
Discover more from A Few Things....
“In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists.”
- Eric Hoffer
“Why should we live with such hurry and waste of life? We are determined to be starved before we are hungry. Men say that a stitch in time saves nine, and so they take a thousand stitched to-day to save nine tomorrow.”
- Henry David Thoreau
“Freedom is the only worthy goal in life. It is won by disregarding things that lie beyond our control.”
- Epictetus
A. The US Dollar
Sometimes fiction can help us better understand the future.
The Mandibles is probably such a book. Written in 2014 by Lionel Shriver (best known for the book and movie - We Need To Talk About Kevin), the book is set in the United States in 2029 in the aftermath of huge government spending and monetary easing, during a debt crisis that results in the collapse of the country's economy and the rise of a supranational currency, bancor, led by a group of countries.
The United States is deliberately excluded from this group, a move that causes President Dante Alvarado (the country’s 1st Latin American President) to take drastic measures, which include defaulting on the national debt. Any and all gold now belongs to the government, and owning bancors will result in treason charges.
One family, the Mandibles, are hit particularly hard by the devaluation of American currency, as they were all expecting to inherit a fortune from the family's patriarch. Now they are unable to continue living in their former lifestyles and they are willing to go to any length to ensure survival.
Each week, the USD falls further, and US citizens are prohibited from leaving the US with anything above a $100. It’s a world in which farmers are valued more than scientists and bankers and a world in which Nevada separates from the United States.
You can hear Lionel in her own words here:
Thank you Julian Sinclair for highlighting this book.
The Mandibles outlines what can happen if our current monetary and fiscal easing goes too far.
B. The Next Plaza Accord?
All this thinking about the US Dollar made me notice, the Asia Times article at the end of January, authored by David Goldman and Uwe Parpart have suggested Western nations may be supportive of a Plaza 2 type Accord that revalues the Yuan up 10%-20% and the Dollar down.
They also point out that it may be in China’s interest to do so, as China shifts toward a more consumption-based economy which imports more - a stronger Yuan would increase consumer purchasing power.
The US interest would be twofold.
By depreciating the Dollar, inflation will rise, a clear goal that the Federal Reserve has set out. But it also cheapens US assets for non-US investors, which the US needs to fund plans for spending on economic stimulus and infrastructure. The need is somewhere between $1.9 and $3-$4 trillion. Private sector demand is insufficient to fund those spending plans, but with the Fed embarking on a new QE, foreigners would have the price signal they need to re-enter the Treasury market after dumping $529 billion in Treasuries last year.
In a Wall Street Journal article of January 6th, Jake Sullivan the National Security Advisor, named the Plaza Accords of 1985 as a model of international economic co-operation. The Biden administration has indicated it wishes to build a coalition of Democracies to counter China’s ambitions. There is reason to think economic considerations and the role of currency may be crucial to that effort.
China spent the past few years building up the BRI list of countries who have become economic partners to one degree or another, essentially building a power base it could use to resist Western attempts to constrain China. Building a coalition of Democracies to oppose China should be more effective than the recent go it alone strategy. The aim is still the same.
It was spelled out in the Indo-Pacific strategy released in 2019, then updated in a declassified document on January 15, 2021.
By the way, Plaza Accord 1 was also a Dollar devaluation and for the record, very good for stocks.
Credit: TIS Group
C. BITCOIN
Reading the Mandibles, I wondered whether this future reserve currency the rest of the world used - the bancor could be Bitcoin?
Most of you saw Tesla’s announcement on Monday that they had bought $1.5bn of $BTC.
This came on the back of similar but smaller announcements from Square, Mass Mutual, MicroStrategy…..
As of December 21, 2020, MicroStrategy held 70,470 bitcoins, which were acquired at an aggregate purchase price of approximately $1.125 billion and an average purchase price of approximately $15,964 per bitcoin.
Mike Saylor, the CEO and founder of MicroStrategy has become the chief evangeliser across US corporates for a shift of part of the treasury cash holdings into Bitcoin.
The company convened a series of webinars last week, supposedly attended by a 1,000 companies.
Here is the full list of presentations, including speakers from Fidelity, Galaxy Digital and Binance.
The one below from Ross Stevens of Stone Ridge is one of the most succinct summaries of why CEOs and CFOs should use BTC as a reserve asset.
One idea as example: if money is a store of value than what happens if one man (J. Powell) can dilute the value of our work by 30% by the push of a button.
D. A Few Things Worth Checking Out
1. Stanley Druckenmiller is one of the best traders of our time and he spoke to Goldman Sachs on his views on the market.
If you prefer to read a tweet summary:

2. Superstar Cities Are in Trouble according to the Atlantic. I sat down with my friend Dror Poleg to discuss: Work, Cities, and Offices in a World of Infinite Choice, last week.
Dror is a big picture and systems thinker and what we discussed has ramifications far beyond real estate. Please read the article.
3. Ezra Klein, To Understand This Era, You Need to Think in Systems (NYT). This is an abridged transcript of “The Ezra Klein Show” with the sociologist Zeynep Tufekci – best known for “being right on the big things”. How does she do it? What frameworks does she use? She describes herself as a “systems thinker.” She also pays attention to “herding effects”, exponential effects, and thinking at the population level versus the individual level (reads in 4-5 min, the full podcast is 1h and 10 min).
4. Charlie McGarraugh, ex-GS Partner, head of metals trading and and now Chief Strategy Officer at Blockchain.com (the largest self-custodied crypto wallet provider) was on the Smarter Markets podcast discussing what Tokenization means for finance. Fascinating discussion since it will re-shape the finance of today.