No Way Back…

They’re eating the cats and the dogs in Springfield, Illinois. Venezuelan gangs are running amok with weapons beyond military grade in apartment complexes in Aurora, Colorado. And the current White House administration claims it inherited the worst jobs market since the Great Depression.

Welcome to the new American political experience, where lies pass as truth, and where truth is so passe it might as well be wearing a corset and a petticoat to the debutante ball down at the segregated country club.

It says so much about modern politicians on both sides of the aisle that our resting presumption as voters is that they’re lying any time their lips are moving—even if they’re just eating.

This is not, of course, something unique to America.

I pay a bit of attention to the United Kingdom, where a litany of lies, misinformation, and stupidity led to Brexit, one of the dumbest self-owns in modern political history. (The UK economy is an estimated $183 billion smaller today, nearly two million fewer jobs exist, and the average Briton is worse off by $2,600 annually.)

Lies, more lies, deceits, and manipulations of truth and reality have also played a part in the divisive politics changing Italy, Hungary, Slovakia, the Czech Republic, the Netherlands, France, Germany, and half-a-dozen other European countries.

We are, sadly, in the post-truth age.

We are now in an Orwellian Ministry of Truth age in which willful ignorance trumps erudition, and misinformation is the glue that binds like-minded simpletons into a collective of “savant idiots” who think they know the facts, but barely remember to breathe.

None of this is good for the remainder of this decade in terms of the global economy… or our pocketbooks.

Savant idiots do not vote for their own best interests, and certainly not society’s best interests. They vote for the politicians that allow them to hate who they want to hate, or those that allow them to salve their bleeding hearts with more and more social spending…

The result is an ever-widening chasm between left and right that has no path back toward the center.

Countries are simply pulling themselves apart.

The middle—the average voter—no longer exists.

Society is stratified and voters fall into two camps: Us and Them.

You’re either with me and my political hero, or you’re against me. And if you’re against me, you might as well die… or at least leave my country and go somewhere else.

Now, while all of this has obvious societal impacts (we see those all over America today as Red and Blue separate into their own cliques), the more hurtful impact will emerge in coming years in Western economies.

Big economies like the US, the UK, and the EU need social cohesion to function properly. Just look at the boycotts that have become sport in the US because one group of people decides it doesn’t like that a company has supported a particular cause or candidate, or maybe just appears to have supported a particular cause or candidate.

There are economic ramifications to that.

Heck, estimates say that Anheuser-Busch lost more than $1 billion and dropped from first to third in the light-beer consumer category because of a boycott tied to the brewer’s support of transgender issues.

Just suppose for a moment that the UK were to split into its separate components, each with patrolled borders that require all kinds of new paperwork and approvals and monitoring/inspections of imported goods (and I am not saying that’s going to happen; just a thought experiment).

Suddenly Wales, Scotland, and Northern Ireland are afterthoughts. Their individual economies would rank somewhere between 55th and 86th largest in the world—i.e.: no one cares.

Brazil might be happy to send soy to England, but it’s not really going to put much effort into the hassles involved with sending soy to the other three. Too small to futz around with. So, those economies would have to go through a middleman, like England, where warehousing, administration, and transport costs would be added onto the process, causing soy prices to rise in the other countries… or causing supply shortages that push up prices for various replacement products that experience increased levels of demand.

Apply that across all the many countries where politics is splitting society, and you end up with economically feeble fiefdoms all over the place. And I am not so sure we don’t end up there.

Either inflation ratchets higher to cover all the new costs introduced into the system, or the world simply shrinks economically to account for diminished demand in smaller countries that don’t want to pay the higher costs of imports that were once so much cheaper when those now-smaller nations were once part of a larger, more economically significant entity.

That, in turn, plays across currencies as global trade contracts.

The dollar is the big loser there, since Uncle Sam’s dinero is the primary grease that lubes global trade. As demand for trade contracts, demand for the dollar contracts. (And that has a whole host of gnarly effects on American families, businesses, and the overall economy—but that’s a different dispatch.)

The ultimate antidote here is gold.

As billionaire investor and Bridgewater Associates founder Ray Dalio said in a recent series of interviews, “If you don’t own gold, you know neither history nor economics.”

Turbulent times lie ahead and the world is traveling a one-lane road with no place to make a U-turn.

The good news is that we will get through this period. I suspect the mid- to late-2030s will be a much brighter day for the world that emerges.

But you have to know how to protect yourself in the meantime…