Anomaly Of A Recovery

Capital Record: From Muddling to Stumbling

David Bahnsen is one of the most original thinkers I know, which is why he is all over TV and podcasts, and is rated one of the best money managers in America. His father was an esteemed theologian back in the 1970s and 1980s whom I had the privilege to personally know and publish. He tragically died way too early, and David had to pick himself up at a very early age to get where he is today. There is a long story there, and I can’t tell you how deep my respect goes.

As far as original thinking goes, the apple did not fall far from the tree. David does a podcast for National Review called Capital Record. We did a two-part series. The following is an edited partial transcript of the first part. Next week I will share some of Part 2.

Please note that some of the best ideas here will be David’s. I always learn a lot when I am with him. If there is something in brackets […] it means I inserted it today. Let’s jump in:

David Bahnsen: Hello and welcome to another episode of Capital Record, very excited today to have what I believe is one of the most influential economists and writers in my adult life, who I've been reading religiously for my entire career, is a very well-known financial pundit, macroeconomic thinker, and hopefully so much of his wisdom is going to come out in our conversation. The gentleman I refer to is John Mauldin. John also penned a book in 2003 called Bull's Eye Investing. I read John's entire book and was really quite moved by his rare ability.

As some of you know, financial writers often can fall into a trap where they go for a brand. I'm going to be a permanently optimistic guy or often in the newsletter publishing world, the brand of being that doom and gloom pessimistic person all the time. John carved out a niche as an actual free thinker, which is all too rare, a lot of objectivity. He can be wrong. He can be right like any other economist, any other thinker, any other writer. But he is right or wrong out of an earnest pursuit of truth and earnest pursuit of objective understanding of economic challenges and situations. He intellectually wrestles with topics. And I've learned a great deal from John. We've become very close friends and have dined together for hours upon hours, many times, discussing many of the things we're going to discuss in the podcast today and have a friendship that enables us to run different things past each other as we seek to better understand the economic challenges of the day. So he's involved extensively in capital markets and in a number of aspects of the investment field.

But John is a thinker and writer and has been a great influence, hopefully, on many of you and certainly on myself. And so I'm going to invite John into a conversation today around the economy, the last 20 years of economic challenges, the next 20 years of economic reality. And we're going to dive into these things and see where the conversation goes. So we're looking forward to another episode here with you of Capital Record.

John, I've been reading you since the very, very beginning that you've been putting out macroeconomic commentary. Since then we’ve had Y2K and a tech crash. We had a financial crisis. We've had all kinds of Federal Reserve machinations the last 10 years. We've had ups and downs in China. And now we've had COVID and here we are. You coined the phrase “Muddle Through,” I believe about 20 years ago now.

John Mauldin: I'm getting old.

David Bahnsen: Yeah, I'm just playing catch-up with you. But the Muddle Through Economy, would you say that description has been pretty accurate for what we're going through?

John Mauldin: Well, let's go back 20 years ago and look at the context. In 2001 we’d come off a recession and then we had 9/11, which gave us even more of a recession. Now I am like you, I'm a big technological optimist. I am really long humanity and maybe we'll get into that. What I mean by long humanity, I think human progress is on an accelerating pace. But that being said, I'm [currently philosophically] short government. I didn't see how we would get through the rest of the decade without another one. I certainly wasn't expecting the level of the traumatic Great Recession in 2007–8. But I said then we're going to muddle through the decade, likely to have 2% GDP growth for the entire decade. People called me too bearish. And as it turned out, I was an optimist. We did 1.9%.

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