What If China Was In Charge of The World?

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The McAlvany Weekly Commentary

with David McAlvany and Kevin Orrick

What If China Was In Charge of The World?

August 31, 2021

“This is not a high-quality economic expansion. This is a feel-good moment. It’s artificially stimulated. It’s not particularly sustainable, and now you have the suggestions of change. Will we be successful? Will the Fed bring about reform in terms of our monetary policy? Or, inadvertently, are the Chinese and the Americans, whether it’s the folks in DC or at the Federal Reserve, introducing us to common poverty?” — David McAlvany

Kevin: Welcome to the McAlvany weekly commentary. I’m Kevin Orrick, along with David McAlvany. 

Being an American, being from the United States all these years, I think I’ve grown blind to what it feels like to be not from the United States. What I mean by that, Dave, is this. I have lived in a country where the dollar has been the reserve currency of the world, and I’ve enjoyed the benefits of that. I have lived in a country that has actually somewhat controlled a lot of the Western world order, maybe the whole world order if you think about it, as far as various countries intervening in time. Rand Corporation coming up with different methods of power control. 

Rand Corporation. I bring that up because Rand Corporation just tweeted this week that if you really look at this Afghanistan situation, you would almost think that Beijing is now controlling the order. I thought about that, and I thought, gosh, what if we didn’t have the reserve currency of the world? What if we were no longer the superpower, but it was another superpower that was administrating the chess pieces of the world. What would that feel like, and what if it was Beijing?

David: I find the role as father sometimes challenging, when I sit at the dinner table and explain to the kids that they can’t assume what has been assumed in previous decades and in previous generations. That the dollar will be stable, that we’ll live in a world which is largely peaceful, and that they’ll have as ample a set of opportunities as previous generations have had, the most recent generations have had. We do have those sober conversations, and the challenge for me as a father is to find something encouraging to say in that mix. You talk about the dollar, you talk about China, and certainly the events in Afghanistan make us reflect on our role in the world and whether or not it will be sustained.

Kevin: I think the world is losing faith that the United States still is the hegemon of the world.

David: Yeah. We try to blend our thinking, whether it’s on the political, geopolitical, or very specifically the economic and financial, blend it together so we have a comprehensive and cohesive view of the world, and as we make decisions, we continue to do so from a top down perspective, as well as a bottom up perspective at this. Special thanks to our asset management clients. This last week, we had a quarterly call, and exclusively for them the transcript is out and available. Again, it’s important to blend thinking. Some of it’s defensive in nature, some of it’s positive in nature. It’s almost the same challenge I mentioned sitting around the family dinner table, how do you prepare, you’ve heard this phrase. Prepare for the worst, hope for the best and be ready for anything. But that’s essentially what I want to see the next generation of McAlvanys embrace.

Kevin: I wonder if we should be preparing now. This last two weeks has been a wake up call for a lot of people who have looked at Afghanistan. Dave, I asked you the question last night as we sat and talked. We have a Talisker and talk before the commentary,...