Today the largest public Chinese tech companies (Alibaba and Tencent) are already the fifth and seventh largest technology companies in the world, right behind some of the largest US “FAAMG” stocks. It was that perspective that allowed Bridgewater to navigate the 2008 financial crisis well when others struggled. As a result of that the Chinese are now holding about $1.1 trillion of US debt, which is about a third of their total reserves though less than 5% of US debt. In the days that followed, I dug into history and saw that there were many cases of currency devaluations that had similar effects on stock markets. He built deep attachments with his teachers and his friends that still exist.

For example, when in a superior position, the Chinese tend to want that to be clear, to have the party in a subordinate position know that it is in a subordinate position and to obey and that, if it doesn’t do these things, it will be punished. As described earlier, Chinese culture compels its leaders and society to make most decisions from the top down, demanding high standards of civility, putting the collective interest ahead of individual interests, requiring each person to know their role and how to play it well, and having filial respect for those superior in the hierarchy. This is Part 1 of a two-part chapter on the US Empire and its path along the archetypical big cycle of dominant powers. As for providing money, both venture capitalists and the government are providing virtually unlimited amounts to Chinese developers. While the consequences are worse for some people, virtually no one escapes the damage.

He didn’t speak the language so he would have to learn through immersion, which he did. I was clerking on the floor of the New York Stock Exchange at the time, and that Monday morning I went on the floor expecting pandemonium with stocks falling and found pandemonium with stocks rising. Later in the cycle, when successive leaders come in to run the more indebted governments the new government leaders and the new central bankers have to face the greater challenge of paying back debts when they have less stimulant in the bottle. All I want to do is bring you up to date and, in the process, make clear how these cycles have worked in the past, which will also alert you to the markers to watch out for and help you see where in the cycles the major countries are and what is likely to come next.
All leading central banks in history have followed variations on this process. So I wondered how Marx, a very practical man who believed that philosophies could only be judged in the successes and failures they produced, would have diagnosed communism’s near-total and universal failures and changed his thinking and modified how communism worked using his dialectical materialism approach to do that. From examining all these cases across empires and across time, I saw that important empires typically lasted roughly 250 years, give or take 150 years, with big economic, debt, and political cycles within them lasting about 50-100 years. The Qing government, starved of financial resources, faced many uprisings over the couple decades following the Opium Wars and spent down their saving to finance fighting them. From gaining this perspective, I’ve come to believe that there are only a limited number of personality types going down a limited number of paths that lead them to encounter a limited number of situations to produce only a limited number of stories that repeat over time.[3]. Note: To make this an easier and shorter document to read, I tried to convey the most important points in simple language and bolded them, so you can get the gist of the whole thing in just a few minutes by focusing on what’s in bold. Early on Deng set out a 70-year plan to a) double incomes and assure that the population had enough food and clothing by the end of the 1980s, b) quadruple GDP per capita by the end of the 20th century (which was achieved in 1995, five years ahead of schedule), and c) increase per capita GDP to the levels of medium-level developed countries by 2050 (at the 100th anniversary of the PRC). While China is still highly competitive economically in world markets, its rate of improvement in this area is slowing. Those responsible for preparing this report receive compensation based upon various factors, including, among other things, the quality of their work and firm revenues. I was thrilled to help them.

So when things worsened in 1930, bad conditions became desperate conditions in these countries, which set in motion the economic and eventually military conflicts that followed. Early on, in February 1979, Deng invaded Vietnam with an assault that was similar to Mao’s intercession in the Korean War early in his term, in that it was to deal with the growing threat on China’s border and to make a clear display of China’s willingness to fight to defend itself. that they have to weigh to make their moves well. This creates a great vulnerability for China, which creates a great weapon for the United States. While I have learned an enormous amount that I will put to good use, I recognize that what I know is still only a tiny portion of what I’d like to know in order to be confident about my outlook for the future. Comparisons between the 1930s leading to World War II and today, especially with regard to economic sanctions, are especially interesting and helpful in considering what might be ahead. In any case, there is a tech decoupling going on that is part of the greater decoupling of China and the US, which will have a huge impact on what the world will look like in five years. Germany struggled under the burdens of its World War I debt and the occupation of the Rhineland by foreign forces. Then, after the devaluation, they typically cut rates. By printing money and buying debt, as had been done beginning in 1933, central banks kept the money and debt expansion cycle going. At the same time this Japanese territorial expansion was a threat the US’s own Pacific ambitions and continued to heighten tensions with Japan. I got to be a small part of China’s evolution toward capitalism in a number of ways over a number of years. Debt is a promise to deliver money. They are followed by more extended periods of peace and prosperity in which smart people work harmoniously together and no country wants to fight the world power because it’s too strong.

For example, quality of education has been the long-leading strength of rises and declines in these measures of power, and the long-lagging strength has been the reserve currency. In this chapter I will attempt to briefly tell the stories of these countries and their most important interactions. Generally speaking the Chinese appear to want tributary-like relationships with most non-rival countries, though the closer their proximity to China, the greater the influence China wants over them. Japan calculated that it would be out of oil in two years. President Carter, who like most political leaders didn’t understand the monetary mechanics very well, knew that something had to be done to stop it and appointed a strong monetary policy maker, Paul Volcker. It was then illegal for individuals to own gold because government leaders didn’t want gold to compete with money and credit as a storehold of wealth. As a principle…, When things are going well it is easy to keep the moral high ground. The Chinese offer significant government guidance, resources, and regulatory support to Chinese industries, most notably including policies designed to extract advanced technologies from foreign companies, particularly in sensitive sectors. From that 1979-81 peak in dollar-denominated inflation and dollar-denominated interest rates until now, both the inflation rates and interest rates have fallen to nearly 0%. The United States, while not having large reserves, has the power to print the world’s reserve currency. Gold is held because it has worked the best for the longest time and, like the British pound, because it was held from a past time—i.e., before 1971 when gold was at the foundation of the world’s currency system. When it sufficiently hurts the actual and prospective returns of “cash” and debt assets so that it drives flows out of these assets and into inflation-hedge assets and other currencies, that leads to a self-reinforcing decline in the value of money. While we consider information from external sources to be reliable, we do not assume responsibility for its accuracy. If trends continue, it will be stronger than the United States in most of the most important ways that an empire becomes dominant. In the chart below I plotted the same overall power gauge that I showed you in the first chart but applied only to China from 600 AD until now. To begin, I will draw your attention to the eight measures of power that I showed you before for other countries and for China since 1800. When taken too far, the over-printing of fiat currency leads to the selling of debt assets and the earlier-described bank “run” dynamic, which ultimately reduces the value of money and credit, which prompts people to flee out of both the currency and the debt (e.g., bonds). That broader-based learning also shifted wealth and power away from 1) an agriculture-based economy in which land ownership was the principal source of power, and the monarchies, nobles, and church worked together to maintain their grip on it, toward 2) an industrial-based economy in which inventive capitalists created and owned the means of production of industrial goods and worked together with those in government to maintain the system that allowed them to have the wealth and power. Basically people produce things in order to exchange them with people who have other things that they want. I will be focusing on how the pound lost its reserve currency status. My study of history and my thinking about cause/effect relationships are what have led me to my beliefs about what works well. Though a bit of an oversimplification, it’s accurate to say that this was a period in which workers in other countries (especially those in China) and machines replaced middle-class workers in the United States. As the United States has been pulling back from them, these organizations are weakening and China is playing a greater role in them. Let’s now take a look at these wars with the lessons from history and the principles they provide in mind. While this debt growth financed relatively strong market-economy growth and created some improvements for lower-income earners, it was accompanied by a further widening of the wealth and values gap leading the “have-nots” to become increasingly resentful of the “haves.” At the same time the political gap grew increasingly extreme with intransigent capitalist Republicans on the one side and intransigent socialist Democrats on the other. Pick the one from each category that you believe works best for your nation’s values and ambitions and you have your preferred approach. Remember That What I Don’t Know Is Much Greater Than What I Know. We are seeing some early signs of US moves to curtail Americans’ investments in Chinese markets and to possibly delist Chinese companies from American stock exchanges. Lenin built on what Marx said to create a two-step process of building the state in which there is at first dictatorship by workers through “democratic centralism” in which there is a voting process of members of the party which would eventually lead to a higher communist state in which greater prosperity would exist, which is the second stage.

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