Thoughts from the Front Line - It’s that time of year when we start thinking about the old and envisioning the new. This has always been a special season for me, perhaps because of my unusual quirk of really wanting to divine the nature of the future—not just an investment in economics but in general. This week’s letter will be in […]

Thoughts from the Front Line -   First, let me wish you Merry Christmas, Happy Holidays or your favorite personal form of greetings for this time of year. I realize as you read this you are more focused on Christmas and the approaching New Year and family, so this will be a shorter letter than normal, but still a topic that […]

Thoughts from the Front Line - If you really want to reduce the federal debt, you don’t have to convince Congress of anything. You can just write a check. The Treasury Department gladly accepts gifts from anyone so inclined. Few are, apparently. So far this year, donations totaled less than $1 million. Shocking, no? <grin> The government’s revenue is mostly involuntary via taxes, […]

Thoughts from the Front Line - Don’t Tax You. Don’t Tax Me. Tax That Fellow Behind the Tree –   Attributed to Senator Russell B. Long, Louisiana ~1930s One thing you learn when writing about the debt problem, as I have been in recent weeks, is that many people think it’s not a problem at all. They believe we could easily balance […]

Thoughts from the Front Line - Back in the Great Financial Crisis era, someone quipped that the federal government had become a giant hedge fund with an army attached. That wasn’t far off. Various agencies and entities were absorbing all kinds of risky assets to stabilize an overleveraged system. It was ugly but worked, more or less…. with a heavy dose […]

Thoughts from the Front Line - Thanksgiving brings to mind not only turkeys, family, and friends, but also should help us recall the remarkable ideas and philosophies that helped shape, and indeed were, the foundation for the United States of America as a Republic. In that spirit, we will forgo for this week the series we have been exploring on cycles […]

Thoughts from the Front Line - If you get beyond the political rhetoric [and assembled a group to solve Social Security] it would take them 15 minutes. It would take them 15 minutes only because 10 minutes was used for pleasantries. —Alan Greenspan, Speech to the Commercial Finance Association on October 26, 2006 The federal government starts a new fiscal year every […]

Thoughts from the Front Line - Exploring federal budget data is a journey through endless rabbit holes, some of which are eerily close to Alice in Wonderland insanity. Countless variables interact in unexpected ways. Seemingly small changes can cascade into billions of dollars within a few years. Exploring federal budget data is a journey through endless rabbit holes, some of which are eerily […]

Thoughts from the Front Line - Identifying problems is great. Identifying solutions is even better, especially when the politicians who are supposed to be solving our big problems don’t even try. In last week’s Debt Catharsis letter, I offered some ideas to start fixing the federal debt problem. To be clear, those ideas won’t balance the budget and in many ways are woefully inadequate. But […]

Thoughts from the Front Line - The ancient Greeks had a word κάθαρσις, which in English we now spell as “catharsis,” although it’s pronounced basically the same. It originally referred to purifying religious ceremonies, medical treatments, and so on. Aristotle was the first we know to have used the word in a non-physical sense. He compared the emotions felt by spectators […]

Thoughts from the Front Line - We have been looking at big historical/economic/political cycles for the past two months. We reviewed Neil Howe’s Fourth Turning concept, then George Friedman’s twin US institutional and socioeconomic cycles, then Peter Turchin’s “cliodynamics” concept, and then Ray Dalio’s Big Cycle. None of these theories exclude the others. It is quite possible they are describing the […]

Thoughts from the Front Line - When your system, whatever it may be, is working extremely well, we used to say it’s “firing on all 8 cylinders.” What does that mean? A gasoline motor contains metal cylinders inside which the gasoline burns (hence “internal combustion engine”) and causes belts and gears to turn. A V-8 engine has eight cylinders arranged in […]

Thoughts from the Front Line - “…what I learned is whatever successes I had in life had to do more with how I dealt with what I didn’t know than what I know… “…the reason I did that book is because there are things that are happening now that never happened in our lifetime before, and I want to be like […]

Thoughts from the Front Line - Intermission is over. Today we resume my series on the global cycle theories that, probably not by coincidence, all point to major change unfolding in the next few years. Finishing it may take some time since I keep finding new material. (If you missed—or want to review—the previous installments, check out this X thread for brief summaries […]

Thoughts from the Front Line - Greetings from Europe. I promised to write a letter describing my personal investment portfolio. I still plan to, but it won’t be this week. Shane and I are having a wonderful trip—a much-needed break for both of us. I will leave you with a suggestion, though. My ongoing series about cycles contains some of the […]

Thoughts from the Front Line - Look up the word “cycle” in a dictionary, and you’ll find something like this: “A regularly recurring sequence of events.” Sounds simple, but that definition leaves a lot of ambiguity. Zoom in on the “regularly recurring” part. A recurring event is one that happens repeatedly. Wherever on Earth you may be, the sun reliably rises […]

Thoughts from the Front Line - Today we continue our study of the historical cycles suggesting a major crisis is in our near-term (5‒8 years) future. We don’t know the precise timing or nature of the crisis, but the patterns indicate one is coming and could be severe. As with many therapeutic programs, the first step is admitting you have a […]

Thoughts from the Front Line - Everything about human life has a rhythm. It is literally built into our bodies: Your heart beats in a repeating pattern that keeps you alive. Your breath is another pattern. Repetition is natural for all of us individually and for the societies we create together. Every society has its own rhythms and traditions. But there are larger, […]

Thoughts from the Front Line - The Old Testament portrays King Solomon as the wisest of all men. In addition to recording his wisdom in the book of Proverbs while dealing with 700 wives and 300 concubines, he also became a chart-topping songwriter in the 1960s (some 3,000 years after his death) with a little help from Pete Seeger and the […]

Thoughts from the Front Line - My friend Neil Howe titled his latest book The Fourth Turning Is Here because, well, the Fourth Turning is here. It is no longer the decades-away crisis he and the late William Strauss described in their 1990s books. As noted last week, each “turning” is generally 20 to 25 years. We are in the last half of […]

Thoughts from the Front Line - We talk frequently about the way central banks and governments affect the economy. In the grander scheme of things, though, whatever the Fed does is more like throwing a hand grenade into a large building. Yes, you’ll make some noise and cause some damage. People may be hurt. But the building won’t care, and the […]

Thoughts from the Front Line -   While inflation is technically about general price levels, in practice we use it to describe living costs. That’s why the benchmarks measure consumer prices and personal consumption expenditures. These are where higher prices hurt because they apply to everyone. Other measures like the Producer Price Index have valuable information but are less immediately relevant to most people. But […]

Thoughts from the Front Line - The market, and maybe all of us, would like to believe the latest 3% annual CPI number was a harbinger of ever-lower inflation, and we are on the road to 2% inflation by year end. I would argue, “Not so fast.” Inflation is far from dead, and CPI will likely go slightly up between now […]

Thoughts from the Front Line - “A man hears what he wants to hear and disregards the rest…” —The Boxer, Paul Simon, 1969 One of the hardest parts of economic forecasting is separating what we expect from what we want. Actually, this is part of the human condition, genetically programmed into us and affecting every part of our society and lives, not just economic […]

Thoughts from the Front Line - National leaders are (or should be) reluctant to enter wars because, once begun, they are often hard to end. You could be bogged down for years, vainly trying plan after plan as the damage accumulates. Monetary policy works the same way. Central bankers think they can handle a situation and fire the artillery. It always […]