The more things change...

The more they remain the same. On my way to work, the local radio had interrupted its program of non-stop Bollywood music (of the kiss me- kiss me fare) to talk about Barack Obama's inauguration.

As the 44th president of the US, his story, eloquence and the fact that we are a relatively pro-American country has caught the attention of the ordinary Indian. The expectation seems to be that he is the messiah come to deliver America and the world from:
1: Financial Meltdown
2: Terrorism
3: Over-reliance on Petroleum
4: Environmental Degradation

Being the messiah may just be too heavy a cross for one man to bear. But even if he were Jesus/Buddha/Gandhi/ML King/FDR/Abe Lincoln re-incarnated, the simple truth is that human nature NEVER changes. The same mistakes that we committed in the 1930s we are condemned to commit again.

The roaring 20s brought about a generation of people used to easy money and booming markets. They learnt their mistakes, suffered pain and put in place a host of regulations and safety nets. But once that generation passed away society has gone about making the same mistakes again.

Just like the 20s we have created another easy money bubble and re-priced risky assets. And just like the 20s this bubble will have the same outcome - for the simple fact that human nature is STILL the same.

We will go through the same deflationary spiral that we did in the thirties. And this deflationary spiral will be followed by hyperinflation as the establishment desperately tries to control the force of nature by printing money. This hyperinflation will create a class of people who will be wiped out. With nothing left to lose this class will take upon themselves to unseat the existing powers and put in place a new system of governance. This might be Fascism or Socialism reincarnated, or it might be some other -ism. Regardless the world will be a different place once the trough of this cycle is reached.

To think that one man, even if he is the most powerful man on this planet, can stop human nature from running it's course is wishful thinking of the first order.