Krystal goes through the factors that led to the Sri Lanka political collapse and how they could lead to similar revolts in nations around the world facing dire circumstances
i mean actually a good example of that
boomeranging back home
boomers did not boomerang okay
and i remember uh the the great
recession of of uh 8283 you know when
you went into the reagan administration
volcker was tightening rates and so on
it was a really pretty bad recession
boomers would do anything rather than
return they would like sleep under a
bridge or something right but they would
not go back home right
that boomerang stuff started with gen
xers in the 90s
and with millennials they don’t return
home they just never leave
they just keep their bedroom there and
you know they’re always
and you understand what i mean just a
very different kind of relationship
uh where i think there’s a little bit of
inversion is when it came to actually
major structural substantive reforms and
how the system worked and how it
actually you know allocated income and
rewards and how we actually built for
pumas had no problem with the gis were
doing i mean they obviously ran things
really well in fact the whole problem
with the gi generation is they ran
things too well they invested too much
right it’s too much repression you know
we need to enjoy yourself more for today
the millennial problem with boomers is
just the opposite right
boomers can’t run anything
they can’t exercise authority they can’t
invest in anything they can’t do
anything for the long term right they
don’t know how to run the system at all
and this is why i say that the
fundamental problem in an awakening
is that the public senses that
institutions are supplying too much
but the fundamental problem of a crisis
the fourth journey
is that the public be particularly the
younger public begins to sense that
institutions aren’t supplying enough
order and that is always the context for
a crisis right
and by the way i mean just just
mentioning you know you said where might
every fourth turning in american history
has featured a total war
and all total wars in american history
have come in a fourth turn right you
don’t want to think about that you know
this goes all the way back to the
circular you know going back in the
early modern era you know in the british
but this is a pattern now sometimes it’s
it’s so it is
we don’t say that war is necessary
for a fourth turning but that sense of
total public urgency and the need to
band together and create a new sense of
is always required at some point before
the fourth turning is over okay
so this is something that’s just simply
i just observe historically now
sometimes this struggle
is we think of it mostly in terms of you
know america taking on enemies abroad
right and i think that’s the idea that
good war and we we all think of world
war ii you know we took on the axis
powers and we conquered half the world
right uh you know fascism and yeah
exactly yeah you know germany and italy
uh but we forget that that era started
out with the new deal which was
not exactly a civil war but it was a
highly contentious ideological conflict
in america right which deeply divided
americans about the new role of
government and you know it had its court
packing threats and you know everything
else that happened uh in the first new
deal and the second new deal and and fdr
finally getting this incredible victory
in 1936 right finally just becoming
absolutely dominant politically
and pushing through these new
this whole new role for government and
the economy right
um but ultimately we all remember how it
all came together in world war ii which
is more kind of you know america versus
the world but it’s useful to go back in
earlier conflicts and many of these
actually had a very major
a civil dimension of conflict obviously
the civil war was literally
a civil war right no need to explain
there the american revolution however is
interesting for people to know that the
american revolution at the time was
referred to by most more americans as a
civil conflict as a civil war rather
than as a revolution it had a very
strong element of patriot-on-tory
conflict within the united states
particularly within the southern states
the backwoods regulators actually
supported the british because they hated
these big plantation owners near the
coast who were always lording it over
them right in other words it exploited
and the british at one point did what
abraham lincoln did he promised freedom
to the blacks
and one of the things the british
couldn’t understand as well these
planters were you know constantly
talking about liberty
you know and and yet they had all these
things so the british said well we’re
gonna use that as a weapon we’re gonna
we’re gonna promise freedom to anyone
who wants to help that’s exactly what
abraham lincoln did right with his
emancipation proclamation about 80 90
in dittos you go back in earlier crisis
in other words very often there’s a very
strong internal component
to the crisis even while it also has an
ex i mean obviously there’s an external
component the american revolution we had
you know fight the british and uh you
know defeat them finally at yorktown and
and you know they all evacuated by uh
1783 they were gone
but then again we were in chaos after
that right and then we had to actually
forge a new constitution and in some
ways that was the real climax of the era
as being able to actually then agree on
a powerful central government
and to some extent i would say that
there was the miracle of of 1788 which
is even more amazing than the miracle of
you know 1781 which is the the defeating
of uh you know clinton and cornwallis so
so anyway that’s i i think that but it
probably illustrates your point that
there is an important
internal dimension i think it’s no
be no surprise today
looking in america that people are going
to say yeah i get the internal component
right now right red zone versus blue
zone i mean my god the two sides don’t
even talk to each other you know i live
in dc i mean i’ve been sort of a dc guy
uh they don’t even talk to each other
now i mean there’s literally practically
no communication there’s nothing to say
at this point adam
right so when you have mutually
of what the country’s future is
how does democracy work right are you
going to completely forfeit your future
just because the other guy gets i don’t
know half a percent more votes
no it doesn’t work that way does it and
here’s the irony and this has been
pointed out by some you know brilliant
uh carl becker pointed that out in 1940
just as we were going into world war two
he said one of the problems with
this democracy only works
when the problems you’re trying to solve
are pretty trivial
i mean think about it if it’s a
fundamental problem how does democracy
right and and i think
kovid may have even sort of reinforced
that argument where you looked at some
of the more totalitarian governments and
you can say whether it’s right or wrong
uh but they certainly took measures to
clamp down uh
and and really stop the virus spreading
its tracks in a way that a democracy
just couldn’t i agree and there’s a
there’s a great uh a wonderful
compendium of worldwide polls done run
by the cambridge institute for for a
uh by a guy named roberto fowa and he
have written a lot on this issue of
growing inequality but particularly
in the turning away of younger
generations in america
not just in america but around the world
from the whole idea of liberal democracy
it’s it’s becoming less popular less
interesting and important
amazingly enough there are a lot more
younger people today
who are willing to say yeah let a
dictator you know handle things for a
this liberal democracy that all these
boomers and silent talk about
has done nothing for us
it just feathers the bed of all these
older people and all these in you know
uh dysfunctional institutions which
aren’t doing anything for our future
and that sense of that sense of being
uh and being much more willing and open
to a more autocratic it doesn’t really
matter too much whether it’s on the left
or the right you understand what i mean
or it could be some crossbreed between
well in in you know in some ways um
can you blame the younger generation um
in the sense that it’s seeing all the
spoils go to the older generations as
we’ve talked about
um and you know you get
somebody that’s promising them for
education free health care whatever you
know the the platforms of those more
progressive uh you know political
parties sound pretty appealing right hey
look if i’m if i’m going to struggle i
may as well you know struggle and get
something so you said you know part of
the fourth turning is
is basically seeing the rise of a
recentralization of power
and i think that that’s probably one of
the drivers that will will drive you
know the um
resumption of central state power and
here in the states i mean we’re we’re
seeing this state get involved in ways
that it hasn’t been a long time
right no you’re right well i mean think
about it for for uh most of the year in
uh the state took over everything i mean
we all became words of the state right
businesses households everyone i mean
remotely close to that has happened in
now that example won’t go away quickly
you know what i mean people will
remember that yeah that you can do that
every window is dependent on the state
even major corporations you know to
renew their turnover their loans i mean
everything right the combination of
huge fiscal largesse plus the fed policy
right yeah the stimulus has been i mean
unprecedented yeah and and it and it by
the way it rewrites the rules of the
um and you know i’ve pointed that out i
mean if you look at the six quarters of
and compare them to the quarter before
the pandemic you know the last quarter
we’ve had something like a
seven percent growth in real disposable
at the same time we’ve had a two percent
decline or nearly three percent decline
actually in real gdp
that is unprecedented right a 10
percentage point gap between what we’re
earning to be able to spend
and what our economy is producing i’ve
gone back and look at all the earlier
recessions that gap is never more than
like one and a half percent
so where did all that free money come
it came from
borrowing it came from borrowing and it
first of all borrowing by the federal
which we’ve seen it ramped up we went
into the recession by the way already
under trump at a
federal deficit of nearly five percent
of gdp that was already a record for a
non-recession year before the panda we
were 4.8 percent of gdp
um and you know everyone was fine with
uh jerome powell is fine with that you
know donald trump is obviously fine with
the next two years are at 12.5 percent
of gdp right so that was an extra five
and a half percent of gdp kicker in two
years well that translates into about 10
of dpi right disposable personal income
so that’s how you get there right
this changes the rules of the regime and
the reason why so many people have been
faked out in the market
and i mean if you had told if you had
told people back in the worst days of
back in 2020
that we were going to
you know the s p 500 was gonna double
in three well i think if you told them
first the global economy is you know
gonna shrink in in the next one yeah but
eight months what do you think’s gonna
happen the s p nobody would guess it
well exactly that it was gonna double
and oh by the way and they would have
already disbelieved you but if you told
them that in addition to doubling
employment level in america would still
be would still be lingering about five
percent below where it was at the
beginning and that we’d be having close
to 2 000 deaths per day
after 18 months and yet we’d see this
and picked up they would have thrown you
out of the room right
and and meanwhile we’ve had the the 40th
anniversary of the of the you know bond
uh bull market right we we we saw
september 30 1980 we had bonds 10-year
yield at 15.8 something i think 15.84
what’s going on with that at a time now
when the economy is recovering the
the s p 500 doubled
i mean how do you see bonds so low well
turns out now they’re they’re not quite
maybe they’re shifting in a slightly
different direction now
but here’s the point why do the old
rules don’t work why do the all those
all those valuation rules you know that
we talked about like like you know
you know earnings to sales ratios or or
uh right they just haven’t mattered for
the past half decade yeah
so they’ve all you know they’re they’re
off the charts they’ve all been
sell but if you had sold recently you
would have been killed right
so i this is a really important question
why are all these rules not working and
i would submit that we’re changing
we’re going from an old regime which we
we call you know sort of the neoliberal
regime the fed just you know buys and
sells the short end influence interest
rates over the business cycle and they
and the federal government keeps the
budget reasonably balanced because they
can’t expect the fed to bail it out
right and then you know a little bit
maybe uh in a crisis the fed will
offer credit at penalty rates kind of
the old budget rule
in the new regime which you could call
the mmt regime right
well what what what what is it now the
fed can buy any asset
at any maturity it can flatten the
entire year curve down it can also go
after high risk credit it can do
anything it wants and the federal
government can basically cut taxes or
expand benefits any way it wants to and
the fed will just monetize right
monetize the difference right yeah so
sorry interrupt but this is such an
important um question that so many of
the viewers have been asking themselves
of late which is um
are we going to see in this fourth
turning kind of will reality re-express
itself and it certainly may amongst
things like you know physical resource
limitations and stuff like that because
you can’t necessarily print those up
but well sort of economically here will
will reality re-express itself and all
those old fundamentals of investing and
whatnot begin to matter again
or have we crossed a rubicon where the
fed is just going to be intervening in
any and all cases going forward and it’s
not we’re not going to return to that
because they require very different
investing strategies we hope you’ve been
enjoying this discussion with researcher
the interview continues in part two
where neil details the economic and
market dynamics that he foresees will
play out during this current fourth
turning to watch part two just click on
the link provided in the description of
this video below
or go to youtube.com
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okay i’ll see you over at part two of
our interview with neil howe
Neil Howe, author of “The Fourth Turning: What the Cycles of History Tell Us About America’s Next Rendezvous with Destiny” and managing director of demography at Hedgeye, joins Real Vision’s Ed Harrison to discuss the demographic forces shaping the coming retirement crisis and the future of America. As one of the world’s foremost demographers, Howe breaks down the collective personality of generations – what he calls “generational archetypes” – and explains why he’s optimistic about the future relationship between Baby Boomers and Millennials. Filmed on February 4, 2020 in Washington, D.C.
And you begin to have these enormous social fissures– rich and poor, young and old, ideological
fissures, identity politics, all the rest.
Until finally, society becomes ungovernable and becomes ripe and vulnerable for the next
Whether it’s the GFC, or whether it’s I think next time around, I’ll be even worse– particularly
given kind of the demographic and debt stresses we now face.
But at that point, suddenly then, the real key point of the fourth turning, and in the
middle of the fourth turning, is when one side just takes over, right?
That’s when everyone re-establishes community again.
And you know, the losers are just pushed out to one side.
I mean, look at the Civil War– that was a fourth turning.
GRANT WILLIAMS: Right.
NEIL HOWE: We’re sitting here right at the divide of the Civil War right here.
You know, that was– these are Yankees are on this side, these are confederates on this
Well, what happened?
I mean, the South was a pariah for two generations.
I mean, the South suffered an enormous decline in wealth and income.
I mean, it took the south many, many decades to ever recover.
The generation that actually is in the most difficult position is the generation in mid-life
during the fourth turning.
That’s you, Grant.
That’s Generation X. GRANT WILLIAMS: Listen, I feel that already.
NEIL HOWE: Because you guys are already invested in the old regime.
You see, when you’re young, you either already have joined the new regime, or you can quickly
But you guys already invested.
This is why John Adams, and George Washington, and all of these what we call Liberty generation
Americans who are in mid-life during the American Revolution.
Had such a existential sense of risking everything, because they couldn’t go back, right?
All of their lives, their property, their sacred honor– it was all on the line.
And the younger generation– like millennials today– incredibly optimistic.
I mean, all the younger generation of Jefferson, and Hamilton, and Monroe, and Madison, and
Jay, and all those guys– they knew the American Revolution was going to win.
But you know, John Adams is sitting there fearful.
You know, my god, this is never going to stick together.
Because the younger generation– because again, they’re young, right?
They’re going to adapt.
They can still change.
They can fit into whatever happens.
GRANT WILLIAMS: So what happens to that?
I mean, let’s use the millennial generation as an example.
That younger generation comes through full of hope, full of optimism, who happen to be
at the center of this fourth turning with all the chaos, and destruction, and turmoil–
what tends to happen to them?
How does that optimism– does it save them?
Does it get changed?
NEIL HOWE: Oh, it saves them, because it’s combined with a couple of other things.
One is community and risk aversion.
So there’s belief you don’t trust the individual, you trust the group.
GRANT WILLIAMS: Which we’re seeing everywhere.
NEIL HOWE: Which we’re seeing everywhere.
And risk aversion, because you risk it.
Remember- – millennials, have been told they’re special since the time they were born.
And that means especially take care of yourself, because everyone expects great things from
And everyone– you know, your parents, and teachers, and public officials all love you,
and really care about you.
And so why take risks with yourself?
Fourth turnings are so often seen as destructive.
I mean, wars, financial panics is one.
GRANT WILLIAMS: That’s how I think of it.
NEIL HOWE: Well, yeah.
Of course it’s destructive.
You know, all this wealth is being uncreated, being torn away.
All of this just obvious destruction of the old order.
But it makes room for the new order.
It makes room for the young.
And one lesson about history is that one of the things that winter does, is it kills everything
back so new things can grow.
That’s why we have forest fires- – so new plants have space to grow up.
That’s why it suddenly floods down here.
It does the same thing through the Rio Grande.
So that clearing out all the junk.
So I think that’s one very important point to remember.
Forth turnings, although obviously painful for everyone, painful for everyone who particularly
is invested in the old order, serve a very necessary, almost biological function.
GRANT WILLIAMS: That’s the word.
We talk about institutions, and we’re going to go to a place that is filled with not just
American institutions, but global institutions, a lot of which were set up after the war.
NEIL HOWE: Absolutely.
GRANT WILLIAMS: So let’s head into town, because there’s a lot more stuff to see and talk about,
NEIL HOWE: Let’s go to the nation’s capitol.
GRANT WILLIAMS: All right, let’s do it.
In the next episode, Neil and I traveled to Washington DC to look at some previous fourth
turning, and try to understand what lessons history has to teach us about how these momentous
events changed the world.
NEIL HOWE: Look at this monument, you say, this is the birth of a golden age.
But there’s one thing we forget.
All the golden ages of history always start with a huge crisis.
GRANT WILLIAMS: And along the way, we’ll talk with a man who’s been at the very center of
previous generational change in Washington, Dr. Harald Malmgren.
HARALD MALMGREN: It’s not something WE think about, but we are edging towards highly concentrated
power in the hands of few.
For me, it’s oligarchies.
I mean, we’re looking a lot like Russia.
Neil and Bill participate in a discussion-presentation on the Silent Generation with Chuck Underwood and a group of four Silent Generation panelists. (2001)
We’re entering the era when the new violently replaces the old.
Neil Howe, demographer and co-authour of the book The Fourth Turning, returns to the podcast this week. In our prior interviews with him, we’ve explored his study of generational cycles (“turnings”) in America which reveal predictable social trends that recur throughout history and invariably result in transformational crisis (a “fourth turning”).
Fourth turnings are characterized by a growing demand for social order, yet supply of it remains weak. The emergence of the surveillance state, a perpetual war machine, increased intervention in failing markets by the central planners, greater government control of critical systems like health care and the Internet — all of these are classic fourth turning signs of the desperation authorities exert as they lose control.
History shows time and time again that such overreach ends in rejection of the current order, usually via violent revolution.
Now that we’re roughly halfway through the current Fourth Turning and things have really started to unravel here in 2020, we’ve asked Neil back on the program to update us on what to expect next.
Neil Howe discusses The Fourth Turning, generations and investing with Interviewer Don Krueger on the Motley Fool (2011)