Good Morning Everyone,
In listening to an absolutely fascinating conversation between Peter McCorrmack and Nic Carter, Nic explains something that absolutely blew me away in how he thinks about commodity prices and the true connection of these costs to the humans in the world.
He explains:
“Commodity price charts; they’re not just numbers on a screen. They’re a measure of human flourishing basically. So if a price of a commodity gets cheaper, humans are flourishing more, and if it gets higher humans are in misery basically. So it’s an inverse flourishing index. So as metals and oil and gas get more expensive, life gets worse for human beings on planet earth. And the fact that commodities are in this enormous, monstrous rally no matter where you look, whether it’s food, commodities or metals or energy - that’s a bad sign for humanity.”
This is a really interesting way to think about it, and it’s most certainly true. You only have to think as far as food to very quickly realise how significant and far reaching the increased cost of basics like wheat are on individuals, families and society more broadly.
When you look at the charts of most commodities this is a pretty deeply concerning dynamic with respect to the “human flourishing index” and it suggests we are likely heading in a direction that leads to extreme pain.
The other thing the ‘inverse human flourishing index’ demonstrates is stability (or lack there of) within the world order specific to trust and cooperation and with respect to global trade. In many ways, given the amount of technological innovation over the past 100 years you would expect our ability to source different resources and utilise these resources would have become increasingly efficient and thus drive down costs. And perhaps it has, but the fundamental break down in trust we’re seeing in the world and the way that is disrupting supply flows of specific resources appears to be over-riding any potential benefit that may have existed.
It certainly is an absolutely wild time that we find ourselves living through. Perhaps in some respects we need to be more restrained in our consumption of resources - there is certainly an argument to be made for this. However i think the true root cause of this dislocation is a fundamental breakdown of the worlds monetary order. As this system is failing, and instruments and vehicles that were previously considered “safe” storage mechanisms for value no longer appear so. This is leading to a flight to “real assets” such as commodities and others.
The problem with this is the same as why it’s problematic to have monetised real estate. By monetising real estate as a store of value, it pushes prices up. This directly and negatively impacts local people because obviously people need somewhere to live. The only reason we have monetised real estate, and may be moving toward a world of commodity backed money, is because we had not previously discovered or invented a superior system. A pristine monetary good. We need a neutral money for the world, that does not need us to trust each other in order to trust the money, or the monetary protocol. With such a monetary good, this ensures we’re not incentivzed to hoard other things people may need, like commodities, in order to store and protect value. We do not want to adopt a money with utility. Quite the opposite. The most superior form of monetary good, is something that purely fullfills the purpose of an optimum money and absolutely nothing else. Those three primary properties are SOV, MOE, UOA. Store of value, Medium of exchange and Unit of account.
Either way it seems clear at this point in time, that without global cooperation and us having an ability to maintain constructive and productive relationships where we align on values, we’re heading toward some severe and sustained dislocations that will have major impacts, particularly hurting developing nations the hardest.
Hopefully we can course correct, and realise we’re all on team human and work toward getting this index trending back in favour of humans flourishing. I don’t think bitcoin alone fixes this obviously, but there is no question in my mind that the world moving to a neutral monetary protocol is one of the steps we need to take to reinstall this trust, and enable us to align team human toward win/win objectives and ensure that the human flourishing index can begin to trend again in the right direction.
Hope this finds you well. I will talk to you tomorrow.
AK
