How Much is Autocracy Already Costing America? Trillions.

The Price Americans are Already Paying Will Probably Startle You

Hi! How’s everyone? Apologies for taking a bit of time away. When summer’s at its peak, sometimes I struggle with the light. Yes, my condition is very real, and it’s true that the light can hurt me. Funny way to live.

I’m back now and I suppose that’s a good thing, because…we aren’t thinking too clearly when it comes to finance and economics. So today I’m going to continue teaching you how to do that.

Right now, there’s a kind of dullness in thinking about the economy, and in particular, how much autocracy’s going to cost. There’s the delusion that there won’t be a price to be paid, as America turns away from democracy, and turns into something more like a dictatorship. The sentiment is thatit won’t cost anything. That’s what the stock market’s saying, what the bond market, barely hanging on by a thread, is hoping for, and the issue America’s commentators on it all are desperately avoiding facing.

So: is the delusion real? Can we make the delusion real, just by pretending? Or is, in fact, autocracy already costing America a great deal, in hard terms, maybe even trillions? (It’s door number three, folks, and I’m about to teach you how high the price is in hard financial terms very shortly.)

America’s always had a tenuous grip on reality, and these days, it’s disconnected from it almost entirely. In the miasma of propaganda, and the dirt of capitulation, reality, you might be forgiven for thinking, doesn’t matter at all anymore, and maybe even doesn’t exist.

How wrong you’d be if you make that mistake. Let me teach you how to answer three critical questions about finance, economics, and autocracy, and shortly, we’ll put hard numbers on this in America’s case that’ll startle you.

1. Is there a price that societies and their economies pay when imploding from democracy into autocracy?

2. What is that set of costs?

3. Is America in fact already paying such costs?

The price that societies pay when their polities slide into autocracy is very, very real. Economies destabilize. Currencies go haywire, and hyperinflation often results. Risk cascades through once stable financial markets, and they become dominated not by stability but by bouts of volatility. Because a society’s key missions become whatever the autocrat’s whims happen to be, labor (aka job) markets cease to function well. In the end, prosperity fades, and hard and bleak times fall. We’ve seen this time and again throughout history.

Let me try and sum up those costs so that you understand why they happen. Markets stop working. Not as in “shut down,” but as in “setting prices with a semblance of efficiency.” They struggle, because now they don’t have good information—since, perhaps, for example, autocrats begin cooking the books. Or, for example, CEOs can no longer decide how much to invest in people or capital or stock—because trade wars escalate. And as markets stop working, an economy grows distorted, which means that it can’t operate properly anymore—money loses its meaning.

Now. How many of those effects do you see already happening in America? I’ll leave that judgment up to you, but I should think that astute readers won’t struggle to identify many of the effects above already coming to fruition. Not the more extreme ones, but certainly, perhaps, a pattern can already be ascertained. Implosion has its price.

So. What’s all that worth? In hard terms. Can we already begin to put a number on it?

I’m going to teach you how to do just that, and like I said, the result’s going to surprise, maybe even shock you. It shouldn’t, but it will, probably. And that is a measure in itself of how poorly you are being instructed in thinking. You are not thinking clearly or well, unless you’ve already arrived at the answer we’re going to derive together. That’s a sad thing, but an economy deserves better than the way it’s spoken of in America, which is to say, not very thoughtfully at all.

So. Hard terms. Do they exist? Of course they do, and they’re already costing you very real money, only many of you don’t know it. Your financial guys should be speaking to you about this, but unless you have access to world-class international ones, they probably aren;t.

For many of you, the story you’re told goes like this. The stock market’s up! Where’s the problem? Ah, but the problem is right before you.

How’s the dollar doing? Not well at all. It’s declined by about 12 and a half percent in the last six months. That’s the worst period in half a century, by the way. And that is how much autocracy is already costing you.

Let’s make that much more visceral. America’s economy was worth $20 trillion, give or take. Now it’s worth a lot less. 12 and a half percent less, in real terms, because that’s how much the dollar’s fallen. How much is that? $2.5 trillion dollars, to be precise.

So America’s autocratic implosion is already costing it $2.5 trillion. (Or if you want to be formally more precise, devaluing its economy so.) And this is just the mere beginning. The real fireworks have yet to arrive. When the stock market—and by now, all the world’s good economists and financial minds agree that it’s in an historic bubble—crashes, how much market cap will be erased? You can add that to the list. How about when America’s current leadership decides to try and tamper with its debt, and its bond markets begins to destabilize? You can add that to the list as well.

How much is that per person, by the way? It’s about $7.5K per capita. So democracy imploding into autocracy is already theoretically costing every American about $10K in real terms. Think of that number as how much less the average person is worth, for example. That’s a headline that could and should be on every front page—isn’t it dramatic, revealing, and doesn’t it give you crystal clarity, after all?

My point, by the way, isn’t that there’s a single hard number. All this is just the most elementary and crude way to answer the question, and from here, the costs only go up. We’re now speaking at a macroeconomic and macrosocial scale, and we’re just estimating orders of magnitude and degrees. Nor am I saying that America’s economy is shrinking, which is a different thing—just that what Americans are now earning and saving is worth dramatically less in real terms, as in, if you converted it to any other currency, gold, or asset—because the world is paying that much less for it, and to it.

Here I am teaching you. Please think this all through carefully with me, because the point is for you learn the following.

The price of autocracy is very real, and it is already severe and steep. So far, nobody much in American economics or finance seems to understand that, or want to understand it, more to the point. They are playing along with the delusion that all this isn’t happening, or if it is, so what, it’s just some abstract set of moral or political concerns. Wrong.

This is the fastest and most severe period of value destruction in the contemporary history of wealthy nations. To have that much value erased from an economy—over ten percent, in real terms, trillions, in absolute ones—is an immense number. To have it vaporized in less than a year is almost unheard of, outside “banana republics,” more formally sometimes termed “emerging markets.” It is a history-making amount.

And it should be a headline-making amount, too. Here, let me write the headline: autocracy’s already costing America trillions. Or we could try the other one: the average America’s already $10K poorer because of autocracy. See how easy that was?

That all this is not in the headlines worries me. It tells me how little what’s left of American media and commentary informs you well enough about the stakes you face. For example, unless your portfolio’s up by more than that, and it very probably isn’t, then you are losing money in real terms.

All this is what you should be being taught, at a minimum, about the new world of economics and finance we are entering. It’s a Big Lie that autocracy doesn’t have a price, or, more to the point, that you don’t pay it. The reality is that implosion is already costing America trillions, and this is just the beginning.

How much more will it cost? That’s the question. If $10Kish per person is just the start…where does it end? When questions like that are finally asked, then we will be thinking well about economics and finance. Until they aren’t, we are in the grip of delusion, and sadly, most people will continue losing money in real terms every single day. When nobody asks basic questions like the above, what is really happening is that folly has replaced wisdom, and moral and intellectual weakness have cast a pallor over a society.

This is what a bad bet—risk unfurling—really is. It isn’t that America’s autocrats are gambling with its economy, which is made of the labor and capital of the average person. It’s that they’re already losing, badly, only nobody’s talking about it. But nobody much appears to be noticing yet.And that, my friends, is what is most disturbing of all. Because when they do, watch out. Those are the bitter moments in which history is made, and we call them crashes, crises, and perhaps even depressions. My advice, as always remains: seek havens.

Lots of love,

Umair (and Snowy!)