This Civil War won’t be a shooting war
- We’re not going to have a war between the North and the South on the battlefields of Fort Sumter or Gettysburg.
- It’ll be an economic Civil War…
- One in which states could exert their financial independence.
- And for the first time, we have the technology to make this possible.
- this is a huge event with implications that will affect every aspect of our lives.
Americans want to splinter apart
- Ideological differences have never been so dramatic.
- And the evidence is everywhere: on TV & radio news shows…
- many Americans feeling this way:
--- Rasmussen poll (June, 2018): 1/3 of Americans think a Civil War will break out in next 5 years
--- Pew Research: Democrats & Republicans are more ideologically divided than in the past
--- Gallup Poll (July 2, 2018): record-low number of Americans are proud of their country.
- Parts of the country hate the other parts:
--- The coastal elites hate the so-called flyover states
--- The red states hate the blue states.
--- This divide is widening, too:
--- California wants to split into 3 states… They’ll be voting on that this November.
- Friends can’t even have a healthy debate about politics anymore
- And the political environment is about to get more polarized and more tense.
Second Civil War won’t be a shooting war. It will be financial
- states will break away economically through the emergence of state-issued money.
- Specifically, cryptographic money on the blockchain.
- states won’t call this currency:
--- The U.S. Constitution prohibits states from coining their own money
--- the National Banking Act of 1863 bans state banks from issuing money, too
--- But there’s a loophole in the law
States can issue bonds, backed by their revenue
- Right now, every state issues revenue bonds.
- These bonds typically trade in $1,000 increments. That will change.
- With blockchain technology, states can issue bonds in increments of one cent or even smaller
- People would be able to trade these bonds 24/7…
- So it would be similar to having cash.
12 wealthiest states in America are pushing legislation, that'll allow them to create their own money
- state lawmakers in California and New York are already pushing bills, that would fund the study of state-issued crypto-currencies.
- These coins would be backed by state revenues, such as taxes.
- pull back and see where the trajectory is going:
--- we’ll see things like Cali-coin in California,
--- Weed-coin in Colorado, and
--- Oil-coin in Texas.
--- This will give people an alternative money - to invest in
Who would use these state coins?
- today large sovereign wealth fund managers parking their money in U.S. Treasuries,
--- because they are the safest assets in the world.
- But I think the smart money manager will move their safe money from Treasuries to these cryptographic state bonds
- What would you rather put your money in?
--- Something backed by full faith and credit of the heavily indebted U.S. government…
--- Or something backed by actual state tax revenue?
--- The choice will be simple.
- This will soon drain money away from U.S. Treasuries…
- And the ultimate result will be the decline of the U.S. dollar.
- Its value will quickly erode, if state-issued money catches on.
- As an investment analyst, that absolutely terrifies me.
What can we do to protect ourselves?
- diversifying out of the dollar:
--- Increase your gold holdings or
--- even consider holding some cash in a foreign currency
To take advantage of the situation, there are 2 things you can do
1. Find out which blockchains the states will use for the cryptographic bonds
- States don’t have the expertise to build out their own blockchain.
- They will piggy-back off public blockchains
2. Own multinational companies
- Because as the dollar weakens, their foreign profits will be worth more here
- So you’re going to want a lot of international exposure in your stock portfolio