I had the great fortune of hanging out with Rebel Capitalist Pro/Capitalist Exploits macro researcher Chris MacIntosh a few days ago on a live Q&A for Rebel Capitalist Pro members.
Coincidently, Chris just released a shocking new Insider Special Report for members titled, “What happens next?”
In this report, Chris claims there may be economic, social, and political capital shifts taking place as lockdowns and neo-Marxist “woke” cultural revolutionaries continue to harass the status quo.
He definitely feels that time is running out, and the decisions made today will be amongst the most important in our lifetimes.
Western civilization is engaged in a cultural war. The stakes are extraordinarily high and if those that advocate the values of liberal democracy, continue to cede ground to postmodernist & radical left narratives then basic freedoms, already dangerously eroded will disappear – and quickly.
The social fabric of society is being torn apart and the ramifications run deep.
emerging market sovereign defaults on the horizon
From a macro view, Chris's current hypothesis is that one of the bigger risks in the World are emerging market sovereign defaults.
He's been observing capital flows throughout Asia and the rest of the world, and one currency that's been fairly consistent has been the Thai baht. It's been one of the strongest performing currencies in that region.
Why is that? And why could Thailand, potentially become the Switzerland of Asia?
Thailand, the Switzerland of Asia
You basically have a military dictatorship that exists in Thailand. However, it's unique in one respect. What they've always done, is the military has stepped in when needed then stepped back out.
Thailand is one of the only countries within Southeast Asia that's never been ruled by another empire. They're clever. They've always managed to play the various powers around them to their advantage.
Thailand is capital friendly, well fortified, and positioned to accept capital flight with open arms. Definitely keep Thailand on your radar.
Swap Lines Can't Fix Solvency Issues
Meanwhile, in the shorter term, Chris is very concerned about sovereign defaults in emerging markets. That's a consequence of the lockdowns, which have decimated cash flows.
And opening swap lines to these countries will not solve the problem. It solves a liquidity issue but it doesn't solve a solvency issue. Many of these emerging markets have got serious solvency issues.
There are over a hundred different emerging market countries that have applied to the IMF for debt relief. And on top of that list are dollar-pegged countries, whose revenues are tied to oil, which has been decimated.
Chris is not suggesting it's going to happen immediately, but he is convinced that we're going to have sovereign defaults. Whether we have one or two or something bigger that rolls into a larger affair similar to the 1997 Asian financial crisis. It's going to happen.
When the Thai Baht collapsed, it created a cascading effect all throughout Southeast Asia.
Countries, which if you looked at their balance sheet status and everything else, you would have gone, “No they're cool.”
But when the market started moving and the speculators came in, it just became overwhelming.
And so now there is a potential for a repeat scenario.
Ultimately, this is Chris's long term view of what is going to happen.
We're going to see a shift of capital from West to East. It's been a trend in motion, it's going to be bumpy.
Capital Flight Is More Than Just Money
Another factor behind capital is that it's not just money. It's intellectual capital. It's what is more important.
What the Marxists don't understand is that capital is not stuff.
When you see all of these demands that are being made by black lives matter, for example, they want assets.
They're like, “We want your real estate and we want your businesses”.
And they don't understand that those things are not the real driver of wealth, of value.
That's just the result of intellectual capital. Its human intellect. Human intellect with a foundation and freedom to produce goods and services that benefit others. And those things require rule of law. Intellectual capital needs protection and incentives.
Intellectual capital requires property rights. It requires enough of an incentive whereby you get to keep what you put in. Or, at least, you get to keep enough of what you put in to make it worth it.
Otherwise, you go, “why would I bother with no incentive?”
Incentive! This is Atlas shrugged stuff.
So, you have to look around and ask, “where in the world is society most conducive to protecting Intellectual capital?”
And, largely Chris believes he found it in Asia.
Singapore – The Capital Friendly dictatorship
Asia is very driven. Singapore in particular.
You can look at Singapore and go, “wow, Singapore is a dictatorship, mainly run by the Lee family.”
Correct. But at least there's economic freedom.
You can go in there, you can build your business, you can do whatever you want to do and you get to keep the vast majority of your toils.
And there's a legal system there to protect you.
Singapore's obviously one of the best within that region, but across that region, there is a whole society that values hard work and prosperity.
Whereas in the West, we're increasingly going the other way. It's now becoming less about hard work and intellectual capital and more about equality and redistribution.
Capital goes where it's treated best
So what we are going to see is human capital moving. People will become fed up when they realize they can't work and prosper anymore.
They'll start thinking about their kids.
Chris put something out on Twitter the other day. And he was like, “if you were going to educate your teenage children at a university, where would that be?”
People were struggling to provide an answer. Western universities are not educating, but indoctrinating, and doing it at asset bubble prices.
When Intellectual capital tries to escape
Then there are two components. One is “Hey, we don't want you leaving.” And the other is “you can leave but your money has to stay”.
Chris has witnessed this firsthand. He grew up in Africa. He went back to Zimbabwe when they collapsed in 2008.
People didn't see it coming. When they got out, they got out with only the shirts on their backs.
Literally. Because people couldn't take anything out. They were not allowed to take a car out of the country that was younger than 10 years old. It had to be an old car. They were not allowed more than 10,000 Zimbabwean dollars, which was practically nothing.
And so people crossed the border impoverished because the government put in capital controls, they couldn't move money, they couldn't do anything else.
And, and they could try to, but at the end of the day, they were risking a bullet in the back of the head.
And when it gets to that point, you're very much trapped. So you will want to watch and see the risks of that.
Now I'm not saying that this happens, but those are the risks and there are probabilities and you see more evidence mounting day after day.
You don't want to be the guy that's left with your 20-year-old car and your kids in the backseat.
Our ancestors went through this kind of stuff. It's the reason that we are here in the west, today.
Everybody listening to this has an ancestor, some made very difficult decisions that had to be made, which is why we are around today.
If you're reading this and you made it this far, then now might be the time to channel your inner ancestor.