Apocalypse Simplified.

01 Apr 2025 by rate3

So, what we have as the WH's "official economic policy" is, as I have already mentioned, the "new mercantilism" or "magantilism". Basically, it means that previously held economic concepts - 2010s-2020s new-Keynesian - go out the window together with their predecessors - 1980s-2010s Libertarian (or new-Classical, Monetarists), 1950s-1980s Keynesian, and 1930s-1950s Government Led Economy (Planned Economy, Socialism, War-Time Capitalism). In fact (and in accordance with Generational theory), we are getting back ~100 years to the start of the 20th century, when the First World War began with several "great" imperial powers fighting for prevalence in international markets and grabbing new colonies to ensure an uninterrupted flow of natural resources to their "strategically important" ("patriotic") manufacturers.

Sure, those historic parallels have been severely criticized by the mainstream "academicians," but we are talking here about the reality on the ground - not out-of-this-world discussions. After all, the parallels between the 1910s and 2020s are undeniable - sporadic, self-feeding local wars leading to larger and larger ones, the rise of totalitarianism, a rapidly growing divide between the 2% richest and the remaining 98%, the triumph of radical ideologies, and all of that is accompanied by a major shift in technologies, actively pushed by a new, power-hungry generation of aggressive politicians, militarized bureaucrats, ruthless social revolutionaries, and genius, "winner-take-it-all" entrepreneurs. "If it walks like a duck and quacks like a duck, it's Elon Musk."

Naturally, we have not one but several informal cliques of those individuals grouped on Pennsylvania Avenue. At least 4 of these cliques can be easily identified: right-wing Republican ideologues, the "Dark Renaissance" revolutionaries of Steve Bannon's "schooling," the F** You Singularity gurus of Peter Thiel's generation, and "Everything-What-Your-Greatness-Want" kind. All of them are now frantically working 24/7 under the umbrella of "let's burn this pile of sh*t castle to the ground before we exhaust our political credit."

Of course, you can also be a proponent of the now prevalent point of view expressed by the as-always-slow-thinking Powell - that all of this is purely "transitory" and good-old-times of "ESG-investing" and "shiny-house-of-all-inclusive-Democracy-on-a-hill" will soon return as soon as a majority of "policy-makers" in the Capital come to their senses after the post-electoral "honey-moon" ends. Well, I am not one of yours, then.

I do not think that the great majority of Americans were just "stupid" when they voted the present Administration into the White House 3 months ago. Not at all. I believe that these changes are fundamental, that "maganomics" will continue and will prevail, supported by disillusioned, disenfranchised, and marginalized voters due to unprecedented income and social divides, despite falling markets, abused allies, and growing outcry from the left of the political spectrum. Moreover, these changes will lead in a few years to an absolutely new geopolitical and economic situation. You can bury your head in Bernie Sanders, or you can wake up and start reshuffling your portfolio.

However, before you start doing that, we need to figure out where we are going exactly, economically speaking, in the short, medium, and long term.

Let's start with the long term. We can see that the WH is pushing world leaders to take a stance on whether they are for, against, or "non-aligned" with America. The first kind will be subordinated and given some small economic preferences. The second kind will be severely ostracized and militarily threatened even if it leads to the point of an open nuclear conflict. "So be it," the "Dark Renaissance" revolutionaries will say. "The great ends justify dark means." Right-wingers will support them because they will rightfully believe that military conflicts will undermine their leftist opponents' "humanistic" rhetoric for decades to come. Among all of those mounting military threats, third-kind countries will be simply forced into submission to one or the other side. So, in the long term (10-20 years), we will have a perfect setup for the Nuclear Apocalypse.

Even after saying that, I'm still thinking we will be able to navigate ourselves out of it - but this is not the topic of this article.

Let's now look at the medium term (3-5 years). Obviously, it would be a period of stage-by-stage growing worldwide divides, worsening international relations, and, consequently, intensifying trade wars accompanied by the return of government regulations (for most G20 countries) of major sectors of the economy, especially those traditionally associated with strategic resources (including cheap food and lodging to support the poorest strata of the population - the base of the new political regime) and military. All the rest of the economy, first of all, SMEs, will be left alone (hopefully), forced to survive facing growing competitive pressure from politically-wired "F** You Visionaries" geniuses.

So the short term - basically, "detox" out of 30-50% of people's 401k because of the corresponding fall of major stock indexes - looks very gloomy for perma-bulls. However, traditional portfolio management strategies - that of going into safety - gold - might work better than the rest, including holding Treasuries or cash, because as we all know "detox" includes getting USD weaker and Treasuries more expensive and less yield-bearing.

What to do in the medium term? It looks a little less dark. First of all, the local economy will start to adapt to new prohibitive trade regimes, which will be complemented by government support for key industries to alleviate the effects of falling international and domestic sales, as well as the rise of new industries like military, AI, and crypto (mostly as a result of deregulation and the poorest educated middle-class desperately looking for new sources of income). So in that situation, some capital might be parked in those new "F** You Visionary" promulgated industries, as well as in old "detoxed" ones (military, energy, food) which will be supported by the government. Additional opportunities will start opening in international markets, especially in third-kind markets - which now have the greatest potential to grow partially as a result of rerouting international trade from "sanctioned" first-type countries.

Now, long-term portfolio management - that when the world comes to the edge of the III World War - will include exiting from "F** You Visionary" industries, repositioning into "strategic," government-supported industries (military, energy, food), and of course, again growing your gold (and possibly, depending on prohibitive legislation, Bitcoin).

So, overall, our proposed portfolio strategy to navigate the next 15-20 years can be presented as Out-In-Out. Stage 1 (short-term, 1-2 years): out to gold to wait during the "detox" period; Stage 2 (3-5 years): in to "F** You Technologies" and "strategic industries," along with some redistribution in foreign markets; Stage 3 (10-20 years): going back to gold (+BTC, possibly) and staying in "strategic industries." That can be accompanied by some investment in commodities (or representative industrial stocks).

Please note that the above is not investment advice. Moreover, the future is unpredictable by definition. So this portfolio strategy is purely speculative. It can be completely changed by myself in the future as the real situation on the ground evolves.