It’s fairly certain that economic / geopolitical forecasting is a fool’s errand. The world is a complex and adaptive system. History is useful but humans / nature also do incredible and unpredictable things.
However the allure of listening someone illustrate the future, often an extreme one, is tough to ignore. I don’t know if this statistic is correct, but this website says that 1 in 5 Americans have consulted a psychic at some point in their life. Despite the fact that they look at cardboard cards and make shit up.
To that end, I indulged the finance version of psychics. A couple billionaires on the All In Podcast recommended a video that Ray Dalio (another fellow billionaire, macro investor, founder of Bridgewater) put out about the rise and fall of empires and said “it is a must watch.” Well I watched it and the conclusion is the US is on the way out and China is going to be the new superpower. It looks back on the history of empires back to whatever, the Ting dynasty of 600 AD (or was it BC?). Basic on his set of indicators (e.g., quality of education, fiscal cycle, etc.) – he says it’s clear the US is on the way down. He also says there’s a 30% chance of civil war in the US in the next 10 years. Oooook bro. He also offers a flagship investment vehicle that curiously is the recommendation without explicitly saying it. Ok bro.
So I looked for people (finance psychics) counter to that viewpoint to understand where this guy could be way off – particularly since it seems like he spent a fortune on the animation in that video vs providing very convincing arguments. Two stood out.
Peter Zeihan has been perhaps the hottest forecaster in the past half year given his prior book predicted the Russian invasion of Ukraine. His approach is based on demographics, specifically how the age distribution of countries helps indicate what their future moves may be. Looking forward, his view is US demographics are extremely favorable versus other nations (e.g., Russia, China, etc.) and it has a long runway of relative advantage versus other countries. That’s nice.
Second, I actually read this guy’s audio book (see left) in a few days, which is a feat as I’ve been unable to sit through a full audio book for about a year, for what reason I can’t understand (attention span shortening for some reason).
His view is that the US, for many reasons, is a unique “empire” that reinvents itself over 50-80 year periods. Examples are the US flipping to massive social program expansion during the New Deal in the ’30s, and dramatic tax regime changes under Regan in the ’80s. He believes that we are at the tail end of the current period where the investor / knowledge expert / technocrat class rules the nation and power shifts to a united multi-race front of the US that is excluded from the current ruling class (primarily the industrial base). The result of this is the dismantlement of government complexities that breed distrust of government (e.g., making laws no ordinary citizen can understand, putting its hand in everything), dismemberment of elite university pipelines (e.g., Yale, Stanford, etc.) that favors the knowledge / technocrat base vs industrial base, and far higher taxes on the wealthy (e.g., aggressive income and investment income taxes) to re-level the wealth disparity. However, he does say with confidence that after this difficult and volatile re-alignment of the US in the 2020s, the US will go on to another period of productivity and calm in the 2030s onwards until the next regime change. That’s nice.
While I obviously have no idea how this will play out, I do think this small indulgence of mine is helpful to open my mind to what is possible. I do think certain things like education at a top institution coming with a price tag close to $100k / yr, requiring massive “extracurricular” preparation in high school, and test prep coaching is an incredibly unfair standard for all to even try to achieve. I do think that the continued wealth disparity between the base of industrial labor and professional labor is far too extreme and has to correct at some point in the not too distant future. But I truly have no idea how those implications can or should affect actions that I take today. And that’s okay.