JD21 wrote:

What’s your view on the likely economic ‘reset’ coming our way?

It's complicated (obviously).

Forces within the United States will seem rather minor compared to forces outside of the United States. Within the United States you will see tax arbitrage seriously wound certain States and Cities. Chicago is high on that list. How people don't see it as a dead man walking is an unbelievable level of cognitive dissonance to me. I suspect NYC will follow in due time. California I'm not so sure about. CALPERS has at least made a decent effort to get out ahead of their problems, it's a much larger and more diverse state economically than IL or NY (or NJ or CT). Demographically it's much healthier too.

Demographics... population pyramids in particular... don't get much attention at all in the mainstream media. Yet it's probably the most powerful economic force at play in the world today. It's a massive but slow force, kind of like the continental plates. A plain is a plain for decades and millennia until, one day, a giant impassible mountain range rises.

If you look at the population pyramid of China... it's a disaster and that disaster is on our doorstep. This will have ramifications far and wide. Commodities spring to mind. China has been the incremental demand source for a host of commodities for decades now. That's coming to an end. This will have ramifications for any country which is reliant on commodity exports. Also a result of China's demographic profile, China now needs export led growth going forward. They've missed the window of opportunity to increase internal consumption. The proverbial "tide" will go out on Chinese companies and you'll see a massive increase in company failures, defaults, and layoffs. The Communist party will throw whatever they can at the problem but the end result will likely be at best stagnation and they'll blow through their Forex reserves as well.

Europe is boned. Germany is pretty much holding the whole thing together and they need to export high-value finished goods in order to keep their engine going. Again, this is driven by demographics. Their population is simply too old for any consumption-led growth and the Germans are far too responsible and principled to try what the Chinese have done with Investment.

Russia is facing an imminent manpower shortage and another uprising in Chechnya is probably an "any day now" sort of thing. When that happens it will take Russia off the global chess board.

South America will be South America. I don't expect anything to materially change in such a way that it would affect the U.S. or the global economy.

I think you'll find that North America will slowly step back from the world. When you subtract trade with Mexico and Canada, the U.S. has less trade with the world as a percentage of GDP than... Afghanistan. Seriously. The last thing that really kept the U.S. engaged in the global system was oil in the Middle East but the U.S. doesn't need that oil anymore. Most people are still in the early 2000s mind frame that high oil prices are bad for the U.S. economy but, in truth, increases in oil prices now add to U.S. GDP on net.

In bullet points, some themes:

• Everyone wants to export their way to wealth but the world has run out of takers on the other side of the ledger
• Globally, an aging demographic is bringing an end to consumption led growth.
• Globally, the aging demographic has historically led to an increase in the supply of capital and thus a reduced cost of capital. This isn't a "forever" type thing. Once populations get too old that trend flips into reverse as the dependency ratio increases.
• Populism is likely to remain... popular... and the U.S. will likely stand out as a destination for capital
• You're going to hear a lot about MMT, modern monetary theory, in the coming years. It's a nuanced theory that has some legitimacy behind it but it will quickly be exploited by politicians that want to spend their way to reelection.

In summary, the dollar will remain king, capital will become more expensive globally but to a lesser degree in the U.S. (currency hedged) and thus when excesses in the U.S. are "reset" they'll clear at a higher price than they would elsewhere.