History does not repeat itself, but it rhymes…Mark Twain

Unfortunately, we live in a new era although similar to Rome.  Politics today is a flag in the breeze. Politicians do not understand what’s different today than other periods like the 1930s :

1. Gov’t checks in the mail (in 1930s you had to work to get a check)
2. Fed’s Infinite Balance Sheet / Markets  (in 1930s, Fed raised interest rates initially)
3. Cheap Robots (Moore’s Law) see book.. https://www.amazon.com/Thank-You-Being-Late-Accelerations/dp/0374273537/ref=sr_1_1?ie=UTF8&qid=1479856235&sr=8-1&keywords=thomas+friedman
4. Mark Blyth style Creditor/Debtor Standoffs (no resolutions)
5. Cheap entertainment for all / breadth of entertainment (Rome did have coliseum but only for citizens)

None of this requires employment. Thomas Piketty notes that only 2 resolutions are available: war and deflation/depression. BUT deflation can’t occur with the Fed’s infinite balance sheet and nuclear peace prevents war. The closest analogy to the quagmire is Japan’s economy from 1990-onwards:

1. Rising Debt/Lower and lower growth
2. Lower and lower interest rates and lower inflation expectations
3. Declining money velocity…rising asset prices
4. Extend and pretend policies
5. Checks in the mail/Make work jobs
6. Rising Fed Balance Sheet
7. Declining Birth Rate
8. No lasting solutions…only temporary band aids.

Aside: TLT falling means yield spike which leads to a recession….