De-Globalization Led by the USA

🌐 US is Leading De-Globalization

Why do you care?

In our crypto echo chamber, we oftne hear about, and talk about some of the issues with government, banks, fiat currency, and macro economics.

On a webinar with Jacob Shapiro a couple weeks ago, we talked about the de-globalization of the the world economy, led by the US and our new protectionist policies.

In my mind, globalization has been about finding the most efficient sources of capital, labor, materials, and manufacturing, in an effort to bring lower cost goods to the consumer. That’s a huge part of capitalism.

The Internet really opened up this ability, so we’ve all become accustomed to a global supply chain. The problem here is when jobs leave the country for another location that can pay workers less, or has cheaper materials. Politicians don’t like when voters lose jobs, and the easiest way to get more votes is to enact, or even suggest, policies that will bring jobs back.

We often subsidize those jobs with US Debt, increasing the total debt deficit, and inflation in the name of votes today.

Why do you need to think about de-globalization?

First, as we’ve discussed, the protectionist stance usually leads to more US debt, and higher inflation. You need to plan to offset the inflation through your portfolio.

Next, for the couple decades of US-led globalization, passive investing was the the best way for most investors to grow their portfolios. Everything moves together when the global economy is all based on US demand.

With the increase in de-globalization, we see more opportunities for investments in other countries, and companies within those countries. The rest of the world is now less reliant on the US, and can undertake policies and strategies to grow at a higher rate than US GDP or equities markets.

Those countries may also have national debt offerings that look more attractive than US debt, and companies or organizations within those countries can outperform the US with only slightly more risk.

I’m not an expert on geopolitics or macro economics, so I can’t expound on all the possibilities. However, unlike in the past 15 years, we’re in a time when the world economy isn’t moving in unison. The US is giving other countries the ability to play catch up, and some, like El Salvador and Japan are taking the opportunity.

It takes some expertise to find the right mix of region and investment within those regions to identify the opportunities, but it seems they’ll be there, and won’t be correlated to US equity or debt market returns.

Are you prepared to globalize your portfolio for diversification and growth?