“There have been three major disasters and you were the only one unharmed.” – Unbreakable
What’s white, loud, and makes you spill your morning coffee? An avalanche.
There is a time and place when everything changes.
Sure, summer turns to fall which turns to winter which turns to, um, Daylight Savings Time. Regardless, like the seasons, some changes are reversible. I can freeze water and turn it into ice. Then, I can melt it and it’s water again and then I can freeze it. I then put it over my eyes – at least that way I look cool.
I saw Vanilla Ice at the local arena recently. He sold me a hot dog.
Reversible changes surround us. But there are irreversible changes, too. If I burn a piece of paper, it’s just gone. Forever. There is no physical process that can unburn the paper. Or bring back that Tweet® once you hit send – just ask Rosanne.
Changes like that happen to people and systems, too. I’m not going to focus on Russia tonight, but looking at Russia and Ukraine is instructive. When the ruble fell, it’s reversible. Will it reverse? Probably. At some point.
Maybe.
Will Ukraine ever be uninvaded? Nope. Heck, if you look at the history of Kiev/Kyiv it’s invaded approximately once every seven months. If ever there was a country that was more invaded, it wasn’t China, since only one person would take the Khansequences. The Ukrainian currency is called the hryvnia and it appears to be missing vowels. If Russia ends up conquering Ukraine, it won’t need any, since it, like the Roman denarius or the Babylonian shekel, will cease to exist.
There’s going to be so much losing. You’ll be tired of losing.
There are some things that you just don’t go back from. And that’s life. I wish I could go back in time and tell Pa Wilder to buy all the gold he could when anyone could purchase it all day long for $35 an ounce. If he had done that, I would have been a bullion heir.
In retrospect, it looks obvious. When Nixon did the irreversible – disconnected the dollar from gold, what did Pa Wilder think was going to happen? He thought the dollar would keep its value.
Why?
Because, after decades of the dollar being worth $35 an ounce, why would it ever change? For forty years of Pa’s life – gold had been priced at $35 an ounce. Gold would be (in the average person’s eyes in 1973) not a great investment.
But people, including Pa, missed the point. There was no physical process that would ever result in the dollar being backed by gold again. Nixon took the United States off the gold standard because he’d printed too much cash. And, as Biden will soon learn, prosperity doesn’t come from a printing press.
Wait, he made his money in Ukraine . . . .
I was watching a video from TIK History tonight when he brought up the conversation between a German and his banker back during Weimar Germany. “If you had only bought Swiss Francs (backed by gold) you would not have lost half your fortune.”
“But these are government bonds. Won’t they pay back?”
“The government that issued them no longer exists.”
In the United States, we have been in a very, very fortunate position. Our currency has been only ravaged by inflation and political theft over the years. We’ve been able to print up large quantities of dollars and just ship them over to people in other countries and they send us iPhones™ and soccer balls made by 12 year-olds since they apparently don’t have printing presses. Or because they have excess 12 year-olds.
Honestly, I’ve had 12 year-olds around the house, and I think one 12-year-old constitutes an excess 12-year-old.
Also, little kids from Nigeria are trying to give him US FIVE MILLION COOKYS.
Many currencies, like the Russian ruble, have been rendered nearly worthless nearly immediately by geopolitical events. That event is coming for the dollar.
I can’t tell you the date. I can’t give you the exact circumstances. But I will tell you that Charles Munger (Warren Buffet’s buddy) was in an interview where he flat out said that the dollar is eventually going to zero. The interviewer missed the point – when a currency implodes and goes to zero there is shock. There is starvation.
There are civil wars. There are revolutions.
But I can tell you after 2020, 2021, and now 2022 so far . . . change is in the air.