Dear Reader,

In his Summa Theologiae, medieval theologian Thomas Aquinas called lust a “special kind of deformity”:

This may occur in two ways: First, through being contrary to right reason, and this is common to all lustful vices; secondly, because, in addition, it is contrary to the natural order... as becoming to the human race: and this is called "the unnatural vice."

While Aquinas was talking about a different form of lust, we can easily transfer his words to today’s economic picture.

Negative interest rates, stock buybacks to raise valuations, and the idea of printing limitless amounts of money out of thin air... it’s hard to argue the fact that these run contrary to reason and that they violate the natural order.

A recent Deutsche Bank analysis shows that the major global economies now have an average government debt of more than 70% of GDP. This is the highest peacetime level in the past 150 years.

Source: Financial Times

It should be quite obvious that this is unsustainable. That doesn’t seem to deter economists and bankers from trying to sustain it anyway—this time not with monetary tools, but with fiscal policy strategies like helicopter money, debt monetization, MMT, and worse.

All of these essentially say that government debt doesn’t matter and that, in some cases, we actually need more of it.

Looking at past precedents, the only way that can be true is if we are on the cusp of another WW2-like crisis. 

Bridgewater founder Ray Dalio recently made headlines by saying the current economic situation reminds him of the 1930s. Ray and I often have differing opinions, but this time I couldn’t agree more.

As Mark Twain supposedly said, history may not repeat but it does rhyme. The fundamental economic conditions, and especially technology, have changed significantly since the 1930s, but human reactions and motivations are still pretty much the same.

You can hear me talk more about it in this short clip of my interview with moderator Jonathan Roth.

I hope you’ll get a lot of value out of our “7 Deadly Economic Sins” Week!

Your always trying to find the perfect rhyme analyst,

John Mauldin
Co-Founder