In his latest letter to investors, Cherry-Coke-sipping Warren Buffett went full fiction-peddle-tard. As the man who perhaps best rode the coat-tails of an ever-increasing wave of American credit expansion exceptionalism (only to come undone in recent times as that game ends), it is no surprise that he explains "for 240 years it’s been a terrible mistake to bet against America, and now is no time to start." We don't mean to rain on his parade too much, but the following charts suggest "nothing lasts forever" and time is ticking.
For a man who runs a massive, highly-levered portfolio of assets exposed to 'Murica, it is hardly surprising Buffett would utter the following:
"For 240 years it’s been a terrible mistake to bet against America, and now is no time to start.
America’s golden goose of commerce and innovation will continue to lay more and larger eggs.
America’s social security promises will be honored and perhaps made more generous.
And, yes, America’s kids will live far better than their parents did."
The trouble is - taking each statement...
Nothing lasts forever...
History did not end with the Cold War and, as Mark Twain put it, whilst history doesn’t repeat it often rhymes. As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip.
America’s global economic dominance has been declining since 1998,
well before the Global Financial Crisis. A large part of this decline
has actually had little to do with the actions of the US but rather with
the unraveling of a century’s long economic anomaly. China has begun to
return to the position in the global economy it occupied for millenia
before the industrial revolution. Just as the dollar emerged to global
reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet...
If you don't think these apply, please check back in at the end of the year. We'll have a firmer grasp of social depression in December 2016... and so will Warren!
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