In particular, I'm going to share excerpts from a book written 17 years ago that focuses on 100-year cycles of the social fabric of society. The authors' observations and prophesies for the future, both in substance and timing, are uncanny.
(While these "big picture" posts are not directly related to gold and silver, they provide important context for making precious metals investment decisions. For thousands of years gold and silver have been secure stores of wealth during times of economic uncertainty, weakness, and chaos.)
In 1997, William Strauss and Neil Howe, historical economists, published their national bestselling book An American Prophecy: The Fourth Turning. In it, the authors argue that the modern age is characterized by the saeculum, a seasonal cycle of history, roughly the length of a human life (80-100 years), that explains periodic recurrences of Crises and Rebirth. The Anglo-American saeculum dates back to the end of the Middle Ages, from which time there have been seven saecula, the most recent of which began in 1946 with the end of World War II.
Each saeculum can then be broken down into four seasons, or Turnings. A Turning is a social mood that changes each time the "generational archetypes enter a new constellation" (approximately every 20-25 years).
The First Turning is a High (Spring) - an upbeat era of strengthening institutions and weakening individualism, when a new civic order implants and the old values regime decays (think Eisenhower America and baby-boomers post WWII)
The Second Turning is an Awakening (Summer) - a passionate era of spiritual upheaval, when the status quo comes under attack from a new values regime (think 1960s social revolution).
The Third Turning is an Unraveling (Autumn) - a downcast era of strengthening individualism and weakening institutions, when the old civic order decays.
The Fourth Turning is a Crisis (Winter) - a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one. It is a period characterized by conflict and chaos (think Revolutionary War, Civil War, WWI, WWII).
Strauss and Howe wrote this book in 1997, before 9/11, before the housing bubble, before the ebola outbreak, and before the Ukrainian civil war. America was in the middle of the Third Turning with the Fourth Turning predicted to begin in the mid-2000s. Keep this in mind as I quote the following extraordinary passage from the book:
Sometime around the year 2005, perhaps a few years before or after, America will enter the Fourth Turning.
In the middle Oh-Ohs, America will be a very different society than in the late 1920s, when the last Crisis catalyzed. The nation will be more affluent, enjoy better health, possess more technology, encompass a larger and more diverse population, and command more powerful weapons - but the same could be said about every other Unraveling era society compared to its predecessor. They were not exempt from the saeculum; nor will we be.
A spark will ignite a new mood. Today , the same spark would flame briefly but then extinguish, its last flicker merely confirming and deepening the Unraveling-era mindset. This time, though, it will catalyze a Crisis. In retrospect, the spark might even seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. It could be a rapid succession of small events in which the ominous, the ordinary, and the trivial are commingled.
Recall that a Crisis catalyst involves scenarios distinctly imaginable eight or ten years in advance.
Based on recent Unraveling-era trends, the following circa-2005 scenarios might seem plausible:
1) Beset by a fiscal crisis, a state lays claim to its residents' federal tax monies. Declaring this an act of secession, the president obtains a federal injunction. The governor refuses to back down. Federal marshals enforce the court order. Similar tax rebellions spring up in other states. Treasury bill auctions are suspended. Militia violence breaks out. Cyberterrorists destroy IRS databases. U.S. special forces are put on alert. Demands issue for a new Constitutional Convention.
2) A global terrorist group blows up an aircraft and announces it possesses portable nuclear weapons. The United States and its allies launch a preemptive strike. The terrorists threaten to retaliate against an American city. Congress declares war and authorizes unlimited house-to-house searches. Opponents charge that the president concocted the emergency for political purposes. A nationwide strike is declared. Foreign capital flees the U.S.
3) An impasse over the federal budget reaches a stalemate. The president and Congress both refuse to back down, triggering a near-total government shutdown. The president declares emergency powers. Congress rescinds his authority. Dollar and bond prices plummet. The president threatens to stop Social Security checks. Congress refuses to raise the debt ceiling. Default looms. Wall Street panics.
4) The Centers for Disease Control and Prevention announce the spread of a new communicable virus. The disease reaches densely populated areas, killing some. Congress enacts mandatory quarantine measures. The president orders the National Guard to throw prophylactic cordons around unsafe neighborhoods. Mayors resist. Urban gangs battle suburban militias. Calls mount for the president to declare martial law.
5) Growing anarchy throughout the former Soviet republics prompts Russia to conduct training exercises around its borders. Lithuania erupts in civil war. Negotiations break down. U.S. diplomats are captured and publicly taunted. The president airlifts troops to rescue them and orders ships into the Black Sea. Iran declares its alliance with Russia. Gold and oil prices soar. Congress debates restoring the draft.
It's highly unlikely that any one of these scenarios will actually happen. What is likely, however, is that the catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction.
Strauss and Howe sound like they are reporting on what actually happened, not what might happen. These scenarios were derived from the study of previous saecula and how Crisis periods unfolded in times past. They were simply using history as their guide, and, in my opinion, their warnings of an impending upheaval need to be heeded. Sitting here in 2014, we're about halfway into the 20-25 year Fourth Turning. We see the potential catalysts all around us - ISIS in Iraq, the outbreak of Ebola, the Ukrainian civil war, tit-for-tat jousting with Russia, an anemic economy marked by unprecedented leverage - you name it, it's out there. It seems as though we're just waiting for that initial spark to push us over the edge and into serious Crisis. Strauss and Howe describe what happens once that spark ignites:
Before long, America's old civic order will seem ruined beyond repair. People will feel like a magnet has passed over society's disk drive, blanking out the social contract, wiping out old deals, clearing the books of vast unpayable promises to which people had once felt entitled. The economy could reach a trough that may look to be the start of a depression. With American weaknesses newly exposed, foreign dangers could erupt.
...History warns that a Crisis will reshape the basic social and economic environment that you now take for granted. The Fourth Turning necessitates the death and rebirth of the social order. It is the ultimate rite of passage for an entire people, requiring a liminal state of sheer chaos whose nature and duration no one can predict in advance. It could involve episodes of social dislocation (and enforced migration), total mobilization (and youth conscription), economic breakdown (and mass joblessness), communications blackouts (and household isolation), or social breakdown (and committees of public safety). Most likely, it will involve more than one of these elements.
Perhaps we won't know for many years, but are we now on the doorstep of this terrible Crisis?