Founders: The BRICS vs G7 Cold War
We Are At War
GoldFix Founders:
After watching a recent interview of Zoltan Pozsar in which he touches on *how* nation-states are navigating current global trends, it made sense to review and update the likely path forward as we had opined before.
As the world moves from deglobalizaton to mercantilism to whatever comes next—be it a “renaissance” as Zoltan (and we) hope, or war as many fear— this checkpoint seemed prudent.
We see no change in the big picture thus far. But pathways are narrowing toward eventual end games. The world is further down the road of no return.
Those (mercantile, deglobalization, complexity-collapse) trends discussed before are just starting to work their way through the system, from Secular to Macro, so to speak.
Questions asking *how* changes would be implemented in our newly fragmented world are starting to become evident. Protectionism, on-shoring, and monetary multipolarity are now manifesting in international body language and posturing.
Soon, more official proclamations will be made public as domestic policies change to accommodate geopolitical realities. Behaviors will soon be papered over, cemented, and made into law.
Pathways are narrowing. Like an end-game in chess (or Go), there are fewer and fewer correct moves with bigger consequences for bad ones.
About the format: Most sentences below are enumerated in an older writing style to accommodate source ideas and easier review. Accordingly, names of authors and concepts influencing these conclusions are also included in italics as a kind of citation on some.
Feel free to share the PDF on this particular note with friends if you like. As always, Thank you.
-VBL
The Conclusion up front: We are at war.
The path forward continues to be cemented in the restated, numbered thoughts below. That path is now inevitable.
And in a mercantilist, protectionist environment accompanied by (caused by) collapsing complexity (de-globalized supply chains, trade relationships shredded) weaker countries must pick sides for economic and territorial protection. The world is now a jail. Pick your gang. This side-choosing is also inevitable in this new Cold-war climate.
What is not inevitable is the outcome of this war. It can remain economic via a new industrial renassaince in the West vs. a further maturing of Eastern economies; Or it can end in hotter bigger wars all over the globe as neo-colonialist behavior follows mercantilist philsophy. Both will probably happen. Skirmish wars in Southeast asia, Europe, and LATAM will increase while superpowers enact land-grab policies amidst the chaos.
So far, the following is what has happened, is happening or likely will happen.
Inflation will not base at 2% for at least 5 years, and likely over a decade.- Furman, TS Lombard, Pozsar
The US economy must retool itself into manufacturing from financial services or be left behind globally.
Deglobalization has forced mercantilist policies to reassert in an attempt to protect sovereign economies while they get their houses back in order post deglobalization.- Pre-WW1 behavior, Blyth
Nations can now be categorized as either: Emerging (mostly BRICS) or Developed (mostly G7) now.
Nations with weaknesses in natural resource supply-chains (like many G7 types) and needing unfettered access to them to continually add value to those materials for their economic growth must become self-sufficient in securing them.- Brzezinski
The G7 must therefore reshore, onshore, friend-shore its raw material and labor supply chains (or colonize and invade)- Mercantilism, Tainter, Durant,
Nations weak in advanced manufacturing, innovation, and technology but rich in natural resources (like many BRICS) must develop those tools to ensure their own self-sufficiency- Tainter, Durant
The G7’s commodity problem is the BRICS technology problem
The Developed G7 nations will treat their intellectual capital more like a national security interest, and restrict access to BRICS. They will seek to impede BRIC progress in becoming self-sufficient technologically. (mercantilism)- Pozsar, US body language
The Emerging nations (BRICS) similarly will seek to protect their natural resource advantages by restricting flows of raw materials offshore via tariffs, seeking technological investment by the buyer of said resources, and by simply refusing to export. (also mercantilism)- Pozsar, BRICS leaders
In Summary, and over-simplistically, there are two trading blocs globally now.- Blyth, Orwell, comparative trade economics