Neil Howe: We May Suffer A Collision of Financial, Social & Geo-Political Crises All At Once

Summary

In this interview, Adam Tagert discusses the Fourth Turning, a theory that suggests society moves in cycles and is currently facing a crisis era. Neil Howe, co-author of 'The Fourth Turning,' shares his insights on the potential for financial reckoning, generational and ideological conflicts, and the impact of the upcoming US presidential election. They explore possible scenarios, from financial repression to class and generational wars, and the need for societal restructuring.

Takeaways

• 🌟 The conversation revolves around the concept of 'fourth turnings', a period of crisis that leads to significant societal change, as described in the books 'The Fourth Turning' and its sequel.
• 😌 Neil Howe, the guest, suggests that we are currently in a fourth turning, marked by internal conflict, external challenges, and financial struggles, which could lead to a major societal reorganization.
• 🔍 The discussion highlights the potential for a financial reckoning, with inflation and financial repression being seen as likely outcomes, affecting bondholders and those relying on fixed incomes.
• 💵 Neil predicts that during a crisis, there will be a push for wealth redistribution and equality, as incentives are needed to ensure everyone's commitment to the survival of the regime.
• 🏛️ The conversation points to the possibility of a significant reallocation of resources, with a focus on rebuilding infrastructure and the 'real' economy, including manufacturing and defense spending.
• 📉 There is a concern about the current state of the stock market, with the potential for a downturn, and the suggestion that passive investing in index funds could pose systemic risks.
• 🚫 Neil advises against investing in long-term nominally denominated assets, as they are likely to lose value in a financial reckoning, and recommends being cautious with complex financial instruments.
• 🏡 The script suggests that the younger generation, particularly Millennials, may be more attuned to the current economic and political climate, and are making investment decisions based on the expectation of a collective bailout.
• 🌱 Neil expresses optimism about the future, believing that adversity can strengthen democracy and society, and that the current crises could lead to positive transformations.
• 📈 The discussion also touches on demographic trends, with a focus on fertility rates and the potential economic implications of changing family structures and aging populations.

Q & A

What are the three types of crises mentioned in the transcript?

The three types of crises mentioned are internal, external, and financial crises.

What does the term 'fourth turning' refer to in the context of the discussion?

The 'fourth turning' refers to a period of crisis and reorganization in society that occurs approximately every 80 to 100 years, characterized by significant social, political, and economic upheaval.

What is the concern expressed about the current state of American society post-election?

The concern is the potential collapse of expectations by whoever loses the election and how they will deal with it, leading to internal conflict and the possibility of resistance movements or defiance of federal authority.

Why is the discussion of the economy focusing on inflation and financial repression?

Inflation and financial repression are seen as likely outcomes due to the current economic policies, which could lead to higher rates of inflation and the need for financial measures to manage the economy during a crisis.

What is the significance of the 'American High' mentioned in the transcript?

The 'American High' refers to a period of strong community and societal cohesion, which is part of a cycle of societal moods that precedes the 'Awakening' and 'Unraveling' phases, leading to the 'Fourth Turning'.

How does the guest, Neil, view the potential impact of a financial reckoning on the current economic situation?

Neil views a financial reckoning as a likely event that could lead to higher inflation, financial repression, and a significant restructuring of public priorities, potentially causing a massive reorientation of society's economic life.

What is the 'birth death model' mentioned in the discussion and why is it considered countercyclical?

The 'birth death model' is a method used by the CES for estimating employment figures. It is considered countercyclical because it tends to show negative revisions before a recession and positive revisions after a recession, opposite to the actual economic cycle.

What advice does Neil give regarding investment strategies in the face of a potential crisis?

Neil advises avoiding long-term nominally denominated assets and staying away from investments with a lot of counterparty risk. He suggests focusing on hard assets, commodities, and sectors that are likely to benefit from a rebuilding of infrastructure and increased defense spending.

What is the 'Catalyst' mentioned in the context of the fourth turning?

The 'Catalyst' refers to an event or series of events that trigger the crisis phase of the fourth turning, leading to a period of upheaval and ultimately a reorganization of society.

What does Neil suggest about the role of Millennials in the current economic climate?

Neil suggests that Millennials are investing in a way that reflects an understanding of the current economic climate, often choosing to invest in large market indices and ETFs, which they believe will be bailed out in the event of a downturn due to their collective size.