Tuesday, August 27, 2013

A Reflection on the Lifespan and Fragility of National Governments

Government survivability are the odds of a government continuing into the future intact (it’s a type of political risk). Gold is a hedge against this kind of threat. Let’s discuss.

Governments Are Fragile

When I look back over the last 100 years there are maybe just seven or so governments that still exist more or less intact (meaning their debts, currency, markets, etc. haven’t gone to the black hole). So off the top of my head those are: Canada, U.S., Australia, New Zealand, U.K., Sweden, and Switzerland. There may be a couple more, but you get the idea. It ain’t many. And notice I say “governments” and not “countries.” France still exists as a geographic area, but it has had multiple governments the past 100 years. Same for Japan, Italy, China, Russia, etc. Geographically the countries are (more or less) the same, but the management has had high turnover. And with this turnover, so goes the currency and debt promises made. Many countries had far more unsavory things happen than just losing money, but for our purposes we won’t go into them.

So let’s be generous and say 10 countries out of hundreds on the planet still have the same government and currency from 100 years ago. In fact, many governments you see today probably weren’t in existence even 75 years ago. Those are really bad odds! That means in the average person’s lifetime, if trends hold, they could likely experience their government having a major problem (up to and including vanishing and being replaced with something entirely different kind of major problem).

Does that also mean the United States falls under the same rules of history? Whether you want to believe it or not, it does. In fact, there should be a voice in the back of your head that is always giving a gentle reminder: The U.S. government is old.

Now when I say the U.S. government is old, I don’t mean in a way that it’s going to blow up tomorrow. It’s just that the longer we go on a timeline, the odds of the same government existing gets worse, not better. Governments are not a fine wine. They don’t get better with age. Governments are fragile and get more fragile the older they are. Think about it in human terms. A 20 year old has a much better chance of waking up tomorrow than a 100 year old. Age catches up with everything, even governments.
Read the rest here.

This is really good and thought provoking post. Please leave comments there.

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