Wow....so the current mode of ops by Fed/Fiscal efforts only further emboldens the inequality mis-match? Great ideas but the entity called Congress or Parliament elsewhere is a political quagmire of special interests...just look at the so called Covid relief bill Herr Trump just signed...full of special interests and sends me a $600 check I don't need. With all the time they had you would think they could cooperate with one another ...but you are spot on that the left vs right vice versa has taken hold and as such nothing will really get done. The US electorate threw out the "bum" but voted to keep political gridlock and even if by a miracle GA flips...the good old boys and their 60% filibuster remains as well as numerous other "block and tackle" Senate rules designed to stymie most everything. An idea...how about RV set up a non-profit to re-distribute the $600 towards those who actually need it? A bit of political statement, but this piece surely ignites something should it not?

Wow....so the current mode of ops by Fed/Fiscal efforts only further emboldens the inequality mis-match? Great ideas but the entity called Congress or Parliament elsewhere is a political quagmire of special interests...just look at the so called Covid relief bill Herr Trump just signed...full of special interests and sends me a $600 check I don't need. With all the time they had you would think they could cooperate with one another ...but you are spot on that the left vs right vice versa has taken hold and as such nothing will really get done. The US electorate threw out the "bum" but voted to keep political gridlock and even if by a miracle GA flips...the good old boys and their 60% filibuster remains as well as numerous other "block and tackle" Senate rules designed to stymie most everything. An idea...how about RV set up a non-profit to re-distribute the $600 towards those who actually need it? A bit of political statement, but this piece surely ignites something should it not?

Well done mate...quite a lot of good analysis. But I have some more points: 1) I would although suggest to eliminate the political class. Make term limits like 5 years and then all politicians should be out of the political process. That is the only way to stop the blame game to get reelected and corruption. 2) For all big political decisions there should be nationwide referendum like in the swiss, but using new technology like tokens for the election process should be key. 3) Eliminate as much bureaucracy by technology, otherwise they will eat all the GDP in the long run.

As someone who has worked in pharmaceuticals for 20 years, I am skeptical of Raoul's suggestion on cutting into the revenue of pharma. It will only make us less prepared the next time a covid virus or something worse comes along. If you think about it, why didn't we have something to treat Covid yesterday? Because there is no incentive for pharma to discover such solutions. And as a result, look at the cost to the world. Also realize, that there are more pathogens just beneath the surface that could possibly become another pandemic and governments have not incentivized pharma to prepare for. And they are not doing so because the public is not pressuring them. They are not pressuring them because the public is unaware (maybe less so now) of how a pathogen can get out of control. I do agree that the cost of drugs are too high. Thoughts on that include one needs to realize that the only benefit that generic companies bring to the table are lower costs. They do zero research and thus provide no innovation to the system. That industry should get cut drastically such that when a drug becomes generic, the generic should only be able to price it at 2% the original brand. Another solution is to have legislators change patent life. Currently a drug gets 20 years. That's not 20 years to sell. That's 20 years from the moment they patent which is very early in the life cycle. They may only get 10 years before the FDA approves. If legislators extended patents but also built some mechanism to force lower prices after a certain window of time, that would provide relief while still providing a flow of income for drug discovery. The US also needs to irradiate such large compensation for law suites for plaintiffs against the health care industry. Some of the payouts are insane. All these costs get passed back to the consumer. If you can't afford healthcare, then the ones that do are eating it. Finally it's my opinion that while there are vaccines entering the market, don't be so sure that they will address the problem in the time lines the media is suggesting. There is a reason that in the past it took 10-15 years to bring 1 vaccine to market. Problems not disgusted in the media include: 1) The virus is mutating. These new strains are not covered off by current vaccines. Think about what that means. It means we have no vaccine. 2) While the FDA and other health agency care as much as possible about safety, it's impossible for them to state with complete confidence as to the safety over an extended period of time. I sell a vaccine, and to me, you need a more time than they have aloud to ascertain the side effect profile. That's not to say that the vaccine is not safe. I am saying we don't know except for the length of time that the drug has been study. That's all we know. So if that's 2 months, then that's all we know. There is no rule in the universe that says that unforeseen side effects could not show up at month 6. Outcomes are the health industries gold standard, which require time. Health Agencies are performing a balancing act of the lesser of two evils. If they believe the side effects are justified in light of the big picture, then they may still approve. But the big picture contains the amount of suicides that are increasing because of people losing hope among many other components. So for example, if the vaccine (and this is purely a fictitious example) were to give participants periodic severe migraines, then in light of the fact that suicide rates would decrease because the vaccine is successful, they may approve. It's just what type of side effects are they willing to accept. Again you need time to know that for sure. 3) We have no clue what happens after the second dose as it pertains to efficacy. The vaccine efficacy could wane, thus requiring boosters on a continual basis. Again it's something we don't know. Think about how that could unfold. Finally 4) confidence the public has in the vaccine, which may be driven by some of the points made above. See below this interesting article from ZH which if true, has ramifications as to how long it will take the vaccine solution to arrive. I am not all negative. I think we need to be optimistic. Many of the questions above will be solved as we get answers in the next 6 months. But just don't conclude that because the news is talking about some people getting vaccinated that we are will be out of this in six months from now. Stay safe everyone https://twitter.com/zerohedge/status/1343388752518012928?s=20

Paraphrasing Hitch, if I came to God after I die and realise I was wrong in believing He did not exist, I hope He would show some clemency for he did not give me enough proof of His existence. Whereas the one taking Pascal's wager is calculating for maximising his own profit rather than to live according to moral principles irrespective of a potential punishment. It is the intention that matters, not the virtue signalling.

If you are going to use the phrase "the fourth turning" in any RV publications then please give credit to Neil Howe and William Strauss (even if its just in footnotes) for coining this phrase in their book "The Fourth Turning: An American Prophecy". Perhaps you would like to invite Neil on to give an update?

Is there any possibility that wage inflation could pick up as the boomers come out of the workforce? Less supply and lower income millennials move up...

Fantastic piece of work, thank you Raoul. I like your proposed solutions.

Thank you! - I really enjoyed the big picture thinking. I had laid out similar thoughts during the holiday break and I think most of those outcomes are likely (Behavioral Economics through CBDCs, UBI of sorts, & Debt Forgiveness). But the unfortunate side of this equation is that the leaders are prescribing similar solutions, but do not understand the true systemic problem (e.g. Left thinks it is the evil rich and capitalism & Right thinks it is the lazy left and socialists). This misunderstanding of the true problem will likely breed misapplication of those solutions discussed. I realize your solutions and application likely fall in the hopeful and ideal scenario, but do you have any thoughts on what is the more realistic outcome due to the misapplication of these solutions? Also, for anyone not familiar with @RaoulPal magnum opus, he has been developing and laying it out beautifully for a while now. The below video from 2018 explains some of the groundwork for this paper. https://www.realvision.com/shows/the-interview/videos/modern-manipulation-behavioral-economics-in-a-technological-world Thank you and CHEERS!

Enjoyed the analysis. Lots of work to be done! Obesity is killing the medical system via its cost burden. The number of drugs these patients take continues to grow exponentially. Somehow need to incentivize the individual to take responsibility for their health. These patients disproportionately use just about all health care resources. Fixing metabolic syndrome through a ketogenic diet, or other dietary means, eliminates the need for many of these medications and can prevent and even reverse non-insulin dependent diabetes. The decrease price of a generic pill does not come without its hidden costs. The generic drug industry has numerous concerns over its manufacturing process and lack of FDA oversight in foreign countries. If you like horror stories, read Bottle of Lies by Katherine Eban.

This report was amazing. I am new to Real Vision this year and can't thank you enough for sharing this type of thought. I only wish more people could see this. Hopefully it finds its way into the law makers hands.

This is, the worst, most wasted time I have ever spent on RV.

Thanks Raoul & team - well researched & thoughtful work. I would like you to publish edition 2 that focuses on investment strategies & instruments considering the following scenarios could play out in the coming decade (1) No change & shit continues (2) Complete change per Raoul's recommendations (unrealistic) (3) Partial realistically possible change As a RV Pro member & an investor, that's what I care the most. While, knowing how we got here & future change suggestion is good to understand & very insightful, it's important to see recommendations to position portfolio for the future. Which instrument should one invest in? Should one get new debt? For a small/medium size business owner, where should one expand or acquire new or sell existing business? Which careers should parents advise their kids to choose for future? I guess I'm looking for answers that would apply to individuals rather than to the broader society or country. Roaul's macro picture could help guide or start discussion for each individual investor to prepare for the future.

You forgot to mention oil price. That's one of the biggest driver of disinflation in the 2010s. And the decline in oil price had a lot to do with larger supply available, which is not related to the other factors you mentioned. And some of your points are not correct. In fact 2/3 of the items in the CPI basket saw less price increase in the 2010s compared to the 2000s. Even for housing and healthcare, their price is increasing, yes. But the rate of increase was less in the 2010s compared to the 2000s. And that contributed to lower inflation, too. The slower price growth in the 2010s is across the board. Not just for electronics or computing goods. For those, the prices have been declining since the 1980s, so they actually don't contribute as much to the lowered inflation of the more recent period. Because keep in mind when you talk about inflation, it's the growth rate of price that counts, not the level of price. So for an item to contribute to lower inflation, the growth rate of its price has to be lower than before, which is not true for the computer-related items. Because their price drop in the 2010s were not bigger than the price drop they had in the 2000s and in the 1990s. The biggest contributors to the disinflation in the past decade are actually the more "traditional" items that saw slower price growth. And that's the combined result of demographics, technology penetration, and oil price.

Excellent summary of the forces at play Raoul. Thank you.

Hi I there Interesting set of solutions. I am a surgeon and so have some idea of what can and can’t be done in health. AI could only ever do very basic things, never an operation in my view because the interpretation is real-time, not algorithmic. Evey operation, same by name, is entirely unique in execution. The fact hat there aren’t reliable self driving cars yet, driving a car being a task virtually anyone can perform , gives some flavour to the problems facing introducing AI in health. Generic drugs and controlling litigation costs is not going to solve much of the cost problem New treatments for cancer will always be expensive. Prosthesis prices are hard to control as well, and who wants less than the best implanted into their bodies?? But appreciate the ideas, as ever. Love the big picture thinking. But tbh, I think we’re in for a rough ride.

Hey Real Vision Team, You should really consider adding correlation constants (R and R^2) to the charts suggesting correlation between two financial series. This would help to show how strong the correlation is, to those who are more analytical than visual. Keep up the great work.

An excellent tying together of a range of parameters by Raoul. Generally great comments and adders below. I think Raoul has done a great job of pulling together a very credible story and sure, some of the points can be debated as to correctness or definitive linkage, but as a broad brush approach I think it reads very well. There is no doubt in my mid baby boomer view, that the 2020s are not going to be fun and that everything I worked for to enjoy my retirement may get turned on its head. This covid pandemic is not really as disastrous to human health as nature could be....... and more importantly as the stupidity of viral genetic manipulation could be. One major reason the population is not fully behind restrictions is because the health rate is low and primarily impacts the older least productive members of society. My worry is, are we going to do just the same again once the next airborne virus appears, as it surely will and perhaps a lot sooner than we think? The population will crack for sure if this happens again in only a year or three. I plan to hedge my bets...... gold, silver, bitcoin, some commodities, value etc.

The last section of this piece might be the best RP has written thus far. It is an intellectual framework not a solution and expresses very lateral and creative thinking. All necessary in order to seek for solutions that reflect Einstein's axiom: "we cannot solve our problems with the same thinking we used when we created them".

Run for public office please. Save us!

I enjoyed this thanks. I'd challenge all to think further up the stream, i.e. we can agree there are problems, and most can agree on the biggest ones, but in order to actualize any solutions we need a policy overhaul, and therefore gov't overhaul. Now, we have a democratic republic (presume US base here, apologies for being typical US centric selfish dude), so it is theoretically possible to vote new blood into gov't; however, I just don't see the tide turning the right direction for motivating (incentivizing) a new group of pragmatists to run for civil service. So I guess what I'm trying to get at is that the most important key to making the policy changes suggested, is to move away from incumbent gov't (and parties), and start grass roots campaigns (and new independent parties) to attract talented pragmatists to run for gov't. Yet currently what gets the most attention are ideologues (on either side) who want to either regulate insane illogical identity politics (the way to unity is not through forced division and a belief in victimization), or populism that wants to burn it down, or status quo seekers who already have regulation capture. So we have huge inertial forces as well as the extremes promulgating each other (and getting the most attention) while the incumbents siphon all the capital underneath the haze of the chaos. So I guess, my point is, if we want to get through this, we need to summon tomorrow's leaders ASAP. I'm hopeful this is still possible, but the fear based click bait media is not incentivized to bring proper public awareness to the Andrew Yang's of the world. Anywho, a huge step in the right direction would be overturning Citizen's United. Then term limits. Then bring in the types of youth who will revive the fierce debates our constitutional forefathers had, but in today's context, and overhaul the shit out of it. Oh, and somehow bringing Agile techniques into gov't so that we can quickly iterate and adapt to unintended effects. Cheers.

Great Report! Raoul's solutions to US problems resonate so much with me. If US can overhaul healthcare and public education, I am 100% certain US will regain its position as the world leader. It is so simple yet it will be difficult to implement due political chaos

Wow! that was enlightening. Thanks Raoul. on pg 9 - is the 400% of GDP US debt govt. and corporate? The former is 27 trln -- more like 135% of GDP.

An entirely unencumbered free market approach is preferable IMO, (more Austrian than the Austrians) but it will never be endorsed by any government anywhere. Wonder why? Queue the loyal Statist dislikes.