[danhak]

Of course a country’s stock market will perform well as that country ascends to become the world’s dominant superpower.

The question is whether the power and influence of the U.S. will grow similarly over the next 150 years as it has over the last 150.

To invest mechanically without thinking about what’s actually happening in the world is cargo cult behavior.

[gumby]

Who cares about returns over the next 150 years? Even half that is excessive. Someone investing at age 18 might care about the subsequent 50 years.

It's going to be a long time before some other country takes over the "reserve currency/investment market of last resort" position the US currently has. No other market is even close to providing the deep liquidity and rule of law the US market has over a wide variety of instruments.

Sure, someone will eventually take over that role, but there are no candidates today. And, to your point: it was clear by the late 19th century that the US dollar would displace Sterling, but it took another half a century for that to happen. On the scale of current human lifespan, you can assume it won't happen at all.

[ganonm]

Keep in mind that the present value depends somewhat on the discounted future earnings, which by definition extends to the end of time. That being said, the associated time discounting heavily reduces the impact of earnings envisaged say 100 years from now (a 5% discount rate would mean ~13k USD in 100 years is worth about 100 USD now, and that's probably generous given historic market returns).

So, the US doing extremely well 100 years from now vs. the US doing very badly 100 years from now could have a non-trivial impact on the perceived value of US assets. I suspect that the large uncertainty about what the world will look like in 100 years means there is just some sort of seldom changing value baked into assets to account for this, but it nonetheless exists, and could change if there was some huge geopolitical shift.

And before you mention anyone on earth would be dead in 150 years, yes that's true, however you can always sell it to someone later on who will be alive in 150 years (or sell it to someone who can later sell it to someone etc. etc.).

[mint2]

Is that actually how it works? Money has to go somewhere regardless of future. Whatever looks the least bad at present is in demand, regardless of what the returns are. Inflation was above tbill rates yet people bought because they don’t have better options.

It’s like food. Food in 100 years does not help the need for food now.

[kqr]

Food perishes faster han equity indices.

If there was a futures market in foodstuffs that basically keep forever and is cheap to store (honey?) you would see that the expected price of that food in 100 years would have some effect on the current price.

[nonethewiser]

In theory maybe, but I'm not sure this is right. The further out you go the more worthless expectations on returns become. Who actually has high confidence in a price model projecting 100 years out? What organization has the conviction to execute on this 100 year plan instead of signals with real correlation for returns over 1, 5, 10, 20 years?

[dalbasal]

Why is "reserve currency" the central issue?

Also, the US stock market, US Dollar and US economy/gdp aren't hard linked to one another these days. The companies listed can be selling to non US markets, employing internationally, founded internationally. They're just listing on the US stock market because well.. that's where the stock market is. The US could, in theory, become more or less popular a stock market regardless of its currency's popularity.

Meanwhile, both the Euro and RMB have similar size markets backing their currency. Neither one is currently trying to displace the USD. I think the importance of owning the international currency is somewhat speculative.

[PKop]

The reserve currency built atop the petrodollar system produces a cycle of the rest of world needing to acquire dollars to trade for commodities and most other commerce around the world. Because it gains this reserve status, it has stability and confidence, and thus since countries need it to buy input commodities and energy, they acquire foreign exchange surpluses by selling goods to the US and running trade surpluses. Since they have stockpiles of dollars, it is conducive that these dollars are also used for trade of other goods and also the creation of borrowing and lending demand in dollars outside of the US.

If countries then acquire dollar surpluses by running trade surpluses with the US, the US by contrast has a trade deficit. This is equivalent to having a capital surplus for the US. It means excess capital is funneled back into the US into the capital markets buying stocks and bonds.

This is maybe a chicken and egg phenomenon..is it the demand to invest in the US creating a capital surplus that creates the dynamic whereby the $ becomes reserve currency and the US runs increasingly large trade deficits? Is it the military/political power that creates all of the rest? Probably all of above. But in any case the reserve currency system has at its core the financial markets of the US that the rest of world invests their surplus into, incentivizing them to produce in excess and trade real goods and work with US in exchange for paper IOU's that they can invest into the US markets.

A big aspect of this $ financial/trade system isn't just the $ as currency itself but the unique and important position of US treasury debt as the premier reserve asset that countries store their surplus and forex reserve in, and which is the center piece of the eurodollar[0] lending markets.

[0] https://www.investopedia.com/terms/e/eurodollar.asp

[lottin]

Trade deficits and capital surpluses go hand in hand. This is easy to see. If the value of your imports exceeds the value of your exports (i.e. you have a trade deficit), the excess imports must be financed somehow—either borrowing money abroad or selling assets (such as equity) to the rest of the world. This results in a net flow of money into the country, i.e. a capital surplus.

[rjzzleep]

The only problem with that is that because of the sanctions the Euro demand has plummeted and all major economies outside the west are dumping their dollar reserves and are moving to non dollar settlements, Saudi Arabia and the GCC just signed a massive cooperation deal with China and some other places have pegged their currencies to the Ruble. Yes the dollar is strong and will stay for a while, but to believe that nothing has changed in the recent past is to be wilfully oblivious of all the idiotic policies that have weakened the Euro and the Dollars position in the world.

[gumby]

There are waves of that effort periodically (use a different reserve currency) but they always peter out. It's simply too hard for reasons in my original comment. Eventually, yes, but unlikely in the lifetime of anyone alive today.

The policies you describe as "idiotic" are rationally imposed. The assumption is that they will weaken Russia's war effort, and that the cost, while high, is much lower than fighting a hot war down the road if Russia is allowed to continue to invade its neighbours.

You can argue that the policies aren't working, but while looks like that in the headlines, if you look at what's going on inside Russia all the lines are pointing down, even if the government's own figures claim otherwise. You could argue that a slightly different class of restrictions could be more effective.

But the only basis for "idiotic" is if you think it's none of the EU's business if Russia chooses to invade and try to conquer one of their neighbors.

[mejutoco]

Could you elaborate on why sanctions are "idiotic" in your opinion?

[gumby]

> This is maybe a chicken and egg phenomenon

Unlike the chicken/egg situation we know precisely when this system was born: the Bretton Woods Conference, 1944.

To some degree of course it recognized what was happening anyway (uh oh, chicken/egg is back) but rather than letting things evolve it built upon emerging practice to build the modern global financial system (basically still in place despite further evolution, like floating currencies).

[bobthepanda]

Yeah, China has already indicated that it would prefer the ability to implement sudden, nearly total capital controls rather than be annoyed with the day-to-day of a reserve currency.

[malandrew]

Stock markets are natural monopolies. Liquidity begets liquidity. What would cause companies to choose other exchanges and what stops the dominant exchanges from adapting to changes that threaten its liquidity advantage.

Is there anything stopping the NYSE, Nasdaq or CME/CBOT from handling trades in another currency?

[gumby]

> Is there anything stopping the NYSE, Nasdaq or CME/CBOT from handling trades in another currency?

It would reduce liquidity. Equity prices would fluctuate not only on buy/sell basis but exchange rates. Sure, computers could figure all that out these days but what's the advantage? Overwhelmingly, equity buyers and sellers (not "traders") buy in their local currency because they use the money to live in a local economy.

Companies list in other countries for access to those countries' buyers. What would be the point of Shell listing in Euro on the NYSE? They want to list in dollars. Nobody outside Nigeria lists on its exchange but local companies do because local people understand the companies and everything (both their operations and their stock) is in naira.

So if you want to be an exchange in a different currency, just buy a local exchange. NASDAQ did try to buy the London Stock Exchange, though I think it fell through.

[time_to_smile]

Or we see a contraction in globalization in general in which all economies shrink.

It's entirely reasonable that we could enter a period of long, slow decline across the board. Especially as we continue to push the limits of natural resources and global supply chains.

For example suppose the US continues to move its push to return chip manufacturing to the US. This might mean both that US chip manufactures have a more healthy future than other more fragile tech companies and that they shrink in size. We could see a return of manufacturing to the US which leads to continued employment in US labor for while also meaning that labor force gets paid much less.

We're already starting to see evidence of this happening.

The concerning thing is that I'm not at all sure that our incredibly debt dependent global economy, which assumes future growth, can really handle a gradual contraction to a more sustainable economic structure.

Either way, assuming up is the only way for the market to go is a very naive assumption, but one nobody is happy questioning.

[verdverm]

> a gradual contraction to a more sustainable economic structure

Why do you assume that it requires a contraction to reach a sustainable economic structure?

What prevents the economy from growing for the foreseeable future while also becoming more sustainable at the same time?

[time_to_smile]

Before answering your question, you need to first be clear what "sustainable" means. For me sustainable means that we can continue to life as we do indefinitely.

Our current economic structure, due to its reliance on credit, requires perpetual growth and development in order to pay off today's debts. Debt in all forms has been growing increasingly and rapidly in recent years.

Infinite growth is not possible on a finite planet.

In many areas we are already seeing the limits of growth, from strains on oil supplies to global population growth starting to slow down. This is already, today, putting a strain on our economic systems.

Since our current way of life can only be sustained by future growth, it is by definition not sustainable unless you sincerely believe growth to be without limit (this would require near term interplanetary travel and energy advances such as fusion). As mentioned, we are already seeing system strain suggesting we are hitting limits.

Contraction is the preferable path of the two realistic alternatives, the other is complete collapse.

How do you propose the economy growth for the foreseeable future and becoming more sustainable?

[verdverm]

By becoming more digital and services based. Most new added value is from non-physical activities, i.e. does not require significant raw material input. We'll also likely get better at recycling and using biology to create new sustainable sources for inputs, like hydrocarbons

[vl]

>We could see a return of manufacturing to the US which leads to continued employment in US labor for while also meaning that labor force gets paid much less.

Interesting! Why is it happening? Shouldn’t labor earn more in this scenario?

[bluGill]

Depends. Manufacturing in the US implies high automation. For those who maintain the machines there is a lot of money, but there are far less jobs and in turn far less in total in labor.

Though I suspect there is more need for such labor than people who can do the job. Hard to say, but there are a lot of things we haven't automated yet.

[MuffinFlavored]

> Someone investing at age 18 might care about the subsequent 50 years.

With a gradual decline in exposure to equities over time.

https://www.google.com/search?q=what+asset+allocation+should...

[ideamotor]

This is terrible advice. It’s more complicated than this and depends on your situation (age, social security, pensions, tax deferred account timing) but generally you want less stocks when you enter retirement but gradually going back up in retirement.

[MuffinFlavored]

> but gradually going back up in retirement.

Why would you want to be more exposed to riskier equities (a la they are down 20% in the past year) when you are 65 years old and have no income other than dividends/bond yields?

[triceratops]

First time I've heard this idea but it intuitively makes sense to me. You spend from your bond investments in the first part of your retirement, which is when you're most vulnerable to market declines. If you have a long retirement then you might still need the higher growth from equity holdings to fund the latter half of your retirement. So start putting spare cash back into equity for that.

[ambicapter]

Why going back up in retirement?

[ideamotor]

I'll respond in more detail later but here is a paper that examines it: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2324930:

"Accordingly, as the results support, for those looking to maximize their level of sustainable retirement income, and/or to reduce the potential magnitude of any shortfalls in adverse scenarios, portfolios that start off in the vicinity of 20% to 40% in equities and rise to the level of 60% to 80% in equities generally perform better than static rebalanced portfolios or declining equity glidepaths. Though as the results also reveal, in particular scenarios where the equity risk premium is depressed, the optimal glidepath includes less equity, and in scenarios where the goal is to withdraw at a level that stresses the portfolio and its expected growth rate, higher overall levels of equity are necessary; with such high-risk goals, having a relatively high-risk portfolio, with the danger that entails, is still the optimal solution (and for clients who cannot tolerate that level of risk, the ideal solution is to choose not a less risky portfolio, but a less risky and aggressive goal). Nonetheless, for everyone else looking to maximize a sustainable income level, or determine the amount of assets to support a (reasonable) target income level, rising equity glidepaths appear to both maximize the likelihood of success and sustainable income and reduce the magnitude of shortfalls when they occur."

There is a a lot of discussion of this here: https://www.bogleheads.org/index.php. Also, this article: https://www.kitces.com/blog/should-equity-exposure-decrease-....

[zeckalpha]

You'll have cleared the riskiest window for sequence of return risk.

[roenxi]

1. After what happened to Russia every planner in China has "the US government seizes our assets" as a plausible in the next 50 years.

2. It is implausible that the US will ever pay back its foreign debts in real terms. Anyone who lends to them will end up with less stuff in total.

3. We live in an age of computers and pervasive digital communication; things can happen a lot more quickly these days than in the 50s.

4. There is a consistent trend of dropping energy security in Western countries.

This is no time to be forecasting assuming things will happen at a comfortable pace. People should have contingencies ready in case something unprecedented happens. It is tense out there.

[cwal37]

Actually, over nearly the past two decades, in the US, it has been the opposite of a “consistent trend of dropping energy security.” Considered like a trade balance, since 2019 the net energy balance in the US is positive.

[roenxi]

https://ourworldindata.org/energy -> Chart per capita primary energy use -> pick the US -> observe steadily dropping per capita energy use per person since 2000.

Down ~20% from peak. That is not a country drowning in cheap energy, that is a coming under a lot of pressure. Not a time to be going "eh, long term trends take a while to kick in". The long term trends have been around for a while, we're well in to the part where we start reaching tipping points and step changes.

What is going to happen? Who knows. But it could happen quite quickly.

[lolinder]

So your argument in support of the claim that the US isn't secure in its energy supplies is that we're using our energy more efficiently than we were before?

I can imagine how that could be a second order effect of energy insecurity, but there are other explanations that seem more likely, like:

* The move from incandescent to LED lighting

* Improved insulation and heating technology

* Energy efficient appliances

* Removal of inefficient vehicles in favor of more efficient vehicles

You're going to have to do better than "per capita energy use is dropping" to convince me there's a looming threat to US energy supplies.

[roenxi]

The US political situation isn't remotely consistent with it being a country that has just freed up 20% of its energy for alternative uses. It is acting like a country that is being squeezed and has an increasingly desperate underclass that has gotten quite disgruntled.

20% is like having no energy on half of Saturday and all of Sunday. The improvements you listed are not comparable.

[JumpCrisscross]

> is not a country drowning in cheap energy

On average, we have cheap power [1]. If you're power hungry, we have some of the cheapest power on the planet [2].

The fact that coal-burning China pays more for power [3] than American industry should drive home our massive geostrategic advantage.

[1] https://www.statista.com/statistics/263492/electricity-price...

[2] https://www.eia.gov/electricity/monthly/update/end-use.php

[3] https://www.globalpetrolprices.com/China/electricity_prices/

[roenxi]

You seem to be referencing electricity. That is missing the energy which comes from oil. The energy from oil is the important stuff here, because it is the one that links into the US dollar and its performance.

And the US having access cheap oil is a good argument for why there might be a sudden step change in their economy - there are a lot of people with a serious interest in breaking the US dollar oil trade. Now including Russia and possibly China if they can read the writing on the wall. The US can't fight them both at once so China is in a pretty good position to get away with stuff right now if their regime survives COVID.

[int_19h]

I would hope that our energy consumption per capita is lower than it was 20+ years ago, given how much of it is from burning fossil fuels that we've been struggling to reduce.

Energy security is not about how much energy we do spend, but rather about how much energy we could spend, if we wanted. On this count, OP is right and the situation is still better than it used to be.

[gumby]

The energy intensity of the USA (Kcal/$GDP) has been falling for decades. You don't understand the figure you are quoting.

[gumby]

Almost all wrong, except #1. #1 is a definite risk, and a more interesting one than just Russian and Chinese "planners." Otherwise your note is nonsense.

2. No sovereign government debt is paid down in real terms over the very long run (this doesn't have to be so, but the data). So why should a non-national buy it?

If you buy US debt you get an asset that is supremely liquid and extremely unlikely to default. Over shorter terms from right now it appears likely to outperform other sovereign assets.

In very short terms at various times you can make money trading marginal countries' debt (even Argentinian!). But you take on a big risk premium for that!

3. There is so much analysis of technological advances of the 20th century that I won't even bother to try an summarize. WWII began with horse drawn artillery and ended with jet aircraft and ICBMs. My own grandmother was alive from kitty hawk to moon landings and robots spread out through the solar system. Things move frustratingly (for me) slowly these days.

4. Arrant nonsense, with the trend pointing the other way.

[nonethewiser]

> After what happened to Russia every planner in China has "the US government seizes our assets" as a plausible in the next 50 years.

Only if they plan on doing something akin to starting a war against Ukraine.

[patrick451]

I'd rephrase this as only if they plan on doing something the Americans have done themselves many times in recent memory. Which makes predicting what will set off western ire difficult to predict.

[the_doctah]

What kind of contingencies? Money in mattress?

[roenxi]

I've got no particular clue. But if the plan is to assume things happen slowly over 50 years then that is a risky plan. If things play out like in the 1900s, we could see an entire world war play out over 5 years and that'd likely break the US dollar. Or some similar shock. We still don't really understand the impacts of the COVID pandemic and what that is doing in China.

> Money in mattress?

The response to every crisis the US has had for the last 3 decades is to print and borrow increasingly large amounts money. And they are probably the most responsible fiscal controller around at the moment.

If you see that changing for some reason then sure, maybe money under the mattress could help. I don't expect that strategy to change myself, and the last thing I'd want under my mattress is money.

[nonethewiser]

The problem is that you have to pick an alternative. The default is probably cash, because that's how you get paid. If you can't even make an argument for an alternative then I think the overwhelmingly historically best option is the obvious decision. Gold is something people often make an argument for in this case but it's historical returns are pretty bad.

[roenxi]

I can make an argument for anything being better than cash including a massive tinned baked bean stockpile. It is quite hard to do worse than cash.

> Gold is something people often make an argument for in this case but it's historical returns are pretty bad.

I don't follow, gold has been making pretty reasonable returns for about 20 years now and has been a far superior option to cash. What don't you like about it?

[bee_rider]

What does investing with possible WW3 taken into account look like? Heavy on canned food, bullets, and remote real estate I guess? Assuming nuclear weapons don’t just magically vanish.

[kudokatz]

> People should have contingencies ready in case something unprecedented happens.

> What kind of contingencies? Money in mattress?

The right to live in multiple countries on a permanent basis (foreign permanent residence and/or passports) and investments that automatically balance as world markets shift over time (e.g. the worldwide equivalent of VTI: VT)

[nonethewiser]

If a world war causes the US stock market to crash you can be damn sure that the rest of the world is going to have bad time starting from a worse place. Not only are other countries so connected to the US's global economy, but many literally cannot secure trade without US security and US lead organizations.

[ahyattdev]

Those lending to the US government are doing so by purchasing US Treasury bonds, which have due dates and earn interest.

Based on the credit rating of the US government, they will certainly not end up with less in nominal terms.

[hammock]

100-year bond spot rate: https://alfred.stlouisfed.org/series?seid=HQMCB100YR&utm_sou...

[itsoktocry]

>Someone investing at age 18 might care about the subsequent 50 years

Those 50 years are part of the next 150, and are no easier to forecast. Most market projections are for numbers ~7% annually, but periods worse than that would drastically alter investing plans, and hence social infrastructure planning.

[JustSomeNobody]

That is why https://www.firecalc.com/ exists. The idea is that you save enough that over all the possible starting years, you would end up with money instead of broke, for the length of time you think you'll be alive.

[kudokatz]

It's my understanding that firecalc uses only US data. Japan has "lost decades" of price-weighted, non-dividend returns that are flat since 1988 (Nikkei 225). Seems worth considering that some version of this has some future probability of happening in the US and hedging that.

Another similar and popular US-data-only tool that is fun to play with is cFIREsim: https://www.cfiresim.com/

(Edit: of course, US companies have non-US revenues - helps out a bit)

[JustSomeNobody]

Yes, that's a risk. If that happens, most of us simply won't ever retire. Yay capitalism?

[paganel]

> Most market projections are for numbers ~7% annually,

Too lazy to web search for an answer, but are those real returns? (i.e. inflation-adjusted).

[zie]

> Someone investing at age 18 might care about the subsequent 50 years.

I get what you are saying, but your math here is a bit off.

50+18 = 68.

People generally can live longer than 68 years old, If we go out on longevity and assume people can live to 100 or 120, then it's more like 100 years.

Your next thought is, but people will retire before/around 68, fair enough, but they stay invested generally the entire rest of their lives.

So if the US dominance ends in the next 100 years, then today's teenagers might need to care about it. People in their 30's or 40's probably don't though.

The next 150 years, you are right todays teenagers might not need to care, unless many/all of our aspirational longer living goals happen.

[purpleblue]

No, this is poor investment advice. The closer you get to retirement, the more your money should be in extremely short term, non-volatile investments like T-bills. You should not be invested in the stock market, because the risk is too high that you could lose a lot of your savings just before you really need it.

[sokoloff]

On the first day of a typical someone’s retirement, they should probably be 40-50% invested in equities. An often cited rule of thumb is for your equity exposure in percentage to be 100 minus your age in years; others suggest 110 minus your age.

[GCA10]

Directionally right. I saw older family members switch out of stocks at 65, only to discover that their ultra-safe fixed-income investments failed to keep pace with the next 25 years' relentless increases in medical and care expenses. Assuming that you're not facing an immediate health catastrophe, your time horizon at age 65 is still decades, not single-digit years.

[zie]

I never talked about asset allocation, you did, but going 100% equities to 0% equities is not reasonable either.

Yes you probably want some bonds, but you still need some equities.

The default answer is something around 20% to 60% equities in retirement.

[FooBarBizBazz]

Everybody says this, but stocks and bonds go up and down together now. I guess it's less an issue if you're holding bonds to maturity and laddering, but that might just be psychological, not sure.

[zie]

Not really, they are somewhat correlated, but they are not completely correlated. Duration has a lot to do with it as well. Look up Long Term Treasuries(TLT/EDV are funds that hold these) and compare that to US stocks like VTI.

Bonds are like buying future cash-flow, stocks are about future growth.

i.e. if you buy a bond that's paying you $25k/yr, then you will get that $25k/yr regardless of what happens to the NAV until maturity(and/or bankruptcy obviously).

[brianwawok]

Not convinced bonds are useful. There are other things that get you away from 100% equity.

[zie]

Sure, there are different asset classes that might be OK, but if you look across the landscape, bonds are still quite nice to have.

Bonds are just converting today's money to future cashflow.

TIPS are inflation adjusted bonds, so you can get a real return > 0% with bonds, guaranteed by the US govt. For baseline retirement expenses, it's hard to beat. Right now they are up over 3%/yr real. You can't buy inflation adjusted annuities anymore, basically Social Security is it.

If one has 50X expenses invested, it doesn't really matter what they do, they would be hard pressed to screw it up so badly as to run out.

If one only has 20X yearly expenses invested, they need to be a lot more careful, as they might not make it, especially if they get a bad sequence of returns.

It all depends on your personal financial situation, it's hard to make general rules that can apply to everyone. It's called personal finance for a reason.

Bonds are just a great default tool, but like all tools, they are not perfect.

[bushbaba]

That would depend on the drawdown rate and total wealth.

[Spooky23]

It should give pause to people who think that the stock market is some sort of science. Macroeconomic conditions and policy influence this stuff.

[newyankee]

My understanding is that development in some modern areas is exponential. This is the reason why China grew so fast. So a case could be made for faster timelines. US may not slow considerably but it will stop leading and being the only one.

[kingkawn]

Your assumptions presume that the pace of historical developments is the same as it was in the late 19th century, which seems clearly untrue. The rate that these things transform today may be breathtaking.

[acchow]

How can anyone assume the next 30-50 years of the US economy will be anything like its rise to superpower over the last 150 years.

[refurb]

Sure, but how can anyone assume it won’t be?

If you’ve been alive long enough you’ve realize the “end of US dominance” has been in headlines since the 60’s.

[rsync]

"The question is whether the power and influence of the U.S. will grow similarly over the next 150 years as it has over the last 150."

No, I think the question is more subtle ...

Will the relative power and influence of the US grow similarly.

... and I think that may be a very good bet.

The three closest "competitors" - the Eurozone, China and Japan - are, in their own unique ways, dysfunctional basket cases:

Europe's northern savers and taxpayers have to pay for southern workers to retire at 60 ... and southern workers need to eat benefit losses to avoid further (br)exits. This is a not-insignificant economic and cultural mismatch and the results of even minor adjustments are riots in the streets[1] ... or boring, orderly referenda[2].

It is unknown whether the CCP can survive any meaningful slowdown in growth and whether much of the growth of the last 10-15 years (enormous empty cities) was substantive or useful at all.

Japan is undergoing civilizational and cultural collapse.

So ... while there is much dysfunction - both economically and politically - in the United States, it is an enormous, resource rich country that can exist wholly independently from the rest of the world.

It also enjoys absolute control of the worlds oceans and brutally dictates economic and geo politics[3].

In a world of troubled and fraught investments, the US is probably the least troubled and fraught.

[1] https://en.wikipedia.org/wiki/Yellow_vests_protests

[2] https://en.wikipedia.org/wiki/Dutch_withdrawal_from_the_Euro...

[3] https://en.wikipedia.org/wiki/2022_Nord_Stream_pipeline_sabo...

[bwanab]

For a civilizational basket case, Japan's GDP/capita has held up pretty well. Their industrial output is very strong for a country with sparse internal resources.

Europe's problems are not unlike the U.S. internal problems where the tech and financial centers mainly on the coasts subsidize the rest of the country. The difference of course is that the states of the EU can exit, where the American states cannot. I'm not sure which situation is preferable.

China is a black box, but so far recent history has indicated the populace will go along with a lot of pain to avoid chaos.

[scythe]

Japan's real limitation here is primarily that they're relatively small (1/3 the size of US/EU), and their most "aligned" neighbors (Korea, Taiwan, Phillippines) don't like them very much. It's not like you could reasonably fit many more people on the islands as it is.

US wealth distribution is much flatter than European. The GDP/capita ratio between Mississippi and Connecticut is less than 1:2, while for Germany to Hungary it's more like 1:4.

China is... China. You can't call yourself the Communist Party and run the global financial system. The world can only tolerate so much contradiction.

The open question now is whether the dollar can be dethroned by nothing: can a basket of currencies become the default reserve?

[bwanab]

<The world can only tolerate so much contradiction.>

My guess is the world can tolerate it as long as everybody is making money off it. When that stops, the contradiction might seem intolerable.

The world needs a default reserve that's not tied to any single central bank. For all the upsides there are also real downsides for the US having its currency as the default reserve.

[neffo]

It does exist. See SDR/XDRs:

https://en.wikipedia.org/wiki/Special_drawing_rights

[another_story]

Taiwan and Japan are pretty close, actually. You'll find few people in Taiwan that dislike Japan. The rest, yah.

[milton0825]

Yeah this is true

[patrick451]

> Europe's problems are not unlike the U.S. internal problems where the tech and financial centers mainly on the coasts subsidize the rest of the country.

Perhaps, but you could as easily make the argument that the interior subsidizes the stomachs of the coasts. That seems more like a symbiotic relationship than the parasitic one you seem to be implying.

[dirtyid]

>may be a very good bet

Trend last few years is PRC closing gap and approaching parity in indicators like GDP (already exceeded by PPP), % of global gdp / trade, science and innovation indexes, value chain upgrades etc. Even PRC military development and diplomacy is sufficient to get countries hedge / not commit to US alignment, which was unthinkable 10+ years ago. IMO US will find it difficult to maintain relative "lead" when, in the words of state department, "China is the only country with the economic, diplomatic, military, and technological power to seriously challenge" US order. That said, I think US has headroom via dictating economic and geopolitics within her relatively wealthy bloc and grow at the expense of others.

>It is unknown whether the CCP can survive any meaningful slowdown in growth and whether much of the growth of the last 10-15 years (enormous empty cities) was substantive or useful at all.

Western fixation with PRC real estate waste as proxy indicator of China (econ) collapse is particularly stupid. It's like suggesting US who spends ~20% of GDP on healthcare (approximately PRC real estate) with suboptimal result is spinning development wheels. Same with PRC wasting a few trillion in suboptimal real estate when significant (majority) resources being invested to bring up other (above) indictators that has substantively contributed more to PRC "comprehensive national power". Like US isn't initiating unprecented PRC containment policies because of a bunch of empty of housing units.

[DiogenesKynikos]

> whether much of the growth of the last 10-15 years (enormous empty cities) was substantive or useful at all.

I don't think anyone who has seen the development in China over the last 10-15 years first-hand would say this.

There has been massive development in nearly every area, both in quantity and quality. Just to give one example, anyone who follows the scientific literature in just about any field will be aware of the massive increase in high-quality publications coming out of China over the last decade.

There are one or two examples of "ghost cities" (though most supposed "ghost cities" actually become populated over time), but that doesn't negate the massive, real development that is visible everywhere in China.

[dmarucco]

Are you sure that southern workers retires at 60? I don't think so ...

[sgu999]

If they are sure, they are wrong. Spain and Sweden retire at the same age. Italy, Greece, Denmark and Norway as well. [1]

Yes, France retires at 62 but that'll change very soon...

Writing that the "north pays for the south" by looking at the GDP per capita instead of the GDP is... naive. [2]

[1] https://en.wikipedia.org/wiki/Retirement_in_Europe [2] https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Eu...

[was_a_dev]

The French rioting is just another Tuesday.

[malandrew]

China is also expected to see population collapse. They are rapidly aging and there’s no sign that that is reversing.

[dirtyid]

IMO population "collapse" or demographic "decline" not right lens for unevenly developed country with massive population and high import dependency especially in context of "relative power". TBH it's surface level PRC collapists narrative.

What will happen (by design or not) is PRC demographics is being "strategically optimized" with the greatest demographic uplift/upgrade in recorded history. Roughly replacing 2 low skilled, under-educated workers with 1 skilled worker with additional automation. Every ~10 years for the next few decades, PRC will be upgrading / swapping the human capita potential of 1 Nigeria for 1 Japan, it's less people, but much more productive people. With PRC pop base effect this is still multiple more educated labour pool per year than US or other blocs can generate with immigration, and 100s of million more in net talent. Less people also alleviates import dependency, PRC with 1B (400M less) people would have substantially more strategic space to operate. It works towards close relative power potential. CCP wants to smooth out the pyramid with more births for better managed transition, which structurally/culturally PRC with some of the highest house hold savings rate and minimal expectation for safety net is positioned to weather, but long term PRC comprehensive national power is best improved by having less net people, with more % skilled people.

[cman1444]

I think this is a pretty optimistic take. I know there's a constant barrage of articles these days about the demise of China, but it's pretty hard to make the case that such a drastic decline in population is a good thing for their economy or geopolitical power.

Yes the Chinese population is becoming more skilled, but I think you're underestimating how much of a drag on the economy and aging population is. Old people don't innovate and require much more healthcare spending. They also cause heavy burdens on their children/grandchildren who must take care of them (see the 4-2-1 family structure).

There's also a lot less juice to squeeze out of urbanizing the population which is what drove a lot of GDP growth in the past few decades. About 65 percent of the population is urban now and the rate is starting to level off.

[dirtyid]

Or just not that pessimistic.

> pretty hard to make the case

It's easy when drastic decline in population leaves behind a still massive country, with more productive potential and less security vunerabilities - PRC's future strategic posture will improve with respect to US relative to where PRC is now. PRC pop projection is 1.4B to 800M by 2100 in geography can barely sustain current 1.4B (1/3 of country is desert, 1/3 is plateau), with central gov working over drive to free agricultural resources in crowded 1/3 that's left. 800M is still an incredible amount of people for internal market and global competition. If higher % of population becomes educated/skilled over generations that in aggregate PRC will have more skilled labour pool with 800M than current 1.4B, then IMO she would be significantly better positioned geopolitically. It's still 200M more brains / bodies than US pop projection in 2100. 800M with current electrification efforts is PRC with feasible energy and calorie security, and combined with hammering automation at current rate, much more productive capacity.

>underestimating, urbanization

First important to recognize PRC currently has 600M+ of excess, relatively unproductive mouths that's taking up already scarce resources. Cohort skews old, are undereducated, unskilled - the ones left behind by modernization. The PRC demographic decline narrative vastly overestimates how much innovation / productivity this cohort of aging out demographics were / are capable of. ~600M in informal economy making subsistent tier ~2000 USD per year, bluntly they're excess people that doesn't substantively contribute to development let alone drag on economy by being even less productive when they retire, assuming they can. 100s of millions are already economic drag by merely living - part of reason why SOEs are so inefficient, or Chinese agriculture so labour intensive (200M+ farmers) when PRC only really needs 1/50th that amount with mechanized equipment, is to maintain 100Ms of make work jobs for folks that simply can't be integrated into modern economy. They're being replaced by new gens who can. Since 2000s education reforms, PRC has been generating 10-20 years worth of pre 2000 talent per year. They're the one's doing the high tier innovating and growth. Really look at SKR, JP, TW, all have grown developed to advanced economies while having terminal tier TFR simply by new generations being disproportionatedly educated / skilled. Even the economic case for integrating / urbanizing these unproductive corhorts are poor, urbanization drives growth when you're clustering productive people. Real reason to herd them into cities is short / medium term, state needs to consolidate land to improve food security, because again, too many mouths.

> healthcare, dependency ratios,

PRC has one of the highest home ownership / house hold savings rates, elders from poverty era culturally know they need to largely support themselves and there's little expectation for comprehensive safety net. Western analysis seems to project expectation that PRC would be crushed by welfare burdens like currently in west with typically onerous welfare systems with increasingly poor long term prospects, the reality is, most Chinese will simply make do with very little state support. Like most of humanity throughout history. PRC will have to accept life expectancy in high 70s (about US level) vs pouring in resources to reach low / mid 80s. Old also knows how to "eat bitter". That said there's plenty of room to up current 6% of GDP healthcare spending.

Sizable % of single kids will get dragged into support family, but this is where income disparity mitigates issue because burdens between rich (educated/skilled) and poor will be different. Folks doing strategic / important work that advances country up value chain and make decent money likely got their because they're priveleged and likely receiving end of support, or they weren't which means their high income will stretch far assisting family back in tier 3/4+ cities. These folks aren't going to be quitting fancy jobs to caretake. They'll pay for help or if it's anything like hollowed out country side where youth left, old people take care of each other. PRC still has lot of communal cultural elements that makes these kind of grass root social systems possible (also see how people organized for zero covid). Burden is going to be disproportionately shifted on that massive underclass, who again bluntly, don't substantively contribute to development / or the components that will increase national power. Really not too different from west. 1% does very well, top few quartiles do well, rest struggles. There's also considerations like when the 4-2 dies, multiple inheritences will go to the 1, and there's prediction of consumption and baby boom when resources eventually concentrate, which will be in the already affluent, talented and productive cohorts. Big reason PRC is having problem pivoting into consumption economy is savings redirected for nest eggs.

[acchow]

> Japan is undergoing civilizational and cultural collapse.

Certainly doesn't seem this way when you visit Japan. Sure, they haven't experienced wildly growing excessive consumption like some American states in the past couple decades, but their society is far from undergoing any sort of collapse.

[pedrosorio]

> Europe's northern savers and taxpayers have to pay for southern workers to retire at 60

Using the yellow vests as representative of "southern workers" makes me doubt how well you've researched this answer. Paris is hardly in "southern Europe", and the rest of the southern European countries have retirement ages comparable to those of the "northern savers".

[vl]

([3] link)

Are you implying that US sabotaged Nord Stream?

[rsync]

Yes. Or that it was sabotaged with our blessing.

It was a Keyser Soze move that basically destroyed Russias bargaining position.

At the same time, it was an enormous fuck you to EU citizens and, in particular, Germany: "Oh yes you will buy our gas ..."

It appears to be panning out in a non-destructive way for the EU citizenry as they muddle through this winter but it was not obvious that would be the case and this (relatively) benign outcome could not have been predicted.

If I were an EU citizen (particularly a German) I would be upset. Even as an American I am disturbed ...

EDIT: You know that thing ... that crazy thing that Dick Cheney said in that interview[1] ? About how there is no reality and reality is whatever we say it is:

"We're an empire now, and when we act, we create our own reality."

... every day that goes by I become more and more convinced that he could be right. NS2 sabotage makes it hard to argue with him.

[1] https://www.theatlantic.com/daily-dish/archive/2009/04/were-...

[lostlogin]

> "We're an empire now, and when we act, we create our own reality."

There is an argument going on in the thread about empires size and distance from the capital.

The person who makes out the US is an empire which controls a bulk of the globe is getting down voted - I think you are needed there.

https://news.ycombinator.com/item?id=34275668

[speakfreely]

Another one of those interesting discussions that the news seems to have forgotten. It seems Ukraine had the most to gain, but from my limited understanding it's not so easy to robotically place explosives at the bottom of the sea in a precise, destructive manner unless you have a really well-funded naval force.

It kind of reminds me of the polonium poisoning that has become a Russian signature move. Despite not taking credit, the number of actors who have the capability to do it is so limited that it's basically outing them regardless.

[DontchaKnowit]

No one seems to want to bring up the press conference where Biden said that if Russia invaded Ukraine there would no longer be a nord stream pipeline. When asked to clarify he said something like " oh youll see"

Everyone just forgot that happened. Strange.

[calgarymicro]

Nobody "forgot". Germany shut it down in February[1], like he said they would. The White House celebrated those words coming true literally the day after.[2]

[1]https://www.nytimes.com/2022/02/22/business/nord-stream-pipe...

[2]https://www.whitehouse.gov/briefing-room/statements-releases...

[nscalf]

More interesting that power and influence, which is an open question, is demographics. There is little to be done about shifting world demographics. Even if the us stays the premier world superpower, can that offset massive declines in the amount of people producing and consuming everywhere? While the us may actually be okay with shifting demographics (Zeihan has some interesting stuff on this), most major economies are facing rapidly declining populations over the next couple of decades.

[toomuchtodo]

Underrated comment. You can’t print human capital, and if fertility rates are declining everywhere, every nation is competing for a shrinking young, productive talent pool.

[mattnewton]

The US is well suited to solve this problem with more immigration, we already have more incredibly talented people banging on the doors then our nightmarish naturalization system can take.

[toomuchtodo]

Convince the electorate. People are challenging.

[jpadkins]

Look at the most recent republican immigration bill - it was basically canada's or australia's immigration system. The electorate very much wants to keep skilled, legal immigration going.

[JumpCrisscross]

There isn’t unified opposition to skilled labor. Look at the purported nurse shortage: we’re going to import our way to wage stability.

[toomuchtodo]

You’re right on the first part, but you don’t need unification to stop something. We’re in the 11th or 12th speaker of the house vote because of ~20 folks.

https://old.reddit.com/r/politics/comments/104vin7/discussio...

To assume logic will prevail in a system with a substantial emotional component is a dangerous assumption.

[thebradbain]

Convincing the electorate of most things is just a matter of marketing, for better or worse. You’d be surprised how many former PR and marketing execs now work in DC think tanks and as lobbyists and political consultants.

Coca Cola has made and kept its fortune by successfully associating a syrup that is bad for you with Pure Happiness.

Marketing, media exposure, and subliminal messaging both turned Americans completely against weed from the 70s-2000s and then also now completely in support of weed legalization in the past decade.

Similarly, as we’re seeing play out today, the right has found success marketing the “danger” of drag queens to turn political opinion against the LGBTQ community, which itself gained overwhelmingly acceptance in the face of once-overwhelming disapproval by powerful self-determination and taking control of how they were portrayed in the media.

The same forces that convince people en masse to buy a certain brand can just as easily be used to affect how we view any political issue.

[BeFlatXIII]

Just lie about what’s in the bills and who supports them. The voters don’t check for themselves.

[scottLobster]

More importantly every nation is competing for a shrinking pile of consumers. Old people can be extremely productive, but they don't buy nearly as much on average, so all that productivity has nowhere to go if there are fewer young people to sell to.

[warinukraine]

> There is little to be done about shifting world demographics

Hmmmm immigration. That's how fast growing powers have always done it.

[badpun]

You can't add 20+ million imigrants to Germany (and that's what's they'd need over the course of the next decade or two in order to avoid demographic collapse) without massive social problems and/or Germany no longer being Germany.

[JumpCrisscross]

> without massive social problems and/or Germany no longer being Germany

This is where America wins. There is no American ethnicity. There may be, historically. But mythologically: no.

[HDThoreaun]

You can if you force every immigrant to be educated. Germany's problem is that their immigrants are not. There are more than enough educated people that want to immigrate to America, start with allowing every international college graduate to stay and your most of the way to solving the demographic problem.

Even still, the US is much less homogenous than germany. A variety of cultures is not a problem.

[badpun]

Imagine if 80 million people immigrated to the US over the next decade or two, most of them from non-Christian cultures. I imagine this would lead to, at least, a major political crisis in US history - i.e. major rise of xenophobic far right, talks of secession or even civil war etc. AND, that is in a country that's very open to immigration, compared to Germany.

[warinukraine]

Saying 20m is meaningless unless you mention a time scale.

[ceejayoz]

Demographic collapse won't cause "massive social problems and/or Germany no longer being Germany"?

[badpun]

Yes, of course. My point is that they're screwed either way. The time to fix this was 30 years ago.

[nscalf]

That’s why I specified world demographic decline. It’s hard for everyone to get large amounts of immigration when there are just less people immigrating each year.

[WeylandYutani]

If population growth is the only way for our capitalist system to survive we're screwed.

Sad that nobody has been able to come up with something better that doesn't involve "infinite growth".

[vl]

I’m actually not concerned about demographics. With coming automations and workforce becoming irrelevant societal changes are going to be so tremendous, that age of the population is not going to matter.

[getToTheChopin]

Fair point. To add some context though, this data is based on the returns of the S&P500 index.

Companies in the S&P500 index are based in the U.S., but most of them earn revenues internationally as well.

"Roughly 40% of S&P 500 revenues are generated outside of the U.S., and about 58% of Information Technology company sales were sourced from abroad."

Source: https://www.globalxetfs.com/sector-views-sp-500-sensitivity-...

So, the performance of the U.S. stock market in the next 150 years will not rely solely on U.S. specific economic growth.

[MuffinFlavored]

I've always wondered, why do American investors get to benefit from companies like Apple? Why does Apple choose to be a U.S. company? We're obviously in competition with other countries globally in terms of getting companies like Apple to give us their tax dollars.

I know Apple does this https://en.wikipedia.org/wiki/Double_Irish_arrangement#:~:te....

I just wonder, can they really not find a more favorable country to route the gross of their revenue through?

[JackFr]

The maturity and stability of the US stock market (by which I mean institutional and structural stability rather than price stability) make it the most frictionless, transparent and predictable place to raise equity capital. Add that dollars are also attached to a broad domestic market and the US corporate form is strongly entrenched in a culture of rule-of-law and there's a compelling case to create and maintain your company in the US.

[MuffinFlavored]

> The maturity and stability of the US stock market (by which I mean institutional and structural stability rather than price stability) make it the most frictionless, transparent and predictable place to raise equity capital.

The number one way that Apple benefits from this is giving shares to employees as compensation, right?

They aren't commonly "financing" projects with stock as far as I understand it. aka, they aren't diluting existing shareholders by issuing fresh shares to take advantage of the share price.

Since they aren't doing that, how do they benefit financially from their share price?

[tylerhou]

When Apple compensates employees with shares they issue them out of thin air IIRC. These are dilutive and are listed on their quarterly financial statements. So yes, they are financing projects with stock.

[saltcured]

They benefit from the stable marketplace every time a bit of ownership is exchanged from one party to another via stock transactions.

Compare this to some partnership or other private structure where owners may be unable to exit unless they can force the company to liquidate some assets to buy them out. Companies and investors who work that way can face liquidity hazards compared to a similar-sized stock corporation.

[im3w1l]

I think that it's because America is such an important market. Compared to Europe, Americans are richer and they all speak the same language. Many European companies struggle to expand from their home country to other EU countries.

[snowwrestler]

Do you think that people outside the U.S. cannot invest in Apple stock?

[MuffinFlavored]

No, I'm saying why does Apple choose to be "home" in America.

[jpadkins]

It's where they were founded / started up. And the cost / benefit of leaving US jurisdiction has never been high enough for them to relocate.

There are a lot of benefits of being incorporated in USA / Delaware.

[snowwrestler]

Ah, it's a good question. Apple was founded in the U.S. obviously, but U.S. companies can and sometimes do move their headquarters to another country. Burger King did it in 2014, reincorporating in Canada for primarily tax reasons. You can look up "corporate inversions" to see some other examples.

But the advantages have be very large for this to be worth it. The U.S. is a great place to do business in many ways. And as you noted above, U.S. companies can still get a lot of "foreign" tax benefits by shifting assets around between foreign subsidiaries (Apple's Irish trick for instance).

There are also emotional complications. A company like Apple is not just headquartered in the U.S., it is tightly coupled with the U.S. cultural identity. Moving out of the U.S. would break some of those ties, with resulting harsh consequences for Apple in politics, culture, retail sales, maybe even employees. You can look up what happened after Burger King moved... people were pissed.

So the short answer is, they started in the U.S. and staying here has a lot of benefits, while moving would come with high costs and somewhat unpredictable risks.

[MuffinFlavored]

> Apple was founded in the U.S. obviously, but U.S. companies can and sometimes do move their headquarters to another country.

https://www.sec.gov/Archives/edgar/data/320193/0000320193180...

Apple Computer Trading (Shanghai) Co., Ltd. China

Apple Distribution International Ireland

Apple Europe Limited United Kingdom

Apple Japan, Inc. Japan

Apple Operations Ireland

Apple Operations Europe Ireland

Apple Operations International Ireland

Apple Sales International Ireland

Braeburn Capital, Inc. Nevada, U.S.

It gets confusing to me as somebody "not in the know" on domestic/international business law/practices.

https://archive.nytimes.com/www.nytimes.com/interactive/2013...

> According to a report by a Congressional panel, Apple has avoided billions in taxes through the use of international subsidiaries.

> Apple has subsidiaries in Ireland where the company has negotiated a special tax rate of 2 percent. These units contract with manufacturers to assemble Apple products, sell the products to other subsidiaries for distribution, and return the profits up the chain of companies in the form of dividends. But some of these subsidiaries do not have a stated tax residence and pay no taxes at all.

This is from 2013 so I'm sure it's out of date-ish.

> These 3 subsidiaries are incorporated in Ireland, but have no country of tax residence

Looks like what I'm looking for is "country of incorporation and tax residence"

Seems like companies can choose to "file/create" their corporation in any country, then have miniature "subsidiaries" (is this the right word) in various other little countries.

[WoodenChair]

1. Rule of law

2. Mature financial system

3. Investment dollars

4. Talent/where talent wants to move to

5. Aligned values with California home base

6. USA represents their largest market for their products

7. The cost of moving

8. Cultural connection to where a company started

9. Existing investment in headquarters/infrastructure around the country

10. Political clout that being a US company provides

11. Network economics of being near other big tech in Silicon Valley/Austin/New York campuses

[refurb]

A great example of this is Singapore. I’ve worked with a few companies in Asia and it’s amazing what: a) rule of law, b) stable political environment, c) free capital flows can do in terms of attracting capital.

Singapore is pretty much the only option in SE Asia and the money keeps flowing in.

[xapata]

What alternative would you suggest?

[froglets]

Didn’t Apple already move to Ireland for the tax breaks?

[ptr]

Nominal Swedish stock market return 1879-2012: 10.9% arithmetic mean, 9.0% geometric mean. Real return: 7.9%/6.1%. And Sweden isn’t really the world’s dominant superpower. https://www.riksbank.se/globalassets/media/forskning/monetar...

[jltsiren]

Sweden, Switzerland, and the US are obvious outliers. Their economies have been abnormally stable, because they have not faced revolutions, civil wars, foreign occupations, and other forms of widespread destruction in a long time.

[ptr]

I’m not sure that’s it. Sure, Norway was invaded but it was a pretty “benign” invasion in comparison to what happened to others. Same with Denmark. Would be interesting to see their stock market returns.

[paulpauper]

The question is whether the power and influence of the U.S. will grow similarly over the next 150 years as it has over the last 150.

It does not need to . What matters is how much profits large companies are earning. There is no indication that profits are slowing. Even if GDP only grows at 2%/year, if multinationals generate 10% annual profit margins, that is $ that must still go to investors even if GDP growth is much lower.

When you compare foreign markets to the US, the US still comes out ahead by almost every metric. There is little indication to suggest this will change. Every problem that the US has, other countries have worse. So relatively speaking ,the US still will be ahead.

[ketralnis]

> The question is whether the power and influence of the U.S. will grow similarly over the next 150 years as it has over the last 150.

I don't think that's required. Most of these analyses use US stock data because it's so easy to gather compared to international data. The do trends hold internationally, but the magnitudes are reduced. So if you think the US will regress closer to the international mean (and I'd agree) then you can use things like the shape of the bell curve, just not the height. And indeed, this bears out if you look at the markets of the UK or most of the EU. Pretty much any reputable adviser will tell you that that's the consensus, that future returns will probably be lower for the next few decades than they were for the last few. (Usually you see this in the media amplified to a more ridiculous version but that's modern clickbait reporting for you.)

There are other possibilities like we could stagnate for 3 decades like Japan. But yes, that's investing, that's the nature of the bets you're taking.

I'm having trouble finding the quotes but around the turn of last century British economists were looking at the US's explosive economic growth compared to the UK and attributed it to the US having the equivalent of a sudden injection of capital in the form of a whole continent full of free real estate. That is, they reasoned that the UK's growth was limited to what they could do on their existing, mostly already owned and developed land but the US had more physical space for the balloon to expand into. They reasoned that soon that would happen though and the US would grow to fill that space and eventually its economic growth would slow down closer to the UK's. That clearly didn't happen then. I don't think the lesson is the US is exceptional and will continue to outpace the world forever, but I do think that a lesson is that predicting this stuff is hard and reasonable-sounding ad hoc hypothesis don't always bear out.

[nemo44x]

> The question is whether the power and influence of the U.S. will grow similarly over the next 150 years as it has over the last 150.

Over the next 150 years I have no idea. But over the next 30-50 then almost certainly. No other country is even close and most seem quite comfortable with the global state of affairs all things considered. USA hegemony has created a stable world where the vast majority of people are far better off than their ancestors. It isn't perfect of course but there's no reason to think anyone else would do better. Especially when compared to the previous tenant, Europe.

[layer8]

Just invest in a world index. See for example https://curvo.eu/backtest/portfolio/msci-world--NoIgsgygwgkg... —> minimum investment horizon.

Of course the whole world could go into a multi-decades-long recession, but then we’ll have much more serious problems anyway.

[Negitivefrags]

I always hate this “If it doesn’t work we have much more serious problems” attitude.

If the world did go into a multi-decade recession, what “more serious” problems would you have then your investments doing poorly?

You might answer things like “ buying food due to shortages” or something, but surely whatever problem you name, being more rich is going to solve it?

Now you can invest on the thesis that this isn’t going to happen, but to argue that the whole concept of investment is useless if it does seems very suspect to me.

[layer8]

Okay, let’s put it this way: There’s no strategy that avoids all risks. You have to balance risks and possible gains. You can balance the risk of investments in the stock market by allocating part of your money to other investments or stores of value that you believe will do better in the scenario where the markets go down long-term. In other words, diversify and allocate according to your risk aversion. This being said, a world index provides a maximum of diversification in the equity market.

[7steps2much]

Different scale of seriousness. If the whole world goes into a recession there is a big difference between food shortages that you can buy your way out of with cash and food shortages that come as a result of societal collapse and money being worthless.

Being rich only matters as long as your investments/assets hold any value. If truly serious problems around your investments go to 0, your assets are only worth something as long as you can maintain control of them (police won't be around, nor will judges be) and even then your car will be worthless without gas.

It all depends on what meaning a person assigns to "serious" in this context. Personally as long as being rich solves my Problems I wouldn't describe any situation as serious.

[paganel]

> Being rich only matters as long as your investments/assets hold any value.

Also, as long as poorer people are not after you and your properties (and your life, even) through a revolution, which revolution could be caused by world-wide economical and societal crisis (if not a revolution then maybe a civil-war where the rich are of the wrong ethnicity etc)

[purpleblue]

If everyone is in a recession, then no one is in a recession.

[mypastself]

Therefore investing mechanically in the whole world might be a safer bet. Other than currency risk, home bias investment never felt like the optimal approach to me, even if your home is the world’s most powerful economy.

[lastofus]

> The question is whether the power and influence of the U.S. will grow similarly over the next 150 years as it has over the last 150.

> To invest mechanically without thinking about what’s actually happening in the world is cargo cult behavior.

This is why it's suggested that unthinking mechanical investors invest globally, not just in the US. For example, VT, a single set and forget index fund has 40% international exposure. That's to speak nothing of the S&P 500 companies that do business internationally.

https://www.morningstar.com/etfs/arcx/vt/portfolio

[nimz]

Your point is valid - we shouldn't take single-country risk in investing. Assuming you believe the world as a whole will get more productive and value creating, globally diversifying your stocks is the answer.

As an example that supports your point, the Japan stock market (Nikkei) peaked in 1989 and STILL has not returned to that high.

However, even if you were incredible unlucky and had bought in at the 1989 peak in Japan, if you had an internationally diversified portfolio, you would be OK. E.g. a 30/30/20/20 Jp Stocks/Intl Stocks/Jp Bonds/Intl Bonds portfolio purchased in 1989 at the Nikkei peak would have more than doubled by 2014 (see here: https://www.bogleheads.org/forum/viewtopic.php?t=265807 and also https://www.afrugaldoctor.com/home/japans-lost-decades-30-ye...).

[paganel]

> Nikkei) peaked in 1989 and STILL has not returned to that high.

Also, the FTSE 100 has been almost flat since the financial crisis, so basically just a little over 10 years. It was at about 6300 in the first half of 2013, it's at ~7700 now, a ~22% return over 10 years is nothing to write home about. For comparison the SP500 was at ~2300 in the first half of 2013 vs ~3800 now, a 66% return. And that's after last year's 23% decline.

[ar_lan]

If you continued to invest in Japan throughout that period after, you'd be up today. The only case you were forever screwed is if you really aren't pouring more money into that (e.g. retirement).

[hammock]

I think about this a lot when you consider the world's largest companies today aren't stocks but sovereign wealth funds and oil reserves. Similarly in days past they were other state-owned entities like the East India Company.

The S&P 500 is not everything there is to be had...

[FatActor]

A long time ago, naive me learned that tech companies also invest their money and that those returns count toward their valuation, and that seems wildly backwards to me, but I'm an engineer, not a financial expert.

[pacetherace]

I find the inflation as a variable very interesting. Countries that don't have strong economies generally tend to have higher inflation. So we may continue to see the stock market continue to rise indirectly due to inflation but the net return would be much lower.

[dpweb]

You can only evaluate returns compared to the risk-free return (ie treasuries) - and favor treasuries cause less variance.

Stock market success depends entirely on when in history you got in and got out. When it comes to US dominance over the next century - who knows. I do trust in Fed interventionism and willingness to print money - so that certainly favors stock market investment.

Personally I find stock market is too high a variance and I prefer not speculate with money I can't afford to lose.

Buffet himself said their biggest peak to trough was 50%. Fine if you're already rich and investing a fund. Not so great if it's kiddos college money.

[huijzer]

> Of course a country’s stock market will perform well as that country ascends to become the world’s dominant superpower.

There is probably more at play too. The number of banks, for example, has been declining steadily over time [1] as has the internet allowed single corporations connect to more buyers (nationally and internationally). Just think of all the local stores that Amazon has displaced.

[1]: https://www.stlouisfed.org/on-the-economy/2021/december/stea...

[TheFreim]

> To invest mechanically without thinking about what’s actually happening in the world is cargo cult behavior.

If things go badly then the money I would have from not investing "mechanically" would probably be as useless as the investments. If everything is going to decline continually it seems the greater reward will almost always be in the investment. This also assumes you only invest in the current world superpower, seeking global diversification would probably be wise if you see a major change in polarity.

[dionidium]

Rumors of our impending collapse have been, let's say, exaggerated. I wouldn't bet against the United States over the next 30-50 years, at least.

[bionsystem]

It's too hard to swallow for most people but you're right. There are significant headwinds coming ahead for most markets whilst productivity gains have stalled. See Robert J. Gordon's paper "IS U.S. ECONOMIC GROWTH OVER? FALTERING INNOVATION CONFRONTS THE SIX HEADWINDS".

I really think millenials should consider hedging their bet, maybe even spend 100% of their income.

[Thorrez]

How would spending 100% of their income be hedging their bet?

[bionsystem]

I meant "or", either hedge their bet OR spend 100% of their income (or a larger % of their income) beyond some safety cushion.

[wintogreen74]

>> To invest mechanically without thinking about what’s actually happening in the world is cargo cult behavior.

Maybe, but this describes the investment strategy of pretty much every index-based fund and they've been the big winners over a long time frame. Why do you care what happens to a market 100+ or even 50 years from now?

[zitterbewegung]

I don’t think we were much of a dominant superpower until after World War 2. Lots of Europe was decimated but our infrastructure wasn’t and we also won the Cold War . We had large factories created also.

If some other superpower does come around you could just try to find a foreign index fund and adjust your investments.

[rr888]

Along with a 50 year bull market in bonds where yields have dropped nearly every year (along with inflation).

[FooBarBizBazz]

It's weird how most of the return from bonds comes not from yield but from capital appreciation [1], which happens because yields are dropping. There's something perverse and circular about it: "Make sure you buy your collectible widget today! It'll go up in value, because next year's widgets won't be as good! Prices only go up, because everything's downhill from here!"

[1] Actually, is this literally true?

[FooBarBizBazz]

About [1]: I'm wrong. If you look at TLT in TradingView, adjusted for "dividends" vs. not, from 2003 to 2019 you see nominal gains of about 150% (with) vs. 40% (without). So most gain is from income. That's ignoring tax.

Would also be good to compare to CPI to understand real returns. Or whatever other number seems to be a truer measure of inflation (house prices, for example).

[rr888]

yes it has been true the last 50 years, as market rates go down the existing bonds become more valuable. But it can't continue forever. https://www.macrotrends.net/2016/10-year-treasury-bond-rate-...

[refurb]

I’d argue the average person’s investing window is more like 30-40 years, not 150.

And even then, you don’t have to be the dominant superpower to see a rising stock market. Plenty of examples of smaller countries who have seen substantial market gains.

[guidedlight]

Agreed. At the turn of the century, Argentina was a similarly prosperous country to the United States.

I’m sure given an investment in Argentina’s stock market in 1900, it would have now been lost many times over.

[dangus]

I would argue that borders are irrelevant. Large multinational companies generally list on US stock exchanges.

For example, Spotify is a Swedish company listed on the NYSE.

[snowwrestler]

This has the causality backward.

The qualities of the U.S. that helped it become a superpower, also help it have a high-performing domestic economy.

[catskul2]

I get what you're saying about "mechanically" but "cargo cult" does not work as an analogy here.

[WeylandYutani]

Smart people invest globally. I have no illusions that American billionaires care about borders or governments.

[radiator]

Actually it looks like the US is already on the way of demotion from a global superpower to a regional power. There is no single country which comes as a replacement, but a multipolar world order instead. Many countries, mostly asian are emerging.