2024 Realities?

“Those who cannot remember the past are condemned to repeat it.” – George Santayana

Last week’s TLR featured an interview with Cassandra that raised the ire of one reader. Her dissenting letter follows.

Dear Mr. Realist:

I read with disbelief the predictions offered by #Cassandra in last week’s #TheLonelyRealist. Cassandra is no oracle. She has no prophetic powers. Her predictions are Pollyanna-trash. 2024 will be the most dangerous, most volatile year this century …, and maybe ever!

Cassandra places her economic faith in the Federal Reserve. How could anyone, let alone someone with would-be Gods-given powers, believe that the Fed itself has God-like powers? The Fed’s failures litter economic history, failures that are consistent with the blunders made by Central Bankers since the beginning of time. America is nearing the end of a 200-year hegemonic run which is coming at the end of an economic-cycle that is little different from those experienced by ancient Rome, early-20th Century Germany, and any number of nations that have ridden the boom-and-bust roller coaster. Recessions – and worse – mark the end of such periods. America will not avoid #recession in #2024.

Cassandra has embraced “immaculate inflation.” There is no such thing. Hard landings are the inevitable consequence of economic, political and social excess …, and America’s levels of excess are historic. Rising energy costs are only one of the several problems that will plague America in 2024. Crude oil, $70/barrel today, will exceed $100/barrel next year. Fracking has created a short-term supply surge that will be waning by the middle of 2024. This month’s multi-year low will not be seen again for decades. Add to the supply-demand equation the widening impact and the unavoidable spread of two wars and it does not take a Cassandra to see that the American economy is running out of steam. It’s not up to the task of supporting the top-heavy stock market. Earnings are deflating and inflation is reflating. Oversupply created inventory overflows and goods deflation at the same time as labor costs have been rising. Profits are suffering. They will suffer greatly in 2024. Overly-optimistic Wall Street estimates even now are being revised. Stock market prices, particularly those that project an AI future, are returning to earth. That doesn’t mean that those who successfully pursue AI solutions will fail, but their number will be small. If you’re not one of the Magnificent Seven, you’ll find it difficult to join the revolution. That’s a problem. Even the Congressional Budget Office expects a 2024 slowdown in consumption, investment and exports.

Ukraine is losing its war. Its defeat, and the consequences of defeat, will become apparent during 2024. American support is waning and divisions in the EU are widening. It is already apparent that the West will be unable to maintain its current level of military funding for Ukraine. Russia has no such problems. Russia and its allies – your Axis of the Sanctioned – understand that time and resources are on their side. Like the failed empires that preceded it, America has been sleepwalking into decline. Meanwhile, its enemies have been working overtime to undermine its power and influence. America has ignored the challenges, including by failing to realign its economy to face 21st Century realities. The consequences will dominate 2024. America has failed to maintain its technological edge in weaponry at both the high-end (with hypersonic missiles) and the low-end (with inexpensive, mass-produced drones). It’s behind in the manufacture of military armaments because it has instead focused its wealth on maintaining a consumer-and-entertainment-centric economy, the failed bread-and-circuses policy that litters history books. It’s behind its enemies in the production of ships (while China’s navy has 340 ships, the U.S. has 291 ships compared to 594 in 1987), planes, missiles and projectiles as well as in the essential acquisition of 21st Century commodities (for example, China accounts for 90% of refined rare-earths output). It is entering 2024 with its smallest military force since 1940 (active duty troops will drop to 1,284,500) at a time when American troops and allies in Iraq, Syria and throughout the Middle East are being targeted by Iranian-backed proxies, when Taiwan is (and The Philippines are) being threatened by wolf-warrior China, when Venezuela is intimidating Guyana, and when America’s closest ally, Israel, is in a war for survival. The non-aligned nations of the world understand which way the wind is blowing. The Biden Administration in 2024 will pay the ultimate price. America’s voters will not countenance increased defense spending by the Biden Administration. They also will not forgive the Biden Administration for losing the Ukraine War or for allowing Israel to fail in its self-defense. These and more will be challenged in 2024.

Resurgent inflation, recession, a declining stock market, chaos in Ukraine, Eastern Europe, the Middle East and South America, and America’s declining international influence will result in a Republican sweep in the November elections, with Republicans gaining control of the House and Senate and President Trump returning to the White House. Among Candidate Trump’s campaign promises is the deployment of U.S. Special Forces against Mexican cartels, a step that would raise cross-border tensions to unimaginable levels. A re-elected President Trump would cut support for Ukraine, end commitments to NATO, and increase tariffs on Chinese goods. These are the policies of the 1930s that led to the stark outcomes of the 1940s. Cassandra ignores these realities.

With the portents for greater turbulence, what does Cassandra advise? She believes that happy days are here again! They are not. Bitcoin has been the best performing investment in 2023, and for good reason. Gold reached a new high this year. Both will surge in 2024. Batten down the hatches!


The Delphic Oracle

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Finally (from a good friend)

1 Comment
  • jeffcsiegel
    Posted at 10:57h, 24 December

    One prediction that is probably correct is inflation. Inflation probably won’t come down as much as expected, driven by persistent rent inflation that has been running over 6% for two years (twice its historic value). This type of inflation is being influenced by immigrates competing for limited housing stocks. Immigration brings down wage inflation while it increases the need for housing. Executive action or laws to reduce the 5,000 daily (1.8M/annually) illegal aliens DHS has been releasing would help bring housing inflation down. It would also increase low-end wage inflation, which would be a positive for low-wage workers, but a negative for those that want low inflation.

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