Daily Balajisms - America is the new Argentina
There is an ascending world and a declining world.
Balaji Srinivasan sounded the alarm on the internet with his BitSignal tweet, warning people that we are entering a central bank crisis and a fiat crisis. He thinks America is becoming a new Argentina. A country that was one of the richest countries in the world, but went sidelines and remained a basket case for decades.
This is not the worst case. It is akin to the fall of the Berlin Wall, with some post-Soviet countries experiencing hyperinflation in the 1990s and some didn’t make it to the club of the wealthy, so called developed countries.
A much worse case is a Venezuela scenario. Once a rich country in South America went into a chaos, or what Balaji calls an anarcho-tyranny. Anarchy and lawlessness for criminals and tyranny for regular entrepreneurial people who face state oppression.
Imagine if the lawlessness of San Francisco scales to the whole of US, and the country goes bankrupt, and you get close to that scenario. You get a hefty parking ticket for being a few minutes late, but the criminal who breaks into your car walks scot-free.
Balaji doesn’t like the labels of developed countries or developing countries. Peter Thiel says that the label developed presupposes a kind of stasis. Balaji uses a term of the ascending world and the declining world instead. It is like the Red Queen dynamics – you need to keep innovating just to hold on to your ranking. The world is a complex, dynamic, and very competitive place.
People in Lebanon or Venezuela know that cryptocurrencies are useful, when fiat fails you get onto the digital gold lifeboat. And El Salvador’s bet on bitcoin seems to be paying off and might be soon repeated by many countries.
Balaji contrasts the Black Mirror worldview of the declining Western establishment with the Bright Sun worldview of the ascending countries like India, with movies focused on promoting STEM education, like Super 30.
The empires rise and fall, and there are many explanations for this. Apex predator theory might be one. We experience business cycles, we know that startups need up to ten years to mature, and we also know that after a few generations humanity needs to relearn some hard lessons. Ray Dalio published his book on why nations succeed or fail in 2021.
There is the meme of “hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times”. Balaji has a helical theory of history that incorporates this cyclical history idea with a linear one.
Progress happens on a z-axis and it’s driven by technology. The so called “great man theory of history” and the “arch of history theory” can be reconciled by the concept of tech trees, thinks Balaji.
We need great founders and also great technologies, because we stand on the shoulders of giants.
There were many moments in recent decades when the US dominance seemed waning. And “there is a great deal of ruin in a nation”, said Adam Smith. Balaji thinks this quote is a strong counterargument to his thesis. But somehow this time it seems different. Big is different. And digital is different.
We may hope for a digital rebirth of once a great nation, or at worst a slow and gradual digital decline. But instead we might get a sudden digital death of an empire.
Crypto is to the US, what America was to Europe. A new frontier and possibility to exit, says Balaji. He urges people to get the bitcoin parachute and leave the plane of the legacy financial system before it crashes.
Buy bitcoin, move it off exchanges and move to a crypto-friendly jurisdiction, says Balaji.