What Will Not Change

By John Mauldin 

“If I have seen further it is by standing on the shoulders of Giants.”

—Sir Isaac Newton, 1675


If you feel a bit overwhelmed, you’re not alone. A lot is happening right now. The US has a big election next week. We’re all on edge about the pandemic, which appears to be getting worse again, not just in the US but in most of the world. Germany and France are closing some businesses again and restrictions are rising in the US, too. This is hitting markets as investors see recovery sliding farther into the future.

All that is important, and I’m sure next week we will talk about whatever happens in the election. But today I want to look at what will not change. And though I will make a few comments on the election below, I want us to think today about what we can look forward to with an optimistic and realistic vision.

We can do this because something hasn’t stopped: human innovation. I keep saying that the business owners hurt by this pandemic will be back. People with the talent and drive to launch new enterprises won’t stop doing so, just like dogs keep barking. It’s just what they do.

But it goes beyond business owners. Human nature drives us to break through the barriers standing between us and our deepest desires. Faced with problems, we find solutions. And faced with new problems, we find new solutions. This process never stops. It is at work even now, sometimes visibly but more often in a million small ways that add up.

What do they add up to? Progress. And we can always make more because progress is an inexhaustible resource. Knowledge, as George Gilder says, is the ultimate currency which can never be destroyed. It can be used over and over again without ever depleting its supply.

Traveling Ideas

If you want to understand how innovation works, you should read Matt Ridley’s newest book, coincidentally titled How Innovation Works. Matt spoke at my Virtual Strategic Investment Conference this year (attendees can still view the transcript and slides, by the way) to rave reviews from all. No one explains better how innovation helps humanity move forward.

As Matt explains, innovation usually doesn’t come from the solitary inventor screaming “Eureka! I found it!” It’s both simpler and more complex than that. Simpler because no one person really guides it, and more complex because more people are involved who often don’t even know each other. At SIC, Matt told the story of a wheat variety that was key to reducing global hunger.

It's quite important, I think, to understand how people collaborate. So Norman Borlaug gets the credit for the short-strawed wheat that launched the Green Revolution in India and Pakistan, basically banishing famine from the world in the 1960s. But Borlaug got the idea from a man named Burton Bayles, who he met at a conference in Buenos Aires who told him about dwarf wheats. Bayles had got the idea from Orville Vogel in Oregon. Vogel had got the idea from Cecil Salmon, who was on Douglas MacArthur's staff in Tokyo at the end of the Second World War, and he got the idea from Gonjiro Inuzuka who had at an experimental station in Japan, bred these short wheats that grew much more vigorously and produced much higher yields. And then Borlaug passed the idea on to M.S. Swaminathan in India, who championed the development of these varieties. So it's very important, I think, to understand that innovation is a team sport, not an individual process

I bring this up because, back then, famine was a bit like our pandemic problem. It was costing lives and harming economies. No one thought it was good that people starved, but the problem seemed unsolvable. Governments did what they could, sometimes helping and sometimes making it worse. People thought we would just have to live with it.


Source: Matt Ridley


But the solution was right there all along. The idea traveled through a series of minds that eventually brought it to the place it was needed. This is often how innovation works.

In fact, Ridley’s book and history are replete with innovations occurring almost simultaneously across the world. Most famously, Alexander Graham Bell filed his patent for the telephone 30 minutes before his competitor. The great advances in math came from all over and almost simultaneously, even though we generally attribute them to a single mathematician

We are watching this play out in our own world. Several companies and countries are building rockets and other methods to take us into space. There are over 100 separate attempts at a vaccine which will lead to probably between 30 and 40 human trials to prevent COVID-19. The cooperation this has sparked will change the pace at which society will transform for the better.

The “Green Revolution” Ridley mentions reached fruition slowly because communication was slower back then. Which brings us to the present.

End of the Concrete Box

Innovation occurs when idea-filled people meet and interact. For most of human history, this kind of sharing could happen only when they met in person. Books and handwritten letters, while useful, lacked the interactive element.

This is why innovation is so closely associated with urbanization. Large cities enable large gatherings, which enable the kind of interaction that leads to innovation. Even today, with all our communications technology, new technologies come from places with concentrations of talented people like Silicon Valley and Shenzhen.

Or used to. One of the pandemic’s many regrettable consequences is the impact on city life. The same crowds that once attracted people now repel them. Companies that once built elaborate offices akin to mini-theme parks (because they know keeping people happy at work raises their productivity and helps spread ideas) are now allowing and even encouraging work-from-home arrangements.

From a health perspective this may make sense, but what will it do to innovation? We’re going to find out. The good news is this problem is itself being innovated. Entrepreneurs and managers are finding new ways to use existing technologies like Zoom, Slack, Team, WebEx and other remote work applications. More sophisticated platforms are coming, using virtual reality techniques to create the kind of meetings and encounters that once occurred spontaneously.

I don’t think we will go back from this once the pandemic is over. Some organizations will move to hybrid work models. Maybe most people will work from home, most of the time, but occasionally the team will gather for an in-person event. Paying for travel and accommodations will still be less than office space would cost. (Of course, this means office space will be repriced or new uses for it will be found. Already, we are seeing plans for empty malls being turned into fabulous living environments.)

It also helps greatly that government is getting out of the way. For example, the technology to conduct many doctor visits by phone or video isn’t new or complicated. We just couldn’t use it because state laws sometimes prohibited it, and Medicare rules wouldn’t pay for it. That suddenly changed this year. Reports suggest it’s working pretty well. Neither doctors nor patients will want to go back.

Now, think about what that does. If you have a medical problem, you want a physician who specializes in it. With remote medicine, you can look more widely and are far more likely to find someone with exactly the expertise you need. This should improve healthcare even if technology stays the same, which it won’t. It will get better, too. All because a pandemic upended the established order.

I think we may be on the cusp of a sweeping change in human organization. Instead of clustering together in giant concrete boxes so we can be close to the people we think we should know, we will cluster virtually, with exactly the people we need to know. Teams that need expertise will be able to access it wherever it is. Severing this tie between “where we work” and “where we live” could have profound consequences.

That’s my hope, at least. We will find out in the next few years whether technology can replace the serendipitous personal encounters that often spark innovation.

A Few Predictions for the Next 10 Years

Let me make a few “happy” predictions for the next 10 years and then a few more sobering ones. Like all such lists of predictions, several will be wrong but at least you will get the idea of where I think we are going.

1.   We are going to see major advances in healthcare. I mentioned a few weeks ago the invention of Far UVC which doesn’t penetrate the skin or eyes of human beings, but will kill viruses and bacteria. Cancer will become a nuisance, rather than life-threatening and expensive. Treatment will likely be done in a doctor’s office rather than a hospital.

Advanced MRI scans will be done annually or at least every two years, with artificial intelligence to help interpret them. Treatments that will look like the “Fountain of Middle-Age” will help us make it to the time when we can turn our own biological clocks back.

There will be treatments for obesity and heart disease. Muscular regeneration will be much easier. These studies and a thousand others are happening all over the world. Picking the winners today is difficult, but the true winner will be humankind.

2.   We will see a continuing move to renewable energy, not because it is mandated under some climate policy, but because it will be cheaper. There are already places where solar energy costs less than conventional methods. I believe by the end of the decade solar will be cheaper than even natural gas.

It would not surprise me, given the number of research projects in motion, if we see new renewable energy technologies that will even outpace solar. Battery research and technology is improving (finally) and will make solar ever more viable.

3.   We will be moving to electric cars (or their hydrogen fusion cousin) by the end of the decade. Urban dwellers will either own cars in co-ops or simply opt to use ride-sharing services.

4.   Self-driving autonomous cars will be ubiquitous. Half the cars manufactured in 2040 will be autonomous. This will have a profound impact on the transportation business much sooner though, as the millions who are currently employed as drivers will have to find new sources of income. But it will also reduce the number of deaths on the highways and car wrecks that have to be repaired, lower insurance rates, and a dozen other things.

5.   New agricultural technologies, including a whole new generation of seeds and plants, will make food cheaper, more nutritious, and hardier, without the “GMO” stigma. This will have more impact than the Green Revolution did 70 years ago. Imagine plants tailored to produce meat substitutes or reduce allergic reactions.

6.   Of course, computers will be incredibly fast and we will begin to see the beginnings of the quantum computer revolution. That extra speed will make artificial intelligence, communications networks, the Internet of Things, robotics, and a dozen other technologies far more viable.

7.   You cannot begin to make predictions without mentioning the improvements that the blockchain will make use of.

8.   And while the pandemic has caused a major setback in worldwide poverty, I expect that to be short-lived. We will see the number living in poverty steadily decrease, as it has for the last 50 years.

I can go on to list many more innovations which will develop over the next 10 to 20 years, and would still miss the ones that nobody has yet imagined. The innovation cycle that began with the Industrial Revolution has gone through wars, economic crisis and depressions, a wide variety of governmental systems, and in numerous countries. 

Whatever the outcome of this week’s election, that won’t change. That also means there will be lots of opportunities for entrepreneurs and investors.

Now, it’s not all sunshine and rainbows. Whoever wins next week will be faced with the $3 trillion deficit in fiscal 2021. And the Federal Reserve interventions and government programs have not been as effective as one might think. This from my friend Lance Roberts on Twitter:

One could take issue with his choice of interventions, but even if you cut them by half (I really don’t think you could), it would still be $6 of interventions for every $1 of GDP.

The next president will have to face this reality. We are approaching the limits of government intervention.

Let me take an out-of-consensus view. I think the 2024 election is going to be far more important than this one. We will see the final gasp of Neil Howe’s The Fourth Turning, always the most tumultuous period in American and Western history, at the same time as George Friedman’s The Storm Before the Calm (a very powerful book). I think the latter half of this decade could be even more divisive and economically frustrating than the period we are in now.

Non-Human Partners

Everything I just wrote has a giant presupposition: Ideas come from people. What if that limitation disappears, too?

Humans have ideas because humans are intelligent. Our senses collect information, our brains process it, and new ideas emerge. We do this better than any other species and that is why we have civilizations and economies.

The never-ending innovation process is now replicating itself. Today we have “artificial intelligence” systems that operate much like we do, only faster. They can take giant data sets, look for patterns and connections, and find solutions in unexpected places. It looks a lot like human innovation, except it’s not human.

These AI technologies are still in their early days, but they’re progressing fast. 

Some people fear this. I don’t. Humans design the machines to serve human needs. I don’t expect a robot apocalypse. I expect a new kind of teamwork as our machines become not just tools, but a kind of business partner.

This is going to be a long-term trend and I want to begin following it more closely for you. We’re exploring some ways Mauldin Economics can do that. To do this right, we need your input. You can help by taking this short, three-question survey. Many thanks.

Final Thoughts on the Election

I have spent the last month or so talking with friends whom I consider to be political insiders trying to get some insight into the election. We see events that are truly unprecedented. It is now highly likely more people will vote in this election percentage-wise than any election since 1908. I don’t know what that means for the outcome but clearly people are extraordinarily passionate. Early voting has been historically record-breaking.

I am a student of history and I recognize there have been periods when the country was just as deeply divided and vilified both politicians and their opponents just as much as we are doing now. Our republic survived all those periods. But that’s small comfort. It is no fun to actually live in those times.

The worst part is that these passions inhibit discussion with those we oppose. A Cato Institute survey shows only 62% Americans feel comfortable expressing their political views, down considerably from the same survey in 2017.


Source: Cato Institute


Significant numbers of both conservatives and liberals would support firing people who donated to the opposite campaign. Indeed, 32% of people feel their political views could harm them at their work. This has led to a self-censorship and lack of serious and friendly dialogue, which is deeply concerning to me. Friendly, even if spirited, debate is the basis for developing common political consensus. I don’t see that today.

I’ll close with a quote from George Friedman’s latest letter where he expresses my own concerns but more eloquently.

Not all is lost, of course, but what has been lost is the idea that reasonable people can disagree over important matters and remain friends. That has become difficult if not impossible in the United States. It is not the political passion that troubles me. It is good for politicians to be demonized, to be forced to the edge and to see what they are made of. What troubles me is the hatred and contempt we show our fellow citizens who might once have been friends. I voted for Ronald Reagan, and I had friends who voted for Jimmy Carter. We disliked the candidate but not each other. The same could be said of the election between Barack Obama and John McCain. I am sanguine about the future of the republic, but our inability to remain friends with those who vote differently is growing and alarming.


I believe this will change when we have our final flashpoint of political angst later this decade, accompanied by The Great Reset. We will see more social cohesion just like First Turnings have for the last 400 years. But getting to that point won’t be fun. So we need to remember to focus on what we can do in our own areas and take care of family and friends. And seek out the opportunities that will come our way. They will be many and powerful.

So I actually look to the future with great optimism and hope, no matter who wins the election this coming Tuesday. Yes, things will change, but we will all adapt. Let’s do so in the spirit of optimism rather than fear. That always works better.

My Update on Trey and Many Thanks

First of all, I want to thank the scores of people who sent me advice and connections to neurologists in Tulsa to help deal with Trey’s issues. I was expecting maybe five or six replies. We were simply overwhelmed. Trey is getting treatment and we hope for the best very soon.

Readers like you are one reason I am such an optimist even as I recognize the economic and political trauma in our future. The genuine willingness to help others, even when there is nothing to be gained from it, gives me hope for humanity. I’m very long humanity.

Thank you for taking the time to read these letters. August passed, and I did not mention that it was this weekly missive’s 20th anniversary. I’ve enjoyed every moment, but mostly I’ve enjoyed your responses.

And with that, I will hit the send button and wish you a great week!

Your so very grateful for all his blessings analyst,


John Mauldin
Co-Founder, Mauldin Economics

Even if Trump loses, Trumpism will live on

US is too militantly divided for a sweeping repudiation of the president to last

Edward Luce 

A defeat for Donald Trump in next month’s election is unlikely to banish the cultural divisions he has stoked © Saul Loeb/AFP/Getty


Though few will dare admit it, much of America is preparing to celebrate the end of Donald Trump. 

Not only would his defeat bring the curtain down on an administration they regard as the worst in modern US history. 

In their eyes, it would also dispel the MAGA hat-wearing, militia-sympathising deplorables who make up the US president’s base.

It would be a moment of redemption in which not only Mr Trump, but Trumpism also, will be written off as an aberration. After four years of unearned hell, America could pick up where it left off.

That would be a natural reaction. It would also be a blunder. Should Mr Trump lose next month, it would be with the support of up to 45 per cent of expected voters — between roughly 60m and 70m Americans. Even now when Joe Biden’s poll lead is hardening into double digits, a Trump victory cannot be discounted.

Even if he loses, it is highly unlikely to match the sweeping repudiation that Walter Mondale suffered against Ronald Reagan in 1984, or Barry Goldwater to Lyndon Johnson in 1964. America is too militantly divided for that.

A victorious Biden camp would need to take three concerns into account. The first is that the Republican party is Mr Trump’s, even if he departs the scene. Five years ago, many evangelical voters still felt distaste for Mr Trump’s libertine personality. They quickly learned he was the kind of pugilist they wanted.

The likely Supreme Court confirmation next week of Amy Coney Barrett, and that of Brett Kavanaugh and Neil Gorsuch before her, are testaments to that. America’s Christian right has embraced its inner Vladimir Lenin — the end justifies the means.

The same applies to professional Republicans. Self-preservation might imply they would distance themselves from Mr Trump as his likely defeat drew nearer. The opposite has been happening. As an Axios study shows elected Republicans have become steadily more Trumpian over the past four years.

Partly this was because a handful of moderate representatives either retired in Mr Trump’s first two years, or were ejected by hardliners in primaries. Mostly it was because of the visceral power of Trumpism. 

It turns out there is not much grassroots passion for fiscal conservatism in today’s Republican party — if there ever was. The impetus is with those who fear that America will cease to be America, partly because of the US’s growing ethnic diversity.

The second point is that America’s information culture is far more degraded today than in 2016. Democrats often blame Mr Trump’s victory on the Russians. Maybe so. 

But whatever disinformation Russia spread was dwarfed by home-grown material. 

According to a study this week by the German Marshall Fund, the amount of fake, or disguised fake, news that Americans consume on their social media has more than tripled since 2016.

Facebook is a much greater vehicle for disinformation today. More importantly, US consumer demand for news that is either distorted or plain false — about the pandemic, for example — continues to grow. A dark conspiracy cult such as QAnon would have been hard to imagine a few years ago. Today it reaches tens of millions of Americans.

The evermore disruptive impact of digital technology on public culture makes governing increasingly difficult. A Biden presidency’s first priority would be to roll out a national coronavirus strategy to flatten America’s curve. Little else can happen before that.

Much of its success would depend on Americans following rules such as wearing masks, avoiding crowds and complying with contact tracers. But a Trump defeat is unlikely to banish the cultural divisions he has stoked. 

Large numbers of Americans say they will reject a vaccine and view masks as a surrender of their freedom. Mr Biden’s fate will partly hinge on the degree to which he can marginalise those sentiments.

His final concern should be on the conditions that gave rise to Trumpism. The ingredients are still there. Hyper-partisanship, blue-collar deaths of despair, the China threat and middle-class insecurity are all worse, or as bad, as four years ago. 

Most of those looking to follow Mr Trump, such as Mike Pompeo, his secretary of state, or Tom Cotton, the Arkansas senator, are harder-line versions of him without the caprice. The fixes to America’s problems are manifold, complex and painstaking. 

A vaccine will not suddenly banish the pandemic. Nor would Mr Trump’s defeat magically bring an end to Trumpism.

This Is Jerome Powell’s Moment, No Matter Who Wins

By Nicholas Jasinski

Jerome Powell, chairman of the Federal Reserve, in the Marriner S. Eccles Federal Reserve Board Building, Washington, D.C./ Photograph by T.J. Kirkpatrick


This week, amid a tumultuous U.S. election, the Washington leader who has done more than any other to stabilize the U.S. economy and steady markets will go about his business as usual.

On Wednesday, Federal Reserve Chairman Jerome Powell will lead the Federal Reserve’s instrumental decision-making panel, the Federal Open Market Committee, in a two-day session on the economy and monetary policy. For investors, Powell is arguably a more important figure in Washington than whoever will occupy the White House come 2021.

Faced with a pandemic that has forced Americans to stay in their homes and shut down their businesses, the Fed, under Powell’s leadership, acted swiftly to prevent a major financial catastrophe from unfolding. The central bank cut interest rates to near zero, unleashed enormous bond-buying programs, deployed new lending facilities, and went far beyond what any Fed had done in the past.

No major change in Fed policy is expected this week—or in the months to come. Yet monetary policy is set to remain a steadfast support for the U.S. economy, and a backstop that takes the worst-case financial-market outcomes off the table. At the center of that will be Powell, whose term runs until February 2022.

As a recovery begins to unfold, his next steps will be to try to return Fed policy to a stance that resembles normal—although that will mean something very different in a post-Covid-19 world. How the central bank can wean the market and the economy off the support it has provided during the pandemic will be its most critical challenge in the coming years.

Guiding its approach will be a rethinking of the central bank’s goals that recently has been completed under Powell. The way that officials react to inflation and unemployment indicators will change in the coming economic cycle.



“His lasting legacy I think will be the important shift in the orientation of Fed policy,” says Peter Hooper, Deutsche Bank’s global head of economic research, comparing it to the Paul Volcker Fed’s quashing of inflation. “It’s as important as what Volcker did in the 1980s. There will be risks, but I think that shift is something Powell will be remembered for.”

There are limits, however, to what monetary policy can do—something that Powell has clearly recognized. With the economy still in the grips of the pandemic, the Fed chairman has been a frequent and vocal advocate for more fiscal stimulus from Congress. And that at times has threatened to drag him into the more turbulent waters of politics.

President Donald Trump has backed off on his criticism about Powell in recent months, after a long spell of berating him on Twitter for not cutting interest rates to below zero. In August 2019, at the height of U.S.-China trade tensions, the president even asked, “Who is our bigger enemy, Jay Powell or Chairman Xi?” 

Despite Trump’s recent approval, it is unclear whether Trump or Joe Biden would renominate Powell when his four-year term expires. If Biden is elected, there would be a recent precedent: President Barack Obama nominated Ben Bernanke for a second term in 2009.

Still, Powell, 67, has shown himself able to remain cool and calm when the political brickbats are flying, and to keep a laser focus on the economy.

“He’s a pragmatic pivoter,” says Edward Yardeni, an economist and president of Yardeni Research. “He’s done what he set out to do, and [shown a willingness to] change his mind depending on what the situation demands, but not be totally inconsistent.”

It may help that unlike many of his predecessors, Powell doesn’t have a background as a Ph.D. economist who spent years in the halls of academia. A graduate of Princeton University and Georgetown Law, Powell had stints as a federal appeals court clerk and at two law firms, before moving to investment banking. 

He then served three years at the Treasury Department under President George H.W. Bush, rising to undersecretary for domestic finance in 1992.

He joined the private-equity firm Carlyle Group in 1997, focusing on industrial company buyouts. In 2005, he set out on his own, founding Severn Capital Partners the next year.

         Photograph by T.J. Kirkpatrick


Powell joined the Fed board in 2012 under Obama. Trump selected Powell to be chairman, and he began his four-year term in February 2018.

At first, Powell largely continued along the path of his predecessor, Janet Yellen. That meant gradually increasing the federal-funds rate, which had dropped to near zero during the global financial crisis.

At that time, policy makers worried about getting ahead of impending inflation and having room to cut rates in a future crisis. The Fed raised interest rates by a quarter of a percentage point four times in 2018 and began to reduce the size of its $4.5 trillion balance sheet by allowing bonds to roll off to the tune of $50 billion a month.

That monetary tightening drew fire from critics who pointed to uncertainties in the economic outlook. No detractor was more vocal than Trump, who repeatedly called for lower interest rates to match negative rates in Europe and Japan.

Powell managed to avoid addressing the president’s criticism directly, emphasizing the Fed’s independence and saying that it would do what the economic data demanded.

“In retrospect, the way he handled the criticism from the White House was telling about him as a person—that he didn’t sway,” Deutsche Bank’s Hooper says.

Trump did eventually get his wish, however. In early 2019, Powell said that the Fed would be “patient” with regards to further rate increases and gradually reduce its balance-sheet roll-off.

“When the situation changed and global economic weakness threatened to spill over to the U.S., he led the committee to back away from their previous path,” says Donald Kohn, a former vice chairman of the Fed and now a senior fellow at the Brookings Institution. “That’s what you have to do.”

Powell’s pragmatism was tested when the Covid-19 crisis hit. In between scheduled meetings on March 3, the Fed lowered the federal-funds rate by half a percentage point, followed by a full point less than two weeks later, to a target range of zero to 0.25%—as low as possible without going negative. 

It also promised to buy hundreds of billions of dollars of Treasuries and mortgage-backed securities, reduced bank reserve requirements, and unveiled programs to maintain dollar liquidity worldwide.

In the following weeks, Congress passed the Cares Act, a $2.2 trillion economic stimulus bill that also funded lending facilities for the Fed to extend emergency credit directly to large and small businesses and municipalities. And the Fed began to buy a wider range of securities, including corporate bonds, commercial paper, and municipal debt—some through exchange-traded funds.

“I give the Fed very high marks for its Covid response,” says Sonal Desai, chief investment officer of Franklin Templeton Fixed Income and a member of the Barron’s Roundtable. “They’ve gone further than people thought was possible, quicker than people thought was possible.”

The Fed barely got started unwinding measures put in place to combat the financial crisis. Will it be able to remove the Covid-crisis support?

In late August, at the Kansas City Fed’s virtual Jackson Hole symposium, Powell unveiled a new approach to inflation targeting that will govern the central bank’s actions in the coming recovery. 

Rather than trying to get ahead of rising inflation that theory dictates will appear once the unemployment rate falls below a certain threshold, the Fed could allow prices to run hot for extended periods to make up for shortfalls in the past. 

And allowing unemployment to fall as close to zero as possible, as it did before the pandemic, extends more of the gains of the expansion to minority and lower-income groups.

          Photograph by T.J. Kirkpatrick


In essence, the Fed won’t be removing the punch bowl when the party warms up—to paraphrase former Fed Chairman William McChesney Martin—but will wait for last call.

Time will tell whether the Fed’s new policy approach—called flexible “average inflation targeting”—will be successful. So far, the bond market does not appear persuaded. 

Long-dated Treasury yields have hardly budged since the Jackson Hole speech, and they aren’t pricing in any significant inflation over the coming years.

But the new framework should be enough to give the market and investors confidence that Fed policy will remain supportive for years, while also giving Powell room to adjust based on what happens in the real economy—another pragmatic move.

“I would call it ‘constructive ambiguity,’ ” Desai says. “They haven’t put into place some kind of mathematical formula that would tie their hands. They’re giving themselves maximum flexibility, while still comforting the markets.”

Others are not so sure. “The consequence of these repeated interventions is that the Fed is expected to intervene everywhere,” says James Grant, founder and editor of Grant’s Interest Rate Observer. “When there’s a new crisis, will the Fed intervene with yet a bigger balance sheet and with yet a lower interest rate? So the question, to my mind, is where does it end? And I don’t know.”

Powell has pushed boundaries in another way, becoming one of the loudest cheerleaders in Washington for another fiscal stimulus package. Without ever going so far as to recommend the size, content, or timing of a potential bill, he has emphasized the need for support from Congress, as have other Fed governors. That has invited criticism about eroding the independence of the Fed.

“I think the Powell Fed has remained independent of any political pressure itself,” Yardeni says. “But with the Fed calling for more fiscal stimulus, they have lost any claim to total independence.”

The calls for fiscal stimulus also reflect how monetary policy is already nearly full-tilt easing. Powell and other Fed policy makers have expressed skepticism about the effectiveness of negative interest rates, but have implied that there is more that can be done in the realm of asset purchases, or via the Fed’s lending facilities. That may become necessary if greater borrowing-funded fiscal policy does lead to higher bond yields down the road.

Still, Congress’ spending powers are arguably better suited to combating a health and unemployment crisis than the Fed’s lending or interest-rate powers can be.

Under Powell, circumstances demanded asking more from monetary policy than has ever been asked before, and much of his legacy has already been cemented by his speed and willingness to act during the Covid-19 crisis.

Although likely to be less eventful, the way that Powell steers the Fed under its new framework and weans markets off the extraordinary measures in the coming years may leave just as large a mark. 

A Different Election

Thoughts in and around geopolitics.

By: George Friedman


In less than a week, the United States will elect a president for the 59th time in its history. This one, as others before it, will be sacred. They represent 59 moments at which the dream of the founders and of the Enlightenment came to be, where the people judged their rulers and decided on their fate. It may not be the noblest imaginable method, but its sanctity lies in the fact that it is an extraordinary idea made manifest.

These 59 elections have also been profane. Andrew Jackson’s wife was called a prostitute, and Abraham Lincoln’s election led to a bloodbath the likes of which the nation had never seen. There is a relentless viciousness of the ambitious who want to destroy the good name of their opponents. We are human, so the sacred and profane resides in us all.

My job is to see patterns, so most events to me are always old songs sung to a new beat. I have seen the beauty of the Constitution unfold in the 1960s and 1970s, stabilizing the republic in spite of the anger in the country. 

I can tell you about the corruption that marred previous elections, like Rutherford B. Hayes’ or John Quincy Adams’ second election. I am comforted by the fact that each moment has a precursor, and that the country’s ability to pass through these precursors means it will likely pass through this moment.

But there is something different here, something that alarms me without causing me to be frightened, at least not yet: a hatred of supporters.

In every election there are candidates, and each is generally loathed by their opponent’s constituents. That’s not new. In fact, I’d argue that loathing candidates is normal and even healthy in a liberal democracy It focuses attention on the event. But beginning in 2020, supporters of one candidate began to despise the supporters of the other candidate with visceral rage. 

A marker for this was Hillary Clinton’s condemnation of Trump supporters as “deplorable.” It is no longer that the candidates might deplore opposition supporters (not a great strategy) but that their supporters hate each other. In a poll a while ago, about 75 percent of New York liberals said they would refuse to date someone who supported Donald Trump. 

Somewhat lower was Trump supporters’ aversion to Joe Biden supporters. There was something of the religious here. My parents did not want me to marry a Christian. My wife’s were less than enthusiastic about me. But the issue then devolved to staying with your own type, not that the other is morally depraved.

Each camp has come to see the other as contemptible. The contempt is expressed as Trump voters being racists or the like, and Biden supporters wanting a powerful government to strip people of their rights. Each is seen as morally depraved, and each is shunned by the other. 

Part of it has to do with social roots. Austin, Texas, is filled with Biden signs. Hays County, where I live outside of Austin, is filled with Trump signs. Hays County sees Austin as a place teeming with amoral techies from California. Austin sees Hayes County as filled with racist rednecks. 

Nothing is so clear in reality, but the stereotype has become the way we sort our enemies and keep them at a distance. There was tension between the counterculture and middle America in the 1960s, but the middle Americans were the parents of the counterculture. 

That made for family crises, but it died down. This time, the line is drawn in a way that family can’t ultimately transcend the line.

If the NPR/PBS/Marist polls released Oct. 20 are right, Biden will beat Trump by about 8 percent. That means that in social terms the country will be sliced nearly down the middle. A bit over half will hate a bit below half. 

A political landslide does not translate into a social landside. A vast part of America will continue to loathe another vast part of America. To me, what is frightening is that this time it won’t go away. It has in the past, but I don’t think it was like this in the past.

Not all is lost, of course, but what has been lost is the idea that reasonable people can disagree over important matters and remain friends. That has become difficult if not impossible in the United States.

It is not the political passion that troubles me. It is good for politicians to be demonized, to be forced to the edge and to see what they are made of. 

What troubles me is the hatred and contempt we show our fellow citizens who might once have been friends. I voted for Ronald Reagan, and I had friends who voted for Jimmy Carter. We disliked the candidate but not each other. 

The same could be said of the election between Barack Obama and John McCain. I am sanguine about the future of the republic, but our inability to remain friends with those who vote differently is growing and alarming.  

German Nobel Prize in Physics Winner

"It's Unbelievable All That's Going On at the Moment in Astronomy"

German astrophysicist Reinhard Genzel was just awarded the Nobel Prize in physics. In an interview, he talks about how he discovered the black hole at the center of the Milky Way.

Interview Conducted by Johann Grolle und Christoph Seidler

Depiction of a black hole: "It's important to get people excited about research," says Reinhard Genzel. Foto: All About Space Magazine / Future Publishing / Getty Images


DER SPIEGEL: Professor Genzel, congratulations on receiving the Nobel Prize in physics. What were you doing when you received the call from Stockholm?

Genzel: The same thing that we scientists have been doing all day everyday for the last six months: Zoom, Zoom, Zoom. I was sitting with 25 other people in the Zoom conference of a virtual committee belonging to the Max Planck Society.

DER SPIEGEL: And your telephone rang right in the middle of the conference?

Genzel: It was almost funny. I was sitting in front of the screen, knowing that I would have to spend the next six hours doing the same. Then the phone rang, and somebody said: "This is Stockholm." Then, the call started breaking up. It took some time before I could hear the "sekreterare" again. During that time, I went over to the window and started thinking: "This damned pandemic. Now I've started hallucinating."

Reinhard Genzel was born just outside of Frankfurt and is now director of the Max Planck Institute for Extraterrestrial Physics in Munich. For his discovery of the supermassive black hole Sagittarius A* in the center of our galaxy, the Milky Way, he received the 2020 Nobel Prize in physics, along with co-discoverer Andrea Ghez.

DER SPIEGEL: It's a Tuesday in early October, shortly after 11 a.m. - time for the Nobel Prize in physics to be announced. And you want us to believe that you didn't know who was on the line?

Genzel: No. You have to believe me. This year, I wasn't thinking about it at all. In previous years I was, like in 2011. We had come a long way with our measurements that year and I thought to myself: It could really be our turn. I'm pretty sure that we were close that time.

DER SPIEGEL: And after the call, you returned jubilantly to your Zoom call to tell everyone?

Genzel: No, no, everything goes according to a strict protocol. Twenty minutes pass between informing the winner and announcing the prize. During that time, you're not allowed to tell anyone. They really insist on that.

DER SPIEGEL: So you acted as if nothing had happened?

Genzel: Well, I didn't exactly do that either. I said to the committee chairman, a vice president of the Max Planck Society: "Mr. Blaum, I have to take care of something. Maybe you should turn on the television in about a quarter of an hour."

DER SPIEGEL: Why is it that you were hoping for a Nobel Prize in 2011 but weren't expecting one in 2020?

Genzel: There are several reasons for that. For one, I was out of the running in a sense since I had received the Crafoord Prize eight years ago. For Sweden, that is the equivalent to the Nobel Prize for fields of research that don't fit into the Nobel categories - things like mathematics, earth sciences and my field, astronomy. Accordingly, I didn't think I had a chance any longer, and certainly not this year.

DER SPIEGEL: What is different about this year?

Genzel: If you look at the Nobel Prize for physics over the last five years, you'll see that they have been awarded for neutrinos, gravitational waves, cosmology and exoplanets. Was it to be astrophysics again? You can perhaps imagine that people in other fields of physics might start grumbling.

DER SPIEGEL: We are apparently living in the golden age of astronomy.

Genzel: Absolutely. It is unbelievable all that is going on at the moment. And it will continue. Take just exoplanets, for example. We are currently experiencing a downright explosion in knowledge. And GRAVITY, our interferometer at the Very Large Telescope (VLT) in Chile is part of this explosion. We have just recently measured the atmospheres of some exoplanets. We are on the brink of being able to practice astrochemistry on planets outside our Solar System.

Astrophysicist Reinhard Genzel: "You have to believe me. This year, I wasn't thinking about it at all." Foto: Roderick Aichinger / DER SPIEGEL


DER SPIEGEL: There is another reason why people may have been surprised that you were awarded the Nobel Prize. Your discovery of the black hole in the middle of the Milky Way was overshadowed by the spectacular image of a black hole published by the Event Horizon Telescope team last year. Why were they not rewarded?

Genzel: It was good that their image received a lot of attention. It is important to get people excited about research. And astronomy has a special role to play.

DER SPIEGEL: Are you trying to say that the image was good for attracting an audience, but wasn't all that important from a scientific point of view?

Genzel: No, I wouldn't say that. It is true, though, that such a beautiful, orange picture is enticing, even if it can't be clearly interpreted. An open discussion is still ongoing among experts: Are we really sure of what we are looking at in this picture?

DER SPIEGEL: Wherever black holes are discussed, that picture is shown. And you are now telling us that we don't really even know what it is?

Genzel: Exactly. It could be that we are looking at the shadow of a black hole, as it is commonly portrayed. But it could also be the outer wall of a jet that is coming directly at us at the speed of light. To know for sure, we need additional measurements. But we have a problem at the moment: the corona pandemic. Most Earth-based telescopes have been switched off.

DER SPIEGEL: Tell us a little bit about your research. What is the importance of a black hole at the center of the Milky Way?

Genzel: We are talking here about a supermassive black hole around which gravity is particularly strong. Most interesting, of course, would be to take measurements from inside of it. That, though, isn't possible. There is a natural limit: the event horizon. Our goal is thus to creep as close as we can to this limit in an extreme environment where everything is moving at around half the speed of light, a place where the tidal forces of gravitation are so strong that they tear everything apart. 

By studying such black holes increasingly precisely, we are gaining a better and better understanding as to why our Milky Way is a rotating spiral galaxy while other galaxies have the form of an ellipse. Because black holes play a decisive role in that difference.

Genzel: At U.C. Berkeley back in the 1980s. At the time, everyone was trying to figure out what quasars are, though curious objects in space that emit enormous amounts of energy. The theoreticians said: It can't be explained with nuclear fusion like in stars. But it could be explained with massive black holes into which a lot of material is falling. According to that explanation, quasars were extremely well-fed black holes. 

The question, though, was: How can we prove it? The idea quickly emerged to study the effect of gravitation on objects orbiting the black hole. But it was also clear: quasars are much too far away to be able to calculate the individual orbits of stars. So we had to get much closer to our objects of desire. And everybody, of course, thought about the center of our own galaxy.

DER SPIEGEL: When you began taking your measurements, it wasn't even clear yet that there was a black hole in the center of the galaxy. How possible did people think it was back then?

Genzel: I would say that a third of practicing astronomers thought it was plausible. A second third would have said: I'm not interested. And the final third vehemently rejected the idea.

DER SPIEGEL: You yourself seemed to have little doubt. We reported on your research for the first time in 1992. You said: "It is difficult to interpret the measurements in any other way than through the existence of a black hole." That means that in the almost 30 years since then, you have simply continually reaffirmed what you already considered likely?

Genzel: Exactly, just that our measurements today are a million times better than they were back then.

DER SPIEGEL: Nobody is as familiar with the center of our galaxy as you are. What does it look like?

Genzel: Bright. If you were to travel to the center of our galaxy, you would be surprised by how bright it is there. The concentration of stars, relative to our neighborhood, a million times higher. And there aren't just a lot of them, the stars are gigantic. In short, the stars in the sky would be dramatic.

DER SPIEGEL: Could one even live in such a region? Would we have the possibility of finding shelter on our journey?

"I embarked on a pilgrimage to her in California, where she berated me for a full day."

Genzel: It's a good question, and I don't have an answer for you. I would guess that your chances would be rather poor because the gravity from the giant stars and the black hole are sufficient to pull apart all planets in alternating fly-bys. But we don't know for sure.

DER SPIEGEL: There is another person on Earth who might make for a good guide on such a trip: Andrea Ghez, with whom you are sharing the Nobel Prize. Your relationship doesn't appear to be completely free of friction.

Genzel: We have consistently been in competition with each other over the years. And early on, this competition was immensely profitable for all of us. We started our measurements in the early 1990s and Andrea joined us in 1995. But she enjoyed the advantage of having access to the Keck in Hawaii, a telescope 10 meters in diameter. 

At the time, we were measuring the speed of stars near the center of the galaxy and we both arrived at the same result. When two groups reach the same results independent of each other, the scientific community says: We believe it. The competition was incredibly helpful in earning respect.

DER SPIEGEL: It became more difficult later on?

Genzel: Yes. The goal was measuring the path of a star in the center of the galaxy for the first time. We were both lucky that there was this one star that needed just 16 years to race around the galactic center at a speed of 7,000 kilometers per second. It was dramatic and unexpected: On one day, it would go in one direction, two months later a completely different one and another two months later it would be different again.

DER SPIEGEL: And where was the problem?

Genzel: As chance would have it, we moved that year to the VLT in Chile, the large European telescope. We had a lot of observation time and were thus able to achieve early results. We published immediately, as fast as possible, which upset Andrea. At a conference at the time, she went so far as to say that we had fabricated our results. 

She said we couldn't have collected such data because we didn't have the telescope to do so - until someone whispered to her: "They are no longer working with a three-and-a-half-meter telescope." "I didn't know that," she responded, adding that it was unfair that nobody had informed her previously. 

She was extremely angry with me as a result. Even if I didn't feel I had done anything wrong, I had to accept that such was her view of the situation. So I told myself: Time to swallow my pride. I embarked on a pilgrimage to her in California, where she berated me for a full day.

DER SPIEGEL: And? Did you make peace?

Genzel: Well, I promised her from then on, I would tell her ahead of time what we were doing. It was simply the case that we were always ahead. We were technically further along, we had more telescope time and we had a larger group. As such, we always had the results first. 

Then, at some point, the aforementioned star was again approaching the center of the galaxy and we both knew: Things are about to get exciting. Just that we were in a much better position. Because we now had GRAVITY. 

It was clear that if we were able from a technical point of view to get our instruments up and running, we would have 20-times better resolution. So I wrote her: "You know that we have GRAVITY. Wouldn't it be better for all of us if we would work together?" 

But she declined.

DER SPIEGEL: You claim that you were ahead all these years. Why are you both getting the Nobel Prize now?

Genzel: Interestingly, I received the 2008 Shaw Prize alone. In the first phase, we were ahead. The fact that we both received the Crafoord Prize was completely justified. We were dead even. I think that if the current prize had come a bit later, the effect of GRAVITY would have been even larger. It is really an unbelievable instrument that will continue to play a huge role in astronomy down the road. On the other hand, I am personally convinced that she is the reason why we have been awarded this prize at all.

DER SPIEGEL: You are referring to the share of women among Nobel Prize recipients?

Genzel: Perhaps you recall the criticism on Monday when the Nobel Prize in medicine was announced: Again three old, white men, people said. I understand. I know it myself as a member of the Shaw Prize committee. We are under immense pressure. And in some cases, the problem is that in order to respond to the gender imbalance, we choose women for the selection committee. But by doing so, we lose half of the best women candidates.

DER SPIEGEL: The prizes have been announced, but they haven't yet been presented. What is the situation in this year marked by COVID-19. Are you planning on traveling to Stockholm?

Genzel: No, there won't be a presentation. They told me they are planning to make up for it next year. I have also heard rumors that we will be able to pick up our diplomas and plaques from the ambassador.

DER SPIEGEL: Professor Genzel, we thank you for this interview. 

America Has No Reason to Be So Powerful

Eighty years ago, the United States made a tragic decision to pursue global supremacy. The project has outlived its purpose.

By Stephen Wertheim

Credit...Illustration by Doug Chayka; Photographs by Don Mason, Shilo Watts, Joel Carillet, narvikk and rusm, via Getty Images, and mikanoka, via iStock


The next president, whoever he is, will not determine the future of America’s role in the world. Joe Biden does not recognize there is a problem. President Trump has no answers.

Three decades into the “post-Cold War era,” still named for what preceded it, the United States possesses no widely shared, deeply felt purpose for vast global power. America’s armed dominance today occupies a position similar to that of liberal immigration, free trade or private health insurance a decade ago. Taken for granted by political elites, it is nonetheless ripe for challenge beneath the surface.

One source of challenge comes from recent experience: America’s wars have projected mayhem across the greater Middle East and brought militarized violence home to American streets. Another source is prospective: As both liberals and conservatives rack up debt, they will face pressure to cut the gargantuan, trillion-plus sum lavished annually on national security.

But the most profound challenge is rooted deep in the past. If many Americans no longer understand why their country should police the world, it is for good reason: U.S. military supremacy has outlived its original purpose.

Eighty years ago, as it prepared to enter World War II, the United States made a fateful choice not only to pursue military supremacy but also to sustain it long into the future. This decision, tragic even then, has become immobilizing now. It has caused America’s leaders to see armed dominance as the only way the United States can relate to the world.

Both candidates for president pine to restore America’s righteous might circa 1945 — Mr. Trump with his paeans to Generals Patton and MacArthur, Mr. Biden with his pledge to defend the postwar “liberal international order.” Such nostalgia is precisely why we cannot confront today’s problems, which have their origin in our greatest moment as a nation.

Dec. 7, 1941, lives in infamy as the date when Japan attacked Pearl Harbor and brought the United States into World War II. By then, however, U.S. leaders were already planning to install America as the pre-eminent superpower in the epoch to come. It was a stunning event 18 months earlier — the fall of France to Nazi Germany — that led them to make the decision for dominance.

When France imploded within six weeks, Adolf Hitler suddenly bestrode Europe. He soon joined with fascist Italy and imperial Japan to form the Axis alliance. For the first time, Americans faced the credible prospect that totalitarian powers could ascend to primacy in Europe and Asia. Congress swiftly approved a vast military buildup and the first-ever draft in peacetime.

Yet acute observers recognized that the United States remained in an enviable position. “We shall not be invaded,” the columnist Walter Lippmann acknowledged as France collapsed. The oceans, fortified by air defenses, would thwart any attack launched from beyond the hemisphere. And the country’s economy was so self-contained, especially after the Great Depression, that it did not rely on foreign trade.

For these reasons, some Americans wanted to guard the entire Western Hemisphere against outside attack but go no further. An eclectic coalition — embracing the democratic socialist Norman Thomas, future presidents John F. Kennedy and Gerald Ford, and the anti-Semitic aviator Charles Lindbergh — rallied under the banner of “America First.” They hoped to uphold America’s traditional aversion to entanglements in the Old World (which might yet resist Axis rule without American intervention) and preserve the New World as a bastion of freedom.

But most foreign policy elites came to a different view. True, the United States could remain safe by steering clear of European power politics. Yet America, or its ruling class, aspired to more. It wished to interact and transact across the globe and to determine the direction of world history. Axis dominance endangered less the United States proper than its expansive vision of itself. If confined, America would become “a lone island in a world dominated by the philosophy of force,” President Franklin D. Roosevelt declared in June 1940. Such a fate, he warned, would leave the American people “lodged in prison, handcuffed, hungry, and fed through the bars from day to day by the contemptuous, unpitying masters of other continents.”

As Roosevelt spoke, the United States remained safe, prosperous and regionally dominant. But now that totalitarian powers had proved capable of attaining mastery in Europe and Asia, hemispheric leadership looked like “isolation,” even imprisonment. The United States could no longer usher in a new and better world unless it acquired the military power to impose its writ. And even if the Nazis had failed to attain primacy, who might try next? The United States would henceforth take up arms not only to defeat today’s totalitarians, but also and especially to deter tomorrow’s.

Global dominance, experts understood, would come at a terrific price: perpetual warfare and the transformation of America into something like an empire. “World domination by the United States and the British Empire” is how the military analyst Hanson Baldwin summed up the vision of his fellow planners in 1941. Public intellectuals were no less shy about the consequences. “Tyrannies may require a large amount of living space,” noted the publishing mogul Henry Luce in his essay announcing “The American Century.” “But Freedom requires and will require far greater living space than Tyranny.”

For half a century, American leadership fulfilled the objectives it set for itself. The United States won absolute victories over the Axis in 1945 and the Soviets in 1991, even as it meted out continual violence against Guatemalans, Vietnamese and others. So long as totalitarians stalked the earth, threatening to close off liberal intercourse and subvert “world order,” the United States retained a coherent rationale for its costly pursuit of armed dominance: better us than them.

When the Soviet Union collapsed, officials scarcely considered pulling back U.S. deployments and commitments. To the contrary, they extended them. The original dream of 1945 — of one world united under American supervision and following American terms — seemed to have arrived at last. Who could deny that in the “new world order,” proclaimed by President George H.W. Bush as he readied for war on Iraq, “there is no substitute for American leadership”? In any case, Russia was flattened. China remained poor. The United States cut its military spending and still exited the 1990s as the global colossus.

Yet the decades went on and no totalitarian rivals arose to take the place of prior nemeses. America’s new antagonists were hardly capable of gaining immense global power, no matter how U.S. leaders inflated weak states as the “axis of evil” or the terrorist threat as “Islamofascism.” In the early 21st century, if any power sought world domination, coercing others and flouting rules, it was the United States. Instituted to enable engagement across borders, American supremacy began to obstruct it. Today the United States deploys troops in more than 170 countries. Its military operates against terrorism in roughly 40 percent of the world’s nations. Dozens of countries are targets of U.S. sanctions.

Many in Washington now acknowledge excesses. Mr. Trump and Mr. Biden alike vow to bring endless war to an end. At the same time, leaders in both parties identify China as the adversary the United States has been missing — an expansive, crypto-totalitarian force whose containment could restore purpose to American power. Citing China’s “bankrupt totalitarian ideology,” Secretary of State Mike Pompeo heralds a new dawn for U.S. leadership. “Securing our freedoms from the Chinese Communist Party,” he said in July, “is the mission of our time.”

Is it? China is authoritarian and on the rise. But it is hardly Nazi Germany or Soviet Russia. China is open for business, whether on fair terms or not; the world’s largest trading nation makes a strange candidate for a totalitarian menace whose every activity closes off the earth. And unlike 20th-century rivals, China has long abstained from armed conquest. Though it threatens Taiwan, no one thinks it is about to invade U.S. allies like South Korea or Japan.

There was a time when Americans believed that armed dominance obstructed and corrupted genuine engagement in the world, far from being its foundation. That insight has been buried, now nearly beyond living memory. But it is perhaps not altogether lost.

Stephen Wertheim (@stephenwertheim) is deputy director of research and policy at the Quincy Institute for Responsible Statecraft and a research scholar at the Saltzman Institute of War and Peace Studies at Columbia University. He is the author of the forthcoming “Tomorrow, the World: The Birth of U.S. Global Supremacy,” from which this essay is adapted.

What the US Election Is Really About

For all the hand wringing over Donald Trump's authoritarian rhetoric, the 2020 US election is not really about the incumbent. It is about deep-seated suspicion regarding the national government's role, which makes populism a recurring feature of American political history.

Eric Posner


CHICAGO – Next month’s United States election is not about policy, nor is it even about President Donald Trump. It is about America’s constitutional system. This is not to suggest that the election could end that system. While Trump has an authoritarian temperament and admires dictators like Russian President Vladimir Putin, he is unlikely to become an autocrat even if he is re-elected. The real question that America faces concerns the role of the national government in the life of the country.1

Trumpism is just the latest in a series of populist waves born of anger toward what people see as unaccountable, self-interested political elites in Washington, DC. Indeed, the story begins before that city was founded. The American Revolution targeted remote, self-interested elites in London, and it was soon followed by a major dispute over the power of the national government.

Critics argued that the proposed new Constitution would create a national governing elite, thus undermining the hard-won sovereignty of the colonies-turned-states. Though the Constitution’s proponents prevailed, the critics proved prescient. Almost immediately, populist movements emerged to challenge what was seen as elite rule. Jeffersonian democracy overthrew the Federalist elites in 1800, and then Jacksonian democracy overthrew the Jeffersonian elites in 1829.

Although Jeffersonian and Jacksonian democracy differed in many ways, both reflected a belief that the elites who had led the American Revolution had broken their promise of delivering self-government to the masses. Elected officials, judges, and bureaucrats seemed to come from great families or the upper class, and to rule accordingly, like the corrupt aristocracy Americans had just escaped. 

The solution was to return political power to the masses by expanding the franchise, extending democracy to more offices (like state judgeships), and limiting the power of the national government.

This wave of populism was temporarily overtaken by the debate over slavery and the Civil War, but it roared back in the late nineteenth century. This time, it was led by southern and midwestern farmers who believed that they were being ignored by the two main political parties, and exploited by the banks and railroads those parties served. The Populists invoked Jackson as their hero, attacked the entire political system as corrupt, and formed their own People’s Party to advance their interests.

The next great wave of populism came during the Great Depression of the 1930s. Politicians like Huey Long, Louisiana’s governor and then a US senator, came to power by promising to redistribute wealth from the rich to the poor. Long accused established politicians of plutocracy, and attempted to undermine all competing power centers, from the state legislature to the university system. By the time he died, in 1935, he had attracted a significant national following.

The last flare-up of populism before now was in the 1960s, when the southern politician and racist demagogue George Wallace sought to persuade northerners to support his candidacy for the presidency by claiming that the federal bureaucracy (“big government”) was responsible for all of America’s problems. Such anti-elitism was also common on the left, which blamed a racist, imperialist establishment for the Cold War and intervention in Vietnam.

The logic of populism is simple and powerful: If things go badly, the blame lies with the government and the elites who run it. While American populists have attacked state governments, the federal government has always been their primary target because of its remoteness. People may trust local politicians and their own representative or senator. But other than the president and congressional leaders, federal officials are largely faceless.

All populist movements burn out when their internal contradictions overtake popular enthusiasm. Populists loathe the elites, but cannot rule without putting their own elites in power. Jeffersonian democracy yielded a one-party state run by Virginia planters; Jacksonian democracy produced a corrupt party system controlled by bosses and professional politicians; the Populist movement lost momentum when, in order to make political progress, it threw in its lot with the Democratic Party. 

And sometimes populists are outmaneuvered by establishment politicians or lose power as conditions improve. Roosevelt moved left to counter the Longian populism of the 1930s, and the populism of the 1960s collapsed with the end of Jim Crow and the Vietnam War.

Trumpian populism should be divorced from Trump, who has ridden a political wave that he neither initiated nor controls. Its main source is anger at the advance of cultural liberalism, economic stagnation, and inequality – all of which have been blamed, with more or less justice, on national elites and the institutions they dominate. 

This same wave helped the relative outsider Barack Obama defeat the establishment candidates Hillary Clinton and John McCain in 2008, though Obama was a technocrat by temperament and governed accordingly.

Populism is dangerous because it rests on an uncompromisingly hostile attitude toward established political institutions and the professional politicians on whom we ultimately have no choice but to depend, whatever their imperfections. That is why, in hindsight, populism can seem irrational even if it has done good by bringing legitimate grievances to the attention of government and the public. 

Trump’s attacks on institutions and norms, culminating in his refusal to guarantee a peaceful transition of power, are veering toward nihilism.

And that brings us to the election next month. We do not yet know whether the twenty-first-century populist wave that brought Trump to power has exhausted itself. It is possible that the pandemic has reminded people of the virtues of expertise and professionalism in government. 

But so many Americans have invested themselves fully in opposing the unelected bureaucrats of the “deep state” that Trumpism could live on without its namesake, perhaps led by a new tribune – threatening more years of chaos and division. Only a truly decisive defeat for both Trump and the Republicans can prevent that from happening.


Eric Posner, professor at the University of Chicago, is the author, most recently, of The Demagogue’s Playbook: The Battle for American Democracy from the Founders to Trump.