Saturday, January 8, 2022

Predictions for 2022

 

The year that ended about a week ago was, I daresay, not quite so full of surprises as 2020. Still, you could make a good argument that our whole country is still in the midst of living out Chamberlain’s curse about “interesting times.”

This is my third January since I started Twilight Patriot way back in early 2019. Each time the new year has rolled around, I’ve tried my hand at predicting some of its major political and economic events. This is, of course, a rather bold business – you probably remember the saying: “It’s hard to make predictions, especially about the future.”

But I nevertheless see it as a crucial test of my abilities as an analyst, since if I really understand the big trends that are shaping my country’s history at the moment, I should be able to follow at least some of them into the future for a while.

Now, it’s been my consistent argument since I started this blog that American civilization as we know it is in a state of steep decline, but that this decline is going to be more gradual than sudden. Or in other words, we’re headed toward a future that looks more like modern-day Mexico, or Russia in the 1990s, than the Hollywood apocalypses that you see in films like Mad Max or The Hunger Games.

Because of this, I don’t try to predict cataclysms. While I freely admit that black swan events matter – things like 9/11, or a certain genetically modified bat virus escaping from a Chinese lab, can have a big impact on history – my vision of the future doesn’t give them top billing, because (1) they’re rare enough that when somebody says, “This is going to be the year of the happening!” he’s revealing more about his own psychological makeup than the likelihood of whatever “happening” he has in mind, and (2) a crisis matters most when it befalls a nation whose existing fault lines make it inevitable that trouble will come sooner or later.

For instance, 9/11 was such a big deal mainly because the Neocon foreign policy establishment, which was already in power and already hankering to regime-change the Middle East, saw it as a convenient justification for its nation-building adventures. Covid-19, as far as viruses go, is at about the same danger level as the 1957 and 1969 Asian flu pandemics, which most people hardly noticed. But it struck a much bigger social and economic blow to the collective West mainly because it was a convenient weapon in a whitehot political ragefest/class war that was already in high gear.

So when I make this coming year’s predictions, I’m going to follow the same pattern: assume that the past is the best guide to the future, identify and extrapolate the trends that have been building up for a long time, and pay attention to the lessons of historical cycles.

But first, a review of last year’s predictions is in order. In January of 2021, I foretold that the official economy would keep growing, and GDP would exceed $22 trillion by the end of the year. (It currently stands around $23.3 trillion). I also said that real inflation, as calculated by my own commodity-based method, would be at least 11 percent. (You can read about the method here; inflation for this year was 24.2 percent, compared to 24.7 percent last year, though even the official rate of 6.8 percent is high enough to be newsworthy).

I predicted, correctly, that the new Congress would spend liberally once President Biden was sworn in, but that most of the money would go to various interest groups rather than to ordinary Americans. I was also right about DC statehood getting passed by the House and ignored by the Senate, and court-packing going nowhere.

The censorship and firing of conservatives – or even just liberals who step on the wrong toes – is continuing apace. See, for instance, the case of Bright Sheng, a Chinese pianist and composer who fled to America to escape the Cultural Revolution, only to become a professor of music at the University of Michigan and then get relieved of his teaching duties for not writing a good enough apology letter after he showed his class a scene from an old Shakespeare movie with an actor in blackface.

Also, the people who think that this is only happening in the humanities, and that the hard sciences are safe, have another think coming. Perhaps you recall that time in October when the  physicist Dorian Abbott got cancelled from giving a lecture at Harvard because word got out that he supported race-neutral university admissions?

Another thing I predicted was that, while the United States might see plenty of civil unrest in the coming year, none of it would pose a serious threat to the continuity of government. Well, having to reroute traffic for a day because a bunch of vaccine protesters are marching up and down the Brooklyn Bridge chanting “Let’s Go Brandon” is annoying, but it does not a revolution make.

In the realm of foreign policy, I predicted that the United States, Russia, China, Israel, and Iran would continue to avoid going to war with one other, and while the dollar would continue its gradual decline, it would still be the dominant global currency at the year’s end. Also, the protests in Hong Kong would de-escalate in a mostly peaceful manner.

Now for what I got wrong. I said that after President Biden was sworn in, the Democrats, acting out of rational self-interest, would do an about face re covid measures and become the back-to-business party. Well, they didn’t, and I had to admit that, in this case, I had overestimated the role of interest vis-à-vis myth in shaping human behaviour.

It turns out that pretty-much all the men and women who make up the western neoliberal technocracy are very strongly attached  to their role as the good people in the ongoing covid morality play. Thus, our ruling class has continued to signal its goodness with extreme and largely symbolic virus-fighting measures, such as making elementary school children wear useless cloth face masks, even when their man in the White House is taking the blame.

My other wrong prediction was that the national debt, as displayed at usdebtclock.org, would grow to at least $31.5 trillion. Today it stands at $29.7 trillion, about the same as a year ago. Now, part of my mistake was using a source which sometimes changes its calculation methods, leading to discontinuities. But at the same time, I’ve come to believe that the national debt just isn’t as big a deal as I used to think.

Both the debt and the deficit are just too easy to gimmick. Also, national debt is not, as some people naively think, some sort of countdown to financial apocalypse – when you’re the government and the interest rate is whatever you say it is, bankruptcy is fairly easy to avoid.

By now, I mostly just care about inflation. All forms of money are, to various degrees, abstract – money, in itself, is not wealth, it’s just a collection of symbols that can be manipulated by the people in power. Thus, the unraveling of the US economy won’t be driven by events in the symbol world per se, but by the eventual inability of the symbol world to command economic force in the real world – and the disconnection between the two is what inflation measures.

So I will start off my predictions for 2022 with a prediction that commodity inflation – measured, as before, with my geometric mean method – will again exceed 11 percent.

I expect the Republicans to retake the House, since the president’s party is at a disadvantage during midterms to begin with, even without massive stagflation. I will not make a prediction about the Senate – it’s balanced on a knife-edge right now, split 50-50 with only a few competitive races – but I do feel quite certain that neither party will gain more than two seats. I also think that the energetic (?) period of Biden’s presidency is over, and even with another year in nominal command of a Democratic Congress, he won’t get any of his major policy goals passed into law.

Nevertheless, America’s plutocratic oligarchy – the combination of people in the universities, the press, the judiciary, the permanent civil service, and corporate management who collectively run the country – is still all-in on its weird brand of woke capitalist SJWism, and will continue to aggressively promote it. Expect more censorship and firing of conservatives, more leftist propaganda in every institution from kindergartens up to the military, more news stories about children changing their genders at school without their parents knowing it, and so forth.

I expect America’s foreign affairs during the coming year to be rather anticlimactic. Our country’s senior leadership will do its best to give the appearance of policing the world, but after the Afghanistan debacle, everybody knows better than to get into any situation in which fighting is even a remote possibility. Thus, I expect no wars with Russia, China, Iran, or any other competent adversary.

Nevertheless, Vladimir Putin’s recent “ultimatum” regarding the removal of NATO forces from eastern Europe is not to be taken lightly, as Putin is the kind of leader who only starts things he’s ready to follow through with. Thus, I do expect that, sometime in the next few months, Putin will find a way to “develop” the situation in that part of the world in a way that humiliates the US and its allies, albeit without open warfare.

As usual, I expect regime continuity in the United States, Britain, France, Russia, China, Iran, and Saudi Arabia, and I expect the dollar to persist as the world’s top currency.

As far as covid goes, I expect that the continuing decline of the disease’s actual lethality won’t do much – at least in the coming year – to blunt its power as a political shibboleth.

Regarding vaccinations, I think my earliest prediction – the one I made back in May of 2020 – has panned out fairly well. That’s when I said that vaccines would be developed and used, but due to rapid mutation rates and other biological challenges (already known from experiments with older coronaviruses) they would end up having low but non-zero efficacy.

There are, nonetheless, powerful elements in American society that cannot admit this, because once you’ve become emotionally wrapped up in a story – and let’s face it, faith in vaccines is filling a mythic-religious role in a lot of people’s lives these days – it’s very hard to let go of it.

Therefore, masks and vaccines (Fifth shots? Sixth? Seventh?) will still be vociferously promoted in the media at year’s end. But I think that by then most Americans will be roundly ignoring the whole matter, and life will be back to normal except in places where it’s especially easy to enforce conformity (i.e. airports, universities, deep-blue cities with zealous mayors, etc.)

At the end of the year, life for most Americans will probably be going on in much the same way as before, only with pricier food, pricier gas, other incremental declines in the standard of living, more crime, more loneliness, a lower fertility rate – essentially, the same things I’ve been predicting for the last three years. Russia, China, Iran, and North Korea will keep on circling the moribund American empire like sharks, but they’ll decide that the time to strike (that is, the time to strike at American dependencies like Ukraine, Taiwan, South Korea, and Saudi Arabia, not at America itself) is not quite yet.

And here in America, the people who make it to 2023 with the fewest scrapes will be those who prepare for the long game, and are careful to avoid getting too wrapped up in collapsing institutions. Winning against the system is, at this point, only possible on the individual and family level, and as I’ve explained in detail here, it consists of small but important steps like being choosy about where you send your children to school, becoming more economically self-sufficient, writing letters to your newspaper about issues that matter to you, and so forth.

In the long run, it’s going to be rough. There are people who are working quite hard to make sure our country remains on track toward having the social values of Sweden, the censorship and surveillance of China, the crime levels of Mexico, the infrastructure of Brazil, and the race relations of South Africa. I wish I could say that by voting for the right people, we could stop this. But at the present time, I just don’t see any realistic political solution.

Even when Republicans are nominally in power, they’re content to let things coast, making no efforts to reverse the Left’s dominance. It has been like this since the Nixon years, and the Republican base has responded to its repeated humiliations by electing politicians who are increasingly short on political competence and long on vacuous, crowd-pleasing rhetoric – from Nixon to Reagan to the Bushes to Trump, it is all one long downward spiral.

The American empire is imploding. It won’t happen quickly; it will probably be several decades, perhaps a whole century, before our country, or its successor states, restabilize. But if you can keep your head screwed on tight and look after your family in the years ahead, the reward is that you – or more likely your descendants – will get to have a hand in building whatever comes next.

End Year Inflation Table 2021

From time to time, I have devoted part of a blog post to explaining to my readers how I calculate inflation (as you probably guessed, it’s different than the way the Fed/CBO calculates it). Because I will be posting my New Year’s predictions later today, and because that post will start off with an evaluation of last year’s predictions, and because one of those predictions involved the inflation rate, I’m going to have to calculate inflation again.

But in order to avoid interrupting my forthcoming post with a cumbersome explanation of my method, I’ve decided to lay it all out here instead. If you already know the method, or if the whole thing bores you, you can skip ahead. Otherwise, read on.

Above you see a table with prices for eight commodities, both at the turn of the millennium, and at the ends of the years 2019, 2020, and 2021. All data are from tradingeconomics.com. At the bottom of each column, I’ve included the geometric mean of the eight prices.

The “geometric mean” means that instead of adding together all the numbers and dividing by eight, I multiplied them all together and took the eighth root. This saved me the trouble of having to decide how much of each commodity to include in my “basket.” (If I used the ordinary average, it would make a big difference whether I included an ounce of gold or a gram of gold, a bushel of corn or a ton of corn, etc.)

With the geometric mean, if you double the price of gold – or of any other commodity – the number at the bottom of the column goes up by a factor of 1.0905 – and it does that whether you started with an ounce of gold or a ton of gold. Similar relations exist for any other logarithm. The upshot is that the process is neutral – the personal biases of the tabulator (me) don’t influence the outcome.

Now, once you have a geometric mean of the eight commodity prices for each year, you can compare values year over year to estimate inflation (24.7 percent for 2020 and 24.2 percent for 2021) or divide by the mean price in 2000 to get the value, in current dollars, of one dollar in 2000. (Right now that figure is $3.55).

Now, I generally refer to the numbers calculated in this way as “commodity inflation,” because they reflect the price of commodities – that is, fungible goods like copper, cotton, and brent oil. What’s left out are non-fungibles like houses or college tuition. The weakness in this approach is that most of the things ordinary people spend money on are not commodities. The strength is that, because my method only looks at commodities, it can’t be gimmicked.

Suppose that the people who work at the CBO or the Fed or wherever sit down to calculate inflation, and notice that the average American family spends 2.5 times more on college tuition or health insurance or housing or what-have-you than they did 15 years ago. Is it because they’re actually getting 2.5 times more of what they’re paying for? Or is it because of inflation? Or is it some combination of the two?

The answer, of course, will depend on your politics. Which is why I don’t trust the numbers that come out of the CBO and the Fed. Their incentives to hide the true scale of economic decline are just too strong.

Now, commodities markets are more volatile than the economy as a whole, which means that the full force of the 24 percent inflation I’ve calculated for these past two years isn’t being passed on to ordinary people… yet. In due time it will be, since things like houses, and food and gas for the people who work at universities, have to be made from commodities like lumber, soybeans, and crude oil.

But at the same time, it’s hard to hide from the fact that inflation is hitting ordinary Americans hard nonetheless. Anyone who’s poor enough to pay attention to how much his or her food costs – and that’s a category that very much includes Yours Truly – knows by now that the true magnitude of the situation is being swept under the rug.

So if you’re reading this, and wondering why it feels like so much of what you eat costs two or three times what it did a decade ago… then I hope I’ve helped to make that mystery a bit clearer.