Change is Coming Fast: Present Dreams, Future Nightmares

Dear Reader,

It’s only with the passage of time that the full extent of change is revealed.

The Chariots of Fire, a film set in the UK in early 1920s, had a central character whose Christian beliefs forbid him to run on the Sabbath.

A century later, Christianity is in decline and the Sabbath is just another day for consumers to consume and players to play.

Within my living memory, unmarried mothers were once a source of great shame to the family.

Today, single mums and their children bring great pride and joy to families.

Police officers were once afforded community respect. Now, the men and women in blue are the subject of scorn and abuse.

What was once inconceivable, can, with the passing of time, become our new reality.


Market Expert Predicts ‘Double Bottom’ for ASX. Find out how to safeguard your wealth.

Change is a constant

Before we delve into today’s Rum Rebellion, those who trade the market know all about change. Price momentum can change from up to down to up so quickly.

My good friend and fellow editor Ryan Dinse has developed a proprietary momentum indicator that has produced timely buy and sell indicators on randomly selected stocks.

If you’re a trader, looking for that edge in identifying a potential change in trend, then go here to register for Ryan’s video series ‘The Private Trader’s Edge’. Well worth your time.

Now, back to today’s topic.

We know change is a constant, yet, for some reason, we continually project our past into the future…what has been so will continue to be so.

One of society’s long held beliefs, the one that’s underpinned a century of economic growth, has been the ‘Australian’ or ‘American’ or ‘British’ dream.

The greater the number of dream believers, the greater the consumption levels (funded by greater levels of debt).

Over the decades even the ‘dream’ has changed.

It began as a humble vision. The homes of the 1930s and post Second World War were modest and functional…I know, I grew up in one. There was one shower and one toilet for seven of us.

The modern-day Australian dream is far more expansive than that of my Depression-era parents.

A price that dream believers have been prepared to pay

En suite bedrooms. Media room. Family room. Pool. Big screen TVs. Two cars. Overseas holidays. Breakfast/lunch and/or dinners out.

Today’s not so humble vision comes with a fairly hefty price tag. A price that dream believers have been prepared to pay…to date.

But will it always be so?

For a growing number of households, buying (or, more to the point, borrowing) into the dream is becoming their living nightmare.

The updated version of my book The End of Australia, was released in December 2019 (pre-COVID). In the book these questions were raised…

What happens if (enough) people decide (even temporarily) to “replace both elements of the society with different goals and means”?

What if the goal posts for what we consider to be a better life don’t just change, but get moved to another field altogether?

What if people decide that this endless pursuit of material goods — to signify success — is a mug’s game?

What if it all becomes too hard and people recalibrate their thinking?

If trying to conform to the dream becomes a living nightmare, it’s possible we could see the emergence of a new dream. 

One based on the theme of “less is more and quality over quantity”.

That cultural shift — and it only has to happen at a slightly wider margin — would play havoc with those theoretical macroeconomic models.

If enough people stop buying the dream (and the “material stuff” that comes with the dream), then we could see a prolonged period of contraction…similar to the 1930s.

That’s what we could be on the cusp of…a change in our value systems.

And that would be disastrous for an economy built on credit and consumerism.

Little did I know this potential shift in thinking would be thrust upon us so soon and so quickly.

Bloomberg on 4 July 2020:

Port Phillip Publishing

Source: Bloomberg

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To quote from the article (emphasis added):

As the U.S. reopens, Americans aren’t much interested in going out and spending.

A survey of 2,200 U.S. adults shows how Covid-19 has dramatically changed behavior in the world’s biggest economy, potentially for the long haul. The data flashes warning signs for the recovery, showing waning interest in public events and material things, like appliances and clothes, and a new austerity, expressed through pantry stockpiling and delayed big-ticket purchases.

This thriftiness could be here to stay, permanently shifting the makeup of the average American consumer—not unlike the Great Depression’s impact on spending habits 90 years ago. More than three quarters of consumers say they expect to increase their savings rate and financial conservatism after economies fully reopen.

The study shows that when it comes to saving, Gen Z adults, ages 18 to 24, are the most intent on “definitely” being more frugal after the pandemic.

Are the survey results a sign of things to come or simply a reflex response to the current situation?

If, as indicated, the younger generation/s embrace an attitude of thrift, then…we could be on the cusp of…a change in our value systems.

Mehlman Castagnetti, a Washington-based US Government Relations firm, has identified that change is coming…and coming fast.

The company’s recently published infographic is titled ‘THE GREAT ACCELERATION — How 2020s Crises Are Bringing the Future Faster’.

The infographic’s flowchart on ‘New Psychology, New Priorities’ caught my attention.

The future for every level of society, Government (G), Business (B) and Individual (I) is expected to be different to the past.

Port Phillip Publishing

Source: Mehlman Castagnetti

[Click to open in a new window]

With more people working from home, what does that mean for public transport?

Will there be greater use of our cars?

Will the trend from suburban space to inner-city clustered living be reversed?

More home cooking? What impact will that have on the hospitality industry?

A preference for renting over ownership…that’s not keeping the ‘dream’ alive.

But it’s the last shift in psychology and priorities — Save more, Spend less, Borrow less — …that would be disastrous for an economy built on credit and consumerism.

Change is coming at a much faster pace than most realise

Those with dreams of the future being a repeat of the past, could find the 2020s become their living nightmare.

Things you thought were set in stone, could suddenly turn to mud.

House prices may no longer rise. Share markets could go into a decade-long slump. Unemployment may remain persistently high. Wages stagnate. Immigration intakes slow to a crawl.

I know, that’s unlikely to happen…just like the Sabbath will always be a holy day, unmarried mothers will be a source of shame and the police will always command community respect.

Change is coming. Best to prepare for it in advance.


Vern Gowdie Signature

Vern Gowdie,
Editor, The Rum Rebellion

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

The Rum Rebellion