What a difference a month makes!
The coronavirus is reshaping work patterns, educational patterns, travel patterns, investment patterns, pretty much everything...
While the US and Europe seem to be going to great lengths everyday to outdo each other in the mismanagement of this public health disaster, we are most likely witnessing The Flippening - where China begins making great strides (compared to the US) to regain its status as the most important economy in the world.
It's not that China meant for this to happen. It's just that China's society and government approach is perhaps the best suited in the world for a natural disaster like this. Americans are really good at not listening, like these University of Tampa students. I call it Cartman disease:
Nothing like that kind of insolent disregard for the suggestions of authority would ever happen in China, which is why the virus was largely able to be contained in just one province. America and Europe don't have that luxury and still reacted way too slowly. Now there are Wuhan-Tehran type epicenters EVERYWHERE, each of them exponentially growing at astounding rates. It sucks and we'll get through it. But people need to take stock of their own behavior's role in how this all played out.
Superpowers don’t die. They just fade away. Like the UK before it, almost exactly 100 years ago, the American decline will be imperceptible at first but gain momentum with each successive global crisis. This COVID-19 fiasco may, however, just get so bad that America falls off a cliff like its employment numbers. I wouldn't bet too much on that in the long run, though. The same stuff that makes us Cartman-esque is the stuff that also makes us innovative and fearless risk takers capable of forging an epic almost-11-year bull run out of the ashes of the previous Great Recession.
Make no mistake. That's where we're headed. But what is going to happen this time is going to make 2008 pale in comparison. With the American unemployment rate set to eclipse 30% in the next 2 months, we'll be lucky to just survive this one. If you have anything left financially after this, it will be because you masterfully navigated these shark-infested waters.
For the UK, by the end of World War II, the jig was definitely up. The US proved it by pushing the Bretton Woods System, with the US dollar as its lynchpin, down the throat of the UK. That system initially looked like this:
At the time, it seemed like a coup because the British interests were represented by the economist rock star of his time - Milton Keynes. He advocated a global currency called the bancor. But America had the soft power and their relatively unknown monetary leader Harry Dexter White led the charge toward the implementation of the Bretton Woods System. In a twist of history that I always find incredibly ironic and more than mere coincidence, Mr. White was caught up in post-war anti-Communist sentiment and died of mysterious circumstances on his own farm in 1948.
Eventually, Nixon ended the gold exchange standard to protect US interests. Then we ended up with our current system that looks something like this:
The US dollar should be MUCH bigger in this graphic and we should also have the Chinese yuan (CNY) in the center there since 2015, but in general that's how it works. This international financial world that Harry Dexter White created is about to come to a screeching halt thanks to the incessant brr brrrrr brrrrrrrr of the world's central banks incessantly printing fiat.
Since these digital times are just faster, even when compared to 2008 and definitely compared to 1929, the impetus for recovery could come at any time from any sector in the world. Will the 21st century Chinese equivalent to the Bretton Woods System be the release of its sovereign digital currency - the DCEP - and a suite of tooling that will ensure its use in global trade? I don't know. I'm just spitballing here, because what else do we got?
I guess that assumes we ever get back to shipping cheap goods in containers all over the world. I think that’ll happen. For sure, yeah. At some point.
Question is: What will that look like when we finally do and when will we finally do it?