"Underproduction, undercapacity, deflation, currency wars, demographics, falling birth rates" - those are the biggest fears which Fourth Turning author, and head of Saeculum Research Neil Howe, lays out in this interview excerpt courtesy of RealVision TV.
While Howe goes on an interesting tangent on the one topic that will surely be absent from all presidential debates, namely the fact that migration into the US is "actually in huge decline", and that the largest immigrant group into the US is Asian (after all someone has to buy those luxury NYC condos), what is more interesting are Howe's parallels of the current economic situation to the Great Depression: "whole areas of the world no longer having a global superpower, no longer having global institutions that enforce orders so you have these huge areas of failed states and power vacuums and regional authoritarian governments - that's exactly what people saw in the 1930s and we're seeing it now in Russia, China, Iran doing whatever they want."
"Another interesting economic parallel is the crisis of overvaluation: in the 1930s it was the gold standard, for southern Europe it's the Euro, and for China they have a fixed rate regime that they're attending to too little too late. It's the nature of an authoritarian regime to always to do too little and too late. Everyone is too timid to tell the person in power "this is what you need to do." I think China faces an absolute choice between a huge devaluation to restimulate its economy, because becoming competitive I think the carry trade is going to go and I think even domestic savings are going to flee. If they don't do that they have very few options left at this point. They have $3.5 trillion of reserves - you'll be amazed how quickly that goes. So that's another parallel.
Of course no Howe interview would be complete without some observations on generational shifts:
"And then there are some fascinating cultural parallels with the 1930s. Another thing that was true in the 1930s was that after the early 30s you saw a continuous decline in the crime rate. Crime began falling over the the course of the 30s: substance abuse, alcohol abuse began to fall, and this is true with Millennials today. And I tell people that Millennials are responsible today for the most dramatic and rabid decline in youth violence in American history. This is why so many young people are moving to cities, because they are safe again."
Will this trend reverse if and when the economy stumbles, as the full parallels to the sad conclusion of the 1930s play out?
The answer is unclear, but for a fascinating, broad and unconventional perspective on where the economy is headed from one of the cult non-establishment figures, watch the full interview on RealVision's website.
Raoul Pal has generously given Zero Hedge readers an exclusive weekly trial so both the full Howe, and all the other fascinating interviews in RealVision's database can be watched in their entirety. To do so, please click here and use the "zerohedge" trial code, at which point the full Howe interview can be seen via this link.
Here is the excerpt with Neil Howe excerpt :