Politics In America Has Changed And We Need A New Way To Talk About It

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.

Knight Foundation’s Jennifer Preston: ‘Improve the flow of accurate information’

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.

Neil Howe: “Deep Demographic Problems Plaguing The U.S. Economy” (Hedgeye Investing Summit)

32:29
great irony is that the real ideological
edge of the whole Bitcoin movement was
was guys like you know James Dale
Davidson and REE smog and they there
were sovereign individual these are
boomers and all the Xers that followed
them these are all libertarians they
believe radically in the idea of no
government you know and we’re just you
know the with no need for trust I mean
talk about an ideal Society for most Gen
Xers no trust necessary so so anyway
we’re gonna do a world with that trust
and and that was really it was it was
actually I think an ideological edge to
a lot of people’s interest in Bitcoin it
was sort of the kind of world socially
politically that they really wanted
and unfortunately ideology as you know
and you’ve often spoken about that in
your programs ideology always warps your
market driven judgment right big time
you don’t want to start with ideology if
you’re marketing an ideology and you’re
good at it you might make a lot of money
in a short period of time but that
doesn’t mean that your views on it or
going to be non cyclical and or crashing
and that’s that’s that’s what you know
sadly is happening a lot of purveyors or
34:47
and speaking about money and again this
is sort of very deep sort of
intellectual history there kind of two
theories about the origin of money
one is the barter theory you know we
started out bothering Bob Barton just
treating goods for goods and then you
know then gold and other things and so
on so it’s basically that’s the kind of
the libertarian theory so the Canadian
guy from like the Hudson’s Bay Company
like yeah you know forever that piece of
paper but then there’s a whole nother
theory which also has a long kind of
intellectual pedigree which is more the
purview of sociologists and that is
government the money was really creation
of governments and there’s a lot to say
for that because in fact that’s how
money was
really introduce now it’s the government
people right that whole theory that
whole that whole intellectual pedigree
kind of feeds into modern monetary
theory and that is its government that
creates money I mean forget this whole
idea that it all comes from gold and
there’s some intrinsic value no god it’s
a system of Social Credit and Society it
makes a collective decision to create it
they can do it as they wish all
government all currency has always been
fiat currency and this whole idea that
only recently we’ve had fiat currency so
anyway that’s the idea behind monetary
theory you don’t have to worry about how
much you issue because you can issue any
amount you want so long as the economy
is it is running at full employment and
so long as you keep inflation to you
know down to a reasonable degree now I
always say that the argument from
monetary theory post GFC is a lot better
than it was right because no matter how
low we get interest rates we had trouble
getting to full employment and inflation
never seemed to show up on our radar
screen so I think this is the reason why
modern monetary theory is so big if the
reason it’s going to be practically
important is not now when we’re you know
unemployment is down at 3% and although
it’s gonna be a big issue come the next
recession right that’s when it’s gonna
hit right and we haven’t even talked
about that when is the nest recession is
that gonna be perfectly time for the
next election or not right that’s going
to be fascinating there are many more
Democrats believe in this mmt then
certainly like you said libertarians but
their but their chances of introducing
that are going to be hugely improved at
the right political juncture with the
economy on the right conditions yeah
wait until the economy is flat on its
back with our unemployment rate up at 10
37:19
percent and 11 percent whatever it is
37:21
suddenly the Fed is sitting there
37:24
flatlining at SERP right not knowing
37:26
what more they come on yeah hundred
37:29
mandatory thirty would be back plus huge
37:33
fiscal spending and you know the two
37:35
kind of merged together right modern
37:36
monetary theory and huge
37:38
of fiscal deficits you’ve been greater
37:40
than we have now so long as you got the
37:42
economy back working again
37:44
what’s the matter we did it with in
37:46
World War two we did it during the New
37:48
Deal mm-hmm the green New Deal
37:50
come on you got bad you got a New Deal
37:52
and the green New Deal
37:53
actually we’re getting some questions on
37:54
that why there’s actually question on
37:57
climate change if it figures into your
37:59
outlook does it you know on climate
38:02
change I’m more of a I have a matt the
38:06
ridley you know the guy the the british
38:10
intellectual who who wrote a a number of
38:13
great books on on genetics and and
38:16
evolution and so I’ve been equine
38:17
deterrent because he he actually covered
38:19
climate change for many many years but
38:21
he coined the term Luke warming he said
38:24
he’s a lukewarm ER which means that he
38:27
thinks it he thinks that rising carbon
38:29
dioxide levels are responsible for a
38:31
little bit of warming but not not a lot
38:34
and not nearly the kind of alarmist
38:37
picture that people think I’m kind of
38:39
more of a lukewarm ER what interesting
38:42
thing warmer sounds like Luke Skywalker
38:43
it’s like an appeal to people because it
38:46
sounds like it makes some sense how’s it
38:49
look warmer yeah a little bit more of a
38:51
hot because you can’t you know we like
38:52
it you can’t be like a total like
38:54
Treehugger or you know you did you got a
38:57
it sounds like a little bit more neutral
38:59
yeah kind of sounds disgusting
39:02
anyway alright great thinking on the
39:05
economic Turan economic direction
39:08
long-term Neil Central Bank policy will
39:10
likely continue to counter the
39:12
demographic gravity and fall failure
39:14
will likely manifest in market and
39:16
monetary crises so slow with chaotic big
39:19
bumps ahead question mark sounds like
39:21
more of a comment but a lot of people
39:23
believe that I got into this with with
39:25
with Lakai a
39:27
lot of people believe that no worries
39:29
more cowbell markets could never go down
39:31
again no I clearly don’t believe that
39:34
and and actually I think around October
39:36
to December you were brown right you’re
39:39
on this side of the you know this side
39:40
of the earth on the right side of the
39:42
grass yeah the markets went down yes
39:47
this is memories are so short it’s
39:50
almost like people watch the market day
39:52
they completely forget what happens you
39:54
could have lot if you’re along the
39:55
Russell 2000 which is a pretty broad
39:56
index of US stocks and now 27 percent
39:59
from August the 30th to December the
40:01
24th what could go wrong that’s that’s
40:04
called a bear market yeah yeah I mean
40:06
it’s a rash so but I think what what
40:10
they’re referring to is the idea could
40:12
could the economy go down yeah and and
40:15
and not only do I think it will i
40:17
actually this is all a part with a lot
40:20
of people i think it’s a good thing I
40:21
actually do I think that is when we
40:24
correct institutions and we rebuild
40:26
institutions I think the idea that you
40:29
would have an economy just constantly
40:30
dribble along you know is actually not
40:34
good for us
40:34
well there’s many periods of
40:36
Reconstruction and and not only that but
40:38
the whole point about market crashes
40:41
depends which side you’re on if you’re
40:43
young and you’re being an invest you get
40:45
to buy into the American dream
40:47
at a discount there are always two sides
40:49
to a transaction and I do believe you
40:51
know when I’ve I see the media following
40:53
Wall Street all the time and every time
40:55
markets will go down a treeless type
40:56
price but whenever the prices go down
40:57
it’s like a terrible tragedy yeah for
41:00
all the older people that owned
41:01
everything but the next generation is
41:04
coming on right it’s their opportunity
41:05
there are always two sides to a
41:07
transaction and and for life to go on we
41:12
have to think about what’s coming on
41:13
after us well what you have seen is the
41:15
opposite like by virtue of not having a
41:17
recession this is the longest u.s.
41:18
economic expansion in US history
41:20
Republicans and Democrats when it comes
41:22
to monetary policy have gravitated to
41:24
the same thing there’s no difference you
41:26
know there’s no difference between
41:28
Donald Trump wanting more cowbell and
41:30
Barack Obama wanted more cowbell there’s
41:32
no difference between this the federal
41:34
reserve members how they go about their
41:37
day job that it’s all one in the same
41:40
thing totally but when the economy goes
41:45
down again and when we’re back at that
41:47
you know that zero bound then all this
41:50
other stuff comes back onto the table
41:51
and and I don’t believe by the way that
41:54
you know people talk about inflation the
41:58
governments can very easily engineer
42:00
inflation if there were enough I believe
42:02
Japan was very near that point a couple
42:04
of years ago and and the way they would
42:06
have done it was simply to say any
42:08
worker or anyone with a payroll you put
42:12
your stuff in a bank and we just we’re
42:13
gonna index it out by a percent a month
42:15
or something like I mean thank you guys
42:17
but but no in other words you can
42:20
engineer it if you if you have the
42:23
incentive to do so a Jubilee what are
42:25
the advantages of that well suddenly now
42:27
your monetary policy has teeth once you
42:31
get inflation going again then holding
42:33
that interest rate low right actually
42:36
gives traction to your monetary policy
42:39
and and we are gonna see that if this
42:44
next time puts us in that same situation
42:46
we were gonna see a lot of the stuff
42:47
that was only discussed before yeah and
42:49
and the inflation to be clear comes from
42:51
the deflation because the deflation is
42:53
what causes the inflation so I mean you
42:55
come from a very asymmetric point
42:56
there’s big opportunity politically in
42:58
that and you save the world according to
43:00
yourself let’s see here
43:05
there’s a lot of political questions and
43:07
I want to go there what what would be
43:11
here this is an interesting one given
43:13
you join the term Millennials what what
43:16
would be your biggest long-term bet as a
43:18
millennial investor given stagnation and
43:21
slowing growth if it comes to fruition
43:27
as a millennial so I assume they’re just
43:30
meaning if you’re Milan you’re looking
43:32
like what’s the best way to play your
43:33
outlook good answer I mean I you know
43:49
other than all the standard answers
43:51
about you know diversifying your assets
43:53
and being geographically diversified
43:55
obviously at a time of crisis you
43:57
certainly want to be geographically
43:59
diversified I mean I often get asked
44:01
which areas of the we you know you’re
44:03
the demographer which areas of the world
44:05
I should be you know invested in from
44:07
that point
44:07
view and you can see that I mean if you
44:09
just look at any of my you know 20
44:12
charts on the subject you can look at
44:14
you can look at areas which are
44:16
reasonably decent in terms of you know
44:22
security legal structure corruption and
44:25
all that and yet have high population
44:27
growth so if you’re really looking for
44:29
that wave you know you’re looking at the
44:31
at the Malaysia’s and Indonesia’s the
44:33
Philippines and so on there there is
44:35
there is again looking at quadrants
44:37
there is an area there where you can
44:40
find economies for the long run that are
44:43
probably going to you know they still
44:44
have a lot of catch-up to do in terms of
44:46
productivity they’re still gonna have a
44:47
proactivity you know dividend over the
44:50
so if you’re looking long term but be
44:53
diversified because you know how any one
44:55
of those countries is gonna go but there
44:57
are ease of the world where you where
44:59
you where you certainly particularly if
45:01
you know if your millennial you probably
45:02
have a target date fund you know out
45:04
there I don’t know
45:05
that’s tough hundred forty five or those
45:07
four old wall products like those are
45:09
like you can’t do it within that product
45:10
so I’m saying if you can take some money
45:12
out of that product yeah you you’d want
45:15
to diversify what is it one way to
45:17
things like Josephine’s for up Neil’s
45:19
four quadrant map with the countries
45:21
quickly if you can what I think you’re
45:23
saying – if I put it within the context
45:26
of my process is if we go to a slowdown
45:29
like one that’s beyond stagnating to
45:31
slow down in the US and then you have
45:33
political change and you have MMT the
45:37
dollar is going to get castrated in that
45:39
environment and those countries that are
45:41
in quod one that you just showed are
45:44
gonna have in dollars don’t forget that
45:46
eeehm does very well when when when the
45:49
US government is burning its currency at
45:51
the stake so you know that is you know
45:53
that is the units the rebalancing of
45:56
global power so rebalancing of
45:57
incentives it’s a rebalancing of growth
45:59
expectations to where you actually have
46:01
the population growth going okay so
46:04
that’s maybe another way to think about
46:06
yeah I I agree with that and it it
46:09
really depends a little bit on the
46:11
nature of the crisis I mean obviously at
46:13
the at the worst of the crisis the
46:14
dollar was strong because that was sort
46:17
of the the safe haven currency but as
46:19
things begin to sort out
46:21
the dollar may still be strong relative
46:23
– you’re absolutely right with regard to
46:25
the EMS but we have I mean if if we
46:27
follow our sector we you know not only
46:29
do I do this kind of long term general
46:31
stuff we actually have particular
46:33
industries we like and I’ll just mention
46:35
two of them here because we’ve written
46:36
about them yeah very particular
46:39
industries which we’re very bullish on
46:41
from from a demographic standpoint one
46:44
is pet care there are a lot of
46:47
interesting ways you know everyone’s
46:49
owning pets and boomers and Xers have
46:51
completely reimagined how we treat our
46:53
animals right I mean you know everything
46:55
about them is is you know the food and
46:57
you know it’s organic it’s every the
46:59
amount of money we spend on my father
47:02
treats my his two dogs better than I was
47:05
ever treated today they know if dogs
47:07
have now have parents and grandparents
47:09
and you know they weekend yeah but but
47:17
another is a huge change there and in
47:21
particularly assertive although I’m not
47:24
big social media generally they’ve got
47:26
the kind of Google Facebook duopoly I’m
47:28
not very positive on I think that you
47:34
know online dating is an incredible
47:37
growth opportunity and we had a piece
47:38
recently on that because you know
47:40
virtually everyone is waiting a lot
47:42
longer to get married older people are
47:45
getting divorced and that’s an entire
47:48
area where there’s been very little
47:49
market penetration in your long the
47:51
screening process I mean that’s that’s
47:52
pretty much the other one is cannabis
47:55
we’ve done a extensive amount of work
47:56
there you could see that the well we
47:58
have lifting we home security that does
48:01
that silly but but it’s it’s not
48:03
shocking to see Shane Laidlaw as hockey
48:07
sticking charts on cannabis consumption
48:09
relative to alcohol consumption yeah and
48:11
it is he calls it hit paper high or
48:14
whatever he calls it you know hit for I
48:16
yeah because it’s a lower it cost less
48:18
here’s a here’s another question this is
48:21
this is this is definitely this could
48:23
take you a whole day to answer this do
48:25
you need capitalism and favourable
48:26
demographics for GDP growth
48:32
well obviously not especially out the
48:34
GDP growth number you can have it all
48:36
the time
48:37
you need you need some form of
48:39
capitalism just to have any kind of
48:40
efficiency in your economy so that’s
48:42
kind of a loaded question I think the
48:44
more interesting question is do you need
48:45
democracy and I think that’s becoming a
48:48
bigger issue I’ve written about that you
know our Millennials giving up on
democracy I think that’s actually an
interesting global question now we know
from a lot of surveys that Millennials
are less interested in democracy than
older generations and you look at not
only is it true and the UK and in the
United States but it’s true around the
world now if you look at particularly
East Asian countries you know with these
new charismatic leaders in a Narendra
Modi and India appealing to the the
Hindu mainstream you look at you know
Burma they’re the Buddhist mainstream
and you know uncle she is appealing in
China to the great Han you know to all
of these leaders in Shinzo Ivy appealing
traditional right you and then you go to
this this this madman is in charge of
the Philippines now you know Rodrigo
Duterte dirty-dirty duterte as they call
it but my point is is that you have
these charismatic authoritarian leaders
who are appealing to the mainstream of
their countries don’t give a damn about
who’s on the fringes right who is voting
most for them younger voters and that is
fascinating to me because earlier in the
post-war era the authoritarian leaders
mainly were voted for him only about the
older voters younger people didn’t want
them and that’s changing around and I
people often asked me this question when
do we know when the world is going from
host word of pre war you know when when
are we going from a post-war mood to a
pre well it’s kind of hard to tell until
you have the next big crisis right but
one key is is that in a in a post-war
era it’s the the generation that just
created the new era they were just went
through the crisis so they really
identify with the institution‘s they
build and generally younger people tend
to want more freedom they want less
order they want less rules that well
write less conformity and all that but
eventually as time goes by right
those younger leaders are in power and
generally have a pretty less a fair you
know libertarian world it’s younger
people who want more order more
certainty more route you soon I’m going
with this that is a sign you’re in a
pre-war little pre-crisis does that line
up with the fourth term absolutely yeah
that’s that’s well that you know I don’t
say pre-war because that kind of
predisposes about kind of crisis but I I
say pre-crisis pre-crisis yeah for those
of you that haven’t read the fourth
turning that I’m biased because I think
that’s your favorite book I think that’s
my favorite book I think that would
probably be a consensus though is it not
your favorite people’s favorite book
51:20
that you write it’s it’s either that or
51:22
the original one we did generations
51:24
generation shoes yeah that was kind of
51:27
the first big book I guess we’ve had
51:29
this question and maybe a good one to
51:31
wrap up on here because people are
51:33
constantly asking where do you think
51:35
Trump the Trump administration fits
51:37
within your framework of what is the
51:39
fourth turning I you know Trump and I
51:43
thought that the two most interesting
51:46
fascinating and path breaking
developments in 2016 were Bernie Sanders
and Donald Trump because there’s a
recurring edge on both the left and the
right of this whole new kind of populism
and authoritarianism right the three
chairs on the left every bit as much of
possibilities of thorough tourism on the
right and you know Bernie Bernie Sanders
is a guy who believes in top-down
government just you know government and
baking big decisions creating winners
and losers and you always have to admire
the guy I mean when was the last time we
had leaders just say this is how it’s
gonna be
single-payer you know and and
Millennials actually gravitate toward
that yeah you know the paradox of choice
why have so many choices is something
small one choice but it works really
well right at least and you find this
now becoming a very dominant view on the
52:36
left so I think just like Jeremy Corbyn
52:39
now sort of the you know the elder sort
52:40
of great champion in the UK of the left
52:42
of the millennial left and you have
52:45
Bernie Sanders here but I think that
52:47
that
that Donald Trump is the kind of the
exponent of the leader the first one who
really galvanized this new populism but
if I had to bet I would say that when
those final populism finally takes shape
in America it’s gonna be a little
afternoon on the right so this is this
is why the you know 2020 election looms
really large and when you look at you
know futures markets and remember again
I come back to this the economy is now
53:19
at three point something percent
53:21
unemployment and already you have
53:23
futures markets predicting right that
53:26
that Democrats are going to come in and
53:28
sweep in 2020 wait and until the economy
53:32
is yeah a little more negative you take
53:34
that outlook and maybe last question on
53:36
this if you take that out looking again
53:37
we’re not I’m not trying to be political
53:39
I’m not a Republican or Democrat I’m
53:40
Canadian I’ve said that all the time
53:41
because it’s it’s it’s of course true
53:43
but if you look at them if you take that
53:46
let’s say the economy’s long we have
53:47
quad three four three quarters in a row
53:49
that’s my outlook and if that’s the path
53:51
and and what you just said is still the
53:53
truth you know what kind of a candidate
53:56
and what generation could or should they
53:58
be from within your lens would come out
54:01
of the Democratic Democratic Party as
54:03
the as the as a front-runner well this
54:06
is the big moment for Generation X right
54:09
you got a lot of candidates in yeah Gen
54:12
Xers you know you have you have you know
54:17
Camilla Harris and Bader O’Rourke and
54:19
you know you know what’s-his-name from
54:21
New Jersey you know they’re all my age
54:23
so you’ve Pro cannabis to New Jersey guy
54:27
yeah but interestingly enough you have a
54:33
millennial candidate running you know
54:35
this guy Pete Bennett reach out of South
54:37
Bend Indiana he’s 37 years old and just
54:42
to show you and I actually had a piece
54:44
on that recently I think he came out
54:46
yesterday but an amazing stat l just
54:48
leave people this one amazing statistic
54:51
and that is as as proof of how
54:54
absolutely disinterested Generation X
54:57
has been in politics you know they’re
54:59
way behind the age curve it actually
55:01
in Congress you know taking the house
55:02
taking the Senate taking us governor’s
55:04
at their current age you know boomers
55:07
had already we’re into the third
55:08
president and already at pluralities in
55:11
both the house in the Senate Gen Xers
55:13
have been so slow
55:14
you know Gen X is in both parties tend
55:16
toward the libertarian edge of their
55:18
party right
55:19
but as proof positive of how
55:21
disinterested Gen Xers are in politics
55:24
we look back and found we looked at all
55:26
of the contenders for the primaries in
55:28
the every presidential election since
55:33
1986
55:34
and for the past almost 30 years
55:37
the youngest contender in either party
55:41
was a Boomer all the way up through all
55:45
the way up through 2012 there were no
55:48
gen extra candidates actually contending
55:51
for the presidency obviously in 2016 you
55:54
had a lot of them the two younger ones
55:55
were Marco Rubio and that guy from
55:57
Louisiana you know the governor from
55:59
louisiana agenda button bobby Jindal
56:03
they were born in 1975 and interesting
56:07
Lena 2020 we have a millennial contender
56:10
so only one year only one president of
56:13
presidential election was a gen Xer the
56:16
youngest contender and it’s already
56:19
moving on to Millennials and this is
56:21
what anyone who’s read the fourth
56:22
turning or my books knows we bill and I
56:25
used to always make the point that
56:27
Millennials are destined to make an
56:29
early and strong entrance into politics
56:33
as a generation and basically filling
56:35
the vacuum that Gen Xers have left
56:38
behind even to some extent so they could
56:39
circumvent Gen X presidential candidates
56:42
altogether and you know most references
56:43
and most Gen Xers always knew it was
56:45
cutting in the cards you know by Stan
56:49
1975 yeah I have a genuine I do not hate
56:54
but I genuinely don’t like any
56:57
politician like that I don’t like their
56:59
parties I don’t like either party and
57:01
the ones that ran to your point
57:03
Gen X Rubio like those are like wet
57:07
Kleenex they feel like that’s not a
57:09
leader that’s not like you know you
57:11
don’t memorize your lines and
57:12
you know so I think that you’re right I
57:14
mean if you certainly if you take
57:15
somebody like me I’m just like disgusted
57:17
by politics and politicians so maybe
57:19
there is somebody there to inspire
57:21
somebody because I’d love to change my
57:22
mind we do we do talk in our ratings
57:24
about dominant and recessive generations
57:26
so between the GI generation which
57:30
fought in World War two you know the
57:31
so-called greatest generation right of
57:33
that was in the white house for a long
57:36
time from John Kennedy you know born in
57:38
the century all the way up through you
57:40
know George Bush Senior and then we had
57:43
a Boomer that completely bypassed the
57:46
Silent Generation yeah anyone who
57:48
remembers the Great Depression and World
57:50
War two as children but were you know
57:53
not old enough to serve that an entire
57:57
generation nearly twenty years was
57:59
completely bypassed for the White House
58:01
and look what’s coming up they say we we
58:04
do this we have dominant generations we
58:07
have recessive generations that’s uh I
58:10
don’t know if that’s a good or a bad way
58:12
to end today’s discussion but for us Gen
58:15
Xers we’re just going to go back into
58:16
our a political holes and we’re gonna
58:18
keep you data dependent as we tried to
58:20
keep you across by the way durations
58:22
today don’t forget we’re trying to talk
58:23
about a multi duration framework so
58:25
whether it’s short term intermediate
58:26
term or Neil House super long term there
58:29
are so many different things for us
58:30
human beings to attempt to contextualize
58:32
it at the end of the day we don’t know
58:34
what the real answers are gonna be but
58:36
we can probability wait how we go along
58:38
the way in terms of positioning
58:40
ourselves and being in better spots oops
58:42
would have been if we were ignorant of a
58:44
lot of these data’s and economic facts
58:50
[Music]
58:59
[Music]

Libra Crypto Curreny: The Spanish Prisoner

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.

“Boo, terrorists!”

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?

NOTHING.

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.

Seriously.

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.