Where We've Been, Where We're Going

You are receiving this post/email because you are a subscriber to Of Two Minds / Charles Hugh Smith. This is Musings Report 2025-4.

Does the study of history give us actionable lessons? Stories such as the one about the wealthy fellow observing shoeshine boys offering stock tips in 1929 prompting him to sell before the crash suggest "yes," if we're alert to the lessons offered, however partially and imperfectly.

My interpretation of this story is that the wealthy fellow understood that human nature--what I call Wetware 1.0--tends to manifest as cycles and waves: human emotions cycle between euphoria and despair, for example, and changes tend to reinforce one another, generating waves that gather momentum, crest and break as they crash onshore.

The difference between waves and cycles is not always obvious. The Austrian School economist Ludwig von Mises observed that the desire to control the economy via lowering interest rates and expanding credit created "wavelike movements" which Russian economist Kondratieff reckoned were cyclical.

"The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion." (Mises)

Many observers have noted cycles of history which relate to humans experiencing hardship and the failure of initial solutions, and these lessons being lost once this generation has on, leaving future generations to re-learn the same lesson the hard way.

Historian David Hackett Fischer, author of the book, The Great Wave: Price Revolutions and the Rhythm of History (often recommended here), explained the difference thusly:

"Cyclical rhythms are fixed and regular. Their periods are highly predictable. Great waves are more variable and less predictable. They differ in duration, magnitude, velocity, and momentum. One great price wave lasted less than ninety years; another continued more than 180 years. The irregularities in individual price movements make them no more (or less) predictable than individual waves in the sea.

Even so, all great waves had important qualities in common. They all shared the same wave-structure. They tended to have the same sequence of development, the same pattern of price relatives, similar movements of wages, rent, interest rates; and the same dangerous volatility in later stages. All major price revolutions in modern history began in periods of prosperity. Each ended in shattering world crises and was followed by periods of recovery and comparative equilibrium." (Thank you, Stuart L. for this excerpt)

In other words, what Fischer is describing is the similarities in history may not be periodic as much as in the characteristics and progression of eras.

One advantage of reaching an advanced age is that we understand past eras not from reading accounts but from memories of our own experiences.

For example, many older readers recall their parents' frugality was a direct result of growing up in the Great Depression, when frugality wasn't an option, it was a necessity for most households. As depressions were banished by central bank and fiscal policies, we've collectively lost any sense of frugality as a necessary strategy of survival. As a result, we will relearn this the hard way.

The title "Where We've Been, Where We're Going" intentionally ties the two together: where we've been influences where we're going.

I am old enough to remember the tumultuous 1960s, which saw global revolutions of various types playing out from China to Iron Curtain Eastern Europe to the U.S. and beyond. Those attempting to condense these extremely diverse revolutions down to one cause or cabal are off the mark. The forces behind the global wave of cultural, economic and political changes were many.

Politically, we can discern various waves of sentiment in this era: the youthful Kennedy replaced (in a razor-thin victory that was likely marred by fraud in Illinois) the "old school" of World War II leaders such as President Eisenhower with "The New Frontier," a vibrant Camelot of The Best and the Brightest, which is the title of David Halberstam's book on the Vietnam era.

This euphoric phase wouldn't last its encounters with history. Kennedy's assassination in 1963 undermined the public's trust in the Federal government, a distrust amplified by the propaganda issued to defend the Vietnam War.

President Lyndon Johnson's "Great Society" foundered on the "guns and butter" of a costly, divisive land war in Vietnam and expansive social programs, leading to a sentiment that the nation was off-track and a return to "law and order" was the needed prescription, one dynamic in Richard Nixon's narrow victory in 1968.

As Nixon's era ended in stagflation and Watergate, the hope for a fresh start generated the unlikely triumph of Jimmy Carter in 1976. These hopes fell apart under the pressure of a geopolitical crisis (The Iran hostage crisis), and a sense of an America weakened by diplomatic policies and economic stagnation / inflation.

This led to the sweeping victory of Ronald Reagan in 1980, who came to the presidency with the slogan "It's morning in America," a term we now hear again as the summary of Trump's 2.0 presidency.

As I have often noted here, the story of history is often mis-interpreted and told as a narrative that misses the point.

CHS NOTE: I understand some readers object to paywalled posts, so please note that my weekday posts are free and I reserve my weekend Musings Report for subscribers. Hopefully this mix makes sense in light of the fact that writing is my only paid work/job. Who knows, something here may be actionable and change your life in some useful way. I am grateful for your readership and blessed by your financial support.