I think of him as The Constant Inquirer. He provides relief from a dismal age where public discourse is modeled on the pre-match challenges you see on the World Wrestling Network. He offers an alternative to a world in which opinion is regularly treated as fact. Instead, John Mauldin offers an honest search for answers in a perplexing world.
But don’t take my word for it.
You can become one of his many readers, for free, by visiting his website, www.johnmauldin.com. Subscribe and read painlessly. If you’re up for more than bite-size reading, you can buy his most recent book, coauthored with Jonathan Tepper. When I checked Amazon, “Endgame: The End of the Debt Supercycle and How It Changes Everything” (Wiley & Sons, 2011, $28) ranked in the top 10 on investing and personal finance. The book is also why I went to visit him in his Dallas home and office.
What Mauldin is announcing to the world is that life as we now know it is over. The convenient world of affluence through public debt has been pushed to its limit. The old borrow-and-spend-trick no longer works. The result is the current dilemma, not just in the United States but also throughout the industrialized world. Our government has borrowed and spent massively, but the economy has barely responded. The game is up, but no one knows what to do next.
Mauldin isn’t the only person who sees us at a major turning point. Economist Lacy Hunt has been pointing to a debt-driven recession and falling interest rates for years. Economist Gary Shilling has been writing about deflation and excess debt for more than a decade. Both are referenced in the book.
Indeed, if you visit the book’s index you’ll find references to dozens of major figures— investment manager Jeremy Grantham, historian Niall Ferguson, Federal Reserve chairman Ben Bernanke, physicist Mark Buchanan, and “This Time Is Different” economists Reinhart and Rogoff, just to name a few.
And that is the significance of this book. Rather than our long past of having lone voices telling us of unsustainable fiscal gaps, impossible tax levels, or debt burdens that can’t be sustained, Mauldin has assembled a crowd and reported on their observations. Having a crowd makes a difference. We have come to what writer Malcolm Gladwell calls the tipping point. It is the place where everyone sees the emperor is naked.
The emperor, otherwise known as our government, has no clothes.
We notice the same thing. Our government is broke, naked, (still) borrowing, and shivering in the dark. And now it is obvious. That’s why the credibility of those in elective office, regardless of party, has disappeared: They continue to insist the emperor is clothed and his beneficence will make things better. It won’t.
“People don’t understand that we’re down to difficult choices and bad choices. But we’re not down to really bad choices like Greece, Ireland, Portugal or Italy”, Mauldin said during my visit.
Does Mauldin offer solutions?
Alas, no. What he does is show how completely steeped in debt we are in the United States and explores the conditions in Europe, England, Japan and elsewhere. So far, no nation has faced the music, although a few may be able to muddle through by inflating away their debt.
Will that be our path? No one knows. But the indications are that inflation is preferred to deflation and that politicians will choose inflation rather than actually admitting they have made promises that can’t be kept.
If all this sounds like unending gloom, somehow it isn’t. Mauldin simply lays it out as an interesting story with multiple observers. When I asked him how he felt about the future he gave a surprising answer.
“Our immediate future will be difficult, but I’m actually a raving optimist. We’ll get through this, as we always do. For instance, we’ve got the equivalent of Moore’s Law working in biotech. We’ll hardly recognize the world 10 or 20 years from now. And that does not take into account the overwhelming changes in communications, energy, nanotech, robotics and more that are in our near future. We will see more positive change in the next ten years than in all of last century. No one in 2021 or 2031 will want to go back to the “good old days” of 2011.”
On the web:
The book on Amazon:
John Mauldin website:
Lacy Hunt: High Debt Means Deflation, Not Inflation (05/06/2009)
Gary Shilling: A Visit with Dr. Deflation (11/03/2003)
Your Helicopter Is On the Way (06/29/2003)
http://assetbuilder.com/blogs/scott_burns/archive/2003/06/29/Your-Helicopter-Is-On-The-Way.aspx
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
(c) A. M. Universal, 2011