“The United States is at a tipping point in which it could go from manageable internal tension to revolution and/or civil war.”
Ray Dalio, The Changing World Order 2021
THE USA has economically evolved rapidly since its post-war shift towards becoming the central economic point for the world.
Between 1948 and 1988 the wealthiest 0.1% owned roughly 10% of all household wealth, and in 1978 that share of wealth fell to 7% according to a UC Berkeley and LSE report.
During the economic crisis of the 1970s the wealthiest 0.1% owned the least share of household wealth for the whole duration of the 20th century. In 1973, Americas wealthiest 0.1% owned 7.5% of all household wealth, over a 40-year period that share of wealth has trebled to 23%.
Three billionaires own more wealth than 50% of all Americans combined. Yes, three men own more wealth than 163m American citizens
The economic stress caused by the pandemic will not only exacerbate this wealth inequality, but it will induce social change. The recent rise in asset prices in the last 12 months has mainly been caused by the rapid expansion of the money supply. Global central banks have increased their money supply exponentially in just 18 months, which will cause higher prices down the line and this will hurt the average American’s buying power.
Within the next 10 years the average American’s purchasing power will decline and their disposable income will dwindle away – this is already happening because inflation levels are starting to increase a lot. This will result in more social hostility between the people and centralised government, and the populism in this decade will dwarf the populism we’ve seen in the last decade.
Hedge fund titan and economic wizard Ray Dalio has spent years analyzing markets, companies, asset prices and economies, and this has rewarded him with a net worth of around £15.5 billion. So out of the many economic pundits, free market think tanks and contrarian economists out there, I would firmly say this guy knows what he is doing and his performance proves it. He regularly talks about the issue of wealth inequality and he freely admits he is part of the problem.
Here is one of his recent quotes:
“From studying over 50 civil wars and revolutions, it became clear that the single most reliable indicator of civil wars and revolutions is bankrupt government finances, often after an economic shock and when there are big wealth gains. I am witnessing a strong link between historic events and the events playing out today.”
Here is a self-made billionaire warning Americans about ultra-wealth inequality and how it could lead to a potential civil war or a revolution. Not only does he admit to being a part of the problem, but he says that if something does not change soon a civil war or a revolution is highly probable.
Dalio has spent many years studying the link between wealth inequality and historic hostile events and has found a very strong relationship between the two. This is quite remarkable and it says a lot about the reality of the economic situation we are in today. I 100% agree with Dalio on this and history shows us again and again that fascism, nationalism, revolutions and civil hostility are mainly triggered by economic factors.
Look what gave rise to fascists like Mussolini, Hitler and Oswald Moseley – it was the great depression. But what caused the depression? The stock market crash of 1929. Today we are replaying these exact same type of events and the correlation between the two periods is very scary and compelling. A repeat of 1929 and a depression is coming whether we like it or not, it is just a matter of time, and the money printing we see now will result in rising inflation and potential hyperinflation.
The question I keep asking myself is, when this does happen what will the consequences be for us here in Britain? We have a £19 trillion public and private debt bill and an economy propped up by QE: when rates rise and ‘fiat’ cash enters inflation mode, how can we save our economy?
Not even The Bank of England could answer these questions.
Will we learn from history and take onboard the warnings from the likes of Ray Dalio and many others? History proves that societies do not learn from history, so let’s buck this trend, learn from history and prepare for the economic bomb that is set to go off.