DRIGGS, IDAHO – “You can eat at restaurants, go to movies, and play sports. Life has basically returned to normal.”
As we’ve covered many times before in these Postcards, China has beaten the COVID-19 virus. There was a story in The New York Times last week describing how China did it.
Anywhere there’s an outbreak, even if it’s just a few cases, an army of bureaucrats descends on the town or village.
They shut down the area, build prefabricated housing to quarantine the sick and anyone who came into contact with the sick, and then they test the people in the area, sometimes millions.
All this happens within three to five days.
From The New York Times:
Beijing’s successes in each dimension of the pandemic – medical, diplomatic and economic – have reinforced its conviction that an authoritarian capacity to quickly mobilize people and resources gave China a decisive edge that other major powers like the United States lacked.
It is an approach that emphasizes a relentless drive for results and relies on an acquiescent public.
Cozy Cabin Life
Greetings from our cabin in the Teton Mountains…
We’re a modern American nomad family. For two-and-a-half years, we lived out of a suitcase and drifted from hotel to hotel, Airbnb to Airbnb, campsite to campsite… never staying in the same place for more than a few days.
But last fall, we retired the suitcase and the tent, and we came to rest in a small community near Yellowstone National Park. We’re going to stay here until April, learning how to ski.
We ski hard during the week. Then we rest our legs on the weekends.
We wear pajamas and lounge around our cozy little cabin, reading books, watching movies, and playing games…
Teaching the Kids About Money
This weekend, we played a board game called Cashflow, invented by Robert Kiyosaki, creator of the Rich Dad, Poor Dad self-help franchise.
In the game, each player receives a salary and gets passive income from stock market and real estate investments.
The goal is to expand your passive income by making wise investments and managing debt sensibly until your passive income exceeds your expenses, and you can leave the rat race.
To do this, each player must travel around the board, finding opportunities while maintaining an income statement that lists all streams of income and expenses, and maintaining a balance sheet that lists all assets and liabilities.
It’s fun to play, but it’s also a fantastic teaching aid. Kids learn the basics of accounting and the virtues of saving money.
The board game is a little expensive – I think we paid around $70 for it – but I highly recommend it for teaching kids (ages 10 and up) about money.
Dusty doing some schoolwork while taking a break from the board game
When we’d finished playing the game, we introduced allowances for the boys. (Penny is 8, so she’s not ready yet.)
Dusty (13) gets $20 a month and Miles (11) gets $15. To encourage saving, I introduced bonuses if the kids can go 1, 2 or 3 months without making withdrawals from their accounts.
Next, we gave them some assets… some dividend-paying stocks, some ounces of gold and silver, and some cash savings.
We entered all these details on the financial statement worksheets that come with the board game and the boys are familiar with.
Finally, I bought some prop money from Amazon to represent their savings in a tangible way, so they can see their savings instead of just having a number in an account.
This morning, Dusty used his savings to buy more dividend-paying stocks. He chose two shipping companies. They each pay around 10% a year in dividends.
First, he adjusted his monthly income on the income statement. His investments increased his income from $20 a month to $31 a month.
Then, he had to adjust his balance sheet by debiting cash from his savings and crediting his investment account with his new stocks.
Back to China…
China’s New Monetary System
Not only has China contained the virus, but it’s also developed a vaccine. The story is equally impressive… and terrifying.
It took China just three months to develop the vaccine and build a giant factory that can churn out 400,000 vaccines a day.
They hope to produce one billion vaccinations this year. And because China has largely stamped out the virus at home, China can sell these vaccines abroad.
I read these stories and I wonder, “How does China not become the richest, most powerful nation on Earth soon?”
In the West, we care about other things, like personal liberty, private property, and democracy.
But if you only care about getting results, isn’t China’s model far more effective?
It’s like a corporation with a clear leadership and motivated employees, working tirelessly on a long-term plan to produce profits and growth.
And what’s more, the West is foolishly clinging to a legacy financial system, set up after the Second World War, that doesn’t serve us anymore.
China exploits this system perfectly… sucking up all the industry and capital while the U.S. picks up the tab for policing the oceans and goes further and further into debt.
We hope if we just print enough money and keep interest rates down for long enough, it’ll all turn out fine.
It won’t. There’s going to be a breakup.
The U.S. is going to have to opt out of the relationship by devaluing the dollar, normalizing interest rates, dropping the “dream” of globalization, and beginning the long process of rebuilding its industrial base – something economists call “reshoring.”
China, meanwhile, is going to become the global economic leader and the author of a new monetary system that is not based on the U.S. dollar.
An article in the Financial Times last week describes the rapid growth in China’s new domestic crude oil futures contract (which I wrote about in more detail on November 20):
Activity in China’s oil futures market has risen to record levels as the country seeks to develop the role of its currency in a trade dominated by the U.S. dollar.
A rise in trading and positions in the contracts, which were launched in 2018, form part of a longer term push by Beijing to establish renminbi-denominated markets that ultimately seek to challenge the dollar’s dominance.
What to do about all this? It’s simple. Hold gold.
As I wrote in the November 20 Postcard, China is accumulating gold. And gold is about the only place that will definitely hold its purchasing power through all this…
– Tom Dyson
P.S. In 2018, I went “all in” on gold… I knew the financial system was broken, and I wanted nothing to do with it. If you’re also looking to escape the rat race, it’s not too late. But there’s more to it than just buying gold bullion… I put together an entire report on how to build the ideal precious metals portfolio – including specific percentage allocations and the 11 gold stocks I recommend today. Learn more here.
In today’s mailbag, readers share their own stories of grief, losing parents, and the gift of family…
Reader comment: Hi Tom, Joseph here, a reader from Ireland. I have read and enjoyed your trip around the world. I find it very futuristic the way you and your family are approaching life. I would love to hear some of your wife’s comments on all your journeys.
I was sad you could not meet your mother before she died. I had that pleasure where I spent some time with my mom before she passed away. It was so good; I could read her prayers and tell her I love her. Was amazing. Tell your children you love them each day. Will work wonders.
Reader comment: Tom and family, so sorry to hear of the passing of your mother. Our parents are our anchors in life, and when they pass, it is devastating. We then become the eldest generation still living, and it makes me think of how I want to add real value to the generations following me.
I lost my father in 2009 and my mother in 2019. Sometimes, I think on how I was shaped by their character and how fortunate I was to have great parents. I am praying for your peace with your loss. I have been following your writings for quite a while. Thank you for your work.
Reader comment: Dear Tom and family, I’m so sorry to learn of your recent loss of your mother. Not only is she no longer physically present for you, but your children will miss her huge slice of what she could offer. My mother died at age 66, some years ago, when I was shy of 40. My father died at age 100, just last year. I had the pleasure of embracing an adult relationship with both.
This last summer, my partner of 42 years died. Someone asked me, “What wisdom did this last year bring you that made you a better person?” Below was my response:
Following two close family deaths, I experienced a spaciness that had no time definition. I allowed myself more time to simply be, to sit, look around, and step back from expectations (mine or others’). I believed I did not have time to be busy. It was a kind, compassionate way for me to respect and hold space for myself. And there was much alone time for doing so in this past year.
Everything has felt deeper, more profound, love intensified. Tom, I wish you peace and quiet time to be. Grief is a unique companion, for however long.
Tom’s note: Thank you for all the kind messages! Your letters have really lifted my spirits and given me strength. Please keep writing in at [email protected].