, John Mauldin shared an inflation chart, broken down into spending categories.

The cost of things average people must buy—healthcare, education, housing—tends to have risen more than wages did over the last two decades.

But aggregate inflation measures, like the Consumer Price Index, don’t show this. Falling prices elsewhere held them down. Those tend to be “luxury” goods… which is why inflation is no problem unless you’re poor.

My friend Bruce Mehlman had a different reaction on Twitter.



Source: Bruce Mehlman

He’s right; the fastest-rising spending categories are things you can’t easily import from other countries. If you suddenly need surgery, you’re going to the nearest hospital pronto.

On the other hand, US hospitals and colleges do import certain components and personnel. That’s why we have foreign-born nurses and professors. It doesn’t seem to have reduced their costs, though.

Bruce’s latest slide deck is about global trends re-shaping the world. He distilled his outlook into a two-factor equation: globalization vs. regionalization, US-centric vs China-centric.



Source: Bruce Mehlman

I realized long ago that globalization was on its last legs. I also think trade conflict will continue and even intensify. So Pax Americana or Pax Sinica (the top two quadrants) aren’t very likely.

The bottom left scenario—what Mehlman calls a “Free World United”—would be a partial end to trade wars, with the US and its allies uniting against China. That might happen but not without a leadership change in Washington. And maybe not even then.

So the “America Alone” scenario within an otherwise China-centered world seems the most likely. For Americans, this will probably mean even greater economic difficulties than we face now.

How people who are already struggling will deal with it is unclear. But it probably won’t go well.

Small Winners

Recently, I shared a report by Gavekal Research co-founder Louis-Vincent Gave called “The Knowledge Revolution and Its Consequences".

Louis has a great way of systematically thinking through a situation to see where it leads. He thinks technology and political trends are aligning against mega-powers like the US and China. His key points:
  • Modern Western economies have become knowledge based. This means Marx’s three factors of production (land, labor, capital) now have a fourth.
  • Neither physical strength nor access to capital are sufficient for economic success. Power now resides with those best able to organize knowledge.
  • The internet has eliminated “middlemen” in most industries. In a representative democracy, politicians are basically middlemen.
  • Hence, the knowledge revolution should bring a shift to direct democracy, but those who benefit from the current structure are fighting this transition.
  • This is the source of much angst around the world, including the current wave of popular protests.
  • Smaller political entities should find the evolution toward direct democracy easier to achieve than big, sprawling governments.
  • Today’s great powers have little choice but to spend their way to political stability, which is unsustainable, and/or try to control knowledge, which is difficult.

The conclusion is that future growth potential should be highest in smaller countries with stronger, more flexible political institutions. The US, China, and most of Europe don’t qualify. Places like New Zealand and Switzerland have better odds.

That brought to mind one of my favorite Enlightenment philosophers, who happens to have been Swiss.

Subhead

Eighteenth-century thinker Jean-Jacques Rousseau wrestled with how to preserve individual freedom when we also have to depend on each other for survival.

Rousseau saw politics as a social contract between a sovereign and citizens. What we call “government” is the interface between them.

The sovereigns of Rousseau’s time were mostly kings, but he envisioned a democracy in which the people collectively were sovereign. But then he ran into a math problem.

In a tiny democracy of, say, a thousand citizens, each possesses one-thousandth of the sovereignty… small, but enough to have a meaningful influence.

Each individual’s share of sovereignty, and therefore their freedom, diminishes as the social contract includes more people. So, other things being equal, Rousseau thought smaller countries would be freer and more democratic than larger ones.

How do we reconcile that with democracy in a US composed of 330 million citizens? I’m not sure we can. It worked pretty well for a long time but maybe, as population grows, the math is catching up to us.

If so, the options are a non-democratic US or a smaller US. Or maybe no US at all.

This land we now inhabit wasn’t always the United States. Nothing requires it to remain so. At some point, it will develop into something else.

When and how that will happen, we don’t know yet. But we know it will.

The Great Reset: The Collapse of the Biggest Bubble in History

 New York Times best-seller and renowned financial expert John Mauldin predicts an unprecedented financial crisis that could trigger in the next five years. Most investors seem completely unaware of the relentless pressure that’s building right now. Learn more here.

By Patrick_Watson

© 2019 Copyright Patrick_Watson - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules