We present the latest weekly anecdote, From Eric Peters, CIO Of One River Asset Management
“You know what I dislike about my own argument?” asked the CIO. “I sound defensive, like I can’t accept I’m wrong.”
We all know that guy, and rarely want to be him. “No one ever truly believed in my thesis,” he said, describing it: A growing dominance by the global economic elite shapes policy to deliberately asphyxiate dynamism. Because dynamism and its fraternal twin – volatility – are the only real threats to an entrenched elite.
Rising income inequality is an obvious manifestation of this process. As the cost of raising children soars, declining birth rates are too.
It’s why our students are drowning in debt and now rent for life. If they fall ill, it’s why laws prohibit them from declaring bankruptcy on college loans. It’s why big firms are bailed out, and why incumbents are securely gerrymandered, rarely unseated.
Peel back the patina and you’ll discover that today’s monetary policy, tax policy, foreign policy, trade policy, and regulations of every stripe are levers the elite pull to entrench their interests. Secular stagnation is what we came to call the symptom without identifying this cause. Then came a synchronized global cyclical recovery, which we may now confuse as a Trump inspired break from this stranglehold.
“If I thought our new president could increase budget deficits by another 2% per year, my thesis would crumble. I’d be wrong. But the odds of this are zero in the absence of starting a new war.” He paused, considering the rebound in interest rates, the record equity highs.
“Am I just looking for reasons to support my position?” he asked aloud, interested only in his own answer. “I’ve been wrong on trades, but never on a big structural theme. That’s because I only bet really big when I’m absolutely convinced. And I’m pretty sure I’m still right.”