In this blog and the one that follows, we focus on two long-shot predictions that we have recently made and additionally mention the changing odds on these predictions coming to pass. The first and most important prediction is that the U.S. and China will find a way to start forming a foundation for a cooperative world. Of course, any world that is fully cooperative is utopian and that is not our bet. Rather, we hope for a time in which disagreements and even confrontations can be resolved by adopting agreed upon principles; underlying those principles would be the preservation of the disputing countries’ sovereignty, religious underpinnings, and basic freedoms. Indeed, many of these ideas are embodied in the Universal Doctrine of Human Rights (UDHR), which under the guidance of Eleanor Roosevelt was adopted by the United Nations in 1948. China and the United States were among the countries that voted to approve the document, which was adopted by the General Assembly with 48 countries voting in favor and 8 abstentions. Without a return to some semblance of the UDHR, humanity will continue to live on the edge of extinction as endless wars and record inequalities continue to wage on.
The second long-shot – far less grandiose – but we think strongly related to the first, is that a major recent buyer of hundreds of billions of dollars of gold has been Berkshire Hathaway, i.e., Warren Buffett. Our long-held view is that the only way the world can transform from confrontational to cooperative is through the mediation of gold as the center of a global monetary system. Fiat currencies, as Buffett’s father so splendidly articulated many decades ago (see “The Curse of Fiat Currencies”), undermine basic human freedoms and destroy creative potential. Buffett’s purchase would likely secure Berkshire’s place as the largest independent enterprise in the world and would be a big win for America as well as Berkshire’s shareholders.
Let’s start by asking why these predictions are such long-shots. Writers ranging from Dante in the early 14th century, to Spengler in the 20th century, along with many others, have pointed out that corruption – in some sense a euphemism for evil – seems to be a part of mankind’s make-up, and our success depends on our ability to overcome such corruption. We have argued that in the West corruption was kept in check until 1971 when we ditched gold and adopted monetarism as a “spiritual” guide for managing the economies of the West. We refer to money and profit in a spiritual sense here to suggest that profit has replaced beliefs and any semblance of religion for many.
Between 1971 and 2000 the decline in America and the West was slow and steady. Since the turn of the century, however, the pace of Western decay has accelerated at an accelerating rate (for those of you who remember calculus the second derivative of the speed of decline is positive). A century from now, a picture that will be a good candidate for the history books is one showing the leaders of the EU disembarking from a bus in Beijing. Led by Ursula Von der Leyen, the leaders were on their way to discuss economic relations between China and the EU with Chinese leaders including Xi Jinping. We’re referring here to the omissions noted in last week’s blog—specifically, the absence of a welcoming committee or, for that matter, any limousines arriving at a designated location. This was an obvious diplomatic slap in the face that echoed far and wide and marked just how much the world has changed in just a quarter of a century.
America’s Decline From Global Power House To Playing Catch-Up
At the beginning of this century, America was the undisputed superpower on the planet. Not far behind was the collection of countries that defined the EU. China, and for that matter Russia as well, were poor countries. For both countries the GDP per capita was only about $1,000; the combined military power was dwarfed by America and definitely by the combined militaries of the non-American members of NATO. The hat in hand arrival of the EU leaders in Beijing is evidence of the tumultuous changes that have taken place in just a twenty-five short years.
Further, if you want hard data to back up the anecdotal, you can look at the broadest measures of economic activity, Gross Domestic Product (GDP). The best measures of GDP focus strictly on how much economies produce in an exchange rate constant across countries. Economists have various ways of equalizing the value of, say a pound of steel, across economies. GDP calculated in this fashion is termed GDP purchasing power parity or GDP (PPP). At the beginning of the century the GDP (PPP) of the U.S. and the EU were both about the same and both a bit more than 2.5 times the size of China’s. As of 2024 the GDP (PPP) of the U.S. and EU are still close to equal, while China’s GDP (PPP) is now about 30% larger than either. China, in other words, has grown its economy by tenfold compared to about threefold for the U.S. and EU. Other broad measures such as total trading confirm China’s increasingly growing stature. And in terms of technology and the all-important military technologies, which range from cyber hacking to hypersonic missiles, we have written several blogs showing that China has a significant edge over both the U.S. and the E.U.
Some will ask, “How can that be? After all, it is well known that China is boiling over with corruption and an extreme autocracy in which a very few leaders control the entire country”. Some even argue that Xi Jinping is a dictator. Our purpose here is not to praise China or even counter criticism but instead make the simple observation that our strategy of containment has simply not worked. In areas such as chip design, in which China is behind the U.S. they are rapidly gaining ground and in areas in which they are ahead such as military technologies, they are putting greater distance between us and them every day. Another observation is that China’s culture is many millennia old and a persistent emphasis on harmony has allowed the culture to persist despite a multitude of external and internal threats over thousands of years. In other words, we do not believe they are out to get us but instead are internally motivated by greater wellbeing for their populace. A motivation that seems to be severely lacking in the U.S.
While we believe there is a spiritual element to China’s culture, spirituality does not take center stage in America as it once did. We have quoted several times Eisenhower’s comments on signing unanimously passed legislation which inserted the phrase “under God” into the Pledge of Allegiance. It’s worth repeating Eisenhower’s words:
“We are reaffirming the transcendence of religious faith in America’s heritage and future; in this way we shall constantly strengthen those spiritual weapons which forever will be our country’s most powerful resource, in peace or in war.”
When Eisenhower left office about six years later, he was succeeded by a relatively inexperienced John Kennedy. Kennedy assumed the mantle in an election tarred with suspicious activity and rampant belief that the election had been bought. His character was subject to severe scrutiny and suspicion. But whatever suspicions accompanied the young president, his charisma and spirituality were unquestioned. Within the government he fought against corruption – especially within the intelligence agencies, which remain the center of what some refer to as the deep state. He stood down men of much greater experience and ostensible authority such as Curtis Le May, who during the Cuban missile crisis accused Kennedy of acting like Chamberlain, when he was cowed by Hitler in Munich. The peaceful resolution of that existential crisis could have easily taken a separate path had it not been for the young president’s internal strength that had to be nurtured by his spirituality. Further, Kennedy made no secret of his religious feelings. One of his last public speeches was made in front of the Irish legislature in which when referring to the ongoing Cold War with the Soviet Union, he stated that, “Hostility today is a fact but it is not a ruling law. The supreme reality of our time is our indivisibility as children of God and common vulnerability on this planet.”
When Kennedy was gunned down later in 1963, America was arguably the greatest economy – indeed country – that the world has ever seen. We don’t need more history but only remark that Kennedy’s killing likely marked a point of inflection in which corruption began to gain the upper hand over national spirituality.
Abandoning Spirituality for Materialism
In contrast to the America of Eisenhower and Kennedy, the America of this century has focused wholly on the material. The consequence has been a country at war every year since 2001. These material, money-making wars have trampled the creative spirit that made this country so great. Ours has devolved into a country obsessed with being the world’s hegemon, while also forgetting that without spirituality of some kind that can unite and motivate our people, regaining the number one spot among nations is an impossible task. Given the ever growing materiality in this country, it would seem we are headed for a train wreck in which the survivor – if there are any – will be the other train. Until very recently we had come to believe our chances of avoiding that collision was very small if not negligible.
But recently we have seen rays of hope. Recall when Kennedy was elected in 1960 many viewed the new president as a spoiled womanizer and virtually no one saw him as a potentially great president. Yet, he defied those expectations. While there are many differences between Trump and Kennedy, there are several commonalities as well. Both had hard to miss flaws. But both were charismatic, explaining in part why both had fierce admirers and equally fierce detractors. Both made enemies of the deep state, and both exhibited a great deal of spirituality. To some Trump and spirituality may seem, to put it gently, an odd pairing; Not to us.
Since 1963, very few presidents have evoked their faith and spirituality as a driving force in their lives; Jimmy Carter stands out as the exception. In his Inaugural Address, Carter quoted Micah 6:8, stating:
“He hath showed thee, O man, what is good; and what doth the Lord require of thee, but to do justly, and to love mercy, and to walk humbly with thy God”.
During his presidency Carter often urged “inner and spiritual strength,” while urging a “fresh faith in the old dream.” We won’t disagree with those who argue Carter’s presidency was a failure in that his policies were seen has sowing the seeds for double digit inflation and unemployment. There may be counter arguments but for us, the most important fact to note is how hard Carter fought for peace between Israel and Egypt. The Camp David accords still stand in today’s chaotic world. While there have been many other peace accords in our history, we believe Camp David was unique – unique because more than any other it came about because of tireless efforts of just one man, a spiritually driven Jimmy Carter. Carter’s achievement may find a more prominent place in future history books than most realize. Today, the Mid-East is a tinder box waiting to explode. What few fail to realize is that without the Camp David agreement the explosion would very likely have already taken place. Thus, it is hardly far-fetched to argue that Carter’s tireless efforts may have bought just enough time for the planet to overcome the barriers of corruption and establish a foundation in which vastly different cultures can form a basis for mutually beneficial growth.
This article will continue with part two to follow early next week, where we will dive deeper into America’s lack of spirituality and the detriment that this is to our standing among nations.
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