An email I sent a reader the other day who had messaged me asking me about the growing appeal of various well-known prophets of the financial apocalypse.
As you say, people are desperate for someone to help them
make sense of what’s going on, and, as the poem goes, "the best lack all conviction, while the worst are full of passionate intensity".Generally speaking, I do buy into some long waves in the market, but they are very difficult to untangle from so much of what is going on out there. For example, there is a long-wave credit cycle, and that just peaked and has now gone into decline, with its last peak having been during the Great Depression. My guess is we will see a similar credit unwinding over the next 3-6 years, with lots of false starts along the way.
With respect to some of the more apocalyptic views out there, certainly anything is possible. That said, organizing my life around a return to barter and barbarism represents a financial variant of Pascal’s wager that I’m not currently willing to take — in part because I can be financially and personally prudent without going all the way to hoarding gold, buying agricultural property, or stocking up on weaponry and canned goods.
More broadly, I think what people are realizing, at core, is that most of what seems "normal" is a useful fiction. That’s not a conspiracy theory, but a simple statement that it’s not black swans that are the issue — it’s our collective willingness or unwillingness to live as if the complex
and tightly-coupled economic system in which we live is actually stable and resilient. It isn’t. It can seem that way, but there is no "normal".Finally, I hear what you’re saying wrt gold. In some very real sense, however, gold is just another ponzi scheme. It is only worth something because other people think it’s worth something. After all, gold is near useless as an exchange medium; there is little supply; and it has minimal
practical value. Does that mean you shouldn’t own gold? No, I do. But it also means that when the wheels come off it, as will eventually happen, then finding a gold bottom is very tough, because there is no underlying economic rationale for any particular value.Semi-random musings.
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