In Pictures: Food of Brat in London, U.K.

Traditional British Cuisine Focused on Cooking Over Fire

No.53 of The World’s 50 Best Restaurants 2023

Chart: Social Media Platforms’ Share of Regular Users in the U.S.

Source : Statista

Real Wealth vs. Claims on Wealth

KANE MCGUKIN wrote . . . . . . . . .

The following excerpts are from Tragedy and Hope. They detail the monetary environment from 1914 to the 1930s. When looked at independently the context helps explain the confusion we find across today’s monetary landscape.

These passages help us better understand money and the lack of order that takes hold when international players desire a change to the system. The greatest challenge then and now was the battle between real wealth and claims on wealth.

With the creation of the FED, the intent was to have a system of central control of the money supply, to provide a backstop in times of crisis, and to have a gold-based monetary system.

However, the outcome led to a handful of powerful global bankers rather than a few powerful centralized institutions.

While the mandate of the FED is said to be price stability and maximum employment, its actions arguably have been the opposite. Making it hard to resist the temptation to assume the goal was actually to empower and enrich the pockets of a few global investment bankers.

Shedding light on the inner workings of the FED and BIS exposes a few harsh truths. It reveals a century’s worth of bankers who have chosen personal gain and growth of personal net worth over mandates of stability. These means have filtered down to the everyday politician who trades by day and passes bills to benefit those trades by night.

Unfettered access to the cookie jar gives one the ability to control flows of credit across the globe.

This power is hard to ignore and easily takes precedence over the intent of price stability and employment. Especially, when “no one’s looking”.

In a post-2007 world, we find ourselves sitting with a very similar backdrop to the early 1900s.

• Global strife due to inflation and a currency system imbalance.
• Unsustainable global debt in the primary global reserve currency.
• Increasingly levered institutions and individuals.
• An upstart money/currency promising to reinstill a gold standard and promises to balance budgets while restoring exchange rates.

This is Bitcoin in 2024. It Was the U.S. Dollar in 1914.

What Bitcoin does that the dollar or any other fiat can’t do at this point is increase real wealth in the community.

An economist or central banker will tell you this is bad because it leads to deflation.

Yes, in an inflationary system like the one we currently have, that is true. However, in reality rather than in economics, deflation is not a bad thing. It is not bad that your cost of living should decline rather than increase over time. Unfortunately, it takes from the banker and gives to the individual. Therein lies the problem.

Deflation in this sense is good, as it allows prices to fall for those who make sound financial decisions, save, and hold money; sound money. While taking from those who choose to lever up or hold a debt-laden money. Money that pre-spends its future by pulling it forward into today.

This is the flaw of fiat currencies like the dollar.

They are debt based. They pre-spend our future without any intention of thinking about how the piper must be paid.

Gold, and now Bitcoin, play this deflationary role. Gold has for centuries and Bitcoin will in the digital century.

What Bitcoin does that the dollar or any other fiat can’t do at this point is increase real wealth in the community.

An economist or central banker will tell you this is bad because it leads to deflation.

This is the flaw of fiat currencies like the dollar.

They are debt based. They pre-spend our future without any intention of thinking about how the piper must be paid.

Gold, and now Bitcoin, play this deflationary role. Gold has for centuries and Bitcoin will in the digital century.

In the early years of the dollar, 1800s and early 1900s, it played a similar role. A rising asset that allowed for more purchasing power (real wealth); until it was commandeered by international bankers in 1913.

That was the moment when devaluation became the method chosen, as there were only three options to solve the economic issues at hand.

(a)to increase the production of real wealth; (b) to decrease the quantity of money; or (c) to devaluate, or make each unit of money equal to a smaller amount of wealth (specifically gold).

… The third method (devaluation) was essentially a recognition and acceptance of the existing situation, and would have left prices at the higher postwar level permanently. This would have involved a permanent reduction in the value of money, and also would have given different parities in foreign exchanges (unless there was international agreement that countries devaluate by the same ratio). But it would have made possible prosperity and a rising standard of living and would have accepted as permanent the redistribution of wealth from creditors to debtors brought about by the wartime.

Today, we battle the problems left by the choice of devaluation.

Sure, it led to a hundred years of the appearance of wealth and the appearance of rising standards of living. However, it shrank the pool of wealth and in a post-2007 world, the piper is here to be paid.

Prices have remained permanently high, forever. The value of money has been reduced forever; by 92-99%. The parity difference between foreign exchange markets was broken by negligence, incompetence, and caused immigration to be the tool of destruction.

These challenges could have been avoided but one must make a tough choice by choosing sound money. Money that builds real wealth and destroys claims on wealth. That is the choice today’s central banker seeks to avoid, again.

Why? Because it requires erasing the appearance of rising living standards. It brings forward truth, and bankers would rather crank up the music instead. They’d rather continue on, pulling chairs away while everyone dances. Because they know most won’t notice, and there isn’t a reliable system of accountability to hold them responsible.

Source : Bomb Thrower

Charts: Selected China Economic Data of February 2024

Source : 国家统计局

We Should Thank God For the Communists

Eric Peters wrote . . . . . . . . .

“Value investors think China is cheap, at some point it’ll turn,” said the CIO of One River Asset Management, decades spent in HK, investing globally, Asia focused. “Perhaps they’re right,” he said, a light shrug. “But markets require capitalism, and capitalism requires rule of law.” China is one of the most important wildcards to track to understand the global economy, markets, geopolitics. “Confucius believed in rule by law, with the word of a wise, moral, ethical leader being law. Mencius (Confucianism’s 2nd sage) agreed about morals and ethics but argued for rule of law.”

“Xi Jinping believes in rule by law; what he says is law,” continued the CIO. “Now that Xi has shown his hand as he tightens his grip on the Party, economy, markets, what could he possibly say going forward that would entice any thinking person to take real risk?” he asked. “For the first time in my career, the Hong Kong tycoons have accepted that it’s over,” he said. “They feel the US has it in for them, and they see China as un-investable now,” he said. “Their grandparents fled the mainland in ’49 and taught them to never trust the Communists.

“The Party hired Xi in 2012 to clean up the mess of successive governments,” said the same CIO. “Rampant corruption of Party members, excessive dependency on property and fixed asset investment, environmental degradation, wealth inequality.” Existential threats to the Communist Party. “Xi looked at this rot and took it apart. It was his chance to introduce rule of law. Had he done so, he would have created a China that could have overtaken the US. But just like in 1949 he caused China’s talent to flee. We should thank God for the Communists.”

“Xi saw the experiment with openness and wealth accumulation as dangerous to Party control,” he said. “He will subordinate everything to enhance state power in his quest to displace America as the world’s rule setter,” he said. “He’s telling you precisely what he’s going to do. Eat bitterness. And each day the surveillance state grows stronger.” AI will make it more so. “What we see as economic sickness, Xi sees a price worth paying, because at the other side of this challenge is China’s rightful place at the head of the table. That’s his objective.”

“Xi believes he can allocate capital to build China top down,” said the CIO. “He thinks he can create Nvidia by decree. But Jensen Huang’s grandparents fled China’s Communists in 1949. Jensen had a vision that accelerated compute would be the future. He suffered multiple failures, made numerous acquisitions over decades, took enormous risks.” 30yr overnight success. “TSMC likewise realized it needed to shrink the geometry to make it happen. ASML knew it needed to go beyond the current understanding of the physics of etching.”

“TSMC’s gross cash flows that they can invest back in capital expenditure eclipses the entire market cap of China’s semiconductor industry,” he said. “Taiwan has an ecosystem with engineers and suppliers who have worked together and know how to talk to each other and make things happen.” No way China catches up. Nor does Intel. “And Sam Altman wants trillions to build data centers and buy chips. Google wants the same.” Microsoft too. “They’re signaling that this is where the future value lies.”

“We’re entering a world where the value is in hard tech,” said the CIO. “Where doing important things are very difficult and capital intensive.” We have left a world of capital light opportunity – the software era is ending with the arrival of AI. “Google was built with $100mm and 1000 people. It’s the greatest business on earth,” he said. “Compare those two inputs to what Jensen had to build, it’s drastically different. And this will be more the norm for the people who build tremendous value. More dollars spent, more people, more risk, more time.”

Anecdote

“China’s inward turn will still allow for years of 2-4% growth,” said the CIO from HK. “Each year the Party will forecast better times ahead. They’ll say we’re weaning ourselves off bad habits.” Perpetual propaganda. “What’s interesting is that countries across Asia are now waking up to this problem and becoming more dynamic,” he said.

“Having tried everything else for 35yrs of stagnation, Japan appears willing to try capitalism. It has countless tech companies with small global market share.” Consolidation will create real global competitors. “Tokyo realizes that if you want a defense industry you must pay for it. It’s expensive and requires hard tech.” The Europeans are realizing this too.

“Seoul has too much dependence on China. And with Kim up north and US global engagement increasingly uncertain, they’re copying Japan and trying to increase corporate valuations.” Dynamic economies fund stronger militaries.

“Indonesia has been a non-aligned country and now it wants to join the OECD,” he said. “China joined the WTO at the tail end of the Asian financial crisis,” he said. “Chinese people don’t need to be told how to make money, they sense profit, and go. The WTO was this gigantic green light to stopped cars at the red light. And they said this is it. If I want to make real money, I need to bet the farm. I’m going to build a big factory because now I can sell everything to everyone in America without a tariff.” Those who raced got rich.

“In India, historically, entrepreneurs didn’t know what would happen when the government changed, so they built one small factory to ensure they didn’t have overcapacity,” he said. “India never scaled. But now you have a stable government with a consistent set of policies,” he said. “Ambani and Adani, they’re in a league all their own. But the next 50 people down the rankings have a chance and they’re going to go for it. These two guys can’t do everything. And the government needs aggressive risk takers to build the country. If you want to be Vanderbilt or Rockefeller this is your moment.”

Source : ZeroHedge