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the swinging of conditions from one extreme to another in a cycle is the norm, not the exception.
the swinging of conditions from one extreme to another in a cycle is the norm, not the exception.
the really big boom periods and the really big bust periods, like many things, come along about once in a lifetime and so they are surprising unless one has studied the patterns of history over many generations.
the really big boom periods and the really big bust periods, like many things, come along about once in a lifetime and so they are surprising unless one has studied the patterns of history over many generations.
the future we encounter is likely to be very different from what most people expect.
the future we encounter is likely to be very different from what most people expect.
Anyone who studies history can see that no system of government, no economic system, no currency, and no empire lasts forever, yet almost everyone is surprised and ruined when they fail
Anyone who studies history can see that no system of government, no economic system, no currency, and no empire lasts forever, yet almost everyone is surprised and ruined when they fail
From my years of wrestling with the markets and trying to come up with principles for doing it well, I’ve learned that one’s ability to anticipate and deal well with the future depends on one’s understanding of the cause/effect relationships that make things change, and one’s ability to understand these cause/effect relationships comes from studying how they have changed in the past.
From my years of wrestling with the markets and trying to come up with principles for doing it well, I’ve learned that one’s ability to anticipate and deal well with the future depends on one’s understanding of the cause/effect relationships that make things change, and one’s ability to understand these cause/effect relationships comes from studying how they have changed in the past.
I believe that the reason people typically miss the big moments of evolution coming at them in life is because they experience only tiny pieces of what’s happening. We are like ants preoccupied with our jobs of carrying crumbs in our very brief lifetimes instead of having a broader perspective of the big-picture patterns and cycles, the important interrelated things driving them, where we are within the cycles, and what’s likely to transpire.
I believe that the reason people typically miss the big moments of evolution coming at them in life is because they experience only tiny pieces of what’s happening. We are like ants preoccupied with our jobs of carrying crumbs in our very brief lifetimes instead of having a broader perspective of the big-picture patterns and cycles, the important interrelated things driving them, where we are within the cycles, and what’s likely to transpire.
My examinations of history have taught me that when wealth and values gaps are large and there is an economic downturn, it is likely that there will be a lot of conflict about how to divide the pie.
My examinations of history have taught me that when wealth and values gaps are large and there is an economic downturn, it is likely that there will be a lot of conflict about how to divide the pie.
From examining all these cases across empires and across time, I saw that the great empires typically lasted roughly 250 years, give or take 150 years, with big economic, debt, and political cycles within them lasting about 50 to 100 years.
From examining all these cases across empires and across time, I saw that the great empires typically lasted roughly 250 years, give or take 150 years, with big economic, debt, and political cycles within them lasting about 50 to 100 years.
When looking at the whole or at averages, you don’t see the individual cases of rises and declines, which are far greater.
When looking at the whole or at averages, you don’t see the individual cases of rises and declines, which are far greater.
to see the big picture, you can’t focus on the details.
to see the big picture, you can’t focus on the details.
While I have learned an enormous amount that I will put to good use, I know that what I know is still only a tiny portion of what I need to know to be confident in my outlook for the future. I also know from experience that if I wait to learn enough to be satisfied with what I know before acting or sharing, I’d never be able to use or convey what I have learned.
I learned that the biggest thing affecting most people in most countries through time is the struggle to make, take, and distribute wealth and power, though they also have struggled over other things too, most importantly ideology and religion.
throughout time and in all countries, the people who have the wealth are the people who own the means of wealth production. In order to maintain or increase their wealth, they work with the people who have the political power, who are in a symbiotic relationship with them, to set and enforce the rules.
I saw how, over time, this dynamic leads to a very small percentage of the population gaining and controlling exceptionally large percentages of the total wealth and power, then becoming overextended, and then encountering bad times, which hurt those least wealthy and least powerful the hardest, which then leads to conflicts that produce revolutions and/or civil wars. When these conflicts are over, a new world order is created, and the cycle begins again.
The most important three cycles are the ones I mentioned in the introduction: the long-term debt and capital markets cycle, the internal order and disorder cycle, and the external order and disorder cycle.
These cycles have remained essentially the same through the ages for essentially the same reason that the fundamentals of the human life cycle have remained the same over the ages: because human nature doesn’t change much over time. For example, fear, greed, jealousy, and other basic emotions have remained constants and are big influences that drive cycles.
Evolution is the biggest and only permanent force in the universe, yet we struggle to notice it. While we see what exists and what happens, we don’t see evolution and the evolutionary forces that make things exist and happen.
Evolution is the upward movement toward improvement that occurs because of adaptation and learning. Around it are cycles. To me, most everything transpires as an ascending trajectory of improvement with cycles around it, like an upward-pointing corkscrew:
Human productivity is the most important force in causing the world’s total wealth, power, and living standards to rise over time.
it has risen at different rates for different people, though always for the same reasons—because of the quality of people’s education, inventiveness, work ethic, and economic systems to turn ideas into output.
Throughout time, the formula for success has been a system in which well-educated people, operating civilly with each other, come up with innovations, receive funding through capital markets, and own the means by which their innovations are turned into the production and allocation of resources, allowing them to be rewarded by profit making.
Countries with large savings, low debts, and a strong reserve currency can withstand economic and credit collapses better than countries that don’t have much savings, have a lot of debt, and don’t have a strong reserve currency.
Most cycles in history happen for basically the same reasons.
These periods of destruction/reconstruction devastated the weak, made clear who the powerful were, and established revolutionary new approaches to doing things (i.e., new orders) that set the stage for periods of prosperity that eventually became overextended as debt bubbles with large wealth gaps and led to debt busts that produced new stress tests and destruction/reconstruction periods (i.e., wars), which led to new orders and eventually the strong again gaining relative to the weak, and so on.
What are these destruction/reconstruction periods like for the people who experience them? Since you likely haven’t been through one of these and the stories about them are very scary, the prospect of being in one is worrisome to most people. It is true that these destruction/reconstruction periods have produced tremendous human suffering both financially and, more importantly, in lost or damaged human lives. While the consequences are worse for some people, virtually no one escapes the damage. Still, without minimizing them, history has shown us that typically the majority of people stay
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My point is that while these revolution/war periods typically lead to a lot of human suffering, we should never, especially in the worst of times, lose sight of the fact that one can navigate them well—and that humanity’s power to adapt and quickly get to new and higher levels of well-being is much greater than all the bad stuff that can be thrown at us.
EIGHT DETERMINANTS OF WEALTH AND POWER
1) education, 2) competitiveness, 3) innovation and technology, 4) economic output, 5) share of world trade, 6) military strength, 7) financial center strength, and 8) reserve currency status.
To deal with the realities that are coming at me, my process is to… Interact with this machine and try to understand how it works Write down my observations of its workings, along with the principles I have learned for dealing with them Backtest those principles through time Convert the principles into equations and program them into a computer that helps me with my decision making Learn from my experiences and my reflections on my experiences, so I can refine my principles Do that over and over again
All peoples throughout history have had systems or orders for governing how they deal with each other. I call the systems within countries “internal orders,” those between countries “external orders,” and those that apply to the whole world “world orders.” These orders affect each other and are always changing.
The way I see it, at any moment in time there are both 1) the existing set of conditions that include the existing domestic and world orders and 2) timeless and universal forces that cause changes in these conditions.
Everything that has happened and everything that will happen has had and will have determinants that make it happen. If we can understand those determinants, we can understand how the machine works and anticipate what will likely be coming at us next.
While the inherited assets and liabilities of a country are very important, history has shown that the way people are with themselves and others is the most important determinant.
When humans have the capacity to produce more revenue than they expend, there is good human capital and self-sufficiency.
While many countries have natural resources that they are able to draw upon, human capital is the most sustainable capital because inherited assets that are drawn down eventually disappear, whereas human capital can exist forever.
In all countries throughout time, though to varying degrees, people are sorted into “classes,” either because they choose to be with people like themselves or because others assign them to a class.
Like everything else, internal orders and world orders are constantly evolving and moving circumstances forward through time, as existing circumstances interact with each other and the forces that act on them to produce new circumstances.
To be successful one must earn an amount that is at least equal to the amount one spends.
Humanity’s capacity to invent solutions to its problems and to identify how to make things better has proven to be far more powerful than all of its problems combined.
The degree of inventiveness and innovation in a society is the main driver of its productivity.
