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It is an age of heightened global angst and uncertainty, an era of discontent. An age which gives birth to brazen, Never-In-a-Million-Years political outsiders like Donald Trump. And Brexit, Britain’s equally shocking decision to exit the EU.

Political “elites” might argue recent voting decisions of their electorate are chaotic, or mad. Whatever you call it, it’s the reality we must grapple with today, says Pippa Malmgren, founder of economic consultancy DRPM Group and author of the best-selling book Signals.”

“The philosophical question of our time is are you a globalist or are you a patriot,” she says. “And can you be a global patriot or a patriotic globalist?”

Once you accept that the global zeitgeist is divided along these two competing interests, Malmgren says, the world falls more neatly into place.

Malmgren knows a thing or two about simplifying the complex. She’s had a storied career on Wall Street and in Washington, having served as special assistant to President George W. Bush for economic policy on the National Economic Council. She also has considerable experience interpreting financial markets, serving as Deputy Head of Global Strategy at UBS and Chief Currency Strategist for Bankers Trust.

“What I find is that people in financial markets love to go around blind in one eye. They only look at things through a mathematical or data lens,” Malmgren says in the Real Conversations interview above with Hedgeye CEO Keith McCullough. These people miss a lot of things. On Brexit or Trump’s victory, Malmgren had the foresight to see both coming long before these events shocked markets.

“What’s fascinating is that you see this populist uprising everywhere in the world  and everywhere people think it’s a local issue,” Malmgren says.

The underlying driver is really simple. The debt burden is so big it can’t be paid down so that causes lack of jobs, slow economic growth and kills your hope for the future, she says.

Meanwhile, the only solution policymakers have come up with is to inflate away that debt by devaluing the currency. This hurts domestic purchasing power as citizens see their paychecks worth less and less.

“The question then becomes how come my wealth is being distributed to some other guy and not me?” Malmgren says.

That leads to a final question that should frighten any career politician desperately clinging onto their post, “Why are you in charge?”

If you follow this line of logic the rise of Trump in the U.S. or Le Pen and Macron in France isn’t a big leap. Malmgren has some intriguing ideas on Trump:

“I’ve been describing Trump as the “Uber of politics.” It’s important to think this way because he is literally disrupting, displacing, disintermediating the traditional power structures. That includes the media. It also includes the fundraisers, because there’s no need for them if you can win the presidency without them. It’s the technocracy, where I come from, and where people are normally hired into the senior jobs in bureaucracy and expect to get big titles. They’ve all been told we can run the government without you.”


Populist tides are clearly rising in Europe too. Malmgren lives with her family in London. She watched as the Brexit vote unfolded in real-time. As freaked-out investors watched at home, Malmgren watched with curiosity as Italian banks got whacked in early morning trading as British voters repudiated their EU membership. The market was sending a clear message to politicians across the continent. Get your act together or more countries could leave the Eurozone.

The reaction also served as a self-perpetuating feedback loop. With share prices tumbling, the pressure was on Italian banks to come up with more capital. The government stepped in:

“Italian politicians said we’ve got to have a bailout because this is such a structurally important institution. And the public heard this and said ‘We’re going to find $5 billion to bail out a bank that’s lost 98% of its share price but we can’t find five euros to deal with the 39% unemployment rate of 25 year olds and younger.’”


Malmgren thinks growing public discontent is stressing the social contract between governments and the people, which brings us back to the question of our times: are you a globalist or are you a patriot?

“It’s a fair fight at this point and the market has to decide the balance of global versus domestic issues. The solution I argue in my book is the only one I think works. It’s not turning to Washington, it’s not money printing, it’s not lowering interest rates. It’s that every one of us has to actually go and build a smarter global economy ourselves.”

Each of us has to do it, she says. The debt-laden state isn’t going to be there to look after you.

May we live in interesting times.