Some still do, but not as many as before
CNBC just published a telling poll showing the change in the voter mindset from 2009 to now around government spending. I think this is a global, generational and secular change in voter thinking that's going to lead to a decade of high government spending.
I can't quite explain why voters feel this way but it's not just in the US. In the UK, Sunak is the most-popular chancellor in a generation because of his free-spending ways. In Canada, Trudeau came to power by promising to out-spend the left wing NDP.
I suspect two things are at play:
- Fiscal conservatives have been crying wolf about deficits for 30 years and despite high spending, none of the negative predictions have happened
- Baby boomers are past the age where they care. That was the voting bloc most worried and they're now at the age where many don't care if the money runs out in 20 years.
- Japan has shown that you can support enormous deficits so long as you have a printing press
While I'm just guessing at the causes, the numbers above show that it's a real phenomenon. At some point the pendulum will swing in the other direction and governments will have to make some tough decisions but for now, voters want a free lunch. I believe this is the defining paradigm of this decade.
What does it mean for markets?
The obvious winner is gold as currencies are debased but hard assets should thrive as well.
