On the heels of wild week that included a missile attack against Syria, today one of the top money managers in the world spoke with King World News about a loss of faith in the American dream and why all roads lead to China and a new gold-backed monetary system. 

Stephen Leeb:  “One of the most disquieting reports to come out recently has been that in the U.S. – in contrast to every other developed country – death rates have been rising among middle-aged, largely middle-class whites. At the century’s start, death rates for this demographic were roughly equal in the U.S., France, and Germany. Today death rates in the U.S. are more than 30 percent greater…

At first glance, that dispiriting trend might not seem relevant to the case for a big bull market in gold. But there’s a thread that clearly links the two.

The Loss Of Faith In The American Dream
It starts with evidence that much of the rise in death rates reflects despair from a loss of faith in the American dream, the country’s long-held belief that this is a land of opportunity where everyone who works hard can create a better life for themselves and their families. That used to be true but no longer is as declining productivity growth here has led to stagnating and declining incomes and living standards. Death rates have been pushed higher by growing middle class substance abuse, alcoholism, suicides, and other clear signs of hopelessness. The only real answer is to create an economy that is once again able to raise worker productivity. 

That will require an all-out effort to improve the nation’s infrastructure, which has been woefully deteriorating. Good infrastructure is indispensable to an economy being able to function productively. If roads are in disrepair and you waste hours in traffic jams, that hurts an nation’s productivity as well as the that of each individual. And if that traffic jam occurred while you were on your way to the airport for a business trip and you missed your plane, a frustration even more likely to occur if the airport itself was old and inefficient, productivity further suffers. Whether you are talking about dams, roads, bridges, or the electric grid, infrastructure is key to rising productivity, rising standards of living and an all-around healthy economy.

This brings me to the latest report card from the American Society of Civil Engineers (ASCE), which since 1998 has issued such reports every four years. Prior to that, starting in 1988, the report cards were issued by the American Public Works Association. The initial rating was a C, not great but not acceptable. Since then, though, they have ranged from D to D+. Of course, like any report card, the composite grade is an average of individual grades. The brightest spot has been the rails, which have moved up from a C- in 2005 to a B today.

Rails, one of the cheapest forms of transportation, are very important to the economy. The more that they handle the goods delivered between cities and to ports for overseas shipments, the more it helps trade and factory efficiency, spurring gains in productivity. Why have rails stood out? Thanks should go at least in part to the long-term thinking of Warren Buffett, whose immense capital expenditures on his wholly controlled Burlington Rail not only have improved that rail but also have likely encouraged other rails to upgrade so as to stay competitive. 

By contrast, roads, electricity, water, schools, and other infrastructure have gone begging and get abysmal grades. These areas aren’t driven by long-term thinkers like Buffett, willing to make huge capital investments for a future pay-off, but by federal and local governments with time frames often as short as two years, and that tend to go for quick fixes rather than making long-term commitments.

A Staggering $4.6 Trillion Is Needed For Infrastructure Repair
In each report since 2001, the ASCE also has estimated how much money is needed to bring each infrastructure category up to acceptable levels. The totals have climbed from $1.3 trillion in 2001 to $4.6 trillion in 2017. In the past six years, the need has more than doubled, from $2.2 trillion to $4.6 trillion. Making plain the clear link between infrastructure’s growing inadequacy and productivity, in those same six years productivity growth has stumbled from 2.5 percent to less than 1 percent, the lowest in postwar history. 

The impact on the entire economy will keep growing unless infrastructure starts to improve. According to the ASCE:

“From 2016 to 2025, each household will lose $3,400 each year in disposable income due to infrastructure deficiencies…Over time, these impacts will also affect businesses’ ability to provide well-paying jobs, further reducing incomes. If this investment is not addressed throughout the nation’s infrastructure sectors by 2025, the economy is expected to lose almost $4 trillion in GDP, resulting in a loss of 2.5 million jobs in 2025.”….more here