The Best Real-World Measure of Wealth

I want to tell you about the most important thing to watch during Trump's presidency. It's not what you're probably thinking, but it's the single best indicator of whether or not he's doing a good job and getting our country back on the right track.

First though, a quick word about the election.

I had been predicting publicly and privately a massive Trump victory, a "landslide," for one simple reason – because the Democrats found a way to infuriate and radicalize an entire group of Americans who don't normally think about government at all.

For me, the surest moment was when my sixth grader came home from school with a Martin Luther King Jr. Day movie list... that was missing the titles of every film the school planned to show our children. What was the school trying to hide? Each of the dozen or so films was woefully inappropriate, rated-R movies with explicit sexual scenes – for example, Brokeback Mountain, which is about a romantic relationship between two cowboys. And none of them had anything to do with improving race relations. They were all, in one form or another, propaganda for alternative lifestyles and, in some cases, virulently racist.

This was not an honest effort to broaden perspectives and educate our children: this was brazen indoctrination.

These kinds of things – constantly putting ideology ahead of competency – simply annoyed most Americans, including those of us generally in favor of liberal social standards.

Did we tire of the President's press secretary because she was the first homosexual woman of color to hold the position? Of course not. We tired of her because she couldn't speak in full sentences and she lied to us, brazenly, about the President’s failing health.

Did we object to the Secretary of Defense because he was a black man? Of course not. We objected to him because he went AWOL and seemed completely unable to meet the reasonable demands of a very challenging job. 

Did we hate the President because his son Hunter Biden is a deeply troubled person? No. We have demons, too. But we don’t like the idea of people doing cocaine in the White House. We don’t like being lied to by every leading spook in the government. And we really don’t like the idea that our President is for sale to foreign powers. 

I don’t think Americans have ever seen an administration that was less competent or more ideologically driven. What Americans want is a country that’s focused on merit and that appoints people to positions of authority who have real talent and experience. We want more competency. And a lot less ideology.

Hopefully, that’s what Donald Trump delivers.

Now, how will we judge the job he does for our country? Let me show you an incredibly accurate way to judge the relative success of our country that’s completely objective and non-political. 

Constant inflation makes it difficult to measure how well (or how poorly) our economy is functioning. 

Example: house prices are way up over the last decade. Is that good? In some ways, sure. But when most young adults can't possibly afford to buy a house, it's hard to say the economy is functioning well.

That's why if you want to understand the real economy (not just the financial markets), you must study real-world production statistics. If you don't, it can be very difficult to discern nominal changes (due to inflation) and real increases in wealth.

The very best real-world measure of wealth is electrical production. Tell me per-capita electrical production, and I'll tell you how rich a country is and how well its economy functions. 

In the chart below, you can see that, for decades, electrical-power generation grew at a steady pace in the U.S. Right up until the end of 2007, when the Global Financial Crisis began. 

The decisions we made back then (and have continued to make since) to "paper over" big problems in our economy, including continually bailing out so many huge companies (General Electric (GE), Citigroup (C), AIG (AIG), and probably Boeing (BA)) has seen prices explode and debts increase massively, but these cosmetic changes have only made moral hazard worse and have seen politics dominate our economy.  

Our economy has become more financialized, with the government printing more and more money and playing an ever larger role in our economy. The result has been more debt and higher prices. But almost no further growth in electrical production. 

The real-world reality is, our economy has been stagnant for almost 20 years. If we want to grow again, we must stop printing money, we must allow banks (and other large corporations) to fail, and we must massively reduce the size of our government. 

And we must start producing more electricity.

Good investing,

Porter Stansberry 

Stevenson, MD

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