Clashing Crises

 John Mauldin January 19, 2024 Thoughts from the Frontline

 “Two is better than one” is a nice saying, but it really depends on what you’re describing. Two hurricanes or earthquakes aren’t better than one. Just one disaster at a time will suffice, thank you very much. The same holds true for man-made crises like the debt fiasco we’ve been discussing. Last week in No Way Out I said we’ve missed our chance to avoid it. We are simply not going to do what it would take to get the federal debt under control—like it was as recently as 2001—until we have no other choice. I have said it before, and I truly believe it, it will take a crisis to force us to act on the deficit and debt.  When you know a problem is coming, the normal ideal is to address it immediately. Procrastination just lets the problem grow and raises the odds you will face multiple problems at the same time.

And that, unfortunately, is what I fear will happen. The government debt crisis will be bad enough, but it’s also likely to crescendo just as we face social, geopolitical, and demographic crises, too. Last fall I spent 10 letters describing the historical cycles that all look set to peak in the next decade. That’s also when I expect the debt to reach its limits. This is something where two is definitely not better than one. And in this case, we’re talking about more than two. A bunch of bad things are going to happen in a fairly short time.

Now is the time to begin preparing for what will come. But to do that, you need to have at least some idea of what to expect. This is where the cycle theories of Neil Howe, George Friedman, Peter Turchin, and Ray Dalio can help. It’s a lot to juggle in your head, so today I want to quickly review these ideas. They will help stimulate your thinking as you develop your own strategy for the next decade.

Their views differ but don’t contradict each other. Rather, they are just different ways to look at history for patterns and causes. And as you might expect, there is often significant overlap in their findings..........To Read More...