Five things every parent should be doing now.
The statues of Columbus, Lincoln, and former-slave-turned-abolitionist Fredrick Douglass are being toppled, and it’s signaling more than just angry mobs clashing over history books.
It signals the end of the American empire.
Before you get emotional, I’m not saying America will cease to exist, or that our way of life has been wrong. Some of it is ill-conceived, sure, but much of it can (and should) be revered. The parts of our culture that are good vs. bad – let’s leave that discussion for another day, and focus on facts.
What do we mean by “end of empire”?
Most people don’t have a clue how the international money system works, so I’ll be frank: Americans have held what’s known as the “exorbitant privilege” since WWII. Our standard of living has been inflated at the expense of trading partners because the US Dollar is the world’s reserve currency.
We send paper abroad in exchange for real stuff – oil, copper, cars, luxury goods, food, wine, appliances, and cargo-loads of plastic shit that makes your life easier (and perhaps less meaningful).
Sure, you and I have to work it, unlike dollars in the bank empire or the government printing press, both that create it from nothing in service to the well-connected – the biggest beneficiaries – but we don’t have to work nearly as hard as an Asian or African to raise our kids in a four bedroom with a tire swing and picket fence.
Some of that advantage comes from the rule of law and property rights. Ours are better than theirs, so we have better opportunities. But some of it comes from the privilege of issuing the word’s reserve currency.
We give each other massages and haircuts, pour cocktails, and stick a grilled cheese on top of a Bloody Mary and call that a days’ work.
Then we order products manufactured elsewhere by people who earn less than half of what we do. They need our dollars desperately to buy oil from the Saudi’s, cars from the Germans, soybeans from Brazil, or to support loan obligations and boost balance sheets (of businesses and countries) everywhere.
Once sitting on those balance sheets, the dollars are lent back to us, so we can buy a second car or third home, perhaps to put on AirBnB as a little side-hustle. You go, girl.
Before you get angry, I’m not belittling Americans. I love Americans. I am one, and I married another. Together we spawned four more little Americans, cute as buttons and every bit as industrious.
It’s not really our fault, this trouble we’re in.
This situation we find ourselves, living high on the hog for decades with a growing entitlement mentality, it isn’t because America didn’t have a strong work ethic, or that we got lazy where others would not have.
It was predestined. The dominos were lined up just so.
It’s called Triffin’s Dilemma (or fate, if you prefer). Economist Robert Triffin pointed it out in the 1960’s. The country whose currency serves as the global reserve must supply the world with an abundance of said currency to meet world demand for foreign exchange reserves and trading.
(If you’re still reading, I’ll try to get more interesting).
What this means is that our biggest export for as long as any of us can remember (or most of us have been alive) has been the US Dollar.
Here, foreign friend, is a green piece of paper. Toil for me. I’m ready for my grapes and massage now.
All the reasons the rest of the world agreed to this deal at the close of WWII really don’t apply anymore. We’re hurdling along on momentum alone, even as it unravels before our eyes.
In 1944, we made a strong case:
(a) We promised to exchange US Dollars for gold – and we had most of it – one ounce of pure gold for every $35 presented, no questions asked
(b) We had the Atomic bomb, and just dropped two of them on Japan – so watch out!
(c) We were the only major developed country with a manufacturing base left standing
(d) We were the world’s largest creditor, and
(e) We were a bastion of liberty; free markets, property rights, and enforceable contracts
What’s left today looks nothing like what was designed. We’d laugh at anyone who wanted an ounce of our gold for $35, but you can buy one on the free market for $1,800 (and counting).
Here, foreign friend, take another of my dollars. I’m ready for my footbath.
Forget Vietnam and the 1960’s era entitlement programs, which caused us to end gold-backing in 1971. Those look quaint in comparison to spending today. We’re printing dollars faster than ever-
Sorry, friends. This is late-stage empire.
Foreigners have no choice but to find alternatives to the US Dollar. Your kids won’t hold the privilege that three generations before them did.
As long as they’re prepared, they can be better for it. Entitlement doesn’t suit us anyway.
Kids will sink, swim, or be left stranded and bobbing, crying for their fairytale prince to ride to the rescue. Take these five steps today to ensure they’re among the swimmers-
- Put them to work, for you at first, and for someone else when they’re old enough.
- Ensure they save at least half of the money they earn.
- Help them to allocate those savings across US dollars, silver American Eagle coins, and equities (stay cautious in the market with the Dividend Aristocrats).
- Download our Ultimate Parent’s Guide to automate the whole process for free.
- Help them study math and science (obviously), but what else? History, especially monetary history! Our Better Bedtime Stories will walk your family through all of it, in just the right order.
Lastly, set a good example – nothing you say really means anything. It’s all about what you do.
The reserve currency before ours was the British Pound Sterling. While the sun did set on the British empire, you could do worse than living across the pond today.
The caveat here is that we eased the pain for our friends in England with an accommodative US Central Bank. We cannot be assured the same treatment.
This end of empire will bring disruption, and massive inflation as all those dollars held abroad come rushing home, but it doesn’t have to spell the end of American values or culture.
More likely, it can be a rebirth of the resolve that made us great to begin with. Perhaps this time we can share the opportunities more broadly across racial and gender lines.
The statue-tumbling, it also portends a populace that’s now largely incompetent (Fredrick Douglass?!?) or perhaps more likely, infiltrated by a dark underbelly looking to advance ulterior motives.
In either case, without the luxury afforded by an exorbitant privilege, neither can persist.
First must come the pain of adjustment, especially for an unprepared, misdirected mob, pitchforks pointed at each other while the rule-makers look on in glee, turkey legs in each hand, and red capes covered in grease. One last hoot at the peasants while the gravy train grinds to a halt…
Good riddance, we say.
Let us return America to sound money – a gold standard, and if we do, to paraphrase Abraham Lincoln in his Gettysburg Address, those before us shall not have died in vain, that this nation shall have a new birth of freedom, a government truly of the people, by the people, and for the people.
Roll up your sleeves, champ. The future awaits, with opportunity for the well-prepared. One’s means are shaped by their own hands!
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