The Changing World Order: Where we are and where we're going

I was seeing the confluence of 1) high levels of indebtedness and extremely low interest rates, which limits central banks’ powers to stimulate the economy, 2) large wealth gaps and political divisions within countries, which leads to increased social and political conflicts, and 3) a rising world power (China) challenging the overextended existing world power (the US), which causes external conflict. The most recent analogous time was the period from 1930 to 1945. This was very concerning to me.

be successful the system has to produce prosperity for the middle class

History shows us that the biggest risk to democracies is that they produce such fragmented and antagonistic decision making that they can be ineffective, which leads to bad results, which leads to revolutions led by populist autocrats who represent large segments of the population who want to have a strong capable leader get control of the chaos and make the country work well for them.

Would the US fight to defend Taiwan? Uncertain. The US not fighting would be a great geopolitical win for China and a great humiliation for the US. It would signal the decline of the American Empire in the Pacific and beyond in much the same way as the British loss of the Suez Canal signaled the end of the British Empire and beyond.

if the US dollar were to lose its reserve status and significantly depreciate in value it would have a devastating effect on the finances of those countries holding those reserves as well as private-sector holders of dollar-debt assets.

the value of assets is the reciprocal of the value of money and credit (i.e., the cheaper money and credit are, the more expensive asset prices are) and the value of money is the reciprocal of the quantity of it in existence, so when central banks are producing a lot of money and credit and making it cheaper, it is wise to be more aggressive in owning assets

Protecting one’s wealth in times of war is difficult, as normal economic activities are curtailed, traditionally safe investments are not safe, capital mobility is limited, and high taxes are imposed when people and countries are fighting for their survival. During difficult times of conflict protecting the wealth of those who have wealth is not a priority relative to redistributing wealth to get it to where it is needed most.

Governance between countries is very different from governance within countries. That is because within countries there are laws and standards of behavior that govern, whereas between countries raw power matters most, and laws, rules, and even mutually agreed treaties and organizations for arbitration such as the League of Nations, the United Nations, and the World Trade Organization don’t matter much. Operating internationally is like operating in a jungle in which there is survival of the fittest and most anything goes. That is what makes having a strong military so important.

Before there is a shooting war there is usually an economic war.

During periods of great conflict there is a strong tendency to move to more autocratic leadership to bring order to the chaos.