Geopolitics are Re-Aligning for the Next Massive Technological Revolution
Central banks are unable to provide the level of liquidity required to feed the next industrial, or technological, revolution. Global population growth has outpaced global production and quality of life factors for at least a century or more. The limitless variables which can be used to measure such factors would range across an expansive list, such as agricultural production, migration of mass populations, imperial movement of capital and wealth, military conflict, disease and overall health of populations, access to natural resources, and the ability to bring those resources to market.
Such an extensive list of variables and data inputs means there is an equally extensive list of interpretations and conclusions. But to confirm that population growth has outpaced actual production the astute observer only need consider the deep imbalances which exist across the regions and populations of the world. The non-sporadic, or non-random, distribution of wealth follows the flow of liquidity and access to capital. This has always been the case, whether it was Roman coins or Federal Reserve bank notes.
A few years back I used the analogy of a pizza being shared among friends. The size of the pizza is established and is being shared by 4 friends. It’s cut into 8 pieces and each friend gets 2 pieces. But before the pizza arrives 4 more friends show up and it’s now decided to cut the pizza into 16 pieces so all of the 8 friends can still have 2 pieces each. The actual size of the pizza hasn’t changed. There is just less of it to go around amongst the friends.
Now imagine that 6 of the friends decided they were going to create a system, or process, to manage the distribution of the pizza. It was decided that the 2 remaining friends would get smaller pieces than the others. The size of the pizza is constant, and the more demand there is for the pizza, the more the number of pieces, and the size of each piece, have to be manipulated. A Pizza Empire is born.
The pizza is the perfect example to assist us in understanding the function and dysfunction which develops in all monetary and economic systems as they proceed from inception to inevitable fragmentation. At the end of every system there comes the need to make a larger pizza.
Economies, like that of the Roman Empire, or America today, need to increase and consume all liquidity and production within reach. This usually means the sphere of influence expands and takes on the management of populations which were not a part of the original pizza. The additional friends. But because the original empire needed extra liquidity to maintain production, the new populations ended up receiving much smaller slices of pizza. Eventually, the pizza would be so divided that the whole idea of sharing the pizza becomes non-functional and obsolete. The pizza needs to be replaced by a much larger pizza.
In the 1997 Pulitzer Prize-winning book Guns, Germs, and Steel - The Fate of Human Societies, ecologist, and anthropologist Jared Diamond put forward a theory on why certain civilizations, such as the Europeans, thrived and advanced over others. Diamond considered the impacts and influences of geographical and ecological barriers, climate, disease, tribal configurations and relationships, food production, the potential of livestock domestication, and overall size of regional populations.
Diamonds logic follows that larger populations with advantages in ecology and geography, with greater animal domestication potential, and a buildup of wide disease resistance due to proximity, created an environment with more competition, ingenuity, and retention of gains realized over extended periods of time.
Back in 1997, Guns, Germs, and Steel was one of greatest books I had ever read. When I turned the last page I felt like I had broadened my understanding of the world and the key data indicators which determined the course of human civilizations. I’m 44 now and have learned much since those buck eyed days of a scrappy 23-year-old at the beginning of his quest.
One of the fundamental components of building a competitive civilization was left out of the book. Diamond queried the origins of the Industrial Revolution. The bits and pieces of technology which were needed to kickstart the Industrial Revolution existed for years in many different civilizations, including China. So why did it start in Europe when it did? The influence and contribution of a monetary system, or distribution of wealth, was never considered by Diamond. This was a glaring omission, whether it was intentional, or a fundamental flaw in the thesis.
For centuries the world suffered through what had become known as the Dark Ages. Modern historians now understand the Dark Ages were not as dark as had first been considered. The period inarguably started with the Great Schism of 1054, when the Eastern Christian Churches were divided from the Catholic Church in the West. This was a fundamental event in the history of European and Western Civilization and was not mentioned by Diamond in his award-winning book.
The battle between East and West continued up through the Protestant Reformation in 1517 and into the various revolutions which shattered the European continent all the way into the 20th Century. The rise and fall of European Empires match with the movement of wealth back and forth from East and West.
The Catholic Monarchs of Spain began to gain back control of the Spanish civilization in 1492. The Iberian Peninsula was changing, Muslims were being forced to convert to Catholicism, Christopher Columbus set sail across the Atlantic, and the first hints of the modern model empire could be seen.
By 1580 the Ottoman Empire was being asked by the Muslims who converted to Catholic for military intervention in Spain. King Philip III began deporting the converted Muslims and the first signs of imperial fragmentation could be seen. Wealth started to move and headed for the Netherlands. The Spanish Empire was bled dry as money flowed into the Dutch economy and funded the worlds first central bank.
The First Bank of Amsterdam was established in 1609 and served as the blueprint for all central banks which came after. This bank created immense liquidity which was used by William of Orange to wage war against James II of England. William and wife Mary won control over both England and Scotland in 1688 and immediately wealth began to move out of the Netherlands and into England. This gave birth to the worlds second central bank in 1694, the Bank of England, and the British Empire.
Through all of these years, the bits and pieces needed to start the Industrial Revolution were being developed. From 1694 the vast amounts of liquidity being created by the Bank of England were being used to fund projects and build the corridors of the Industrial Revolution. The first productive steam engine was created in 1712 and there was no looking back.
There is little doubt that much of what Jared Diamond proposed in his thesis were contributing factors to why the Industrial Revolution started when and where it did. But nothing had more of an impact than the new central bank model for creating the massive amount of liquidity which was needed to drive the industrialization of the West. The growth of the Industrial Revolution matches with the expansion of liquidity as the central bank concept spread throughout Europe before being taken to even greater heights in the early 1800s when Mayer Amschel Rothschild began issuing international loans from Frankfurt, Germany.
After 400 years the central bank system has run its course through various empires and reserve currency configurations. With each passing year, the world is getting closer to a complete fragmentation of the international monetary system and its supporting central banks.
Like in the years leading up to the Industrial Revolution, the world is seeded with the bits and pieces of new technology which haven’t yet been brought together to kickstart a new technological revolution. These technological fragments are being developed in labs and test facilities around the world. Everything from artificial intelligence, robotics, exotic power sources, nano and blockchain technology, as well as a huge leap forward in our medical understanding of the human body, are all waiting on a new and larger source of liquidity which can be used to develop and spread the technology at what will be a shocking pace.
Blockchain and crypto liquidity will be the fuel for the evolution and transformation of civilization in much the same way that the central banks were for the Industrial Revolution. The company Ripple and its digital asset XRP will provide the corridors for the movement of wealth which will be taking place throughout this new revolution. The institutional money and banks are partnering with Ripple for the same reasons that Spanish wealth began to move to the Netherlands and onward a century later to England.
Even the 200-year-old wealth of the Rothschild family is beginning to invest in blockchain technology and crypto assets. Iran and Russia are beginning the process of using crypto markets to balance trade. This would bypass the American dominated SWIFT system of international payments. SWIFT is the main target of Ripple's strategy right now. Replacing the outdated and slow SWIFT with an international payment process which takes just seconds will be the opening shot in the new revolution.
Add in a whole new micropayments industry and SMART contracts, as well as the function of moving value between A.I. nodes and across the Internet of Things, and it becomes obvious that the old world has already died.
The pieces are starting to come together and nothing will stop the transformation which is about to take place. Nations are re-aligning geopolitically, as is always the case during periods of fundamental socioeconomic change. Access to resources and the securing of trade routes are high on the agenda for most nations. Reliance on US dollar dominance as a tool of wealth security no longer exists.
American interests are beginning to understand this truth. Corporations, banks, and institutions of varying purpose are building relationships and making partnerships with those in the crypto world who can guide them down the corridors of change.
Production will now catch up to population growth as technological advancement begins to meet the needs of a changing and dynamic world. The pizza is about to get a whole lot bigger. - JC
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