Good Morning Everyone,
I watched a clip last night of Chinese President Xi Jinping address the World Economic Forum, outlining his vision for the world, values he see’s as necessary and some priorities and areas of focus for future. It was quite strange to watch, as his audio had been muted and had someone else narrating essentially what he is saying, rather than providing subtitles to his audio.
His primary points included:
* Embrace Cooperation and defeat the pandemic
* Resolve various risks and promote steady recovery of the world economy
* Bridge the development divide and revitalize global development
* Discard Cold War mentality and seek peaceful coexistence and win-win outcomes
It got me thinking about Ray Dalio’s framework for the changing world order, outlined in his book titled ‘Principles for Dealing with the Changing World Order’, and where we may be in the present cycle.
The image below lays out the birds eye view of the cycle from the book, with the second image zooming in a little.
While the image above shows where we may be in the current cycle from the perspective of the US, it got me wondering, where are we from the perspective of China? If in fact, Ray’s thesis is on the money.
Please understand this is not a judgement on whether or not any of this is good or bad. Where possible, I try to avoid thinking about it in those terms. It’s simply a mechanical assessment of the situation rather than a moral, ethical or ideological one.
Whether China are at 5, 6, 7 or 8, it seems difficult to dispute that they are on the rise, while the US is in decline. That much seems difficult to make a case against at this point.
As you can see in the cycle above, a loss of reserve currency is part of this cycle. In the last 500 years it happened from the Dutch Guilder to the British Pound and most recently again from the British Pound to the US Dollar.
Is the world is going to go through some kind of Yuan-ification? Potentially. We are certainly seeing a trend of de-dollarization that is likely to continue. What i’m confident about, is that money as a technology has no place being controlled by any central government or entity. As i’ve said many times here already, it’s simply too great a power to be allocated in that way, and ultimately leads to the system corrupting, and some form of monetary reset. Over time, it is a fragile architecture.
The Chinese President made this analogy, reflecting the collectivist mentality central to socialist or communist styles of governance.
“Facts have shown once again that amidst the raging torrents of a global crisis, countries are not riding separately in some 190 small boats, but are rather all in a giant ship on which our shared destiny hinges. Small boats may not survive a storm, but a giant ship is strong enough to brave a storm.”
While this is true in many ways; of resources, skills, production capabilities and others, decentralization is a strength and not a weakness. While it is most ideal to cooperate and seek to play positive-sum games, the game of trying to force our values and ways of life on others, in my opinion, is a loosing one.
It is anyones guess how things progress throughout the 2020s. I remain increasingly convinced we’re in the throws of a period of rapid change whereby 100 years of change likely happens in a decade. Whether we label it the great reset, the changing world order, or the fourth turning makes little difference.
I’m just grateful there is an escape hatch, a mathematically deterministic monetary standard available to anyone that wishes to opt-in and that no one can control. That is open, borderless, neutral and censorship resistant. A global standard to provide some certainty in a world that has never seemed more uncertain.
While the values and principles of Bitcoin are clearly in opposition to those of China, it provides the rest of the world with a way out. It will be fascinating to see which countries choose to pull this lever and opt-in and adopt a global monetary standard built on rules without rulers.
Hope you have a great day, and i’l speak with everyone tomorrow.
AK
