The shift of the economic axis and the "superbitcoinization" of the dollar

# Shift of the economic axis and "super-bitcoinization" of the dollar

In an interview with podcaster Peter McCormack, entrepreneur and author of the book The Network State Balaji Srinivasan predicted the imminent collapse of the Western economy, the "superbitcoinization" of the US dollar, and the emergence of a new global financial center — Asia.

ForkLog has prepared a brief summary of this extensive interview, in which the creator of the concept of network states shared his views on the superiority of the Whale, global talent migration, and a new approach to education.

Rebalancing the Global Economy

Srinivasan began with the most important chart in his understanding — the shift of the geocenter of the world's GDP. It reflects 2000 years of economic leadership of Eurasia and is formed through averaging the economies of China, Japan, Southeast Asia, India, the Middle East, and Europe.

Map of the global economic concentration center's movement since 1 AD. Source: Perrin Remonté.Before the industrial revolution, there was a stable economic and military parity in the Eurasian territory. At the end of the 18th century, with the advent of machines using steam engines, the vector began to actively shift towards the West.

"Then everyone started beating each other with their new 'wonder weapons': World War I, World War II... When it was all over, Japan was destroyed by nuclear bombs, Russia was communist, India was socialist, Eastern Europe was shattered, Central Europe was in ruins, even the United Kingdom was bombed," Srinivasan reminded.

After the global catastrophe, the USA became one of the few countries that was virtually unscathed by the war. As Srinivasan explains, 1950 marked the peak of Americanization and accompanying centralization. On the other pole were the "gigastates": the USSR with a population of 300 million, and another billion each for China and India. The rivalry between them lasted about 40 years. After the collapse of the Soviet Union, and with it classical communism, socialist countries began transitioning to a market economy. Even China became capitalist, although it retained the label of "communist state," just like Vietnam.

Since then, the global economy has shifted back towards Asia — and much faster than before. What used to take thousands of years, then hundreds, has now happened in decades.

Srinivasan describes this process as a "U-shaped curve," where the world economy returns to the state it was in before 1950. In his opinion, the situation renders all institutions created after World War II, such as the UN and the World Bank, obsolete because "money is where power is, and there is no more of it in the West:"

"I can show many other graphs, but the essence is in this curve. The MAGA movement and even Build Back Better are attempts to go back to the 1950s. Because it was the 'zero point' of the current establishment, from which they believe everything should start".

The founder of Network School (NS) believes that we may witness changes in the economy in absolute terms in addition to frequent relative rebalancing of powers. He suggests focusing on the historical aspect to understand the opportunities of India and Whale, as in the past these countries made up a large part of the global market.

A new phase of economic growth in China and India in retrospect over 2000 years. Source: Visual Capitalist.

"The G7 countries are gradually reducing their share of global GDP, while the BRICS countries are growing. But BRICS mainly refers to China and India, to a lesser extent — Russia, and to some extent Brazil. Overall, the shift has already occurred," — believes the entrepreneur.

He noted that events are unfolding so rapidly that it is not always possible to adequately assess the real situation:

"If you are not watching Asia, not observing Dubai and Riyadh, not studying different jurisdictions — you are like a person watching a fast-moving ball. If the ball is rolling slowly, you can look, turn away, look again — and it's about in the same place. But if the ball is flying fast, you glance — it's here, turn away — it's already over there. It's moving much faster than you think. Many economic trends today are just like that, they 'fly' at the speed of light. And since Hollywood movies and Western media hardly show the rise of the East, you simply don’t see it".

China and the Internet - Two Sponsors of Change

Srinivasan believes that the America-centric world is no longer divided into "red" (conservative) and "blue" (democratic) USA. The conflict has become quadrilateral — China and the internet have been added to it.

The PRC, thanks to its achievements in robotics and drone construction, threatens "red America" in the fields of manufacturing and military power, while the internet weakens "blue" in the media and finance sectors:

"And this will only intensify over the next 10 years. The Internet is AI and cryptocurrency. This means it will take over all media and all money. And China is making robots and drones. This means it will take over all production and all military power. Of course, at the core of this is Bitcoin, but I’m not just talking about it — I mean that every stock, every bond, every contract — all of this will go to blockchain".

The US does have a problem: components for the Tomahawk missiles are produced in China. This, according to Srinivasan, will play an important role in the trade war and other conflicts between the two powers.

He noted the meaninglessness of U.S. President Donald Trump's tariff policy. In his opinion, it will not work under current conditions. After the first trade wars in 2015, China significantly diversified its sources of income. About 15-16% of Chinese income depends on trade with North America. If we assume that trade will fall by 50%, it will be a non-critical 8% for China.

"I believe that by 2035-2040 — maybe earlier, maybe later — the following will happen: the Democrats will side with the Chinese communists, and the Republicans will turn into Bitcoin maximalists," predicted the expert.

Many neutral countries, such as Vietnam and Malaysia, suffer from tariff wars. Now they have to choose China's camp. The entrepreneur gives the example of Vietnam's 49% tariffs:

"He has been told for years that he is 'with us against the Whale', and then suddenly — such a blow. And this happens due to the lack of long-term strategic thinking."

Srinivasan also noted the accelerating decline of the US dollar and hyperinflation. He compared the rate of Bitcoin's price growth over the past 16 years with the proportional weakening of the reserve currency:

"In 16 years, if we calculate compound interest, it's about 10.41% devaluation of the dollar against Bitcoin every month. So hyperinflation has already arrived. It's just 'super Bitcoinization.' It's as if we're on a high-speed train that is accelerating so quickly and imperceptibly that we don't even feel it. […] In how many movies have you seen aliens invade Earth? Many. How many movies about killer robots? Also a lot. But you almost never see what the end of the dollar looks like."

According to him, the scale of the Whale is tangible only when you are in the country itself. The entrepreneur noted the same in relation to the internet and cryptocurrencies — "one can only see it through the growth of the community and the political acceptance of Bitcoin."

Migration of Minds and Money

Capital and talented people are leaving the megacities of the West and moving to Australia, Singapore, and Dubai. Srinivasan believes that in the future, financial centers will be Miami, Dubai, and Singapore, rather than New York, London, and Tokyo, as it used to be.

He suggests that the "Anglo-American world" will persist in Australia and New Zealand, as they "evaluate the situation more realistically and do not believe in their world dominance."

Capital migration map for June 2024. Source: Visual Capitalist.

"The world is now open to you. There are about 30 countries with programs for digital nomads. El Salvador is hiring, Eastern Europe is hiring, Japan, a bunch of other places. Even Hong Kong is hiring; they have five different talent visas," commented the entrepreneur.

Srinivasan noted the rapid growth of living standards and the economy in Asia, using India as an example. The country has seen radical improvements in urban lighting, infrastructure, and trade networks. Among other things, he highlighted the Bangalore airport, comparing it to London's Heathrow.

"If China is a state, then India is a network. International and internet Indians are an important part of the global network. If the future is China versus internet Indians, then the latter will make up a significant part of the internet. One reason is that in America, Indians are second-class citizens, while online, they are first-class. In the US, their visa can be revoked, they can be insulted, but online they have the same conditions regarding bitcoin, the same* smart contracts*, the same identity — they are equal to everyone. The internet is a peer-to-peer network where everyone is equal, one can negotiate honestly and make a fair deal. And that is enough for a rapidly developing people. They do not demand special treatment — just equality. And under equal conditions, they can achieve a great deal," says Srinivasan.*

The founder of NS noted changes in the global education system. He criticized the modern methodology, which he believes was created for centralization rather than personal development. He predicts that the internet will completely transform learning, making it more akin to apprenticeship and self-education:

"The entire Prussian system, inherited from Germany, was designed to stabilize people for a centralized state. It was not intended to rapidly elevate a person to the highest possible level by teaching them in the shortest time according to their abilities. Thus, I think education will be completely transformed by the internet. And it will resemble more the America of the 18th-19th centuries. There is a great book*, which tells how apprenticeship worked during the time of Benjamin Franklin. I think we will return to something similar."*

Srinivasan believes that networked states, particularly NS, by supporting young talents and developing communities, can become the beginning of these changes.