A Rebirth of American Independence

We pick up where we left off yesterday…

To sum up yesterday’s dispatch… America has seen three tectonic shifts politically in our roughly 250 years of existence:

• 1776, when we violently cast aside monarchy for democracy.

• 1861, when we fell into a violent Civil War that gave rise to a true federal government instead of individual states and regions acting in their own self-interests.

• 1945, when the America we have today—and the dollar we have today—grew out of a violent global war.

Each of those events is separated by 80 to 85 years. And now here we are, 80 years after the end of the last great war, and America is once again on the cusp of another radical sociopolitical change.

As I spelled out in yesterday’s dispatch, we’re likely moving toward something called “communitarianism”—with an apple pie flavor.

Stealing from my yesterday self:

A return to a federal republic in which DC is no longer overlord but rather a low-powered aggregator of laws that govern common needs such as interstate commerce, border control, defense, interstate highways, and transportation.

States, even smaller city-states will very likely emerge as the centers of power locally and regionally. Think: Miami, in the form of Singapore, as its own, separate political entity serving as gateway to and financial hub for the Caribbean basin. Or Atlanta remade as the once and future Capital of the South.

Basically, “community” in its purest sense of the word (people caring for people) but broadly reimagined as cities, states, and maybe smaller, particular regions that function symbiotically based on shared political, social, and religious values.

That version of America promises to be a better version of America than the one we have today—a country in the throes of a Gatsby-esque implosion flowing from vast income inequality and social deterioration suffered most acutely by a middle class that has lost its birthright to greedy corporations, billionaires, and the politicians they control like empty-headed marionettes.

Then again, the version of America I see emerging, means a radical departure from what we now call normal. And therein lies some dark days for America and the world.

A communitarian America won’t bend the knee to DC. Political power inside the beltway will be meager and utilitarian. States and regions are where the heavy lifting will happen.

Because of that, the American government will not carry the heft that it does today.

Individual regions and states will.

Just consider California. Alone, it’s the fourth-largest economy in the world. Texas would rank eighth; New York eleventh. Florida would compete alongside Spain for a spot near #15 or so. Pennsylvania, Illinois, and Ohio would all be in the top 20. The US South—let’s call it Dixieland, but without the segregationist overtones—would be in the top five, ahead of the UK, France, Italy, Russia, Canada, Brazil, and Mexico.

Point being: Several states/regions could easily go it alone and negotiate their own trade accords globally and build their own armies and whatnot… leading the world to increasingly sidestep DC to focus on opportunities with those individual states and regions.

But here’s the big question: Would the states (or countries globally) need the US dollar?

Maybe.

Though probably not.

At best, the dollar will be just another currency in a basket of currencies (plus bitcoin and gold) that function as a new global reserve.

At worst (probably more likely), the dollar will cease to exist as we know it today, replaced by regional dollars that grow out of the communitarian redesign. After all, economies in some regions will outshine others, and those citizens will balk at subsidizing laggards—as is the case now—with weaker education, subpar job growth, and greater levels of reliance on government for financial support.

For you and me, all of that has implications… which, finally, is the real point of this two-part dispatch.

America functioning under a communitarian model is not a country that hosts a world reserve currency. In fact, the very idea of a single reserve currency is quickly fading from history because of the complications a reserve currency necessarily imposes on the host nation (e.g. expensive exports) as well as the countries required to conduct trade in said reserve (e.g. lack of financial freedom).

The upshot: The dollars that define our current wealth will lose value as America’s new political landscape unfolds and as the world stops looking at the greenback as King Dollar.

Better to own gold and bitcoin, since they will preserve purchasing power lost to a dollar in decline. Both will see unimaginable highs.

When does this happen?

Well, you have time to prepare. It’s not like all of this unfolds in one day.

Radical, fundamental changes to a long-entrenched system build over time. Years, really. They percolate as society grapples with the pros and cons—some unwilling to relinquish the past for a future they don’t trust, others unwilling to forsake the future for a past that has failed them.

Thing is, this radical change has already been percolating for years. We’re just seeing the bubbles gurgling up now.

Probably best to tell you here that progress always wins in the end.

• 1776 gave us a new and exciting age, a new country yearning to prove that one man/one vote can actually work as a political bedrock.

• 1865 gave us new and exciting times for a country unifying as it moved into the Gilded Age and rapid industrialization—on the brink of breaking out into a global giant.

• 1945 and the end of WWII gave us the greatest middle class in history (to this point) and led to America’s role as the world’s most important and influential economy.

What will the 2030s give us?

My bet: A much brighter future, without a doubt.

But the path from here to there is dark and dreary. Many won’t survive—financially—the changes that are coming.

And the dollar?

As we know it today, the greenback isn’t likely to be around when America’s communitarian tomorrow arrives.