Who governs?

Plus: global growth, China, nuclear reactors, bond yields and more

“The lesson is that no amount of sophisticated statistical analysis is a match for the historical experience that ‘stuff happens’.” – Mervyn King ||

Hi everyone! I hope you’re all doing well. October is halfway through, how can that be…

A shorter and earlier email today (they’ve been long and late recently, I know, working on that) as I have to dash out the door to give a talk on the geopolitical impact of central bank digital currencies – kinda relevant!

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IN THIS NEWSLETTER:

• Who governs?

• Macro-Crypto Bits: growth, China, NFIB, yields, crypto market cap

• Also: gold mania, the Fed, Gen Z, nuclear reactors and more

WHAT I’M WATCHING:

Who governs?

Here’s an important question for you: who do you think should decide how much tax you pay?

My answer would be the government of the jurisdiction in which I am domiciled. The same goes for my business, if I have one. We can quibble about the rate, but the government provides me and my business with valuable services, even beyond the essential pillars of infrastructure and the protection of law.

Taxes should not be decided by the United Nations, which is accountable to no-one, and does nothing useful (created to maintain world peace, where were they during the Israel-Gaza negotiations?).

This week, the International Maritime Organization (IMO), a UN body based in London, votes on a “net-zero framework” for shipping which will impose a tax on ships that emit carbon-dioxide above a certain limit. The amounts discussed are not enormous – perhaps an annual take of $10-12 billion – but they’re not nothing, and the administrative burden will add further friction to the already struggling transport industry.

Much more relevant is the principle: who gave the UN the power to add more cost to the goods you buy?

We can agree that trying to slow down climate change is good, but we can also acknowledge that taxing emitters will do nothing for that.

The reason I bring it up is that it is painfully relevant to the macro-geopolitical shifts I talk about in this newsletter: power expands until it is stopped.

Centuries ago, it could expand outward, exploring and conquering new territories. Now, the earth is explored, space is expensive, and invading your neighbour is frowned upon.

So, the expansion is inward, funnelling deeper into our lives and stealthily carving out more of our economic activity. It’s an inevitable trend, and even revolts do little more than reset and pause before embarking on what power always does – take more.

This is one of the many reasons the rapid evolution of crypto markets and services is so important as the power grab accelerates. Digital resistance: it’s not just about the significant value of a hard asset at a time when power is bought by printing as much money as is needed; it’s also about the possibility of existing outside the centralized systems when someone in authority notices you’re alarmed about their plans.

Back to my original question: who should be able to levy taxes that, directly or indirectly, affect you personally? Inherent in that thought process is the very essence of our contract with government, which we tend to forget about in the noise of daily life. It’s worth examining every now and then, especially in this era of over-reach.

Macro-Crypto Bits

Short-form thoughts on key macro/crypto twists: