Is America the
Sun or the Moon?
By Jeff D. Opdyke, Editor of Profit Seeker
Dear Tom,
Strolling through Warsaw last year, I stopped to take a few photos in the snow of 16th century astronomer and mathematician, Nicolaus Copernicus, who proved that the heavenly stars and planets orbit the sun. Most thought Nick was mad, given the conventional wisdom of the day that insisted the Earth was center of the known universe.
But with time — lots of time — people came around to the truth.
Today, many people think I’m mad when I contend that America is not the center around which the world economy spins. Conventional wisdom has them convinced that no other reality can exist.
But with time — far less than Copernicus’s theory needed — they, too, will be forced to accept the truth.
They will realize, probably too late, that this dog had its day in the sun and is now fat and lazy and pretty much living on its laurels, sleeping on the porch. The world, in reality, is now spinning around Asia, China in particular. And as soon as you drop your belief in conventional wisdom, the sooner you can begin to build your wealth.
But with time — lots of time — people came around to the truth.
Today, many people think I’m mad when I contend that America is not the center around which the world economy spins. Conventional wisdom has them convinced that no other reality can exist.
But with time — far less than Copernicus’s theory needed — they, too, will be forced to accept the truth.
They will realize, probably too late, that this dog had its day in the sun and is now fat and lazy and pretty much living on its laurels, sleeping on the porch. The world, in reality, is now spinning around Asia, China in particular. And as soon as you drop your belief in conventional wisdom, the sooner you can begin to build your wealth.
To believe that America is the epicenter of our modern world is a dangerously dated and simple-minded belief.
We still throw our weight around — sometimes for good, sometimes for not-so-good. And the world still sort of shows us some respect, much like a teenage son shows dad a little respect on the basketball court … right before schooling him.
The rest of the world is rapidly moving away from an American-centric view; even some of our Western partners are beginning to look away.
Australia’s main trading partner today: China, which buys more than 30% of all the goods the Aussies sell to the world; exports to the U.S. are one-fifth the size. Clearly, China is more important to Australia’s long-term economic health than the U.S., and, thus, Australians clearly see greater utility in strengthening ties in the East.
Neighboring New Zealand in the last few weeks signed a currency deal with China that removes the U.S. dollar from trade deals between the two countries. Though largely overlooked here in the States, this opens the door to many more such arrangements and seriously weakens the already-specious but nonetheless conventional argument that the U.S. dollar will always be relevant because it represents 81% of world trade. Great … for now. But in which direction does the 81% go when other countries begin following New Zealand (and they most assuredly will, since trading through a third currency like the dollar adds unnecessary costs)?
Germany, meanwhile, announced last month that it’s expanding the new Silk Road with China — 7,000-mile railway already connects Chongqing, in south-central China, to Duisburg, in western Germany. That once-a-week rail link takes half the time of seaborne trade and is half the cost of air freight. Now, China and Germany want to expand it to thrice-weekly service, with the idea of one day making it a daily service.
China’s imports into Germany now are nearly double America’s. As for exports from Germany … well, China only marginally trails the U.S. Erich Staake, president of a Duisburg port company, says large trading partners like the U.S. simply don’t have the growth potential to be as meaningful as China will be to Germany’s future.
We still throw our weight around — sometimes for good, sometimes for not-so-good. And the world still sort of shows us some respect, much like a teenage son shows dad a little respect on the basketball court … right before schooling him.
The rest of the world is rapidly moving away from an American-centric view; even some of our Western partners are beginning to look away.
Australia’s main trading partner today: China, which buys more than 30% of all the goods the Aussies sell to the world; exports to the U.S. are one-fifth the size. Clearly, China is more important to Australia’s long-term economic health than the U.S., and, thus, Australians clearly see greater utility in strengthening ties in the East.
Neighboring New Zealand in the last few weeks signed a currency deal with China that removes the U.S. dollar from trade deals between the two countries. Though largely overlooked here in the States, this opens the door to many more such arrangements and seriously weakens the already-specious but nonetheless conventional argument that the U.S. dollar will always be relevant because it represents 81% of world trade. Great … for now. But in which direction does the 81% go when other countries begin following New Zealand (and they most assuredly will, since trading through a third currency like the dollar adds unnecessary costs)?
Germany, meanwhile, announced last month that it’s expanding the new Silk Road with China — 7,000-mile railway already connects Chongqing, in south-central China, to Duisburg, in western Germany. That once-a-week rail link takes half the time of seaborne trade and is half the cost of air freight. Now, China and Germany want to expand it to thrice-weekly service, with the idea of one day making it a daily service.
China’s imports into Germany now are nearly double America’s. As for exports from Germany … well, China only marginally trails the U.S. Erich Staake, president of a Duisburg port company, says large trading partners like the U.S. simply don’t have the growth potential to be as meaningful as China will be to Germany’s future.
Sadly Regressing While the World Progresses
As someone who pays a great deal of attention to the ways the world is changing, it’s not very hard to see how these individual data points coalesce into a picture very different than the one that conventional thinkers here in America want you to believe represents global reality.
Yes, we are a great country … though certainly not as great as we used to be: 12th in economic freedom, 29th in education, 19th in corruption. We are, however, No. 1 in health care spending — yay! — but somehow manage 35th place in longest lifespan and 1st place in egregiously expensive medical care — not so yay! We lead the world in public debt and are No. 6 in household debt. We have the fourth-highest poverty rate among OECD countries, and we’re one of the world leaders in child poverty. Per-capita income is declining, not rising.
We are, as a country, sadly regressing as much of the rest of the world — including, yes, China — are progressing. The rest of the world is taking over the mantle of supremacy that the West, and the U.S. in particular, once controlled.
The emerging nations — led by China; sorry if you’re unhappy about that — are the new center of the world. They represent the global growth of tomorrow.
We will still be an important part of the train that is the world economy, but we will no longer be the lead engine. In a Copernican world, we’re not the sun; just one of the larger planets.
For investors open-minded enough to accept that, this is an opportunity. This new world that’s taking shape will create vast wealth for those who put their money to work away from America.
You just have to realize how the orbit is changing.
Yes, we are a great country … though certainly not as great as we used to be: 12th in economic freedom, 29th in education, 19th in corruption. We are, however, No. 1 in health care spending — yay! — but somehow manage 35th place in longest lifespan and 1st place in egregiously expensive medical care — not so yay! We lead the world in public debt and are No. 6 in household debt. We have the fourth-highest poverty rate among OECD countries, and we’re one of the world leaders in child poverty. Per-capita income is declining, not rising.
We are, as a country, sadly regressing as much of the rest of the world — including, yes, China — are progressing. The rest of the world is taking over the mantle of supremacy that the West, and the U.S. in particular, once controlled.
The emerging nations — led by China; sorry if you’re unhappy about that — are the new center of the world. They represent the global growth of tomorrow.
We will still be an important part of the train that is the world economy, but we will no longer be the lead engine. In a Copernican world, we’re not the sun; just one of the larger planets.
For investors open-minded enough to accept that, this is an opportunity. This new world that’s taking shape will create vast wealth for those who put their money to work away from America.
You just have to realize how the orbit is changing.
Until next time, stay Sovereign …
Jeff D. Opdyke
Editor, Profit Seeker
Jeff D. Opdyke
Editor, Profit Seeker
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