Of Two Minds

The net result of hyper-globalization and hyper-financialization is the crumbling of the middle class. Neofeudal societies and economies lack a vibrant middle class. This is the defining feature of feudalism and its updated V2.0, neofeudalism: a nobility (based on birth or finance, it doesn’t matter) controls the vast majority of wealth, political power and productive capital, all served by a powerless peasantry.

We will enter a world without finance, and it will be a better world, for the economy will no longer be in thrall to the derangement and inequality of parasitic, predatory finance. A world without finance is currently unimaginable, because finance is now synonymous with financialization.

There is an element of inevitability in play, but it isn’t about central bank bailouts, it’s about Death Spirals and the collapse of unsustainable systems.

Simply put, people are moving not just to escape unaffordable housing and high taxes. They’re moving to escape fiscally irresponsible, ineffective, unaccountable governance. Defenders of high state taxes like to point out that surveys find few high-net-worth households move primarily to lower their tax bills.

Our reliance on the endless expansion of credit, leverage and credit-asset bubbles will have its own high cost. The Great Moderation of low inflation and soaring assets has ended. Welcome to the death by a thousand cuts of stagflation.

What’s truly valuable has no price and cannot be bought. If all investments are being cast into Treacherous Waters, our investment strategy must adapt accordingly.