Trade War of Ideology

Hello again, I hope you’ve had an interesting week to stew on what we discussed last Saturday. Or, perhaps you’ve completely forgotten and moved onto other topics.

I wouldn’t blame you, it’s been another heated week. There are plenty of incendiary headlines and data to pick apart. And that’s perfect, because they all feed into the bigger point that I’m trying to make.

Before we get onto that though, here is a refresher of what we discussed last week…

Ray Dalio’s warning about the sign of the times resembling the 1930s was the centerpiece. An insight that was stealthily pointing to the parallels that helped usher us into the Second World War.

However, my point was that war wasn’t the desired outcome. It was just the means to the real end: a reordering of power.

The Second World War and all its horrors was the catalyst for Europe’s decline and the US’ rise in power. It was a conflict shaped by morality, politics and economics. Ideals that are in crisis today.

See I agree with Dalio, we’re on the cusp of another reordering of the world. The instability and turmoil is a clear symptom of this change.

But, the prospect of another world war cementing this change is unlikely. There will be conflict, just not as we know it.

Nuclear weapons have rendered national fighting moot. The threat of mutually assured destruction means all-out war is far less appealing. From a risk/reward perspective, it just isn’t feasible.

Just as an aside, I realise this calculating and statistical analysis comes across as cold. Talking about risk and reward when it involves human lives seems callous. But, bear with me, this is the only way to see the bigger picture without blinding oneself to emotional biases.

Fret not though, the fighting won’t take place in the trenches…it will be on the streets.

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Rise of the globalists

Democracy, communism, capitalism, socialism, fascism — the list goes on. These were the key ideologies that defined the wars of the 20th century.

Indeed, you can look back through history and point to ideology throughout every major conflict. War is fought over ideas, or rather the different ideas those in power hold.

This is simply because as a species we are tribal. We’re hardwired to live in small groups that are intensely violent to other groups. Why? Because that is the only way our primitive ancestors survived.

At our most basic, we are all just mad monkeys trying to stay alive.

In the past 100 or so years though, our ‘tribes’ have radically changed. The industrialisation of the world has turned the tribe into a society. Groups that are much larger and much more advanced than anything we’ve ever seen in human history.

For the most part, we’ve adapted to them pretty well though. They’re big and messy, but people got along for the most part because there were still shared values. But, there was also a new and unexpected side effect.

As the world developed, particularly the Western world, we saw the rise of a new ideology. For the first time ever people were becoming globalists.

For all intents and purposes, these people are oddities. They are the first humans to distance themselves from a local, communal tribe. Instead the world is their tribe, all of humanity.

Now in theory this is all lovely and nice. A true globalist will after all be accepting of everyone. The problem though is that globalists are almost entirely unique to the west. It is an ideology born from the wealth and stability of generations that have enjoyed the success we’ve built over the past 200 years. But, especially the growth seen since the Second World War.

Here’s the kicker though, this prosperity isn’t totally universal.

Yes, poverty and crime have been on the decline for decades now. That’s not how each of us experience the world on a day-to-day basis though. We place an emphasis on events in the present.

And for each and every one of us, this ‘present’ can look wildly different. Especially for those outside of the Western world, but also within.

War of ideology

Today we are seeing the ramifications of this disparity play out. A clash between ideologies that is leading to internal and external conflicts.

You might point to the China–US trade war as one such example. But, like the Second World War, this is merely a byproduct of a much deeper moral crisis.

The real divide is the one we’re seeing in American politics. Or the protests we saw in France earlier this year. Or the riots we’re now seeing in Hong Kong.

People are literally fighting over ideology. A split that has resulted in our extreme partisan politics.

The gap between the left and the right has never been wider. Why? Because people are angry about the world.

Let me be clear in saying that it doesn’t matter which side you’re on either. I’m not trying to point out the blame on one side or the other. It is this ‘blame’ in general that I’m trying to point out.

There will be no war between nations because the conflict is within nations.

The problem, as Dalio rightly points out, is that economic pressures are now compounding this divide. As the haves continue to hoard their riches, the have-nots grow angrier.

Each of us, the mad monkeys that we are, just want our fair share. But, as the last great global recession has taught us, the world isn’t always fair.

Bankers across the world brought markets to their knees. They threatened all our wealth, safety and our sovereignty. And many of them got away with it scot-free. When we needed our politicians to step up the most, they failed us.

Unsurprisingly, this made the mad monkey in all of us madder.

We watched the globalist dream implode, which incited the right to say enough was enough. And that inevitably irritated the Left who perceived this backlash as overstepping the mark. That has brought us to our current impasse.

So, how does it all end?

Dalio is certainly suggesting whatever happens it will be ugly. I agree with that, tensions are far too high and the wounds of 2008 too fresh for it not to be.

The real question though isn’t how, it’s who.

An orderly re-ordering

I know I’ve already borrowed so much from Dalio, but he has one last idiom that I simply couldn’t ignore.

The hedge fund guru has a notion that he calls ‘a beautiful deleveraging’. That is, an economic downturn sans crisis.

From my perspective I believe we’re in the midst of a ‘beautiful revolution’. Our political, moral and economic divide is forcing a new world order upon us. It might sound dramatic, but it is happening. As I said, just look at France and Hong Kong. Which is exactly why we can accomplish it without having to go to war.

Even US ex-army officers have noticed this trend. They’ve called it a ‘post-primacy’ world. A scenario where power isn’t centralised by a nation or handful of nations. Instead, power is more omni-present and dispersed thanks to things like the internet.

It started with social media, making communication with anyone, anywhere easier than ever. This is just the first stage though.

This, to me, is the start of our economic reordering. Both left and right, though they don’t see eye to eye, are sick of seeing this malpractice of money. Just like the people of the 1930s were sick of being downtrodden.

Mark my words, there will be clashes, there will be fighting — but the real bloodshed will be in the markets. It may start with the banks, but others will follow. An overhaul to rid ourselves of this mad money.

After all, just as the evil and unjust actions of the Nazis inspired the allies to unite against a common enemy, the elites will unite the people of today.

As the renowned moral sociologist, Jonathan Haidt eloquently put it:

The most powerful force ever known on this planet is human cooperation — a force for construction and destruction.

Get ready for it, because we’re about to see a whole lot of both. But, if you’re ready for it, if you can see the change coming, you can make sure you get your fair share.

Because at the end of the day, all us mad monkeys really want, is a fair go.


Ryan Clarkson-Ledward,
Editor, Money Weekend

PS: US–China trade tensions have actually created some incredible opportunities for Aussie investors. Click here to discover three unique plays on the US–China trade war.

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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