Chapter 15. Politics and Policies in the Long Wave Trough

I've always believed that America's government was a unique political system—one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.

Thomas L. Friedman[89]

In the preceding chapter we pointed out that there is a confluence of several negative forces at work in the United States—a sort of perfect storm—combining the after-effects of the banking crisis, deleveraging of the private sector, resumption of the long wave economic decline, and evidence of a significant waning of U.S. superpower status, reinforced by rapidly deteriorating fiscal viability.

We also warned of the dangers of excessive pessimism. People have a tendency to extrapolate the recent past indefinitely into the future. It is entirely appropriate to be realistic about the obvious challenges facing the United States, but we have to keep in mind that the outlook for the world has been bearish for the past 50,000 years! Somehow things do get better over time, and that has a lot to do with the long wave, which is essentially one of progress, decline, and progress again, through invention, innovation, and the birth of new industries and institutions that raise living standards and the quality of life.

Whether we are optimistic or pessimistic has a lot to do with time horizons. The basic message from the long wave is bullish, but not yet. ...

Get The Great Reflation: How Investors Can Profit from the New World of Money now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.