Market cycle = Government cycle

I've always felt that govt activity aligning with market cycles couldn't be a coincidence.

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But what of the Commodity producers? Ill be a Jim Grant and own some physical but I still have to do something with all this 410k capital LOL, I have been surprised to see commodity producers have very low debt and often multiple commodities they are producing from each mine, not just gold or silver. As a O&G guy I am fascinated at the balance sheets and various ways they make money off mines and control costs. They are not my grandfathers mining companies it seems.

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The heroes of the pro labor era were Alfred Sloan and McNamara. Company men. What’s good for GM is good for America

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The chart that is speaking to me is the US Govt Spending Growth over 5 years.

With the pandemic, governments all around the world has unleased fiscal stimulus and I feel there is no turning back from here on in. Take for example, Liz Truss vs Rishi Sunak. LIzzie is promising more spending and the populous knows that isn't the best outcome but more willing to embrace that. If politicians don't provide some form of fiscal stimulus, they will simply be voted out. With each financial crisis, we go on to more easy money measures. 2000s interest rates go almost zero, 2008 QE and 2020 fiscal + QE. Next crisis, probably fiscal stimulus +QE + universal income (if you earn below a certain threshold)? I fail to understand, how will Government finance this, if that is the case.

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Great piece, it's certainly food for thought!

Even with the benefit of hindsight it can be difficult to precisely date structural turning points.

For example, do we date the death knell of the progressive/new-deal philosophy to the Volcker shock of 1979-80, Yom Kippur oil shock of 1973-4 or as early as when Nixon abandoned the gold standard in 1971? Or was the whole period 1971-80 really just a transition period, an intermezzo if you will (with a tremendous commodity rally and bond massacre to boot!) This isn't just an academic exercise - I wouldn't want to be short gold in 1971, or long gold in 1979-80.

With the benefit of hindsight (if only!) I can now more confidently say that the post-2008 "Great Stagnation" was really the intermezzo of my generation (I'm a Gen Y- millennial). In 2009 I struggled to understand what was happening and kept pondering, what next? If only I knew then!

Now I view the 2008-22 period (between Lehman Brothers collapse and the Russo-Ukrainian War) as the precursor to the statist (or pro-labour, as you put it) era.

Just as I wouldn't want to be short bonds in 2009 (only to see interest rates collapse to zero!) I wouldn't want to have been long bonds at the beginning of 2022!

But if forced to choose, I would actually date the turning point to the 2015-6 period - right after the late 2014 oil crash and 2015 Chinese devaluation and market rout.

Now that I think about it - many of the salient issues today date from that period:

Chinese GDP in PPP terms overtook the USA in 2016

China ended its one-child policy in 2015

OPEC plus (Russia joined the extended grouping) in 2016

The Covid pandemic of 2020 and War of 2022 only just confirmed the change in trend later on.

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