Forget Donald or Hillary: God preserve us from the global slowdown...
"HOLD your nose and vote," writes Bill Bonner in his Diary of a Rogue Economist.
That's the advice we've been getting lately. Even our minister, on Sunday, encouraged his flock to vote.
"For whom?" we wanted to ask.
Caligula or Nero?
We closed our eyes. We tried to imagine it. But we couldn't picture Jesus Christ in the voting booth.
Would he really hold his nose? For whom would he cast his ballot? And why would he cast a ballot at all, if he had to hold his nose to do it?
"Render unto Caesar the things that are Caesar's," he said, to escape a trap.
When they come after you for taxes, you gotta pay, he implied.
But in what version of the New Testament would Jesus participate in choosing the next Caesar?
"You've got to vote," say the Pharisees. "It's your civic duty. Which will it be? Caligula or Nero?"
We know many of our readers are outraged. They can't imagine why we wouldn't pull the lever for Donald Trump. They're sure he's the only thing standing between America and doom.
Maybe. But here at the Diary we are sometimes right. Sometimes wrong. And always in doubt.
Would Jesus pull the lever for either Trump or Clinton?
Meanwhile...that sound that you don't hear...that bull-dozer you don't see moving earth...that road not being asphalted...or that ditch not being dug...
...that's what the world's largest maker of mining and construction equipment, Caterpillar Inc., told us about last week.
It reported that sales were down again this year – for the fifth year in a row. And it announced it had to cut its profit forecast again, for the third time this year.
Oh, woe! The poor yellow machines! Spiders are building their webs in the unsold inventory...confident of being unmolested.
Sales are off nearly 20% since 2015. Earnings have fallen, too.
Caterpillar sells worldwide. So it is not only in Teaneck or Tulsa that the yellow machines are silent. You won't see many new ones in Tianjin or Timbuktu either.
Since the crisis of 2008, world trade growth has averaged only half the rate of the preceding half-century.
Why was trade growing so fast before the crash?
Because some countries make things better than others. A cellphone, for example, might have been designed in California and assembled in China, with components coming from Japan, Germany, and Malaysia that had been fashioned out of raw materials from South America and Australia.
That meant a lot of ships and a lot of trucks...and a lot of yellow machines building the infrastructure to keep them moving.
But now, the entire world seems to be cooling on the idea of globalized commerce; the yellow machines are slowing down.
Nobody knows why...but several hypotheses have been put forward.
In the pages of our Diary, we've focused on one of them: Caesar has perverted our commerce, our economy, and our society...with his fake money and crackpot economists.
He has teamed up with his Deep State cronies to transfer trillions of Dollars to the insiders and zombies, penalizing the productive economy and punishing savers and workers.
He has driven down growth rates, boosted financial asset prices, and increased debt to bubble levels.
But that is not all that is going on. Today, let's look at another hypothesis: deteriorating demographics.
People in the developed world are getting older. As they age, they stop spending so much money. They stay at home rather than go out to dinner. They take vacations near home, visiting their children and grandchildren, rather than travel abroad.
And as for the latest gadget, they find it a bother, not a "must-have."
Not only do older people tend to consume less, they also tend to produce less and save less. This further slows down growth. As they age, they withdraw capital from the productive part of the economy; they leave the diligent ants and join the wastrel grasshoppers.
A new paper from the Fed tells us that "demographic factors alone account for a 1.25% decline in the natural rate of real interest and real gross domestic product growth since 1980."
Is this true?
We doubt it. But demography is a big deal. Governments' old-age pensions and medical-care programs are a claim on future wealth.
As growth rates decline, those programs will default...one way or another.
Benefits will be cut – either purposefully, by the government...gradually, through inflation...or suddenly, by involuntary bankruptcy.
Again, we don't know what Jesus would do. But we'll bet we know what the old folks will do. They'd vote for the Devil himself if they thought he'd protect their pensions and medical benefits.
Caesar won't cut the programs; instead, they will go broke.