It’s time to rethink how we view the U.S. political spectrum.
The 2016 election and President Trump’s first term in office has transformed politics in this country. His election represented not only a radical change in policy but an assault on what we consider fundamental American values.
Going into the 2020 election, many on the left are thinking about the work that the next president and Congress will have to do to repair the damage done since 2016 and address the crises Trump has created and exacerbated. Protect Democracy, for example, has proposed a package of legislative reforms to prevent presidential abuse of power. However, some have argued that Democrats should adopt some of the tactics Trump has used and bend some rules to set the country back on the correct course.
This represents a big shift in the way we think about politics, and we need new terminology to accurately discuss what we believe in.
For most of my life, our political spectrum has run from the political left to the political right. People are socially liberal or socially conservative, economically liberal or economically conservative. Increasingly, this dichotomy fails to capture a new spectrum emerging in American politics — those committed to “liberal democracy” and those more willing to sacrifice it and live under a more authoritarian style of government in order to secure policy gains.
The emergence of this new political spectrum has come about through what has been called “the big sort,” where people’s identities are increasingly aligned with their political parties. Gone are the days when someone who shares your life experience across geography, age, race, and education may belong to either political party. Increasingly, if you know someone’s race, age and education level, you can guess their political affiliation. For example, as a 28-year-old non-white law school graduate, you can guess that I am a Democrat because 73% of non-white millennials lean Democrat as do 59% of voters with post-graduate experience.
Leaders from Modi in India to Trump in the United States to far-right populist movements in Europe are using the fact that our political opponents are often different from us across religion, race, age, and education level to make us fear and even hate them. Around the world, we have seen this suspicion of the “other” play out in political movements through a rise of would-be dictators using racism and a narrow view of national identity for their own political gain. In the United States, Americans increasingly view their political opponents as the enemy, saying that they’d oppose their child marrying someone of a different political belief. In 2018, in a perfect encapsulation of suspicion of the other party, we saw Republican voters wearing shirts saying, “I’d rather be a Russian than a Democrat”.
Furthermore, because of the “big sort,” we have increasingly little interaction with people of different political parties and, therefore, less opportunity to challenge these suspicions or narratives from opportunistic political leaders. For example, I had not knowingly interacted with a Republican until a year and a half ago, when I started at Protect Democracy, a non-partisan non-profit working to prevent the United States from declining into a more authoritarian form of government. Working with Republicans has caused me to challenge my idea that the GOP is the enemy and forced me to think about the extent of my tolerance and inclusion.
I have found myself surprised by my Republican colleagues’ indignation around racism and sexism. And then embarrassed by my surprise. I have found myself moved by their willingness to fight their own party, which for some of them has also meant a loss of close friends or family, because they believe in higher principles and a version of America that more closely aligns with mine than with the Trump-led GOP on race and gender. I’ve become less judgmental and more curious. I also have more trust in the intentions, if not the impact, of my fellow Americans’ political decision-making.
This is important, not only for me as an individual but for American democracy as a whole. We know from the research that “levels of personal trust tend to be linked with people’s broader views on institutions and civic life.” Put simply, if we don’t trust each other then we don’t trust our democratic process to deliver for us. To be sure, our processes are not neutral and often rooted in historic inequality and power disparities. However, if we are unwilling to engage in the project of improving the processes of liberal democracy and are instead focused solely on implementing policy we agree with at all costs, we may create more problems for ourselves in the future.“Democracy in the United States is not guaranteed, it’s an idea that each generation has to renew and redefine. “
For example, some Members of Congress have called for the next President to declare a national emergency to address the actual emergency of climate change. They would have the next President replicate the abuses of President Trump by bypassing Congress for the sake of policy expediency. While I deeply appreciate the urgency of the climate crisis, I also see the danger in a Democratic president legitimizing Trump’s abuse of the National Emergency Act — it could be abused yet again when someone I disagree with gets elected again.
Even as I look back on President Obama’s presidency, I can see the ways that President Obama — struggling with a Republican Senate that wouldn’t work with him — laid the groundwork for some of the abuses that we’re seeing under President Trump on appointments and executive orders. President Trump has taken that lesson and gone well beyond it. I fear what a president with similar inclinations to Trump, but more strategic wherewithal would do.
American politics is no longer split merely between left vs. right. We are in an era of American politics when some people recognize and value the frustrating moderating effects of the checks and balances of American democracy, whereas others view it as a hindrance to achieving their policy goals. Right now many think that it’s those in the opposing party who don’t care about democracy, but I am not convinced. We need a better way to discuss the precedents in decision-making the parties are cementing and the dangers they may be setting us up for.
We need an additional ideological spectrum to talk about politics in America today, one that places those who care about our democracy on one end, and those willing to live under a more authoritarian style of government for policy gains on the other.
As I watch the 2020 primary season play out, I find myself looking beyond a candidate’s policy preferences and paying attention to whether their plans for implementing their agenda will help or hurt our democracy. I believe it’s not enough to win. We have to think about the process and structures we’re leaving in place for the next person, whose policy views we may not agree with. I want to know what candidates will do to prevent the emergence of another president like Trump. How will they make sure our checks and balances work so that someone can’t blatantly disregard norms? How will they ensure elections are free, fair and accessible? What will they change to make sure the marginalized are protected and our right to dissent is maintained?
In order to solve the new problems we’ve been confronted with, we need new solutions. Democracy in the United States is not guaranteed, it’s an idea that each generation has to renew and redefine. By including this new political spectrum in our thinking, we can ensure that we work to preserve and perfect our democracy for future generations.
Jennifer Preston, Vice President, Journalism at the John S. and James L. Knight Foundation, describes the foundation’s efforts to battle misinformation and encourage organizations across the country to rebuild trust in journalism on a local level.
What we need to do to battle misinformation is to improve the flow of accurate information and strong reporting.
32:29great irony is that the real ideologicaledge of the whole Bitcoin movement waswas guys like you know James DaleDavidson and REE smog and they therewere sovereign individual these areboomers and all the Xers that followedthem these are all libertarians theybelieve radically in the idea of nogovernment you know and we’re just youknow the with no need for trust I meantalk about an ideal Society for most GenXers no trust necessary so so anywaywe’re gonna do a world with that trustand and that was really it was it wasactually I think an ideological edge toa lot of people’s interest in Bitcoin itwas sort of the kind of world sociallypolitically that they really wantedand unfortunately ideology as you knowand you’ve often spoken about that inyour programs ideology always warps yourmarket driven judgment right big timeyou don’t want to start with ideology ifyou’re marketing an ideology and you’regood at it you might make a lot of moneyin a short period of time but thatdoesn’t mean that your views on it orgoing to be non cyclical and or crashingand that’s that’s that’s what you knowsadly is happening a lot of purveyors or34:47and speaking about money and again thisis sort of very deep sort ofintellectual history there kind of twotheories about the origin of moneyone is the barter theory you know westarted out bothering Bob Barton justtreating goods for goods and then youknow then gold and other things and soon so it’s basically that’s the kind ofthe libertarian theory so the Canadianguy from like the Hudson’s Bay Companylike yeah you know forever that piece ofpaper but then there’s a whole nothertheory which also has a long kind ofintellectual pedigree which is more thepurview of sociologists and that isgovernment the money was really creationof governments and there’s a lot to sayfor that because in fact that’s howmoney wasreally introduce now it’s the governmentpeople right that whole theory thatwhole that whole intellectual pedigreekind of feeds into modern monetarytheory and that is its government thatcreates money I mean forget this wholeidea that it all comes from gold andthere’s some intrinsic value no god it’sa system of Social Credit and Society itmakes a collective decision to create itthey can do it as they wish allgovernment all currency has always beenfiat currency and this whole idea thatonly recently we’ve had fiat currency soanyway that’s the idea behind monetarytheory you don’t have to worry about howmuch you issue because you can issue anyamount you want so long as the economyis it is running at full employment andso long as you keep inflation to youknow down to a reasonable degree now Ialways say that the argument frommonetary theory post GFC is a lot betterthan it was right because no matter howlow we get interest rates we had troublegetting to full employment and inflationnever seemed to show up on our radarscreen so I think this is the reason whymodern monetary theory is so big if thereason it’s going to be practicallyimportant is not now when we’re you knowunemployment is down at 3% and althoughit’s gonna be a big issue come the nextrecession right that’s when it’s gonnahit right and we haven’t even talkedabout that when is the nest recession isthat gonna be perfectly time for thenext election or not right that’s goingto be fascinating there are many moreDemocrats believe in this mmt thencertainly like you said libertarians buttheir but their chances of introducingthat are going to be hugely improved atthe right political juncture with theeconomy on the right conditions yeahwait until the economy is flat on itsback with our unemployment rate up at 1037:19percent and 11 percent whatever it is37:21suddenly the Fed is sitting there37:24flatlining at SERP right not knowing37:26what more they come on yeah hundred37:29mandatory thirty would be back plus huge37:33fiscal spending and you know the two37:35kind of merged together right modern37:36monetary theory and huge37:38of fiscal deficits you’ve been greater37:40than we have now so long as you got the37:42economy back working again37:44what’s the matter we did it with in37:46World War two we did it during the New37:48Deal mm-hmm the green New Deal37:50come on you got bad you got a New Deal37:52and the green New Deal37:53actually we’re getting some questions on37:54that why there’s actually question on37:57climate change if it figures into your37:59outlook does it you know on climate38:02change I’m more of a I have a matt the38:06ridley you know the guy the the british38:10intellectual who who wrote a a number of38:13great books on on genetics and and38:16evolution and so I’ve been equine38:17deterrent because he he actually covered38:19climate change for many many years but38:21he coined the term Luke warming he said38:24he’s a lukewarm ER which means that he38:27thinks it he thinks that rising carbon38:29dioxide levels are responsible for a38:31little bit of warming but not not a lot38:34and not nearly the kind of alarmist38:37picture that people think I’m kind of38:39more of a lukewarm ER what interesting38:42thing warmer sounds like Luke Skywalker38:43it’s like an appeal to people because it38:46sounds like it makes some sense how’s it38:49look warmer yeah a little bit more of a38:51hot because you can’t you know we like38:52it you can’t be like a total like38:54Treehugger or you know you did you got a38:57it sounds like a little bit more neutral38:59yeah kind of sounds disgusting39:02anyway alright great thinking on the39:05economic Turan economic direction39:08long-term Neil Central Bank policy will39:10likely continue to counter the39:12demographic gravity and fall failure39:14will likely manifest in market and39:16monetary crises so slow with chaotic big39:19bumps ahead question mark sounds like39:21more of a comment but a lot of people39:23believe that I got into this with with39:25with Lakai a39:27lot of people believe that no worries39:29more cowbell markets could never go down39:31again no I clearly don’t believe that39:34and and actually I think around October39:36to December you were brown right you’re39:39on this side of the you know this side39:40of the earth on the right side of the39:42grass yeah the markets went down yes39:47this is memories are so short it’s39:50almost like people watch the market day39:52they completely forget what happens you39:54could have lot if you’re along the39:55Russell 2000 which is a pretty broad39:56index of US stocks and now 27 percent39:59from August the 30th to December the40:0124th what could go wrong that’s that’s40:04called a bear market yeah yeah I mean40:06it’s a rash so but I think what what40:10they’re referring to is the idea could40:12could the economy go down yeah and and40:15and not only do I think it will i40:17actually this is all a part with a lot40:20of people i think it’s a good thing I40:21actually do I think that is when we40:24correct institutions and we rebuild40:26institutions I think the idea that you40:29would have an economy just constantly40:30dribble along you know is actually not40:34good for us40:34well there’s many periods of40:36Reconstruction and and not only that but40:38the whole point about market crashes40:41depends which side you’re on if you’re40:43young and you’re being an invest you get40:45to buy into the American dream40:47at a discount there are always two sides40:49to a transaction and I do believe you40:51know when I’ve I see the media following40:53Wall Street all the time and every time40:55markets will go down a treeless type40:56price but whenever the prices go down40:57it’s like a terrible tragedy yeah for41:00all the older people that owned41:01everything but the next generation is41:04coming on right it’s their opportunity41:05there are always two sides to a41:07transaction and and for life to go on we41:12have to think about what’s coming on41:13after us well what you have seen is the41:15opposite like by virtue of not having a41:17recession this is the longest u.s.41:18economic expansion in US history41:20Republicans and Democrats when it comes41:22to monetary policy have gravitated to41:24the same thing there’s no difference you41:26know there’s no difference between41:28Donald Trump wanting more cowbell and41:30Barack Obama wanted more cowbell there’s41:32no difference between this the federal41:34reserve members how they go about their41:37day job that it’s all one in the same41:40thing totally but when the economy goes41:45down again and when we’re back at that41:47you know that zero bound then all this41:50other stuff comes back onto the table41:51and and I don’t believe by the way that41:54you know people talk about inflation the41:58governments can very easily engineer42:00inflation if there were enough I believe42:02Japan was very near that point a couple42:04of years ago and and the way they would42:06have done it was simply to say any42:08worker or anyone with a payroll you put42:12your stuff in a bank and we just we’re42:13gonna index it out by a percent a month42:15or something like I mean thank you guys42:17but but no in other words you can42:20engineer it if you if you have the42:23incentive to do so a Jubilee what are42:25the advantages of that well suddenly now42:27your monetary policy has teeth once you42:31get inflation going again then holding42:33that interest rate low right actually42:36gives traction to your monetary policy42:39and and we are gonna see that if this42:44next time puts us in that same situation42:46we were gonna see a lot of the stuff42:47that was only discussed before yeah and42:49and the inflation to be clear comes from42:51the deflation because the deflation is42:53what causes the inflation so I mean you42:55come from a very asymmetric point42:56there’s big opportunity politically in42:58that and you save the world according to43:00yourself let’s see here43:05there’s a lot of political questions and43:07I want to go there what what would be43:11here this is an interesting one given43:13you join the term Millennials what what43:16would be your biggest long-term bet as a43:18millennial investor given stagnation and43:21slowing growth if it comes to fruition43:27as a millennial so I assume they’re just43:30meaning if you’re Milan you’re looking43:32like what’s the best way to play your43:33outlook good answer I mean I you know43:49other than all the standard answers43:51about you know diversifying your assets43:53and being geographically diversified43:55obviously at a time of crisis you43:57certainly want to be geographically43:59diversified I mean I often get asked44:01which areas of the we you know you’re44:03the demographer which areas of the world44:05I should be you know invested in from44:07that point44:07view and you can see that I mean if you44:09just look at any of my you know 2044:12charts on the subject you can look at44:14you can look at areas which are44:16reasonably decent in terms of you know44:22security legal structure corruption and44:25all that and yet have high population44:27growth so if you’re really looking for44:29that wave you know you’re looking at the44:31at the Malaysia’s and Indonesia’s the44:33Philippines and so on there there is44:35there is again looking at quadrants44:37there is an area there where you can44:40find economies for the long run that are44:43probably going to you know they still44:44have a lot of catch-up to do in terms of44:46productivity they’re still gonna have a44:47proactivity you know dividend over the44:50so if you’re looking long term but be44:53diversified because you know how any one44:55of those countries is gonna go but there44:57are ease of the world where you where44:59you where you certainly particularly if45:01you know if your millennial you probably45:02have a target date fund you know out45:04there I don’t know45:05that’s tough hundred forty five or those45:07four old wall products like those are45:09like you can’t do it within that product45:10so I’m saying if you can take some money45:12out of that product yeah you you’d want45:15to diversify what is it one way to45:17things like Josephine’s for up Neil’s45:19four quadrant map with the countries45:21quickly if you can what I think you’re45:23saying – if I put it within the context45:26of my process is if we go to a slowdown45:29like one that’s beyond stagnating to45:31slow down in the US and then you have45:33political change and you have MMT the45:37dollar is going to get castrated in that45:39environment and those countries that are45:41in quod one that you just showed are45:44gonna have in dollars don’t forget that45:46eeehm does very well when when when the45:49US government is burning its currency at45:51the stake so you know that is you know45:53that is the units the rebalancing of45:56global power so rebalancing of45:57incentives it’s a rebalancing of growth45:59expectations to where you actually have46:01the population growth going okay so46:04that’s maybe another way to think about46:06yeah I I agree with that and it it46:09really depends a little bit on the46:11nature of the crisis I mean obviously at46:13the at the worst of the crisis the46:14dollar was strong because that was sort46:17of the the safe haven currency but as46:19things begin to sort out46:21the dollar may still be strong relative46:23– you’re absolutely right with regard to46:25the EMS but we have I mean if if we46:27follow our sector we you know not only46:29do I do this kind of long term general46:31stuff we actually have particular46:33industries we like and I’ll just mention46:35two of them here because we’ve written46:36about them yeah very particular46:39industries which we’re very bullish on46:41from from a demographic standpoint one46:44is pet care there are a lot of46:47interesting ways you know everyone’s46:49owning pets and boomers and Xers have46:51completely reimagined how we treat our46:53animals right I mean you know everything46:55about them is is you know the food and46:57you know it’s organic it’s every the46:59amount of money we spend on my father47:02treats my his two dogs better than I was47:05ever treated today they know if dogs47:07have now have parents and grandparents47:09and you know they weekend yeah but but47:17another is a huge change there and in47:21particularly assertive although I’m not47:24big social media generally they’ve got47:26the kind of Google Facebook duopoly I’m47:28not very positive on I think that you47:34know online dating is an incredible47:37growth opportunity and we had a piece47:38recently on that because you know47:40virtually everyone is waiting a lot47:42longer to get married older people are47:45getting divorced and that’s an entire47:48area where there’s been very little47:49market penetration in your long the47:51screening process I mean that’s that’s47:52pretty much the other one is cannabis47:55we’ve done a extensive amount of work47:56there you could see that the well we47:58have lifting we home security that does48:01that silly but but it’s it’s not48:03shocking to see Shane Laidlaw as hockey48:07sticking charts on cannabis consumption48:09relative to alcohol consumption yeah and48:11it is he calls it hit paper high or48:14whatever he calls it you know hit for I48:16yeah because it’s a lower it cost less48:18here’s a here’s another question this is48:21this is this is definitely this could48:23take you a whole day to answer this do48:25you need capitalism and favourable48:26demographics for GDP growth48:32well obviously not especially out the48:34GDP growth number you can have it all48:36the time48:37you need you need some form of48:39capitalism just to have any kind of48:40efficiency in your economy so that’s48:42kind of a loaded question I think the48:44more interesting question is do you need48:45democracy and I think that’s becoming a48:48bigger issue I’ve written about that youknow our Millennials giving up ondemocracy I think that’s actually aninteresting global question now we knowfrom a lot of surveys that Millennialsare less interested in democracy thanolder generations and you look at notonly is it true and the UK and in theUnited States but it’s true around theworld now if you look at particularlyEast Asian countries you know with thesenew charismatic leaders in a NarendraModi and India appealing to the theHindu mainstream you look at you knowBurma they’re the Buddhist mainstreamand you know uncle she is appealing inChina to the great Han you know to allof these leaders in Shinzo Ivy appealingtraditional right you and then you go tothis this this madman is in charge ofthe Philippines now you know RodrigoDuterte dirty-dirty duterte as they callit but my point is is that you havethese charismatic authoritarian leaderswho are appealing to the mainstream oftheir countries don’t give a damn aboutwho’s on the fringes right who is votingmost for them younger voters and that isfascinating to me because earlier in thepost-war era the authoritarian leadersmainly were voted for him only about theolder voters younger people didn’t wantthem and that’s changing around and Ipeople often asked me this question whendo we know when the world is going fromhost word of pre war you know when whenare we going from a post-war mood to apre well it’s kind of hard to tell untilyou have the next big crisis right butone key is is that in a in a post-warera it’s the the generation that justcreated the new era they were just wentthrough the crisis so they reallyidentify with the institution‘s theybuild and generally younger people tendto want more freedom they want lessorder they want less rules that wellwrite less conformity and all that buteventually as time goes by rightthose younger leaders are in power andgenerally have a pretty less a fair youknow libertarian world it’s youngerpeople who want more order morecertainty more route you soon I’m goingwith this that is a sign you’re in apre-war little pre-crisis does that lineup with the fourth term absolutely yeahthat’s that’s well that you know I don’tsay pre-war because that kind ofpredisposes about kind of crisis but I Isay pre-crisis pre-crisis yeah for thoseof you that haven’t read the fourthturning that I’m biased because I thinkthat’s your favorite book I think that’smy favorite book I think that wouldprobably be a consensus though is it notyour favorite people’s favorite book51:20that you write it’s it’s either that or51:22the original one we did generations51:24generation shoes yeah that was kind of51:27the first big book I guess we’ve had51:29this question and maybe a good one to51:31wrap up on here because people are51:33constantly asking where do you think51:35Trump the Trump administration fits51:37within your framework of what is the51:39fourth turning I you know Trump and I51:43thought that the two most interesting51:46fascinating and path breakingdevelopments in 2016 were Bernie Sandersand Donald Trump because there’s arecurring edge on both the left and theright of this whole new kind of populismand authoritarianism right the threechairs on the left every bit as much ofpossibilities of thorough tourism on theright and you know Bernie Bernie Sandersis a guy who believes in top-downgovernment just you know government andbaking big decisions creating winnersand losers and you always have to admirethe guy I mean when was the last time wehad leaders just say this is how it’sgonna besingle-payer you know and andMillennials actually gravitate towardthat yeah you know the paradox of choicewhy have so many choices is somethingsmall one choice but it works reallywell right at least and you find thisnow becoming a very dominant view on the52:36left so I think just like Jeremy Corbyn52:39now sort of the you know the elder sort52:40of great champion in the UK of the left52:42of the millennial left and you have52:45Bernie Sanders here but I think that52:47thatthat Donald Trump is the kind of theexponent of the leader the first one whoreally galvanized this new populism butif I had to bet I would say that whenthose final populism finally takes shapein America it’s gonna be a littleafternoon on the right so this is thisis why the you know 2020 election loomsreally large and when you look at youknow futures markets and remember againI come back to this the economy is now53:19at three point something percent53:21unemployment and already you have53:23futures markets predicting right that53:26that Democrats are going to come in and53:28sweep in 2020 wait and until the economy53:32is yeah a little more negative you take53:34that outlook and maybe last question on53:36this if you take that out looking again53:37we’re not I’m not trying to be political53:39I’m not a Republican or Democrat I’m53:40Canadian I’ve said that all the time53:41because it’s it’s it’s of course true53:43but if you look at them if you take that53:46let’s say the economy’s long we have53:47quad three four three quarters in a row53:49that’s my outlook and if that’s the path53:51and and what you just said is still the53:53truth you know what kind of a candidate53:56and what generation could or should they53:58be from within your lens would come out54:01of the Democratic Democratic Party as54:03the as the as a front-runner well this54:06is the big moment for Generation X right54:09you got a lot of candidates in yeah Gen54:12Xers you know you have you have you know54:17Camilla Harris and Bader O’Rourke and54:19you know you know what’s-his-name from54:21New Jersey you know they’re all my age54:23so you’ve Pro cannabis to New Jersey guy54:27yeah but interestingly enough you have a54:33millennial candidate running you know54:35this guy Pete Bennett reach out of South54:37Bend Indiana he’s 37 years old and just54:42to show you and I actually had a piece54:44on that recently I think he came out54:46yesterday but an amazing stat l just54:48leave people this one amazing statistic54:51and that is as as proof of how54:54absolutely disinterested Generation X54:57has been in politics you know they’re54:59way behind the age curve it actually55:01in Congress you know taking the house55:02taking the Senate taking us governor’s55:04at their current age you know boomers55:07had already we’re into the third55:08president and already at pluralities in55:11both the house in the Senate Gen Xers55:13have been so slow55:14you know Gen X is in both parties tend55:16toward the libertarian edge of their55:18party right55:19but as proof positive of how55:21disinterested Gen Xers are in politics55:24we look back and found we looked at all55:26of the contenders for the primaries in55:28the every presidential election since55:33198655:34and for the past almost 30 years55:37the youngest contender in either party55:41was a Boomer all the way up through all55:45the way up through 2012 there were no55:48gen extra candidates actually contending55:51for the presidency obviously in 2016 you55:54had a lot of them the two younger ones55:55were Marco Rubio and that guy from55:57Louisiana you know the governor from55:59louisiana agenda button bobby Jindal56:03they were born in 1975 and interesting56:07Lena 2020 we have a millennial contender56:10so only one year only one president of56:13presidential election was a gen Xer the56:16youngest contender and it’s already56:19moving on to Millennials and this is56:21what anyone who’s read the fourth56:22turning or my books knows we bill and I56:25used to always make the point that56:27Millennials are destined to make an56:29early and strong entrance into politics56:33as a generation and basically filling56:35the vacuum that Gen Xers have left56:38behind even to some extent so they could56:39circumvent Gen X presidential candidates56:42altogether and you know most references56:43and most Gen Xers always knew it was56:45cutting in the cards you know by Stan56:491975 yeah I have a genuine I do not hate56:54but I genuinely don’t like any56:57politician like that I don’t like their56:59parties I don’t like either party and57:01the ones that ran to your point57:03Gen X Rubio like those are like wet57:07Kleenex they feel like that’s not a57:09leader that’s not like you know you57:11don’t memorize your lines and57:12you know so I think that you’re right I57:14mean if you certainly if you take57:15somebody like me I’m just like disgusted57:17by politics and politicians so maybe57:19there is somebody there to inspire57:21somebody because I’d love to change my57:22mind we do we do talk in our ratings57:24about dominant and recessive generations57:26so between the GI generation which57:30fought in World War two you know the57:31so-called greatest generation right of57:33that was in the white house for a long57:36time from John Kennedy you know born in57:38the century all the way up through you57:40know George Bush Senior and then we had57:43a Boomer that completely bypassed the57:46Silent Generation yeah anyone who57:48remembers the Great Depression and World57:50War two as children but were you know57:53not old enough to serve that an entire57:57generation nearly twenty years was57:59completely bypassed for the White House58:01and look what’s coming up they say we we58:04do this we have dominant generations we58:07have recessive generations that’s uh I58:10don’t know if that’s a good or a bad way58:12to end today’s discussion but for us Gen58:15Xers we’re just going to go back into58:16our a political holes and we’re gonna58:18keep you data dependent as we tried to58:20keep you across by the way durations58:22today don’t forget we’re trying to talk58:23about a multi duration framework so58:25whether it’s short term intermediate58:26term or Neil House super long term there58:29are so many different things for us58:30human beings to attempt to contextualize58:32it at the end of the day we don’t know58:34what the real answers are gonna be but58:36we can probability wait how we go along58:38the way in terms of positioning58:40ourselves and being in better spots oops58:42would have been if we were ignorant of a58:44lot of these data’s and economic facts58:50[Music]58:59[Music]
Seven or eight years ago, I was on a commuter flight, sitting in an aisle seat. Two rows ahead of me, across the aisle on my right, a guy was arguing with his wife/girlfriend. It wasn’t a ferocious argument, but any sort of personal disagreement is noticeable in these circumstances, and it had been simmering since I noticed them boarding the plane.
There were two other things I noticed when they sat down. The wife/girlfriend had the husband/boyfriend’s name – Randy – tattooed on the back of her neck, and Randy had the letters T – R – U – S – T tattooed on the fingers of his left hand. I remember smiling to myself when I saw this. Obviously these two were from a very different background than me, but I really appreciated the public display of commitment they had made by getting these tattoos. I remember thinking to myself that I bet their relationship was a strong one, even though the disagreement seemed to simmer throughout the flight.
The plane landed and we all stood up. And then I saw the letters tattooed on Randy’s right hand.
N – O – O – N – E
All of a sudden, I was pretty sure this guy’s name wasn’t Randy. All of a sudden, I was pretty sure this relationship wasn’t likely to last.
I feel like I have TRUST NO ONE tattooed on my hands today, and if you’ve been working in finance for more than 10 years, I bet you feel exactly the same way.
Used to work for Bear? I know you feel this way.
Used to work for Lehman? I know you feel this way.
Used to work for Citi? I know you feel this way.
Used to work for Merrill? I know you feel this way.
Used to work for Deutsche Bank? I know you feel this way.
Yeah, we’ve all got these tattoos today. We have them as a reminder, as a figurative reminder (or literal in the case of “Randy”), that we really really really shouldn’t trust anyone AGAIN.
Because we need a reminder. Because we want to trust again.
Jimmy Dell is the con man in the 1997 David Mamet movie, played by Steve Martin in his finest dramatic role. In lines like above and below, Jimmy builds a personal trust with the mark by calling his attention to the lack of trust in business relationships. Effective consultants do this a lot, speaking of confidence games.
Jimmy Dell: Always do business as if the person you’re doing business with is trying to screw you, because he probably is. And if he’s not, you can be pleasantly surprised.
That’s the thing about the Spanish Prisoner con. It doesn’t work on saints. It doesn’t work on people who forgive and forget, who turn the other cheek and have an unending reservoir of faith in their fellow humans. It also doesn’t work on sociopaths. It doesn’t work on people who truly trust no one, who can lie to themselves and others without consequence or remorse.
The Spanish Prisoner con works best on smart and accomplished people who think they have TRUST NO ONE figuratively tattooed on their hands, who think they’re too clever to be fooled again, but end up only being too clever by half.
The Spanish Prisoner con works best on coyotes.
Too Clever By Half
Who is a coyote? A coyote is a clever puzzle-solver who really has the best of intentions. Who really wants to be successful for the right reasons. Who really wants to accomplish something of meaning in the world. Who is smart and aware and nobody’s fool. Who has been beaten up professionally a bit and has a healthy skepticism about the business and political world.
And who is just a little bit on the make.
The defining characteristic of the Spanish Prisoner con is that the mark believes he is doing well while doing good. The mark believes that he is doing the right thing, that he’s the good guy in this story. And if the liberated Prisoner is financially grateful, or if the Prisoner’s sister is grateful in her own way if you know what I mean and I think you do … well, that seems only fair, right?
Now the Spanish Prisoner doesn’t have to be an actual person that needs rescuing. That’s a con for the rubes. The Spanish Prisoner is what Alfred Hitchcock called a MacGuffin – anything that serves as an Object of Desire for the mark, anything that motivates the mark and furthers the narrative arc of the con.
In fact, the most effective MacGuffins are rarely simple signifiers of wealth like an rich Spanish dude. No, the most compelling Spanish Prisoners are Big Ideas like social justice or making America great again or resisting the Man. That’s what gets a coyote’s juices going. Especially if there’s also a pot of gold associated with being on the right side of that Big Idea.
The most successful con operators are the Nudging State and the Nudging Oligarchy. Why? Well, partially because you’ve gotta have some heft to credibly commit to rescuing a Big Idea from the clutches of whatever Big Baddie has it now. But mostly because running the con for money is just thinking waaaay too small.
The Nudging State and the Nudging Oligarchy don’t need your money. They already have it!
The con here is to gain your trust – again – so that you willingly hand over your autonomy of mind. So that you accept without thought or reflection the naturalness of your current relationship to the State and the Oligarchy.
You’d never fall for this con if it were part of a straightforward commercial arrangement like a job or a purchase. Please! You’re much too savvy for that. You have TRUST NO ONE tattooed on your hands, remember?
But for the chance to help rescue a Big Idea …
But for the chance to make a few bucks or enjoy yourself a bit more as part of doing the right thing …
There’s not a coyote in the world that can resist that bait. And that’s why once you start looking for the Spanish Prisoner con, you will see it everywhere.
Libra, the cryptocoin promoted by Facebook, is a Spanish Prisoner con.
What’s the Big Idea? Why it’s banking the unbanked. It’s facilitating cross-border remittances. It’s bringing the benefits of crypto to the global masses. ALL OF THIS IS TRUE. So far as it goes.
And if it facilitates e-commerce along the way? if it’s possible to make a few bucks or enjoy some greater conveniences as part of Facebook and its partners executing on this Big Idea? Well, what’s wrong with that?
What’s wrong is that this is how Bitcoin dies.
This is how a censorship-embracing coin replaces a censorship-resistant coin. This is how the State and the Oligarchy co-opt crypto. Not with the heel of a jackboot. But with the glamour of convenience and narrative.
And in a few years it will all seem so natural to you.
Using government-approved electronic money will be the water in which you and your children swim. You will not be able to imagine a world where a censorship-embracing coin is not everywhere.
Libra was designed to co-opt Bitcoin.
Libra was designed to allow government oversight over your economic transactions.
Libra was designed to provide a transparent regulatory window and control mechanism over your money.
Libra was designed for Caesar.
A year from now, the narrative story arc regarding “criminal activity” through cash transaction networks AND censorship-resistant transaction networks like Bitcoin will be louder, not softer. In three years, it will be deafening.
Libra and its e-commerce convenience, together with its Big Idea skin of helping The Poors … that’s the carrot.
The “Boo, terrorists!“ narrative … that’s the stick.
Will Bitcoin itself be outlawed? Maybe. But I really doubt it. It’s too useful as a societal steam valve, now that we’ve got Libra and (soon) other Oligarchy-sponsored and State-supported cryptos in circulation.
What does Bitcoin become in a world where state-approved e-money is in wide circulation?
It becomes an act of effete rebellion, like a non-threatening tattoo on your upper arm that you can cover up with a shirt if you like.
Bitcoin becomes a signifier of Resistance rather than a tool of Resistance.
Owning Bitcoin will make you a Bad Boy! or a Bad Girl! … a safe malcontent that the Nudging State and Nudging Oligarchy are delighted to preserve.
What’s my message to the true-believers who continue to see Bitcoin as a tool for Resistance?
For the next fifty years, you get to play the role of the grumpy old man yelling at clouds.
You know, the role that gold true-believers got to play for the past fifty years.
It’s a miserable way to live.
It’s a miserable way to live for two reasons.
First, and most crucially, this role that the Nudging State is laying out for you is steeped in negative energy. You will find yourself rooting for catastrophe. You will find yourself hoping for decline and collapse. You will find yourself conflating justice with loss and comeuppance. You will take on sadness and schadenfreude as your resting psychic state. Trust me when I say that I know of which I speak. Negative energy is deadly. That is not a figurative statement. It will literally kill you.
Second, you’ll be infested by raccoons, which will be tolerated if not encouraged by regulators, in exactly the same way they are tolerated if not encouraged by regulators in gold-world. Sure, you’ll have the occasional show trial of egregiously aggressive security frauds and Crypto-Funded Criminals ™, but the run of the mill hucksters and con men will walk with impunity.
Because this is what ALWAYS happens.
The money quote from Too Clever By Half:
And that brings me to what is personally the most frustrating aspect of all this. The inevitable result of financial innovation gone awry, which it ALWAYS does, is that it ALWAYS ends up empowering the State. And not just empowering the State, but empowering the State in a specific way, where it becomes harder and harder to be a non-domesticated, clever coyote, even as the non-clever, criminal raccoons flourish.
That’s not an accident. The State doesn’t really care about the raccoons, precisely because they’re NOT clever. The State — particularly the Nudging State — cares very much about co-opting an Idea That Changes Things, whether it changes things in a modest way or massively. It cares very much about coyote population control.
It’s all about coyote population control. It always is.
Is there a way out of this for Bitcoin? No. Co-option by the State and Oligarchy was the Doom of Bitcoin from the beginning.
I mean … I say “Doom” like it’s going to be hurled into the fires of Mordor, but that’s not it at all. There will still be true-believers and raccoons alike generating tradable narratives. You’ll still be able to make money by trading Bitcoin on these narratives (and altcoins, too, I’d expect, although I have no idea how you generate a compelling altcoin narrative these days).
It’s not like Bitcoin is going to go away.
But Bitcoin is going to be permanently diminished in its social importance by the adoption of Libra and other Oligarchy-sponsored and State-embracing crypto currencies. Bitcoin will never again mean what it used to mean.
You know … just like gold was permanently diminished in its social importance by the adoption of Oligarchy-sponsored and State-embracing fiat currencies. Just like gold will never again mean what it used to mean.
I wrote this note six years ago. It was the first Epsilon Theory note to get widespread recognition. You’ll see hints – more than hints, actually – of all the big ET themes over the past few years, particularly The Three-Body Problem.
How Gold Lost Its Luster, How the All-Weather Fund Got Wet, and Other Just-So Stories
The core of this note is a quote by Bob Prince, Bridgewater’s co-CIO and an actual prince of a guy. I just think he’s wrong when he says this:
The relationships of asset performance to growth and inflation are reliable – indeed, timeless and universal – and knowable, rooted in the durations and sources of variability of the assets’ cash flows.
I think Bob Prince is wrong in exactly the same way that JP “Jupiter” Morgan was wrong when he said this:
Gold is money. Everything else is credit.
If you get nothing else from Epsilon Theory, get this:
There are no timeless and universal relationships between asset performance and ANYTHING.
The only determinant of price for a non-cash-flowing thing is Narrative. Actually, the only determinant of price for a cash-flowing thing is Narrative, too, but we can save that argument for another day. And what I am saying about these non-cash-flowing things is this:
The introduction of Libra changes the Bitcoin narrative in exactly the same way that the introduction of fiat currency changed the gold narrative. And by change I mean crush.
That makes me sad. That makes me angry. I am convinced that it is part and parcel of a Spanish Prisoner con game. But I refuse to give into the negative energy of that realization AND I refuse to give up on the Big Ideas that I believe in.
So what do I do?
I con the con man.
I know what Mark and Sheryl and all the other Davos-going Team Elite sociopaths are about.
I see what they are offering me and I TAKE it. Without hesitation. Without remorse. I take it just as they are trying to take from me … in full sociopathic bloom.
And what do I give them in return?
Do I care about banking the unbanked and cross-border remittances? Yes, I do. Very much. So I will TAKE the protocols and the KYC procedures and everything else Libra offers, and I will USE all of that to further the social justice goals that I maintain. And they will get NOTHING from me in return. I will keep my autonomy of mind. I do NOT forget what they are trying to steal from me. I do not ALLOW them to steal that from me.
I refuse to give them my trust.
And I will look for every opportunity to destroy their Little Kingdom.
Do I really have TRUST NO ONE tattooed on my hands? No.
I trust lots of people. I trust my pack.
But Mark and Sheryl and Christine and Jay and Donald and Barack are not in my pack. And they never will be.
Trust no one? No.
I just don’t trust THEM.