Is the American Economy Booming? – John Mauldin Interview

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Future Money Trends: Greetings and thank you for joining me at I’m here at the Casey Summit with John Mauldin of Mauldin Economics.

John, thank you so much for joining us.

John Mauldin: Good to be here sir.

Dan of FMT: John first of all, I’m happy to be in Texas. I know you’re a Texan and I noticed the economy feels different here. People are busy. There’s a housing bloom going on. I mean when you travel the world, is that what kind of what makes you optimistic? Because I mean, you can go to one area and be depressed if you’re in Toledo, Ohio.

But you come to Austin, and it’s like “Man, America is thriving.”

John: Actually Toledo is booming right now.

Dan of FMT: Is it?

John: It is because of shale oil. It’s part of that Marcellus plate, so Toledo and that whole Akron…they’re now producing steel again, but it’s now steel pipe.

The jobless rate in Ohio is now underneath the national average as opposed to being before, because high paying jobs, because, you know, they’re putting holes in the ground.

Dan of FMT: Yeah. The reason I bring that up is because we’re at the Casey Summit, gold bucks, big concern about inflation and deflation, and overall, suicidal collapse.

So you are left here being the optimist in the room.

John: I am the optimist in the room.

Dan of FMT: Why should we be optimistic about America, the US, and the US dollar?

John: Well, I guess it depends on your time horizon. If your time horizon is the next six months, or the next year, the next two years, there’s reasons to be pessimistic.

If your time horizon’s twenty years, I’m a wild‑eyed optimist, because one of the things that will happen, not just in the US, but in Europe, in Japan, in China, the imbalances that have been created by government are going to have to be restructured.

I mean, if you don’t, you collapse.

OK, we’ve had financial collapses before, but that didn’t change the structure and the rate of human progress.

We’re seeing technology now at the elbow of the curve; it’s an accelerating curve, and as human beings, we don’t understand how rapid this change is going to be.

We’re going to see more change in the next ten, fifteen, twenty years than we saw in all of the last century combined. It’s going to be compressed.

The things that we will take for granted in 20 years…We will take for granted that of course you don’t die from cancer. That you can get…atherosclerosis will be things of the past. Viruses will be gone. I mean, we’ll look back on 2014 as this dark age of medical technology.

How could…you really lived with this?

You know, just like our kids say, “Dad, you really didn’t have a cellphone growing up?” You know, because they’re used to being connected.

I mean, you’ve got young kids, they already can play with the iPad, they know what to do. They do it intuitively.

Dan of FMT: My four‑year old asked me what…we were in a grocery store and he pointed to the newspaper and said “What’s that?” and I literally told him that “It’s something people used to read before we had computers.”

John: I mean, I now carry my library in my briefcase. Whereas I used to have to choose which two or three books am I going to take onto my road trips.

Now, I’ve got an abundance of books. Too many almost. I feel guilty about not reading.

But that’s just the tip of the iceberg.

The rapidity of mobile communications, the Internet of things, robotics, advanced drones, communications systems, artificial intelligence, the world shifting to solar or other forms of renewable, digital type energy.

I mean we’re living…this is San Antonio. Austin is up the road. Permian Basin is not too far off to our left.

In twenty years, thirty years, that natural gas revolution will be receding because we will have been replacing it with digital energy, which is solar and other forms of energy that will come along.

We’re getting ready to get into a world of abundance.

Now, it’s going to be a race between how much wealth can governments destroy in the process of how much wealth can humanity and our ingenuity create. And it’s not all together clear who is going to win and what countries.

Some countries are going to fall behind and that’s a problem for them because in a age of accelerating change, as you’re doubling and you’re doubling and you’re doubling again, if you fall behind a couple doubles, you don’t catch up.

And even if you’re growing, you’re getting further behind because they’re further down the curve than you are.

Dan of FMT: Now with creative destruction…like what you’re talking about essentially is a huge advancement of technology, and I think of Blockbuster Video, and to this morning we were talking about, we drove by a Barnes and Noble. I can’t believe they’re still around.

John: Oh God bless Barnes and Noble, they sell a lot of my books now.

Dan of FMT: Well it’s just what you’re talking about it seems like yes it all sounds great, a life of abundance, maybe even more leisure for humans, but it also seems like a lot of jobs. From your understanding and analysis of the economy, when these things, when technology advances like this, what is the net gain or loss for jobs for people?

John: Well, it’ll be a net gain overtime.

Let’s go back to 1870, the number one job was, you know eighty percent worked on the farms. By 1900 the number one job was personal servant.

There was that much of a shift because of the McCormick Reaper.

I mean people started moving off the farms. Today less than two percent of the people work on farms.

And we’re feeding not just the country, we’re feeding the world.

I mean, I think it’s not much more than one percent, it’s closer to one than two.

But those people found jobs and that’s what technology does. It’s going to replace, first of all, it replaced muscle power, and now it’s replacing mental power.

We’re augmenting ourselves.

We’re going to have at our fingertips, at our phone tips, probably wired into our minds, access to massive amounts of information and data and skill sets.

You’ll be able to ask your computer, “How do I do x?” and that computer will go out, that computer that you’re wearing that will be part of you, will go out and access a hundred different expert systems and come back and say, “Here’s what you need sir.”

“Here’s how you do that.” And that power is going to be in the hands of children, who are going to be only limited by their imagination.

Now we know that these kids have a lot of imagination.

Dan of FMT: I want to close off with the question about we’re in San Antonio and I recently just moved to Texas. I know you are from Texas and Texas man, this economy is booming. And you know to anybody who’s from the Social Republic of California where I came from, it snows all year here, and it is freezing.

Please stay away from Texas.

John: You know one of the things that I was laughing about, because we’ve had a remarkable mild summer. The weather’s really been good, it was good for the last two winters.

If the weather was somehow another change, that this was what we get year around. And it’s not. I’m telling you “It’s lousy, don’t come.”

I mean our biggest problem in Texas would be tax refugees from San Diego wanting to come here.

If I could figure out how to only let Republicans in the border, or something I would do that.

I don’t want to become like them.

Dan of FMT: My question is, does it logically make sense as someone who start coming from Southern California, the Texans from the most part or at least the people I’m talking with, they have great income.

But instead of having $750,000, their homes were like $200,000‑300,000, maybe $400,000 even for a really nice home.

What’s the deal with that?

John: I have a fabulous apartment in Downtown Dallas. I couldn’t even own a bedroom in New York for what I own in Dallas.

Dan of FMT: Did you see Texas homes prices rising for the next decades or so?

John: No.

We have land. There’s no constraint on you know, moving out.

That’s one of the reasons Texas didn’t participate in the last home bubble.

I mean to some degree Austin did because there was a limited amount of land because of their regulations, but the rest of the state, they just built further out.

They built more freeways, more roads, and so we didn’t get a housing price bubble now.

Housing prices have gone up in downtown areas, where people want to live, urban environments. But we’re not going to see the, I don’t see us becoming Southern California.

Dan of FMT: Last question analysis more for fun, do you think Governor Perry is likely to be more secured by the Secret Service or the Federal Penitentiary?

John: Neither.

I mean this whole thing…you just have to understand inside‑Texas politics and it is such a political junkie.

I mean, Austin is a hot bed of liberal radicalism.

They hate Governor Perry, and in Texas, they got into pissing contest. And one of them said “OK, this is what’ll do.”

It’s not the first time they’ve done that to Texas governors.

You know Travis county DA’s do that. And I like Rick Perry. He was a great governor, but I don’t think he’s going to wear well in the national stage.

Dan of FMT: Do you think Rand Paul has a chance?

I know I keep giving you with the last questions.

John: You know, I would normally say no. And now I have to put an asterisk beside that, and I would normally say no because he’s too young and he hasn’t really done the national spotlight thing yet.

Dan of FMT: It’s not possible for a first term senator to become president right? [jokingly][laughs]

John: Well yeah, we knew that. [jokingly]

Given that there are no obvious choices in the Republican Party, it is a wide‑open field. And Senator Paul has a stake in the ground for a significant chunk of the party. He is broadening the base. He is coming up with very creative positions. He is open to radical changes in technology and structure in taxes.

And he is creating policies that says, for instance…I want to be careful not put words in his mouth…but on social policies, he’ll say “I don’t believe that quite personally, but I think that’s a state’s decision to make, and that resonates with young people.”

They don’t want the federal government in their home, in their house, in their life, poking around. And if you say “Hey that’s a state issue and you guys get to do what you want to do.” As I was arguing with Newt Gingrich a few years ago, the Republican Party does not need to become more conservative. It needs to become more libertarian.

We need to be the party of freedom and letting people live their lives.

Dan of FMT: John, besides Barnes and Noble, where’s the best place people can find your work?

John: On the Internet. Just Google John Mauldin.

Dan of FMT: All right thank you so much for your time.

John: Thank you.

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