The intensifying rivalry between the US and China is reshaping global capital flows. The US is seen as using naval choke points (like the Strait of Hormuz) to counter China's manufacturing dominance, while the AI race is framed as an existential national security issue for both nations.
With US government debt exceeding 120% of GDP, the only politically viable solution is to devalue the debt through a sustained period of inflation. This strategy is seen as a deliberate choice to avoid default or crippling austerity, especially before the deflationary forces of AI take hold.
The stability of the electrical grid, dominance in AI, and control over critical mineral supply chains are now considered paramount national security issues by the US government. This re-framing justifies massive public and private investment into these sectors, treating them as essential defense priorities.
Vulnerabilities exposed by the pandemic and geopolitical tensions are forcing a move away from hyper-efficient, 'just-in-time' global supply chains. Countries and corporations are now prioritizing resilience and redundancy by holding larger inventories of physical commodities and localizing production.
Keep pulling the thread on Chris Judd.