Which would you prefer to invest in today, a payment system or a database? The difference is philosophical. It is the difference between the value in stated human preference and value in actuarial abstraction.
There’s a fine line between growth and fantasy. The CCP virus lockdowns exposed an enormous amount of leverage in the system that was taken for granted or hidden. By illustrating a breakdown in the legacy political coalitions, primarily in the Republican Party, the American election results underscore that a social change is afoot favoring equity over debt, the authentic over the story. It illustrates how our Baby Boomer generation lived in a neverland of credit and globalization, where bits expand and atoms are regulated to death. By contrast, the Millenial generation doesn’t do big wars (yet), they casually stay married, they casually like vintage things, they care if their neighbors have jobs and are gainful in a local sense, and not just if exotic people overseas have them. They aren’t corporatist nor culty socialist either.
Next year Millenials take over as prime directors of markets. While they have less than 10% of the capital as the Baby Boomers did at this stage, American Millenials are the only example of demographic growth in the industrialized world. We have no choice but to tolerate them. Similarly, the single dominant factor in markets is still in limbo — $3T in new bank reserves and zero lending growth in 2020. The dominant factor of fantasy central banking is unwinding. China is also unwinding, which has represented ~50% of global GDP growth for the last 30 years. But what ideological coalition can underpin their replacement?
We are trending back to doing more with less — the equity-driven way of Charlie Munger — with some solar panels thrown in. Virtuous internal drivers of returns over macro (the era offers plenty of opportunity in in currencies, etc., but owing to model breakdown instead of expansion). Millenials, like Gen X, are known for weak identity, but this is not fair. The identity is found in this transitional age where the world moves back from the exogenous into the endogenous, from borrowing to earnestness. Debt-fueled growth is an Epimethean fantasy; equity-fueled growth is rare but Promethean. American culture must be recapitalized after two generations of warping, and take on new global and demographic realities never faced by hegemonic Americans to boot. To say “no identity” is merely to fail to see the complexities involved. The lack of visible sloganeering and heuristics to compress these challenges betray a lack of sociological macro aggregation and weak adherence to traditional coalitions, ergo no identity. (Even our so called “tech” companies are macro aggregators into centralized systems — in a sense they are just doing less with more, riding a wave of global debt growth).
Part of the US becoming more geopolitically insular is simply this: less organic local capital available to fund global expansionism in debt service, technology experimentation and frothy stock market unicorns, serial IMF bailouts of CCP economic hit jobs, war and maritime guarantees of the US Navy, millions of acres of shopping centers but fewer factories.
Even so-called conservatives have been caught in the under-tow of historic fiscal expansionism with its roots in the Epimethean fantasy of “modern monetary theory.” A Baby Boomer recently agreed that technology investment has become a civilizational requirement, no longer a luxury. The fact that he agreed underscores that the apparatus of rapid technology expansion to fuel even more rapid growth in debt on which the ancient regime survives is in breakdown. The onus on youngsters to invent radical new productivity, in which previous generations do not have to invest, but can mortgage nonetheless to survive their next debt-rollover is the mentality of an entire generation and a half of Americans. This mechanism is in wholesale mechanical failure — and the ideological support for it also crumbling.
What we think of as normal social coalitions of the last 50–80 years are not aligned anymore. Neither liberal nor socialist has the same religious adherence enjoyed when Pax Americana was heading off nuclear war with the Soviet. Pan-global bolshevism is passe and intellectual defection among traditional Americans has meant a failure to decisively win key arguments. The repudiation of the Roosevelt era policies of Carter by Reagan, and the technology boom which ensued, has seen the beneficiaries of that boom defect from the social coalition which spurred it. Furthermore, the Millenial generation has little visceral relationship to either.
The impact on opportunities and markets bubbling up from the deeper social trends has a greater emphasis on local organic capital formation, driven by a deeper understanding of capital as social, psychological, naturalistic, cultural and historical, not just financial. The concentric rings of meaning which have been glossed over by previous expansionist generations are coming to be understood as integral in novel and promising ways.
The loss of these coalitions means Millenials still haven’t fully developed core sociological messages. The practiced ability of database monopolies to throw history down the memory hole does not help. But what throws off seniors about Millenial identity, their indifference to reliance on coalitions, could be a new form of even greater, long-run strength.
An analog for the contrast is distributed ledger-based currency systems, which are by nature payment systems and databases in one. The combination of these two features in an autonomous way threatens and exposes the fatuous nature of these legacy coalitions as a two-faced Janus required to vindicate coercive social arrangements people would otherwise know as immoral. Distributed ledger currency systems are a transitional recombination of these fundamental elements of capital, stripped of reliance on ideological coalitions. They transform hierarchy into heterarchy. Millenials are much the same.
However, some Millenials casually believe they are post-ideological because they have cryptocurrency. A “whatever, Boomer” attitude to money and markets, banking on the assumption exponential change of an old Reaganomics technology boom. The most important questions remains: if the ideologies of a century of Epimethean war are falling away, what coalitions will Millenials formulate if they themselves one day actually must fight for something? What Promethean principles must they resurrect?
-RC
