Fighting The Last War

Alasdair MacLeod put up an article called Shorting the Yuan is Dangerous. Not only does he explain the situation, but he provides a link to PLA Strategist: The U.S. Uses Its Dollar to Dominate the World. Both are worth reading, the latter particularly so because it indicates the way in which China views recent history, and suggests it's recent actions in the market are not the silly anti-market communist moves our media suggests, but an attempt at self defense.

The PLA strategist associates a pattern of history with the rise and fall of the dollar. These correspond with periods of foreign investment, followed by a flight of capital back to America, usually associated with some sort of regional disturbance. Basically, in period one, we get plenty of goods (because most of the manufacturing is in foreign lands now) and in period two we get a strong dollar. After a cycle of this type, the assets still in these foreign lands become very cheap, so there is always a potential for a repeat of the same project.

In practice, this is mostly right. I don't know how coherent the elites in America are- do they plan this stuff or is it the resultant of the ebb and flow of power to different individuals over time? In any case, the cause for true free trade is severely weakened, because USG describes free trade as whatever happens to be in their interests. The Chinese see the dollar game as integral to the rise of America as a superpower, and they would like to imitate it, so that they too can rise.

The unquestionable game ender will be getting off the fiat currencies. Gold is a known, Bitcoin a bit riskier, but both better than a fiat currency. If there really as many Chinese bitcoin holders behind the Great Firewall of China as the recent dust up about bitcoin implies, then China may be in a unique position to benefit if Bitcoin becomes more viable.

But this is the last war.

The greatly devalued thing, since the dawn of the revolutionary movements, has been intelligent people. I have heard the Chinese are on top of this, doing some serious research into geniuses. Unfortunately, I suspect their scientists- as many scientists do- think that the future is in things like gene splicing: basically genetically engineering new geniuses. In addition to being geniuses, I suspect many assume they will be able to edit out undesirable traits.

Which isn't going to happen.

The engineering part will lead to too many errors. Most of the dna research needs to be verified, since more and more people appear to be relying on computer modeling instead of actually testing, which is far more expensive. Additionally, intelligence comes with traits that some may attempt to edit out, but which should be handled via environment. So, to be blunt, someone has to start providing incentives for intelligent people to breed, and pay some attention to making a decent environment for these people. A decent environment, generally speaking, is one that makes sense from an evolutionary standpoint.

A few years ago I was at stoplight near a college when an Asian guy suddenly opened my driver's side door. He was in the middle of the street, freaking out. I drove to the grocery store (where I was going anyway) and told the police officer there about the guy in the street. He asked her to shoot him when she went out there to confront him. They brought him to the hospital, I am pretty sure, for the ambulance came before I got out of the store.

Probably a smart guy dealing with the evolutionary mismatch. It is almost like being a piece of technology yourself, that the people around you just sort of forgot how to use or take care of. A miracle more of us don't go nuts. Or maybe not, there probably aren't that many anymore. All of the incentives are to not have children if you are smart, and to have plenty and sign up for food stamps if you aren't. It's been like this for a while.

China has a head start, to some extent here too. IQ is apparently pretty high in Hong Kong.

Anyway, it will become more apparent in America, especially as more infrastructure starts falling apart. We need engineers who can rebuild bridges a lot more than we need these ersatz geniuses who have mastered the art of jacking up the stock price of some stupid social media company.