Notes on Mark Moss Lecture: The Trade and Monetary War

Introduction

• The trade war is evolving beyond tariffs to control of global trade.
• China's second fatal mistake could cost them global power for the next century.
• Historical reference to China's first mistake in 1873 regarding monetary systems.
• Current situation is not just trade-related but a monetary war, compounded by Trump's trade policies.

Key Concepts

Trade War Dynamics

• Trump's "Liberation Day" aimed at correcting perceived trade imbalances.
• Retaliatory tariffs implemented by the US and China, leading to market panic.
• Many countries (India, Argentina, Vietnam, EU) are negotiating deals with the US, but China is resistant.

Historical Precedent

• China's First Fatal Mistake (1873):
  • Shift from a silver standard to a gold standard occurred globally.
  • China stayed on the silver standard, leading to economic decline and a 30% drop in purchasing power.
  • Nationalization of silver and the eventual shift to a paper currency standard by 1933.

China's Current Strategy

• China has been acquiring gold to regain influence lost since the 19th century.
• Official gold holdings: 1,948 tons, but estimated to be much higher (between 20,000 and 30,000 tons).
• China is the largest producer and importer of gold.
• Rumors of a potential gold-backed yuan to challenge the US dollar's dominance.

The Rise of Bitcoin

• Bitcoin is emerging as a significant asset in the monetary evolution.
• The evolution of money: from collectibles to a store of value, potentially becoming a medium of exchange.
• The US is embracing Bitcoin while China is banning it, resulting in a shift of Bitcoin mining power from China to the US.
• Economic strategists in the US recognize Bitcoin as a store of value and are positioning for its future.

China’s Second Fatal Mistake

• China lost control over Bitcoin mining by banning it multiple times and pushing miners out of the country.
• The US is now benefitting from this, becoming home to the majority of the Bitcoin hash rate.
• The US is building a strategic reserve of Bitcoin, enhancing its global dominance.

Conclusion

• The current monetary shift will redefine global power for the next century.
• Ownership of Bitcoin is seen as a way to consolidate wealth before broader adoption occurs.
• Emphasis on being a first mover in the evolving monetary landscape rather than repeating past mistakes like China.