God and the Art of Toy and Diecast Marketing
Investment Strategy
By Lu Su
Last time we left off on the subject of Charlie Munger’s prophetic statement that “over the next hundred years, the currency [U.S. dollar] is going to zero.” For those who don’t know, Charlie was one of the top investors in the world, who passed away last year. He made this statement on February 16, 2022, so if his investment prowess is correct, we have less than 98 years. Another way you can look at it, is you and I, our kids, or their kids are likely going to see this event. I think this event is going to be ugly and I think every person on this Earth will be impacted by this “different environment”.
Starting around the early 1920’s (some argue officially in 1944, after the Bretton Woods agreement was signed after WW II), the US dollar became the world’s reserve currency. Being the world’s reserve currency has huge advantages and benefits that I won’t go into now, but If we look back say roughly 600 years these countries had the coveted title and how long they held it.
- Portugal (1450–1530)………...80 years
- Spain (1530–1640)……………..110 years
- Netherlands (1640–1720)…...80 years
- France (1720–1815)…………….95 years
- Great Britain (1815–1920)…..105 years
- United States (1921 to today)*……103 years
The reason why I think it’s going to affect every denizen on Earth negatively is whenever a country senses its glory days are waning and the trophy (i.e. world’s reserve currency) needs to be passed to another nation, it’s always accompanied by great resistance. If you think the last hand Presidency hand-off was contentious, that’s going to be nothing compared to thd world reserve currency hand-off. History shows that whenever a country sees it slipping away, it uses every available resource including its military to keep the title longer. And man, do we Americans have weapons! Unfortunately, we possess weapons that can reach and harm every biological organism on Earth.
In the above light, Charlie’s marketing pitch that our currency will go to zero really isn’t all that Earth-shattering. But it’s my working theory that it’s going to be Earth-shattering event when it eventually happens. We already know from history that fiat money so far, has a 100% failure rate. The GINI Foundation looked back 1000 years at all the fiat currencies that countries have issued and concluded that the “average lifespan of a fiat currency is about 35 years”. This foundation has put on their web page pictures of past fiat money that entered the graveyard. So many countries designed put beautiful designs on their paper money. Artistically, I’d say most of their designs are more beautiful than ours. I guess if it’s going to be worthless, at least make it beautiful. Check it out:
https://ginifoundation.org/kb/fiat-currency-graveyard-a-history-of-monetary-folly/
Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver. Fiat currency is backed by faith in the government that issued it. So whether you trust in God or not, fiat money requires faith from at least two parties that it has value before goods and services can be exchanged.
Also, we’re not in the situation where the US fiat money has never gone to zero before. It failed twice for us Americans. From 1775 through 1779 the U.S. Congress financed the American Revolution by issuing fiat money—the Continental Dollar. The basic story of the Continental Dollar follows what happens when countries print huge amounts of it which in turn causes hyperinflation. In 1779 Congress permanently discontinued producing it and shortly thereafter abandoned paper money. In 1781 Continental Dollars ceased to circulate as a currency and markets for Continental Dollars soon disappeared. “Not worth a Continental” became a common derogatory phrase.**
Things were no better for those of us living in the South. First of all you had the problem of multiple states issuing paper money. The overall quality of the most dominant Confederate currency declined throughout the war. The first notes were worth only 95 cents when compared to a dollar in gold, and that value quickly fell. By 1863, the notes were worth 33 cents to the dollar. Two years later, they were worth less than 2 cents to the dollar. Southerners continued to use the currency for at least a month after the end of the war in 1865. After that, the bills became worthless and could not be converted into anything else. Many Southerners lost their fortunes as a result of using Confederate fiat money throughout the war**^.
The one piece of advice Charlie gives us multiple times is to not overspend your income. It’s sound advice ANY financial advisor would give you. But as a nation, we’ve rejected this advice. If we keep growing our debt faster than our income, I’d like to quote one of my favorite philosophers.
“Somebody’s gonna get hurt real bad.” -Russel Peters.
We agree that neither a household nor a nation can grow their debts faster than their income indefinitely, right? We agree that it’s going to be problematic (anarchy) when all the money in everyone’s accounts can’t even buy a loaf of bread, right? At that point even if our government wires us several millions of dollars, it’s not going to help, but only make the problem worse.
Charlie believes the collapse of the US dollar will occur in less than 100 years. That’s really soon. That means we, our kids, or our kid’s kids are going to see this event in our/their lifetime. We also know from history that no nation gives up its title of world reserve currency holder without a fight. And our weapons are getting smarter and deadlier. One really smart individual was asked what type of weapons will be used in the next world war.
His reply was, “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.” – Albert Einstein.
So what should we be doing now if we know that the US monetary system (at least fiat money) will collapse soon? We engage in the marketing of merchandise. Should we be marking it down and getting rid of it? This question reminds me of this vendor marking stuff down at the Alamo.
Courtesy: Far Side comic by Gary Larson
What to invest in depends on what financial advisors call an “investment time horizon”. I think most of us have too short of an investment time horizon, so we misappropriate our time and energy. If we believe this statement,
For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.” John 3:16
If the above statement is true, this then extends our investment horizon way past when our current physical bodies fail. If the above statement is true, then this investment advice should make more sense to us:
Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also. -Matthew 6: 19 -21
“Break-ins” are time-consuming and always cause outrage. One reason every government wants to use fiat money instead of money tied to the value of some commodity is because it allows them to break in and steal without most of their citizens getting outraged. The more money that is printed and put in circulation, the more our holding dilutes in value, which in turn reduces what we can purchase. The Federal Reserve printed approximately $3.3 trillion in 2020 alone, which, equates to one-fifth of all US dollars in circulation in the same year^^.
So if our fiat currency is going to fail, what should we be investing in now? Gold, food, weapons, and crypto? Maybe, for those who have really short investment horizons. I want to bring to light this investment advice that comes from a person whose wisdom exceeds Charlie Munger or even King Solomon. Incidentally, Solomon’s tangible wealth exceeds anyone's wealth today, once you adjust for inflation. The investment advice was recorded in a conversation that took place roughly 2000 years ago. One thing you should realize is How wealthy you are is directly proportional to how much time you have to enjoy that wealth right? See if you can pick up the investment advice in this conversation.
On one occasion an expert in the law stood up to test Jesus. “Teacher,” he asked, “what must I do to inherit eternal life?”
“What is written in the Law?” he replied. “How do you read it?”
He answered, “‘Love the Lord your God with all your heart and with all your soul and with all your strength and with all your mind’; and, ‘Love your neighbor as yourself.’”
“You have answered correctly,” Jesus replied. “Do this and you will live.”
-Luke 10: 25 - 28
The advice is to 1) love God and to 2) love others. Loving God makes sense if not for selfish reasons, because God is the only one that can extend our lives. He’s the only one that can save us. Note that John 3:16, doesn’t say everyone gets eternal life. Loving others also make sense to me, because its the relationships we make in this lifetime that can extend for thousand plus years, thus making it a really good long investment.
*“The History of World Reserve Currencies Since 1450”, Olukayode Olayemi, Thrive, https://www.thriveng.co/the-history-of-world-reserve-currencies-since-1450
*^”Fiat Currency Graveyard: A History of Monetary Folly”, GINI Foundation, https://ginifoundation.org/kb/fiat-currency-graveyard-a-history-of-monetary-fo
** https://www.quora.com/What-happens-next-if-all-fiat-currency-in-the-world-became-worthless-and-the-collapsed-of-every-countries-banks
**^ https://www.dhr.virginia.gov/blog-posts/cornerstone-contributions-paying-for-rebellion-confederate-currency-in-the-lee-cornerstone-box/
^^ “The US printed more than $3 trillion in 2020 alone. Here’s why it matters today”, Depledge, https://www.depledgeswm.com/depledge/the-us-printed-more-than-3-trillion-in-2020-alone-heres-why-it-matters-today
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