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28 October 2017


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blue peacock


I'm a Millenial so my "real world" experience is limited. Having said that my experience is that somethings are up while others are down. My own personal standard of living is significantly higher than my parents had at my age.

However, I get that the median household income has stagnated for over a decade and wealth inequality is worse than in the 1920s. There are many explanations depending on your point of view. My bias is that fiat currency and growth in government, particularly the backstop of financial institutions, drove the financialization of the US economy and the concomitant growth of debt across all sectors. This has enabled "ponzi finance" as described by Hyman Minsky. It is this belief in no consequences that has financed all kinds of wasteful expenditures including the unending wars that the US is engaged in globally.

You make 3 points to distinguish the prior period when the US was "up".

1. Unlimited manufacturing capacity. I agree with you that the US voluntarily shipped its manufacturing base overseas. Ross Perot rang the bell in his quixotic presidential campaign and has been proven prescient. Bill Clinton and the establishment Democrats & GOP are responsible for this. It is clear they did this at the behest of Wall St as they have been the primary winners. Bob Rubin played a huge role in steering the Clinton Administration in this regard as Treasury Secretary and as the prior CEO at Goldman Sachs focused on the benefits to his group. I watched a video of Sir James Goldsmith debate Laura Andrea Tyson, Clinton's trade chief on the Charlie Rose show. I think it is a must watch for anyone who would like to understand the "free trade" debate in the 1980s & 90s.


2. Great inventiveness. Patrick, I would argue that "inventiveness" has actually accelerated in the US. From communications to autonomous systems to biotechnology and in several other areas the US has been at the forefront of innovation for the past several decades. The market capitalization of US technology companies created just in the last 2 decades is staggering.

3. Stable political system. I recently watched Ken Burns Vietnam documentary. Relative to the 60s we have a remarkably stable political environment. No doubt there is substantial angst but compared to then there is so much more social stability.

I agree with you that Putin is today the most mature and sophisticated national leader on the world stage. Russia needs to be very grateful that a leader of his ability strode on to their stage at such a crucial juncture. I watched his interviews with Oliver Stone several times and I came away very impressed.

I am a contrarian on China however. Xi continues to consolidate his authoritarian power by eliminating his rivals. This removes any chance for a more inclusive political environment in China. Couple this with the greatest expansion of credit in history which has exploded Chinese banking system assets as well as Shadow Banking assets. That last time an emerging great Asian power did this was Japan in the 1980s. Many don't realize that the Japanese banks were the largest by assets in that period. We have seen what happened there when the credit cycle reversed. Chinese expansion of credit over the last 2 decades has been on steroids relative to Japan in the 80s.

I want to conclude that IMO the election of Trump is a symptom of a change in attitudes of the American people. While Trump may be considered by some as an ignorant buffoon and divisive, this is not about him. Instead it is about the average American citizen no longer so easily bamboozled by the MSM and the status quo political and corporate establishment. In this regard the ability of people like you and Col. Lang to provide alternative viewpoints and analysis is shaping public opinion at the margins. And change begins at the margins.

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