DRIGGS, IDAHO – China is taking over the baton of “global leader.”
Everyone knows China is already the world’s great industrial giant… but it’s now becoming the world’s economic giant…
Teton Mountains Hideout
Greetings from our mountain hideout…
My family and I are a traveling family. We have no home. We live out of a suitcase and drift from town to town, like hobos looking for the next hot meal…
But recently, we decided to take a break from traveling. We leased a cabin in the mountains, and we’re going to hunker down here for the winter and see what it’s like to get dumped on by snow.
The area we’ve chosen – the Teton mountains – is one of the snowiest places in North America.
The nearby ski resort gets 500 inches of snow a year. But this is a La Niña year and meteorologists are predicting a snowier-than-usual winter. We’ve already had 104 inches.
Capital Pouring Into China
While Kate and the kids do their schoolwork, I study economics and capital markets.
And, as regular readers know, I’ve been watching China. It’s made a huge economic leap this year…
China is already the world’s great manufacturing power.
Isn’t it interesting that China is also the world’s largest producer of gold (and owns the most gold)?
China is the world’s largest miner of bitcoin, too. Something like 70% of all new bitcoins mined come from China.
And China is the world’s leader in 5G.
It also has the world’s best-performing stock market… best-performing currency… and the most attractive government bond market. (Chinese 10-year bonds yield over 3%, while U.S. 10-year bonds yield less than 1%. Euro bonds have negative yields.)
International capital is pouring into China.
“There is an appetite for China assets from all over the world,” says BNP Paribas, the world’s ninth-largest bank by total assets.
“China’s onshore markets have sucked in tens of billions of dollars worth of foreign investment this year as stocks have rallied on the back of its economic recovery, ensuring strong demand for the renminbi,” says the Financial Times.
And here’s another industry leaving the U.S. and heading to China…
For years, the U.S. has been the world leader in petroleum refining. But recently, refineries have been shutting down in the U.S. (and Europe, Australia, and New Zealand) and moving to China.
A Black Hole for Dollars
While China turns into a global powerhouse, the U.S. government is utterly and irretrievably bankrupt. And it’s becoming a black hole for dollars that can only be fed by Federal Reserve currency printing.
There literally aren’t enough dollars in the system to feed the U.S. government, or anyone else that needs them.
Money-printing is going to end up destroying – or at least massively impairing – the value of the dollar.
In other words, China is doing to America what America did to Britain in the 1920s – taking over as world economic leader…
The system we use now revolves around the dollar. But as the center of financial gravity moves toward China, the dollar should lose its value as the pound did 100 years ago…
The dollar hit a two-and-half year low this week…
– Tom Dyson
P.S. On an unrelated note, Kate and I drove to Florida last week for Thanksgiving. It was a 5,200-mile round trip. We passed miles and miles of wind farms. Thousands and thousands of white turbines spinning away. And more going up all the time. We saw several trucks carrying windmill parts in Kansas (with Chinese lettering on the wrappers). And we saw a wind farm under construction in Colorado.
I’ve heard offshore wind farms are going to be the next big thing, though. Offshore wind farms are nothing new. But what will set these new offshore wind farms apart will be the scale. These are going to cover gigantic areas of the ocean. And the windmills themselves are going to be gigantic… 3x the size of the current windmills. And able to handle much higher wind speeds.
It makes more sense to build wind farms out at sea. Not only is the wind stronger, but it is much easier to achieve scale in open water than on land.
In the future, it’ll probably be a lot cheaper to install a windmill at sea, too, lowering it into the ocean using a big ship, instead of moving it around by truck like they do with windmills on land.
In today’s mailbag, readers offer homeschool suggestions and envy Tom and Kate’s little libertarian school in the mountains… while others question the Dyson family’s decision to travel to Kate’s parents’ house for Thanksgiving…
Reader comment: Thank you for sharing your family’s adventures. I enjoy reading Postcards From the Fringe. It sounds like you and Kate are doing a great job educating your children. I would recommend the book Old Yeller for your boys to read. The story Tikki Tikki Tembo (retold by Arlene Mosel) is a little more geared to Penny’s age. I love this story because it is a great introduction for a discussion on learning from one’s mistakes. Have a great day!
Reader comment: Tom and family, I did great in Catholic school through 6th grade but that’s where it ended. I went off to the public high school for 7th grade and experienced a downward spiral for my academics. I didn’t pick it up again until I enrolled in a nearby all-men’s Catholic university, where it was game on.
I think we discount if primary school should be interesting. The nuns made it interesting for me. You’re making it interesting for Dusty, Miles, and Penny. Can I get a “do over” at The Libertarian School? Now that sounds interesting.
Reader comment: Love Tom Dyson’s postcards. Keep them coming!
Reader comment: What kind of parent takes his children to the most COVID-19-active state in the U.S, exposes elderly people, then blithely heads back to possibly infect others?? Almost 300,000 deaths from COVID. This is not a walk in the park. It is deadly serious.
Canada took the bug seriously with lockdowns and masks… and most areas have no COVID. Around 12,000 deaths, which means the U.S should have about 100,000, not 300,000 and growing. Young people get sick, too, many with long-term damage to their systems.
Reader comment: While I normally enjoy your writings, I have to ask what you were thinking, making the cross-country trip, in a car, for a day (or maybe two) of “masked up” turkey. Not only are you stressing your immune system, which will make any response to COVID-19 exposure that much worse. But I also wonder what you are bringing “home” to your in-laws after traveling across many of the “hot states.” Not sure this is one of your best decisions.
Reader comment: I am surprised you are making the trip, despite the warnings about traveling because of COVID-19 concerns. I am watching in my area (NY) the numbers rising as close as 2 miles from my home. I only venture out for laundry and grocery shopping. And I do my daily, outside exercise in my alleyway, which has a double set of stairs plus a walkway that stretches the length of the building.
I know you want to spend time with your in-laws to get that Thanksgiving meal atmosphere. I am assuming they live in an area of Florida that is more rural than urban. Just keep the hand-washing tactics going and enjoy the family get-together. Hopefully, you’ll have leftovers to snack on the return trip. Be safe, and enjoy the get-together and the meal. Be mindful of your health.
Meanwhile, another reader is skeptical of positive COVID-19 test results… one offers the Dysons a place to stay… and one shares their love of traveling…
Reader comment: All those so-called “COVID-19” cases are just folks testing positive. Doesn’t mean you have the disease. Researchers are finding there are a lot of false positives. The test sensitivity is set too high. So in the case of false positives, it means viral fragments were found but these don’t cause infection. Remember, this virus has a 98% recovery rate.
Reader comment: Wished I knew you guys were coming through, and you could have opted for better accommodations. The sheets are soft and we have lots of room. Alas, it appears it’s been a long day for you so I will let you rest. I believe we have some mutual friends from the investing/newsletter worlds. Maybe next time… Keep up the good work!
Reader comment: I certainly love your position on gold. My IRA is in gold and silver, and I have gold and silver (mostly coins) in a safe deposit box (realizing that safe deposit boxes are not insured). I also enjoy reading about your travels with your family. My wife and I took a great road trip a few years back from Rancho Cucamonga, California, to the Arctic Circle.
My working life (I am now retired) took me all over Southeast Asia, the Western U.S, British Columbia, Alberta, Saskatchewan, Nova Scotia, Newfoundland, Ontario, Maine, New York, Pennsylvania, Connecticut, D.C., and Maryland. I also visited North Africa, Nairobi, Thailand, and the Philippines on mission trips. I also took a 20-cents-per-day trip through Northern India and Nepal in 1971. I love traveling.
Tom’s note: As always, thank you for your messages. We read every note you send us. Keep your questions coming at [email protected], and I’ll do my best to answer them in a future Friday mailbag edition.