I’m going to write a series of reflections about the USA economy, still the largest economy but challenged by the Chinese economy.
And also some reflections about the state of other economies in the world. And how this impacts the value of sats.
Because we want to stack sats and know why we do this. Stacking sats against a background of developments in the USA economy and the other ones challenging it.
What are some developments I see now that could influence the sats?
- BRICS. The BRICS are a group of large countries not part of the West. Brazil, Russia, India, China and South Africa.
Together their economies are slightly larger then the G7. The top 7 industrialized Western economies. I created a graph about the development of the G7 compared to the BRICS and compared to Europe. BRICS are not larger then Europe.
Now Saudi Arabia is wanting to join the BRICS or at least trade with them. This means that there will be less demand for US dollars. As Saudi Arabia is one of the top countries exporting oil to the world. And those oil sales are settled in dollars. What will happen with those dollars when nobody wants them? They will go home back to USA in chase of goods and services. That means inflation. The purchasing power of the dollar dropping. And people would want to change the dollar for something scarce. Sats. It means you will get less sats for your dollars. So that is why you need to stack sats now!
Let me know what you think about the BRICS and how that could impact the sats. Ans I will go deeper on the economic mechanisms of a stronger BRICS.
- The next development that I want to put on our desk is the USA debt. It stands now at 129% debt to GDP. This means if you earn 100 dollars in a whole year (your Gross Domestic Product or your annual income) as USA you have a debt of 129 dollars. Your debt to gdp is your debt divided by your gdp. For small island nations and for European countries the maximum debt to gdp target is 60%. Above 60% you will get a visit of the International Monetary Fund telling you you have to cut you expenses or grow your economy or raise your taxes. To lower your debt to gdp to sustainable levels.
Almost every country in the world, except Japan, with such a high debt to gdp ratio - above 100% -ultimately defaults on their debt. When they default their currency weakens. So they have to pay much more of their money for 1 sat. That is why their citizens stack sats as soon as their debt increases. Almost every country with debt to gdp higher than 100% defaults and see the value of their currency decrease against sats. Argentina did. Venezuela did. Zimbabwe did. Many others will do, keep reading and you will fins out why.
USA can keep such a high debt to gdp ratio of 129% and peojected to increase further in the future, because it prints the global currency everybody trades in. It has the magic printer of the greenback. Some people in the USA believe they don’t need to stack sats because they can print the dollar.. But the BRICS and other nations are awakening and starting to say:”we don’t want your paper dollar for our physical goods, oils, minerals, cars”.
There is where trust in the dollar starts to diminish. And trust in the sats could increase. There is nobody with a global printer of sats. Nobody can print sats out of air.
Question:
I’m curious what you think about this scenario with the debt. Will it be sustainable for another year, another 5 years, 10 years? In the meanwhile, stack sats.
- Linked to this is a thing called The Reset. Resetting the global debt. When things get reset assets and liabilities get wiped out. Wealth moves from some to others. If you own bonds as assets and the debt gets wiped out or reset your net worth could change. Some assets like stocks, gold etc could retain their value. Also the asset sat could gain in value as people move out of money, out of bonds etc in search for digital real estate. This reset is also linked to the CBDC. Central bank Digital Currency.
You will own nothing and you will be happy is the slogan of the reset. Could you imagine what that would mean on a global scale?
I’m an economist and I build economic simulation models. These are tools to simulate what could happen. I have built such models for a dozen small island nations.
It is more difficult to build these models for small island nations than for large economies like the USA, China or BRICS. Because for small island nations there is a lack of data. While for large countries there is plenty of data.
I’m in the process of creating such a model for the USA economy, Chinese economy and maybe BRICS. All BRICS together or all the 5 countries separately and added together.
With these models you cut right through the noise. You see the big interrelationships between the economic areas in an economy. You have all the relevant data right in front of you. You can compare countries and you can create a view of the future. Where is it going.
Based on these models you could simulate what happens if say Saudi Arabia decides to accept a BRICS currency instead of the USA dollar.
You could see how the deficit on the current account of the USA (deficit means imports are larger than exports) will widen. And you could see how inflation would increase and its impact on purchasing power of the USA population.
These are just some indicators to show you what you could do and what scenarios you could run.
I want to add the value of the sats in terms of dollars in terms of the price of gold etc to these models. So we could see if it is good to stack sats in each scenario.
This is not investment advice nor any advise. You need to do your own research. This is for educational purposes only. To increase your knowlegde.
Let me know what other country or region you would be interested in and why? Why that matters for stacking sats.
Let me know what economic topics you are interested in. And how you try to make sense of the Global macro or the USA economy right now. Let me know why you stack sats?