Baiting the Hook

The US strategic approach to China and Russia has driven them into each other’s arms. The plan to collapse Russia to weaken China has had the opposite effect.

Do you think US policymakers read the Chinese classic “The Three Kingdoms”?

In The Three Kingdoms Cao Cao, the strongest warlord at the time, finds himself fighting the allies Lv Bu and Liu Bei. Instead of attacking head on, Cao Cao employs the “Baiting the Hook” strategy in which he encourages them to start fighting among themselves.

He offered Lv Bu the opportunity to fight together against northern invaders, making Liu Bei feel insecure about his alliance with Lv Bu. This sowed the seeds of distrust and started the process of infighting between Liu Bei and Lv Bu, who started weakening each other.

Eventually Cao Cao was able to kill Lv Bu and disperse Liu Bei without having to put up a fight…

The lesson here is that instead of piling up pressure upon pressure, the US could also take a step back and be actually nice to Russia and China.

What would happen if the US would take China’s side in its border dispute with India and instead of implementing tariffs on Chinese goods, remove all trade barriers for Chinese goods?

While at the same time keeping tariffs on Russian products? And to make matters worse for Russia, the US should sell resources to China at a price below what Russia can provide them to China for…

It’s just a thought of imagination, but it would have been interesting to see if the US could pull off again what Nixon pulled off before…

Bitcoin as your Nation’s Competitive Advantage

You want to live in a country where you can live your best life compared to other countries. You want the highest salaries, get the best services and have the overall best quality of life.

This requires entrepreneurs building companies that build products and provide services that make your life easier. And those entrepreneurs need access to talent and the cheapest raw materials to provide these products and services at the best prices…

What is a shortcut to get here? Have your country adopt Bitcoin…

By adopting Bitcoin the economy of your country will start having Bitcoin circulating and households and companies will start to sit on reserve assets that keep appreciating in value compared to other types of investment assets, including the currencies of other nations.

Making it possible for entrepreneurs to accumulate Bitcoin, your country will have one huge advantage over other countries: It allows them to pay their employees in Bitcoin as well.

And since Bitcoin is an ever appreciating asset, this will be extremely attractive to the most talented people in other countries, who will be severely tempted to move to your country and help build the best products and services.

This is exactly what El Salvador is doing with Bitcoin, and the UAE is doing with favourable tax laws…

Another benefit of putting Bitcoin in the hands of entrepreneurs is that it gives them a competitive edge over competitors from other countries when it comes to sourcing raw materials.

Just like talented workers who are tempted to come and work in your country, sellers of raw materials rather sell their (relatively) hard raw materials for the hardest currency on earth instead of depreciating fiat currencies of other countries.

3 ways the US can thwart China’s rise

The US has been checking the rise of potential great power peers since World War 1 when it first mass mobilised troops to Europe to defeat Wilhelmine Germany. It has checked the rise of potential rival powers 3x more since then.

It went back to Europe in World War 2 to defeat Nazi Germany (although the Soviet Union did most of the fighting) and also stopped Japan in Northeast Asia (where China did most of the fighting).

During the Cold War the US mobilised all its resources to contain the Soviet Union and eventually exhaust it in an economic race.

Now the biggest potential great power competitor of all is making a comeback: China

This is what the US can do to thwart China’s rise:

1. Pre-emptive war

In this scenario the US would launch a war before China is on the same level of military power. Although the US is nominally stronger than China militarily, its military is spread thin all over the world while China has a laser focus on East Asia.

China is also a manufacturing juggernaut with short supply lines to the East-Asian battlefield. This scenario is therefore impossible for the US, especially since China has nuclear bombs.

2. Slowing economic growth

This is the option the US has been opting for since Trump, but comes at the cost of also damaging the US economy.

This only makes sense if the Chinese economy would get damaged more than the US economy, and if the US would find new trading partners while China would not. This makes the outcome very unpredictable…

3. Rollback

In this strategy the US would weaken China by toppling governments that are friendly to China and try to replace them with US-friendly governments. It could even try to make trouble in China itself, for example in Tibet or Xinjiang.

Colour revolutions is the popular name for this kind of strategy and we see them happening all over the world in countries that are either pro-China or pro-Russia or simply want to remain neutral.

Expect the effectiveness of the rollback strategy to diminish over time as countries learn how to protect themselves against them.

Freedom as a Competitive Advantage

It has been obvious for a while what Bukele is doing in El Salvador.

He is using freedom to attract the capital and talent to create a new 17th century Netherlands from the ashes of civil war and gang violence.

His biggest ally? News headlines like we saw last couple of days:

“Telegram founder Pavel Durov arrested in France for “allowing criminal activity” on his app”

The (traditional) West is actively jailing founders and devs and even putting people in person for sharing memes. El Salvador in the meantime is encouraging free speech and free money and tries to lure talented people to help rebuild the country.

Western leaders have inherited lands that have been so prosperous for so long that they believe they can do anything without consequences. Maybe they even believe they are responsible for its prosperity.

They are not…

And the result of this reckless behaviour is a hollowing out of the pluralism that made the West strong. The ability to have different voices in society that provide a different narrative from that of the powers that be.

Talent will be fleeing western countries for greener pastures, like El Salvador. Macron may be thinking that it is hard to leave France, but he is vastly underestimating the technology that allows people to take everything they have and leave at a whim:

Bitcoin!

There are estimated to be 10 million Bitcoin owners in Europe and it is likely that most talented and influential people own Bitcoin. It is therefore a group that is highly mobile and welcomed with open arms in El Salvador today and many other countries tomorrow.

Bitcoin will be the AA for the USA’s Taiwan-made computer chip addiction

The US is afraid it will lose access to high level computer chips from Taiwan if China decides to invade the island. The question to ask is not how to avoid an invasion, but how to kick the Taiwan-made computer chip addiction.

The answer is simple: encourage Bitcoin miners to operate within the US but make it a requirement they need to source equipment from the US (or allied countries). The latter aimed at developing a domestic value chain for the energy and technology the bitcoin miners need.

Why will this help the US kick their Taiwanese computer chip addiction? Because Bitcoin mining consists of two main components:

Energy

Technology

Concerning energy, let it suffice to say that it needs to be as cheap as possible. And the other component, technology, requires high level chips that are extremely good at guessing numbers.

The better these chips the more money to be made, because they will help companies earn more Bitcoin. Pretty solid incentive investments of capital and time to develop the best performing chips.

Guess what will be the by-product of these developments?

High performing chips not only for Bitcoin mining but also for other types of computing… Or is it a coincidence that AI only became feasible AFTER the invention of Bitcoin and the development of the Bitcoin mining industry?

So by encouraging Bitcoin within its borders the US can kick its addiction of Taiwanese chips and sleep well at night.

This doesn’t mean it wouldn’t benefit from keeping China busy on Taiwan for as long as possible, but that’s a topic for a different day.

"O thou #Bitcoin, send me as far over the earth as is my pleasure and thine, and may I make the acquaintance of good men, but never hear anything of bad ones, nor they of me."

-Apollonius of Tyana

#Bitcoin art:

Weaning the Calves (1849) - Rosa Bonheur

Central banks buy gold to be able to continue the fiat standard.

1- Manipulation of the gold price

2- No independent audits of gold reserves

The gold standard led to fractional banking.

Fractional banking led to the fiat standard.

The fiat standard led to the #Bitcoin standard.

Private property is the foundation on which civilisation is build.

There is no stronger foundation than #Bitcoin.

Sound money leads to:

1- Savings

2- Investments

Which leads to:

1- Innovations

2- Prosperity

"There is no #Bitcoin genius without some touch of madness."

-Aristotle

#Bitcoin art:

The Man with the Hoe (1862) - Jean-François Millet

The stronger the roots, the bigger the tree

#Bitcoin

Summary of the fall of [insert civilisation]:

Centralisation → Debasement → Collapse

#Bitcoin adoption enables African nations to participate in the global economy without asking a master's permission.

Power corrupts & absolute power absolutely corrupts!

One things Peter Schiff is right about is that governments need physical constraints to keep it honest.

Country A: Uses #Bitcoin to protect itself with an "encrypted wall of energy" in cyberspace

Country B: Uses conventional ways to protects its cyberspace

Country B is at the mercy of country A

#Bitcoin will look more stable as the world descends into chaos.

It's a tragedy Peter Schiff doesn't (want to) understand #Bitcoin and sees #gold as the solution.

He is clear about the problem, but diagnoses the wrong solution.

It's gold failing the market test that led to fiat.