If you follow the trends, do your own research, or listen to those with a track record worth listening to, you can see the writing on the wall. The balance of power is slowly, but inevitably shifting. Empires have risen and fallen throughout history, and we are currently in one of those transition periods. The balance of power is shifting from West to East, from the US to China. Economically, politically, militarily. That may be hard to swallow for some, and understandably so.
Fortunes are won and lost as empires rise and fall, and this time is no different.
The US was designed to be the dominant military and economic power in the world for a period of time to accomplish certain goals. And have been in almost constant military engagements since the countries founding.
The structural underpinning of this design was solidified with the Bretton Woods agreement in 1944. The US Dollar would back international trade and act as the worlds reserve currency. This guaranteed demand for US currency meant the US would experience a relatively high standard of living, stability, economic, and of course military might.
As long as the demand for Dollars remained in place, enforced by the US military, the current order of power in the world would remain stable. The US of course has thrown its weight around. Through military and economic influence (wars, threat of wars, trade deals, corporate takeovers, etc.) the US has controlled much of the world for a long time.
However over the last couple of decades these trends have begun to reverse – and that is accelerating. After the failed attempts at moving away from the US Dollar by Libya, Iraq, and Egypt (ended by the US military), the big boys are now taking steps to do so, and the US can’t stop them.
China is dumping treasuries and the only buyer left outside of a handful of controlled US cheerleaders is the US Central Bank.
So the demand side of the US Dollar equation is in danger.
At the same time, the supply side has also gone through a massive change. A quick look at the US Central Banks own numbers illustrates the point.
Conveniently, the St. Louis Fed, who puts out money supply numbers stopped keeping track of M3 right around the time of the ‘debt crisis’ when the Fed began to print ad infinitum. Finding reliable numbers on M4 is impossible so it’s not included at all.
So should you learn Mandarin and head to China? In strictly economic terms, maybe. But if military conflict kicks off between East and West, I would certainly add China (for different reasons) to the list of places like the Middle East, Europe, the US, and Canada, as places you’re better off not being.
So what about the Southern Hemisphere, places like Ecuador? Exactly :-).
As the balance of power continues to shift towards China, there will, at the very least, be some turbulence and economic upset.
The Southern Hemisphere, home to about 12% of the worlds population, and 0% of worlds nuclear arms offers a lot of advantages. Places like Ecuador, rich in arable land and water, safe, and with year round warmth will only gain in popularity.
Ecuador has already seen the writing on the wall and has aligned economically with China.
Will the transition for Ecuador be a smooth one? I don’t know. Will it be a lot smoother than places like the US? Without a doubt.
And should the worse happen, you couldn’t be in a better place.
And for your viewing pleasure, a few charts that illustrate the situation in the US and the overlooked relationship between the money supply and all other economic metrics on the planet.