Gold News

The Real Green Revolution

See those tractors heading for the Bastille...?
TO SOME, the most appropriate economic analogue for the current parlous state of the world is the Great Depression of the 1930s, writes Tim Price of Price Value Partners.
The economist Sean Corrigan, riffing on this theme, offers the coinage of 'the Great Suppression'. Our preferred comparison, as things currently stand, is with the 1970s, with the economic fallout from the oil crisis, the three-day week, and increasingly fractious relations between unions and the government. But perhaps an altogether darker and more substantial comparative reset is that of the French Revolution itself.
Some historians, perhaps most notably those of a Marxist bent, regard the French Revolution as the most significant event in the history of the modern world. The Revolution replaced a monarchy with a republic, reshaped the social order and the role of the aristocracy and the Church, ushered in a period of extraordinary outbursts of violence, and ultimately led to a dictatorship under Napoleon – who would then export many of its principles, by force, to much of western Europe.
Like so many revolutions, this one was in large part triggered by finance. When Louis XVI took to the throne in 1774, the French state was nearly bankrupt, primarily due to the country's involvement in the Seven Years' War and then the American Revolutionary War. A financial crisis and a linked constitutional crisis forced the monarchy to call the Estates General – a body that had not been summoned since 1614. The financial crisis came about through defaults in tax payments after bad harvests and systemic weakness throughout a network of local tax officials and provincial treasuries which ultimately failed. The damage was intensified via a crisis in the international money market following the conclusion of the American war; the market simply stopped lending to Paris, cutting off the King's ability to borrow.
As Louis' authority evaporated, violence ensued. The fate of Joseph Foulon de Doué, the minister of the King's finances, is illustrative. Parisians alleged that when told that the poor throughout France were starving, de Doué responded that they could eat straw. After the storming of the Bastille in July 1789, de Doué attempted to flee Paris, but he was discovered and forced to walk barefoot back into the city. After trying and failing to hang him three times – since the rope could not support the weight of his body – the mob decapitated him, stuffed his mouth with straw, and paraded his head on a pike.
Few social groups were spared. In the September Massacres of 1792, more than 1200 people were slaughtered over the course of five days or so, including prisoners, priests and nuns. During the so-called 'Reign of Terror', for example, as many as 40,000 accused prisoners may have been summarily executed or died awaiting trial.
The very earliest days of the Revolution offered a promise of hope, and not just to the citizens of Paris or wider France. The English poet William Wordsworth, in a passage from The Prelude originally published as French Revolution as It Appeared to Enthusiasts at Its Commencement, had written
"Bliss was it in that dawn to be alive,
"But to be young was very heaven!"
But by 1794, sickened by the wild violence that attended the Revolution, he was saying in a letter to a friend that "I am of that odious class of men called democrats", and in another he flatly stated "I recoil from the bare idea of a revolution." By 1811, in View From the Top of the Black Comb, he was likening Napoleon to Milton's Satan.
The author and critic Sinéad Fitzgibbon writes of the Revolution as seen through the poetry of the time:
"As is often the case with such things, it can be argued that two competing narratives have grown up around the events in France at the end of the 18th century – there is the myth and there is the reality. The second generation of Romantic poets, including Byron and Shelley, were greatly inspired by the utopian ideals of the early Revolution, without giving sufficient weight to the destruction and horror which followed. It was easy for them to embrace a selective, almost mythical, version of events twenty years after the fact. Not so for Wordsworth; for him, the French Revolution was reality, and a painful reality at that. In renouncing all the beliefs he had once held dear, he was perhaps the most honest of them all."
Of all the things that governments provide, maintaining the peace is surely at the core. But it seems today that wherever you look, the glue of social order seems to be slowly – or not so slowly – dissolving. One by-product of the pandemic has been a general erosion of trust in many of our own major institutions. The police, the Church, government, the scientific 'establishment', the judiciary, and the mainstream media; each of them has endured a pretty miserable crisis thus far. And then you look abroad. As the sheriff replies laconically to his deputy in the book (and film) No Country for Old Men,
"If it ain't [a mess], it'll do till a mess gets here."
Expect to hear much more about the Overton Window – of acceptable social policy – in the weeks and months to come. When we first started discussing it, back in 2019 and very early 2020, concepts like UBI (Universal Basic Income) and MMT (Modern Monetary Theory) were still theoretical. Then central bank printing presses throughout the world worked overtime and millions of workers developed a taste for being paid to sit at home, stuff themselves via services like Deliveroo, and watch Netflix. The Overton Window didn't just widen – it was smashed to pieces. But furloughs do not last forever.
The financial analyst Doug Noland captured the surreal nature of the securities markets at the height of the confected pandemic even as the real economy burned:
"A global pandemic and historic economic downturn. A rapidly escalating US/China cold war. [Little did we know what would happen in Ukraine..] Surging US unemployment and economic depression. A deeply fragmented society with intensifying animosity and conflict. Heightened social instability, with mounting protests (and even a number of ugly riots). Friday Drudge headline: 'A Society On Brink of Complete and Utter Chaos...'
"A booming stock market. Rapidly expanding 'money' supply. Exceptionally loose financial conditions, with record debt issuance. Huge inflows into corporate investment-grade and high-yield bond ETFs. Record Treasury and investment-grade corporate bond prices.
"It's easy these days to question securities market sanity. Yet it's a fundamental tenet of Credit Bubble analysis that things turn crazy at the end of cycles. In the waning days of history's most spectacular financial Bubble, should we be too surprised by Complete and Utter Craziness?"
It is easy to reach the conclusion that the legacy of the French Revolution – despite its evident cruelty – was ultimately largely benign. In ending the monarchy, France developed democracy. Civil rights were implemented. The French people were granted freedom of speech and of religious worship, freedom of association, freedom of the press and the ownership of land. But looking at the state of the EU and its chaotic response to Covid-19 hardly inspires confidence about the union's sustainability today.
The rise of China points to a multipolar rather than unipolar geopolitical world, and the global response to the pandemic points to a violent reaction against globalisation – a retreat, if you will, against prospects for wealth, full stop. Meanwhile the unified central bank response – print money and be damned – reinforces the case for the ownership of commodities (especially gold), unloved (but highly cash-generative) value stocks, and absolutely not the ownership of debt, especially government debt.
Historians, perhaps inevitably, continue to argue about the importance of what happened in Paris all those years ago. Linda Colley, writing for the London Review of Books in the French Revolution's bicentennial year, 1989, reviews Simon Schama's Citizens: A Chronicle of the French Revolution. Colour him 'not impressed' by its achievements:
"Schama's anger is made more emphatic by his belief that the Revolution accomplished very little. Far from making France safe for capitalism, he argues, it actually retarded for several decades the nation's commercial and industrial growth. As for the organisation of the state, he agrees with de Tocqueville that survivals of pre-Revolutionary trends were more apparent than any overwhelming change instituted after 1789. The abolition of seigneurial rights and guilds, he claims, promised ordinary Frenchmen and women far more than they actually gained. And for those who were really poor, the Revolution proved an unmitigated disaster. It devastated the Roman Catholic Church's charitable and educational foundations without in the short term establishing any adequate alternatives. As one of my colleagues at Yale remarked in a recent lecture, Schama's verdict on the French Revolution is doubly damning: its achievements were small and it was horrible."
Times of dramatic change are accompanied by huge uncertainty, to be sure – but with great change also comes great opportunity. Fortes fortuna adiuvat. Those who consume their news content via the legacy media may be unaware of the mass farmers' protests that have swept across Europe in recent weeks. Mark Tinker:
"As French Farmers shut the auto-routes and effectively blockade Paris, blaming both the French Government and the EU for 'absurd, extreme, and unworkable environmental policies dreamt up by the EU and zealously implemented by the Macron government', the technocrats in Paris and Brussels are getting distinctly nervous.
"The quote from Stephane Sejourne (a key ally of President Macron) – 'a populist and nationalist rise almost everywhere in Europe. The risk of ungovernability is quite strong...if the populist parties ever manage to have a blocking minority in the European Parliament' – identifies the real concern, which is not just that the 'peasants are rebelling against the Bien pensants' but that, following the upcoming EU Elections in June, the whole magical thinking that underpins the power of the EU might disappear and it will lose its ability to 'govern' the 448m people in 27 member countries...
"It would take a conspiracy theorist to blame either the US or China for deliberately setting policies that suit their own countries at the expense of the EU, but that is almost certainly going to be some of the rhetoric we will start to hear from the populists. Trump has made it clear he will push back against the Democrats' Green agenda on Oil and Gas and will likely spin it as being stopping something that benefits China – who make the electric cars, almost all the solar panels, the key rare earths that go in all the Windfarms, all while using plenty of Coal, gas and Nuclear power.
"Marine Le Pen, meanwhile, has previously said she would oppose energy sanctions on Russia for example as well as weapons for Ukraine, both seen as US policies. Other protests such as AfD in Germany are more in line with those identified by the survey discussed above – anti open borders and anti Green and thus may pick up on any of Trump's anti China rhetoric if it suits. The Grand Project of the Brussels Bureaucrats is facing attacks from all sides. Death by a thousand cuts even. Ultimately, the Euro itself could come under a lot of pressure.
"Thus, rather like the Butterfly's wings over Mount Fuji, we may find that Tractors on the outskirts of Paris could lead to a dramatic unravelling of the stealth Global Government assembled over the last 20 years. Maybe this is the actual Green Revolution."
London-based director at Price Value Partners Ltd, Tim Price has over 25 years of experience in both private client and institutional investment management. He has been shortlisted for the Private Asset Managers Awards program five years running, and is a previous winner in the category of Defensive Investment Performance.
See the full archive of Tim Price articles.


Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals