Meditation on How Things Work

Everything is new. And we are living among events so singular
that old people have no more knowledge of them,
are no more habituated to them,
and have no more experience of them than young people.

We are all novices, because everything is new

—Joseph Joubert, 1797

Take the telephone, now. Used to be a heavy black object made of Polyoxybenzylmethylenglycolanhydride-Bakelite, for short. Early plastic. Portable, so long as you didn’t take it any further than the length of the cord that attached it to the wall. Go beyond that and you broke your connection to the world.


Remarkable device. Once, in Mexico City, while home from college on Spring break, I called my girlfriend all the way in New Orleans. Great connection, but my Dad nearly had a heart attack when he got the phone bill.

The phone I have now is housed in new plastic. Polycarbonate. It’s a smartphone and it is not attached to anything. Kids take this for granted. I do not see how the damn thing works without being wired to a wall. But it does, and I can call my grandkids in Costa Rica for practically nothing.


This is comic book stuff. Dick Tracy had his 2-way wrist radio, but I knew that was make believe. And it gets even more bizarre: I buy a car the other day and the salesman “pairs” my phone to something called Bluetooth in the vehicle. Now, when somebody calls I don’t even take it out of my pocket. I talk to the air and whoever is calling answers back somewhere in the dashboard.

According to the manufacturer, I can do 1 million other things with the phone. Just download the 1 million thingies they call “apps” and I’m good. I promise I’ll do this, just as soon as I have time.

We do adapt, and we do swiftly take all this amazing technology for granted. And when the rate of innovation is accelerated like now, we can easily believe this implies an ever growing economy. Would that it were so.

Innovation is the result of tinkering. It goes on all the time. When it happens during bad times, it goes unnoticed. During good times, and especially during financial bubbles when optimism is high, it is held to be the reason the economy cannot fail. But it can, and does.

The governing factor in the economy is not innovation. It is human behavior, which is cyclical. The cycle is immutable because, as my Marine Corps gunnery sergeant used to say, human beings are the most fucked up people in the world. Not happy leaving well enough alone, we eventually overreach.

The cycle plays out, approximately, as shirtsleeves to shirtsleeves in three generations. The generation that came into the workforce late in the Great Depression had to roll up their sleeves and dig the country out of the disaster they inherited. That was the Greatest (luckiest) Generation. They, in turn, passed a debt free, vibrant, growing economy on to their kids, the boomers.

The boomers’ have been in charge for the last thirty years. Look around: is there anything of importance besides your smartphone that is not totally, irretrievably fucked up? Unprecedented debt weighs the economy down, policymaking in the nation’s dysfunctional capital serves big corporations, big banks, and big government. The rest of the country sucks wind.

It’s all coming down. The function of bear markets is housecleaning. Boomers will be broke and out of power by the end of the decade. Their kids will be the third generation, the one that takes the brunt of a final collapse in the nation’s affairs.

The millenials, already beset by the effects of the long mismanagement of the country, will be the ones to roll up their sleeves and change the world. They will be asserting themselves politically by the 2020 elections. What seems politically impossible today, will happen then. The millenials will stage a radical grassroots uprising. The jerk-off toadies of big money that inhabit the halls of power will be thrown out of office.

The millenials will be the next Greatest (luckiest) Generation. They will fix things. The rest of us can benefit by holding cash in our investment portfolios now so we can get back in when, along about 2016, the situation looks the worst.

After that, the millenials will engineer an astounding recovery in the economy and the markets.

Gonna be fabulous.



No one should consider any part of this presentation as a recommendation to buy or sell any securities whatsoever.

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