The stock futures when I looked were up again this morning. Several reasons for that, but the main one seems to be the U.S. is beginning to abandon the “strong dollar policy” around the edges.
This has massive implications, but let’s start with the basics.
The “strong dollar” idea is that the U.S. dollar should reign supreme in many aspects of the modern world: Most international trades and debts are settled basis the USD (US Dollar). And, that’s a good bit of financial clout, but when you have the pre-eminent military – not to mention some of the world’s best financial engineers, what the hell, right?
EXCEPT that a strong dollar distorts the world economy and literally drives up-and-coming countries to make financial decisions that may not be in our best interests.
For example, there’s talk of a BRICs currency. (*Brazil, Russia, India, China) Then we see countries in trouble (Venezuela) looking at a move into a full crypto-based economy. Which continues to get cheaper, by the way: The Bitcoins were down in the $10,500 area earlier – just as I’ve been predicting, we’re ‘stuck in the trend channel’ which is going down.
In order to make clear what a decline in the US dollar will mean, it’s easiest if we first look at an extreme case. Let’s assume what will happen if the U.S. Dollar’s purchasing power (now strong) is cut in HALF.
Not going to be that extreme, but it is likely to come down.
First, a look at the import side: If the US buck is halved, the price of goods from other countries will double.
This means a car built in Germany, for example, will go up in price. An interesting best I’ve made in the past when this kind of move became apparent, was to buy a Porsche and drive it while the currency move was going on. At the end of the two times I’ve ridden that pony, I ended up essentially driving a Porsche free!
That’s because when the move of the currency faded, the prices of Porsches within the US had gone up so much that I made money (slightly better than breaking even) and had a lot of fun in the process.
But now, let’s look at what rising IMPORTS will do to America, right?
You will be almost compelled to BUY AMERICAN because all that stuff coming in from elsewhere would double in price. America cars. American everything.
With the corporate tax rate down to 21 percent, what’s the point for Apple to sink more money into China when the landed cost of their phones and such stand to go skyward? Tim’s no fool – he sees it clearly. The US is back.
At the same time that import prices would be doubling, the value in onshoring would become dramatic. Maybe those call centers in the Philippines and Guyana seem like sweet deals now (sweet financially, not user-comprehensible, mind you) but if the US Dollar is whacked in half, suddenly ALL those jobs will be coming back to the USA.
Except, of course, when they get here, they will be automated and therein lies one of the more interesting stories from my personal history.
You see, back in 1983 (and in 1985 when I returned) there was this little company called Micropheripheral Corp in Redmond, Washington. Just up the street, Ron Judy and colleagues had this other new company going – Nintendo – and Bill Gates was still compiling code in the 520 building. Forget the Halt & Catch Fire days my buddy Gaye and I have been through.
Point is that Microperipheral was the bleeding edge of outbound telemarketing systems and I was the first person on earth to “run an outbound mission” where my voice said “Please hold, I have an important call for this number…”
Well, one thing led to another. Micropheripheral became Digital Systems International, and that was rolled up by a company that (last I checked) was Avaya and they own the telephone automation world.
Here’s the point most people will miss: When the US dollar comes down internationally, the economics will shift toward the AI/telephony folks (like Avaya) and we will begin to reap many of the promised benefits of AI, not the least of which is getting the low-end jobs done…just not with people.
In other words, in the long-running time domain of technological change, we will have exported labor jobs while the tech steams ahead for a couple of decades, but when the time is right, we will import back TECH jobs, not stunningly boring machine-operator jobs.
This is one of those areas that the uber-owners of the world don’t talk much about. But, believe me when I tell you there is a schism between the major ownership classes in the world: Some want more and more people – with more and more concentration of power. Such folks are promoting their (heavily socialist) way of thinking – which I’d categorize George Soros, et al in.
But then, there’s this other class of “future owners” – and these would include the Trump-like thinkers who see the future quite differently: If we are going to be the world’s preeminent tech country, we don’t need dispersion of focus. We need one language, one concept, and not as many people. We need clean environment, reliable energy, more time off, but more brains. We need to move toward stability by modulating the changes of tech to something we can all live with – and prosper from.
Naturally, the political parties are too busy fighting with one another to even think – let alone articulate – this big picture stuff. But as we have been explaining around the edges in our Peoplenomics.com reports, we have a serious problem of a world that will “our f*ck” itself, resulting in famine and massive die-offs, if we don’t re-model our thinking.
Problem is that many of the financial Genghis Khan class (where I’d lump Soros) go out and buy political parties and social actions in order to win with a tide of lower class bodies rather than understanding and levering technology.
But getting back to point:
When you see the US Dollar begin to weaken a bit, and when you hearing rumbles that the Trump administration is evolving a new concept of the future (it’s why Amazon hasn’t been broken up on anti-trust grounds, for example), this is likely the level where people don’t see it coming.
Halving the dollar’s purchasing power will do lots of other things, too:
Stocks would double. Price of gold and silver would double, U.S. exports would double. That would turn around the National Debt rather quickly. Income taxes would double. Costs of food would double. Wage-driven inflation would appear. There would be more jobs created – we could have a low-level job shortage.
Concurrently, a revolution in the left-wing education sector would come. Those who don’t comprehend the new model of makers and doers, who have been busy spawning ineffective me too social media useless texters would have to be removed. An empowering class of thinking skill promoters instead of ultraliberal social engineering shills would emerge.
You see, this is why the democrats are on the losing end of history right now: They are trying to represent the workers…but that’s what’s going away. The UAW isn’t going to benefit from the onshoring of autos so much as the companies that make robotic assembly lines. Democrats are still promoting massive immigration, rather than massive AI, you understand. They are on the wrong side of a massive historical wave. Even many RINOs don’t get it.
But that IS where the future’s going – with ’em or without. It’s why Hillary lost. It’s why the would-be election manipulators in the FBI are going down. Because at its core, there’s still enough American Knowhow to see a Future and go for it – with gusto!
The picture comes into focus, though, only if you take the time to consider trends at their extremes. Like this halving of the dollar idea. Most people don’t have the ability to do that; to see it at the grand strategy level.
Most people are, frankly, not as bright or as Truth-seeking as we are around here.
But, you’ve now been shown – not much more we can do but keep pushing out Peoplenomics reports for subscribers as we see this big wave coming. It will wash over some of us with more money than ever…yet there will be those, defending the old paradigms who don’t realize that humans are the new buggy whips. We’re going to drive technology to a brighter future…
Most people don’t even know this is coming. You do.
And when you see Apple making a major investment in American tech do not be surprised to see the NE press lash them where they can. That’s how we’d frame Apple Goes Deeper Into La La Land With Damien Chazelle Project in the NY Times today.
When you read stories like World stocks party like its ’99, dollar wilts again, try not to join the hand-wringing?
It’s all going to be OK…if we remain one nation, indivisible, etc…but there is a lot of bidding against us, no doubt about it.
Trump In Davos
Try here – this is how it’s rolling out:
Economic Data du Jour
Durable Goods, GDP, and Trade are all out this morning. Where to begin? Here…
Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the fourth quarter of
2017 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the
third quarter, real GDP increased 3.2 percent.
Smoking, huh? Now try this:
New Orders New orders for manufactured durable goods in December increased $7.0 billion or 2.9 percent to $249.4 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 1.7 percent November increase…
Advance International Trade in Goods The international trade deficit was $71.6 billion in December, up $1.6 billion from $70.0 billion in November. Exports of goods for December were $137.6 billion, $3.6 billion more than November exports. Imports of goods for December were $209.2 billion, $5.2 billion more than November imports.
So in summary:
Dow futures are up only 47 as we near press time.
Next week, we will have housing data from Case-Shiller/S&P on Tuesday. Monday features Personal Incomes…
FOMC is meeting starting Tuesday – and they might make a rate move Wednesday, though I think they might wait a month – depends.
ADP job creation data will land next Wednesday, Challenger job cuts Thursday, and the dance card winds up Friday with the “offishul” jobs data.
More on where this all goes, of course, in Peoplenomics tomorrow for subscribers.
Political Correctness Overdone?
And did you see where Burger King slams net neutrality repeal in Whopper commercial?