American Democracy In A Bear Market

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…As partisans have drifted apart geographically and ideologically, they’ve become more hostile toward each other. In 1960, less than 5 percent of Democrats and Republicans said they’d be unhappy if their children married someone from the other party; today, 35 percent of Republicans and 45 percent of Democrats would be, according to a recent Public Religion Research Institute/Atlantic poll—far higher than the percentages that object to marriages crossing the boundaries of race and religion. As hostility rises, Americans’ trust in political institutions, and in one another, is declining. A study released by the Pew Research Center in July found that only about half of respondents believed their fellow citizens would accept election results no matter who won. At the fringes, distrust has become centrifugal: Right-wing activists in Texas and left-wing activists in California have revived talk of secession…

What has caused such rancor? 

But the biggest driver might be demographic change. The United States is undergoing a transition perhaps no rich and stable democracy has ever experienced: Its historically dominant group is on its way to becoming a political minority—and its minority groups are asserting their co-equal rights and interests. If there are precedents for such a transition, they lie here in the United States, where white Englishmen initially predominated, and the boundaries of the dominant group have been under negotiation ever since. Yet those precedents are hardly comforting. Many of these renegotiations sparked political conflict or open violence, and few were as profound as the one now under way.  — The Atlantic

The above is a must-read, folks (click on the link to the Atlantic).

Rather than just momentum and central bank haruspicy — the reading of the Fed’s entrails, for example –  there are much bigger forces at work which will determine the future path of asset prices in the long-term.  Politics and demographics are a couple of the biggies.

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