The Post-American World (or Why America's Becoming Obsolete)

Hi! How’s everyone? Welcome back old friends, welcome new ones, and here’s a tiny Snowy hug to put everything right in the world.

Apologies for the radio silence. Sometimes when the seasons change, the sudden dazzling change in the light makes me quite ill. That’s what happened as spring bloomed this year. So my lovely wife sternly made me take a few days off from writing and sessions both for the sake of my health (if you want to know what it feels like when the light your blood turns to dust, I’ll tell you sometime :)

Today we’re going to talk about where the world goes next, what it means, and how it’s going to affect all of us. We’re now entering a post-American collapse world, or at least one in which American collapse is becoming real.

I’m going to teach you how the world will change, and what it means for your life, future, money, and what you want to leave behind, too. We’re going to go deep, and it’ll take a moment or two to get to the good stuff, so bear with me.

We’re going to discuss how American capitalism is becoming obsolete to a world now outgrowing America (and how that’s really why everyone’s 401K’s melting down.)

Ready?

A Post-America World

In Canada, a remarkable turn of events just came to pass. A few short weeks ago, Canada was poised to elect Yet Another Far Right Figure. And then…we all know the story by now, but it bears repeating, and even celebrating. Then Donald Trump began to threaten to annex it, and the swiftest and deepest comeback in modern politics happened.

Today, Mark Carney’s the PM, and he’s exactly the figure Canada needs at a moment like this.

What Carney’s going to do next, if he’s smart, and he is smart, is find ways to grow closer to Europe. He’ll begin, probably with access to Europe’s customs union or single market, and then, in a couple of years, probably move towards formal EU membership for Canada.

And that will make Canada + Europe something remarkable. A trading bloc with more people, and greater GDP, than America. The first truly transcontinental alliance in modern history. An axis of social democracy.

Together, they’ll take the position of leadership America once occupied. And my feeling is that the world will be happier about it, too, since they don’t come with America’s checkered history so much, of war and violence.

Welcome to the Post-America World.

Meanwhile, towards the south, something just as interesting’s happening. Mexico’s President is beginning to articulate a new vision of what she calls “Mexican Humanism.” You’d be hard pressed not to understand that’s as significant as it sounds.

Because of course it’s a direct challenge—and a sophisticated and beautiful one—to the forces laying waste to our world, all of which are anti-humanist, and maybe even anti-humanity.

Towards the south, too, a sort of axis of social democracy is forming. Not a mature one, like wealthy Canada and Europe, because of course, southern nations are poorer. But make no mistake, Claudia Sheinbaum in Mexico is articulating a new vision of humanism precisely to unite the region in a bloc.

And that is what the world will be made of now.

Not so much countries anymore, but blocs.

Now think of America. It will be surrounded on all sides by blocs.

To the North and to the East, Canada and Europe’s new axis of social democracy, which, ultimately, Japan might well join, too.

To the south, by a nascent bloc of developing social democracies, checkerboard by failed states, and I’ll come back to those.

To the West? By China’s bloc, and the ASEAN nations (which are already a trading bloc.)

America will be left isolated in this new world of blocs.

For a very simple—and lethal—reason.

Nobody trusts it anymore.

Nobody Wants to be America Anymore

What does Canada’s election really mean? Obviously, for Canada, it means that it doesn’t have to spend a decade in the wilderness making the foolish mistakes Britain did. But to history and the world, I think, it might well prove a watershed moment.

Canada’s election means that nobody wants to be America. Not anymore.

You might say, Canada never did! But I think that’s not quite right. Canada’s mini-Trumps built their political power on emulating…big Trump. And they promised Canadians exactly Trump’s politics. Grievances, resentments, anger, rage. It was all their fault! The immigrants! They weren’t Real Canadians. Canada First! Lower taxes, more capitalism, more money, money, money.

All of this was a very thinly veiled way of saying: let’s be America.

Canadians almost fell for it.

Almost, until something genuinely remarkable, and almost funny happened. Trump came along, opened his big mouth, and said: no, seriously, don’t just be like America, actually be America. As in, the 51st State.

Canadians reacted in horror, and united in shock.

See the point I’m making? I’ll come to investments and money and so forth soon, but first I want you to see the point.

Nobody wants to be like America anymore. Canada thought it did, but when the chance was offered by Trump himself, it turned away in revulsion, at what that would actually mean.

America once used to believe it was a model for the world. I don’t think that was true, so much, but America believed it, anyways. And in some ways, America was at least the idea of a model for the world, even if a contested one, in the sense, it was the one we’d debate about and contest.

Those days are over now.

Nobody wants to be America. End up like America. Become what America became.

The idea of America as a “leader” now is finished.

Canada’s election proves that beyond a shadow of a doubt, because Canada was of course America’s closest neighbor, friend, and ally. But not anymore.

There are strongmen, it’s true, who’ll want to emulate Trump. But I highly doubt at this point that many people would want their country to end up like America, and that is the point I’m making.

So why am I making this point? Just to win some kind of college debate? Of course not.

Let me make it crystal clear for you.

The Price of What’s Happening to America

If nobody wants to be America, who’s going to invest in America?

Over the last month, we saw something remarkable in economic history. America’s financial markets all fell in tandem: stock markets, bond markets, and the dollar. That set the nation’s 401Ks, aka its retirement plans, on fire.

That began to happen because the world started to lose trust in America. If you can disappear people right off the streets, can’t it happen to money, too? Don’t think for a moment that’s a naive way to imagine it: the world’s most sophisticated investors assess the quality of a nation’s institutions, and America’s are dysfunctional.

Then the world started to lose confidence in America. Trump wasn’t kidding, or bluffing. The trade war was for real. The dollar lost ground as institutions and investors began to sell it en masse. The bond markets almost melted down—we were hours away from bank failures—because confidence was lost in this once-safest asset of all. Would this America even repay its debts?

After all, it was in the Mar-a-Lago plan to default.

All this triggered capital flight. I’ve explained to you in detail that capital flight is what causes financial markets to all drop in tandem, and it’s more or less the only thing that does.

America is now undergoing the beginning of what will be a long and painful process, in which many, many people will lose their life savings. It will have be revalued as something more like an emerging market, or a banana republic, labels don’t matter here, the reality is what does, which is that markets now have to revalue America as a society and economy without functioning institutions, malign leadership, hostile norms, and crackpot plans, like defaulting on the debt and starting trade wars.

That eventual valuation is going to be much, much lower. For everything. American stocks, American bonds, and the dollar.

That is why I warn you that many people will lose everything. We are only at the beginning of this process.

How do I know that?

Because of what I just taught you.

Nobody wants to be like America.

If nobody wants to be like America, then that tells us, prima facie, that at this point, the world is only investing in America because it has to.

Not because it wants to.

If there was any other alternative, the world at this point would take it in a heartbeat. Any alternative to dollars, T-bills, and so on. For stocks, that’s already true. International stocks have bounced back, while American markets are still off, precisely because they are seen as more than good enough substitutes, while offering far less risk.

Because nobody wants to be America, the world is only now investing in America because it has to, not because it wants to, and that means this process of revaluation, which is one of devaluation, must and will go on.

Please re-read that until you really understand it, and follow its implications.

You see, when I say this kind of thing, I know your average money manager tells you everything will be fine, and don’t worry. They’re not bad people, but they’re not paid to think, just to tell you the party line. Those who have been taught to think well about economics will tell you very clearly what I’m pointing out to you above.

If nobody wants to be America, then it must now be revalued at a much lower level. All of it. The entire economy. All the assets in it. Stocks, bonds, dollars, all of it.

Right now, the world is investing in America because it has to, and that means things like this. There are rules governing how much money this pension fund or that wealth fund put into American stocks and bonds, and changing them takes time. There are formal procedures governing how much this bank or that insurance system has to hold in T-bills and dollars, and changing that takes time.

But eventually, the dam will begin to crack, and then to break.

That is when the real crashes will happen.

The moment there are good alternatives to America now, the world will continue capital flight away from American assets, because they are all now contaminated by macro risk. Trump can tariff them, tax them, maybe even seize them, destroy them with a tweet, give them a “reprieve” which means they had a death sentence to begin with, just like that.

Nobody sane would trust any of that, and when your money managers ask you to, should you ask yourself: are they thinking about this clearly at all?

So this process of revaluation is only just beginning, and must now continue. Perhaps at some point America will establish some form of credibility again, but that point is so far in the future right now it might as well be purely theoretical, because by then, if that’s your bet, I hope you have really, really deep pockets to last the next generation or two.

The World is Outgrowing America, or, American Capitalism’s Obsolete Now

We are now entering a Post American World.

What that means is that the world is now outgrowing America.

It is outgrowing it politically: America will be surrounded by social democracies, who once used to be its friends. It’s outgrowing it intellectually: think of how much more a sophisticated vision “Mexican Humanism” is than whatever crackpot junk comes from America’s thought leaders these days. It’s outgrowing it institutionally: as truly modern transcontinental blocs like a Canada-EU alliance form, America becomes something obsolete, a relic, by comparison.

And all of that carries an implication.

A world like that is outgrowing America financially and economically too.

You see, in this world we are entering now, there is less need for America. If the world is reorienting around blocs of social democracy, then what need is there, really, for America’s hyper capitalism? Didn’t it just melt down into fascism anyways? In a world where scarce capital must flow not just to predators and lunatics, but to genuinely useful activities for humanity again—what good is American capitalism?

To make that concrete, think of a Canada-Europe bloc. What good is American capitalism to it? In such a bloc, which is socially democratic, the point of an economy is to invest in the public goods everyone needs tomorrow, which range from healthcare and retirement to literacy to community to air and water themselves.

What point does American capitalism even have to a bloc like that? I can’t even think of one, and if I can’t think of one, which is my only Real Job (go ahead and chuckle) then rest assured, there probably isn’t one.

Please see the point I’m making, because this is the part that really matters, to you, the rest of your life, you future, your money, all you want to leave your kids and grandkids.

The world is now outgrowing America, and to the world of the 21st century, American hyper capitalism is going to become—is already becoming—something like an obsolete relic. Its inequalities and toxicities give way to tyrants and crackpots like Trump and to the disaffected masses which will follow him to the edge of violence and beyond. Meanwhile, it can’t solve a single real problem in the world, period, full stop, anymore, which is why America has so many of them, whether we’re talking basic resources, public goods, climate change, or just giving people decent lives, not ones of despair and rage.

And as the world goes on discovering that American capitalism is obsolete, in the way that an internal combustion engine is, or largely useless now, like a broken compass is, what happens? America’s economy, which is solely based on it, must be revalued at a much lower level.

Sit with that, reflect on it, take it in. It is going to shape the world around for you generations to come. Your money managers don’t understand it at all yet, they will fight it every step of the way, they’re True Believers in the Cult of Capitalism, like Wall St is, but they don’t understand, as all such figures do at moments like these, that their idol has feet of clay, which are now melting in the heat of transformation.

It doesn’t do have to a die-hard believer in a crackpot cult tell you what to do with your money, your future, or your life, and that’s what American capitalism is doing to most of you at this point. I don’t say that in a “communist” way, just a realistic one, capitalism’s fine, if by that we mean at a human scale, perhaps, but America’s lethal, dehumanized, alienated, terrifying version of it? It’s obsolete now. The world doesn’t want it, need it, or even like it anymore.

Don’t Sink With the Ship, my friends. I warned you about this long enough ago that many of you got out of the markets at the right time. Now I am teaching you in a fuller way what it really means. And it doesn’t mean that you can’t ever invest again—far from it. But it does mean that you can’t blindly follow American capitalism, just like the world won’t and can’t anymore. And that those who do blindly follow it will now all but surely Sink With the Ship.

As always, if you need advice, just reach out. (If the calendar’s booked up, and you need an urgent session, just email me, I know these are challenging times. Hang in there.)

Lots of love,

Umair (and Snowy!)