charleshughsmith.blogspot.com / CHARLES HUGH SMITH / WEDNESDAY, JANUARY 01, 2014
Here are eight more trends to watch in 2014-2015.
At the beginning of this year (2013), I identified eight key dynamics that will play out over the next two to three years (2013-2015):
Trend #1: Central Planning intervention in stock and bond markets will continue, despite diminishing returns on Central State/Bank intervention
Trend #2: The omnipotence of the Federal Reserve will suffer a fatal erosion of confidence as recession voids Fed policy and pronouncements of “recovery”
Trend #3: The Mainstream Media (MSM) will continue to lose credibility as it parrots Central Planners’ perception management
Trend #4: The failure of what is effectively the “state religion,” Keynesianism, will leave policy makers in the Central State and Bank bereft of policy alternatives
Trend #5: Economic Stagnation will fuel the rise of Permanent Adolescence
Trend #6: Income, the foundation of real economic growth and wealth-distribution stability, will continue to stagnate
Trend #7: Small business—the engine of growth—will continue to decline for structural reasons
Trend #8: Territorial disputes will continue to be invoked to distract domestic audiences from domestic instability and inequality
I know it may strike some as “cheating” that my forecast is for these trends to be consequential within a three-year window rather than by a specific date, but note these are trends, not events, and trends tend not to matter until suddenly they do. This is the nature of Pareto Distributions, in which trends are inconsequential until they reach a critical mass of 4% of the populace, at which point the “vital few” exert outsized influence on 64% of the populace.
Let’s see how the trends developed in 2013:
Trend #1: Intervention yielded outstanding returns on corporate profits and stocks, but diminishing returns on employment, household incomes for the bottom 80%, and growth, all of which are historically subpar: