There’s something I’ve noticed on Slope that I find perplexing, a little troubling, and ever-so-slightly amusing. Whenever I write anything that seems to be a prediction, some people get their feathers quite ruffled. Indeed, it seems to kind of piss them off, and they pound their virtual fists on the virtual table and declare that no one can predict anything, and that it’s an arrogant waste of time to even attempt it.
I’m in the business of prediction. Principally, I use historical price charts to try my best to suggest what the future holds. That sort of thing doesn’t seem to bother folks. On the contrary, it’s kept Slope popular, to varying degrees, for nearly fourteen years.
However, when I make, shall we say, textual predictions, some people object. I guess all I can say to that group is………you might as well stop reading the post now, because I wanted to offer up a few speculations about what’s ahead. I am by no means a futurist or an expert in societal trends. By far my biggest “this is what’s coming” success was the 1983 book I wrote, which I’ve mentioned here before, called The World Connection, which predicted our online world with Nostradamus-like accuracy.
So in spite of my general non-expertise in the realm of non-chart predictions, I’d like to take a stab at it. These musings are based on one overarching premise: that the financial cataclysm that began in 2007-2008 and which was papered-over so desperately in the years that followed is going to come back with a furious vengeance. To be clear, this little essay is not about this forthcoming financial mayhem. It has more to do with the attendant side-effects from such a circumstance.
Thus, with the notion in mind that the global economy begins a multi-year slide, taking on the characteristics we saw in 2008 (but even worse), here are some surrounding situations and circumstances I believe are most likely to take shape:
- Economic Distress – – As people begin to realize that BTFD is dead and that the decline in stocks isn’t some brief transitory nuisance, fear will start to set in. Equities will follow a path of “lower lows, lower highs”, and financial insecurity will spread. Keep in mind, even during these days of peak prosperity, the majority of people couldn’t put together a few hundred dollars for some kind of minor emergency. Imagine how swiftly tens of millions of people could find themselves in fiscal peril.
- Pension Panic – There are literally trillions of dollars of unfunded pension liabilities. Paying every civic employee a six-figure salary for the rest of their lives adds up, you know. As asset values diminish and tax revenue decreases, the pension crisis is going to start spiraling out of control. More than a few people are in for an unpleasant surprise.
- Job Loss– With unemployment at a 3-handle these days, there’s pretty much nowhere for it to go but up. These are historically low levels on a multi-decade timeframe, and I firmly believe the fears surrounding AI job displacement are going to be realized. We’re going to be left increasingly with only very high-end high-IQ jobs and very low-end, manual jobs.
- Anti-Immigrant Feelings Heighten– As unemployment increases and assets deflate, anti-immigrant politics will get a big boost. I marvel how there can be so much animosity toward immigrants these days with the stock market at record highs just a few weeks ago and unemployment under 4%. Imagine what it’ll be like during a severe recession!
- Debt Becomes Relevant– The United States alone is over $21 trillion in debt and is taking on a trillion more per year. No one seems to care. No one seems to talk about it. Back when the debt was literally 95% smaller, politicians would talk all the time about a Balanced Budget Amendment to the Constitution and wring their hands about deficit spending. Seems rather quaint now, doesn’t it? In any case, the sheer size of the debt and its enormous servicing burden will start getting a lot more attention than it does these days.
- New Attention Toward Gold– Precious metals have been an absolute wreck of an investment for over seven years now. People are going to need some kind of reliable store of value, and it seems to me this could be one zone that becomes fashionable again.
- Preppers in Vogue– The “canned beans and ammo” crowd might not seem so wacky as civil unrest becomes worse. I suspect fear will fuel interest in going to great lengths to protect your family and property.
- Backlash Against Materialism– The plutocracy in which we find ourselves will become distasteful to the public, and as poverty and financial insecurity spread, anti-materialism and a move toward simpler living will in turn strength.
- Trade War Intensification– Once more, in our current state of prosperity, we are still starting trade wars. Politicians will pander to unemployment and distress by ratcheting up protective barriers.
- Taxes In Style– The government and its expenses aren’t going to shrink at anywhere the rate of the tax base, so in order to keep feeding the beast, governments at all levels (local, state, federal) will get aggressive. “Soak the Rich” will become a very fashionable political platform.
- Radicalized Politics– The financial crisis gave us Obama, which was a victory that would have seemed absolutely unthinkable a year before. The 2020 election is going to be nothing short of extraordinary. I have no idea who will win the Presidency, but there’s one thing for sure: it’s going to be someone that absolutely no one expects with views that, in the present day, would seem unthinkable for the United States.
- Military Risk– There’s nothing like a war to divert people’s attention from domestic troubles.
- Turn Toward the Family– As government becomes less reliable as a source of safety or security, individual citizens will realize the importance, both financially and emotionally, of turning toward families (or, alternately, close friendships) for survival.
This is all kind of off-the-cuff; I’d be interested in other ideas of things I’ve missed.
I certainly hope Slope continues to hum alone in the years ahead. It will be both important and interesting to see which, if any, of these above musings actually comes close to transpiring. It’s going to be quite a show. Slope is your front row seat.