Hola Libertinus!

This week we’re navigating the wild world of economic predictions, including whether U.S. hegemony will survive the looming global demographic collapse. Maybe we’ll even be able to answer the age-old question: does our milkshake really bring the boys to the yard? Meanwhile, Biden’s infrastructure dream of 500,000 EV chargers is off to a roaring start—seven down, only 499,993 to go. All in the name of equity, of course.

So grab your libation of choice, sit back, and prepare to chuckle, grimace, or shake your head at the absurdities of modern politics, economics, and... DEI-driven EV stations.

✉️ DISPATCHES

Zeihan's Milkshake Risk

Zeihan is an interesting cat.

He makes bold predictions in a very public way, and opens himself up to intense criticism.

I actually buy into some of his ideas, and I have to give him credit for putting his name on the line.

For some context, Zeihan believes that demographics and global trade are the main drivers of the current global order.

His macro-view is that as the US abandons its role as the world's nightwatchman and birth rates decline globally, basically every economy outside of the US will take a beating (he makes some nuanced exceptions for Canada, France, and Argentina).

This general idea has some merit to it.

Indeed, the US Navy has kept international trade routes relatively safe over the past near-century.

And countries that fail to replace population through birthrates, or fail to attract immigrants, will likely be less productive.

In the video above he accurately points out how rapidly the US debt has risen and its causes.

Expansion of social benefits, never-ending wars, and the ousting of fiscal conservatives from the political arena.

He doesn't think this is a near-term problem though.

Why?

Because the alternatives to the US economy are even worse.

Europe if facing major demographic issues, and China and Japan are facing even worse demographics all while having debt to GDP ratios over twice as bad as the US's.

In other words, the US economy will win by default because there is nowhere else for investors to turn.

I couldn't help but draw some parallels between Zeihan's take and Brent Johnson's Dollar Milkshake Theory.

Johnson posits that investors will flock to the dollar due to its status as a global currency, leading to mayhem for non-US currencies (before the US Dollar eventually collapses, too).

While Zeihan's prediction is based on demographics and deglobalization, and the Dollar Milkshake Theory focuses on the USD's status as a global currency, they both arrive at the same place: the US will be the economic last man standing in the coming decades.

I will go a step further and consider: what if they are both right and demographics, deglobalization, and global currency status all combine to thrash non-US economies on a faster timeline than either Zeihan and Johnson anticipate?

If that's not jurisdictional risk, I don't know what is.

So then we should go all in on the US economy and the dollar, right?

Well, not so fast.

What Zeihan fails to acknowledge, but Johnson does, is what happens after the US attracts capital and achieves bloated economic hegemony.

What happens when the US economy is the last bastion of capital left in the world but has to face the inevitable consequences of fiscal irresponsibility?

A total meltdown.

Where does capital flow when even the last man standing is down?

Well, if you believe Johnson, it's to gold.

Others posit that Bitcoin will have matured enough by then that it will reign supreme.

We certainly need to acknowledge the fact that Zeihan and Johnson could be correct, but we also need to consider what happens if they're wrong.

After all, if we don't do this, we fall prey to an even more fundamental risk - psychological risk.

What if we bet big on the US, but political and economic mismanagement leads to capital flight, and ex-US economies become the life rafts investors use to escape the American titanic?

What if Zeihan and Johnson are both right and every non-US economy is set to collapse, but it doesn't happen for another 60 years?

What if every economy outside of the US collapses in a decade, but the US keeps chugging along for another 100 years before it too collapses and investors turn to gold as the last safe haven?

We would be exposing ourselves to timing risk and miss out big in the meantime.

Let's look at a situation unfolding in real time to help us understand how jurisdictional, psychological, and timing risks impact investment decisions.

China's economy has been taking a beating lately with VC money avoiding the country like the plague.

To combat this, the Chinese government is set to roll out a massive stimulus package that theoretically will provide a much needed boost to businesses.

Will it work?

Will China's sweet sweet stimmy be able to bring its economy back to searing highs, or is this China's Renminbi-fueled swan song?

When will either of these events occur?

Should we buy the dip, or sell everything China?

I don't know.

But I don't have to.

While I applaud Zeihan for trying to read the crystal ball, that's not the business we're in here at Libertas.

I said at the beginning of the article that I buy into some of Zeihan's ideas, and I do, I just don't let that influence my investing (at least in my passive portfolio).

We believe that the best thing investors can do is design antifragile portfolios that perform in inflation, deflation, bull runs, and bear markets.

We do this with risk management. 

Don't buy into any one narrative, and always think critically about alternative hypotheses.

Don't make your financial well being reliant on the performance of any one asset, asset class, or country.

Don't base your retirement on whether or not the tarot cards told you to buy before or after the new moon.

But if you are hellbent on investing based on chicken entrail divination (hey, we've all been there before), at least separate that money from the money you need to send your kids to school.

Risk management won't enable to you to predict the future.

But when you fully grasp risk management, you won't have to. ~West

DEI Gone Wild: The White House Wants You to Charge Your Tesla in the Worst Part of Town

Remember when Biden promised to build 500,000 EV charging stations by 2030?

If not, I forgive you. It's a part of his infrastructure plan, a green revolution to get more Americans consuming even more finite resources (mined, in part, by destitute laborers living in the most polluted and unsafe conditions known to man for poverty wages)… to save the planet!

Fast forward almost 3 years, and how many stations have been built?

Seven.

Yep, seven stations. Which, in case there was any doubt, is a comical amount considering the administration's lofty promises to electrify the nation.

(Though, for full transparency, the White Hose proudly reports 15 stations have been built, and Trump's recent comments regarding astronomical costs are inaccurate, because they can't even spend the money, as you'll soon see.)

According to apologists for such abysmal progress, “you have to go slow to go fast.”

Maybe. But here's where things get real slow...

According to Biden's infrastructure law, 40% of all funds must go towards “historically marginalized communities.”

Yep, according to Executive Order 14096, 40% of ALL Federal investments in clean energy must advance environmental justice and ameliorate systemic racism.

That’s right, Team Biden isn’t just building EV charging stations for the privileged.

No, no. They’re promoting Diversity, Equity, and Inclusion.

Which makes perfect sense, honestly...

To secure one of these Federal contracts, you can’t just put chargers where actual EV owners would find them convenient. That wouldn’t benefit the right folks!

But we’re getting ahead of ourselves. Before you even break ground, got to demonstrate you’re “engaging with stakeholders” through block parties, hiring multilingual outreach staff, playing games with local children, and filling out hundreds of pages of equity reports. No joke.

It's all right here if you're curious.

The people need to know the government is sticking up for the little guy, after all.

It's a benefit for consumers too.

I mean, why should chargers go in places where people actually drive electric cars… when they can go where no one even knows what a Rivian is? It’s all about education.

Plus, it’s high time to put some teeth into our commitment to anti-racism.

I mean, nothing says “I’m an ally” like having to plug in your Tesla in the most disadvantaged neighborhoods, so you can feel good knowing you’re not just selfishly charging your car… you’re promoting equity in the most deserving part of town.

Just imagine the effect on the local economy!

While you’re waiting, you could even patronize the local mini-mart, and sure, you might get relieved of your wallet, and possibly your keys in the process, but that’s all part of allyship in the single most direct way possible, righting centuries of inequality with every kilowatt.

Bravo.

But the cynic in me always returns to Vladimir Ilyich Ulyanov, who famously said…

“In politics it is not so important who directly advocates particular views. What is important is who stands to gain from these views, proposals, measures.”

Well, let’s give that some thought.

Perhaps the true motivation behind this program is not the environment or even infrastructure. Maybe it’s—surprise!—just about votes. Plain and simple. Handouts disguised as "progress."

And we’re not just talking about the oppressed communities, of course. I’m not even sure how much they’ll benefit after the parade of contractors, consultants, and the usual array of non-profits line up to cash in on this taxpayer-funded, DEI gravy train.

Think of the endless meetings, PowerPoints, TPS reports, and diversity audits to make extra sure these funds are distributed equitably. Everyone wins!

And as a bonus, maybe everyone will also remember who wrote those checks come election time.

Meanwhile, actual EV infrastructure remains as elusive as those 500,000 chargers.

But to all the Tesla drivers out there…

Next time you’re low on juice, just remember: soon you won't just be doing your part when it comes to your carbon footprint, you’ll also be driving progress, equity, and systemic change right into the heart of the most marginalized neighborhoods in town.

Surely the residents will welcome you with open arms! ~Zach

That’s all for this week’s deep dive into the tangled world of economic forecasts, bloated government projects, and the relentless march of DEI-driven policies. As always, amidst the noise and polarization, it's crucial to keep your focus on what really matters—preserving your freedom and independence.

Stay sharp, stay skeptical, and never forget that true independence comes from thinking critically and protecting your own sovereignty.

Until next time…

Sic semper debitoribus,
~ West & Zack

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