Appropriate song from the Last Dance Soundtrack to listen to while you read.
“Vengeance” by Zack Hemsey, The Last Dance Soundtrack
This post is a little off the initial intent of this blog but it is still in line with the concept of Capital Misallocation. It is just unfortunately about the tragic results of over two decades of Capital Misallocation in policy - monetary, trade, fiscal, and education.
So this week I spent a few nights in the ER with my mother and after the second evening I came back home in a foul mood. I didn’t want to go on Twitter or Bloomberg or do any work and decided to go to Netflix - a rare event for me as I don’t watch TV really. I knew I needed something that would get me fired up & went straight to “The Last Dance”. In order to cheer myself up, I watched a few episodes of the epic documentary about the greatest story in the history of modern sports - the rise of Michael Jordan & the Chicago Bulls.
As a former college basketball player who grew up in the 1980s/1990s, I have always been drawn to that documentary as it hits home in many ways. Michael Jordan’s approach to “his craft” of having a singular focus on winning and keeping everything else to the side is truly unique. In many ways it represents a purity that we all strive for as humans - we have a goal and focus on achieving that goal. But what really hits home about him was his ability to continue to motivate himself after having more success & fame than 99.99999999% of humans who have ever been around this earth. As someone who has had a lot of success & wins in life, I can tell you that I always found it easy to just coast when I was on top. It takes a special individual to keep pushing when money and legacy are no longer motivating factors. Whether it was his ability to motivate himself by “Taking it Personal” after any slight or just focusing on the task at hand, Air Jordan found a way to always get it done. He set the standard of winning for my generation and future generations.
However, aside from being reminded of #23’s greatness, the masterpiece documentary reminded me of just how great the 1990s were as a moment in the long history of space time. The 1990s were pure - it was a decade when the world was opening up as the Cold War was ending. I recently saw a video of Metallica and AC/DC playing a concert in Russia in 1991 right after the break up of the USSR in front of 1.6m Russians who had never experienced the electricity of badass Rock N’ Roll. It was extremely moving to see that video, especially in the moment we sit in now with a world that seems ready to delve back into darkness after an almost 80 year period of unprecedented peace and prosperity.
After You Are Done Reading This Watch It & Slide it to Minute 4 & Enjoy Enter Sandman and 1.6m Former “Enemies” Explode On Their First Experience With American Rock N’Roll. Even If You Aren’t a Metallica Fan You Will Like It
The 1990s was the peak of modern civilization in my opinion - it was the beginning of the internet and the democratization of information. It was the time when rap music officially arrived on the scene and began to end the systemic racism in America in a serious manner. Sports were singular at that time as their wasn’t any internet competition so we all were able to sit and cheer for our heroes together. We weren’t distracted by Instagram, Twitter, messaging our friends, or any other garbage that has come about as a result of the smart phones invading our lives. Optimism reigned, financialization had yet to takeover, and we had limited violent altercations or wars to speak of during that time. The famous essay by Francis Fukayama entitled, “The End of History” and the “Unipolar Moment” and “Globalization” were the flavor of the day.
Bottom Line: People Still Knew How To Be Present While the World Was Opening Up - In Trade & Communications. Fiscal Discipline Existed, Tribalism Began to Decline, War Was Non-existent, & Wealth Was Growing Expontially.
I graduated high school in 2000 as a member of the unique class of the millennium. The people born between 1978 and 1984 are a small group that don’t fit into Gen X or Millenials, so they call us Xennials. We were the last group of people to experience the analog world and then simultaneously grow up in the new digital world. I still to this day remember our car cell phone that you had to plug into the cigarette lighter & pay $1/minute for a call - something I got yelled at a lot for using. But I wouldn’t trade anything in the world to have grown up in any different time period in history. I feel we were a unique group that got a taste of the old world but were young enough to become digitally competent from a young age. We also got to see the world transform right in front of our eyes and many of us yearn for the old days - something that is not consistent with the linear time model of progress that has been ingrained in our brains since the Catholic Church took over many millenia ago.
After I graduated high school in 2000 the world changed. NAFTA had really ramped up by that point sending American jobs to Mexico, Bush and Cheney were elected, the “Fake Maestro” broke the social contract with savers & took rates to 1%, China was admitted into the WTO, and American politicians and Wall Street had sold out its population in the name of Riccardian “Law of Comparitive Advantage” - a theory that was pushed hard by the owners of capital.
Since 2000, the USA has been in 4+ “proxy wars”, we passed a bill called the Patriot Act that legalized spying on our own citizens, inequality has risen dramatically (GINI Index is an imperfect proxy), our government went from running a surplus to previously unfathomable deficits of almost $2 trillion annually, we witnessed the private banks damn near blow up the global financial system, we have lost complete faith in our institutions, we elected the guy from Home Alone 2 to be president, and now we sit on the verge of WW3 - something most of us thought to be impossible for most of our lives. Not to mention that the society has come to resemble some horrible combination of Aldous Huxley’s Brave New World - a society of addicted, distracted, and unhappy people lacking purpose - and George Orwell’s dystopian world of authoritarianism in his seminal book 1984.
Bull Market in US Govt Debt/GDP & Inequality = Gilded Age #2 (See: Bezos Buying GF a 2nd Yacht) Due To Debt Rising Much Faster Than GDP
Wait, Haven’t Financial Assets Have Kept Rising? I Have Killed it on my Stocks, Bonds, & Real Estate Over That Time Period So Things Must Be Better Right?
Yeah, if you were one of the fortunate people to amass some capital this era of “excess capital” has treated you well despite a few periods of volatility. But lets remember that financial securities are just claims on money and money is a claim on energy, or stored energy. What really is to credit for this period of insane financial asset price growth? I would argue that it is a massive downward shift in the global labor supply combined with excessive credit (private and public) due to interest rates dropping from 18% to 0%, & marginal tax rates getting cut in half.
US Top Marginal Tax Rate Dropped From 69% When I was Born to 37%
US Debt/GDP Has Doubled in My Lifetime & Is Up 80% Since 200. The Govt Debt/GDP Now Sits at 122% Meaning All New Money Is Inflation
US Trade Balance With CHINA (2001 WTO)
US Trade Balance With Mexico (1994 NAFTA)
US Interest Rates - 15% Down to 0% (FU Savers) But Just When You Adjust to 0% World We Will Rug Pull You & Smash Asset Prices . . . Sorrrry
Housing Affordability At All-Time Low in My Life
Unaffordable Housing + Bad Economy = Highest % of Young Adults Living With Parents Since WW2
College Tuition Is In Hyperinflation Mode
Education Trends Are Going the Wrong Direction
Life Expectancy Is Now Declining No Longer Rising
Well said and you captured a lot of my thinking's and recent discussions with my wife.
It’s fascinating how media lies to us Americans. They keep saying life expectancy in USA is 84 not 76 lol