Bullet 2. Those plans are embodied in recent seemingly throwaway statements aspired to a next candidate by Greenland, reclaim Panama, and to eventually reconvert Brazil after making landfall in Argentina last year. Chapter 1. Mercantilism Revisited. For the past three years and perhaps more, almost every governmental behavior and policy change has been explained by one overriding concept, mercantilism. Now is a good time to restate what mercantilism is. Getting a textbook definition out of the way, mercantilism emphasizes the importance of a favorable balance of trade and strong governmental control over economic activities to increase national power and wealth. Mercantilism is a transitional economic ideology, first implemented post-feudalism’s collapse, and until recently have been shrinking in use as a more globalist type of trade flourished.

Now it has become useful again as globalized economies struggle to remain somewhat friendly toward each other as globalism recedes. Mercantilism has a stigma attached to it. Chapter 2. Don’t Use the M-word. Legacy Press will still not dare use that word, for incorrectly connotes bulletism. But we did and continue to write about it in this space as objectively as can be done. To that point, several previous works on the topic are at bottom, including our January 2022 Public Declaration of it as the returning economic model governing global trade. So what is it at its core? Chapter 3.

What is mercantilism? Mercantilism, for purposes here, is a trade philosophy that permits global trade in a less cooperative world. It came about as the world started to rebuild into nation states after Roman Empire collapse. Following the fall of Rome, Europe was divided into local and regional political and economic entities, each politically functioning and economically surviving in high degrees of isolation from each other. This was feudalism, result of the first time globalism collapsed. However, that began to change in the 15th century. From how mercantilism brought Europe’s fragmented economy together. However, beginning in the 15th and 16th centuries, forces came into play that began to reverse this.

Kings and princes were determined to concentrate power in their own hands as absolute rulers, which meant reducing the power at the local and regional levels. Mercantilism developed in the emerging nation states under the kings, especially in France, Spain and Great Britain, as a set of economic tools to assist in bringing about the centralization of political power and control. Thus, mercantilism is the name given to a system of trade where trust between trade partners is greater than what feudalism’s collapse, little trust was, but less than under globalism. As such, it is considered a transitional economic ideology. Gold or some other hard currency is used to preserve receding trust, dropping down from globalism or protect growing trust, rising from post-feudal times.

Mercantilism is an approach to commerce that, as a result of the above, understands by necessity, sometimes the whole is not greater than the sum of the parts. Using globalism as reference point for comparison, mercantilism emphasizes return of capital over globalism’s return on capital, prefers cash flow over future earnings prospects, prioritizes reliability and security of supply chains over optimization of them, prefers self-sufficiency over codependency, looks at far more and statistical probabilities less, no longer assumes global abstractions are going to suffice in a crisis, prefers spot markets as more important than futures markets, utilizes bilateral trade over multilateral trade.

As a result of these concepts, and still using globalism as the reference point, we are getting manifestations in physical and financial markets, like reduction in trade complexity under globalism to reflect reduced interdependency, onshoring and frontshoring of supply chains, onshoring and frontshoring of payment chains commensurate with supply chains, protectionism of resources and industries deemed gay, less financial leverage, an assumption that there will be less investment by foreigners in your country. Foreign investment will be more persuaded by synergistic and asset-secured FDI styles equity rather than straight debt to come on board. Current accounting balancing over balance of payments, which offsets current with financial.

These concepts dictate nation-state policy and behavior more than historical and macro correlations. In policy execution, this oil boil boils down to, one, be self-sufficient, two, export more goods than you import, three, nurture trade partnerships based on mutual economic need, not necessarily ideological similarity, or know the difference between need and desire in commerce, five, position for fragmentation, market share will be up for grabs, six, learn comparative advantage economics, seven, own the gold and silver for above board trade. What causes mercantilism to manifest? It is important to understand that some of mercantilism’s main characteristics and unwillingness to look for ongoing value beyond the current transaction.

An ability to thrive in state-enforced monopolies and regulations and its export-oriented preferences were all features structurally determined by broader forces at play. Mercantilism is a reaction to mistrust and embodies the means needed to survive the collapsing supply and payment chain complexity concurrent with deglobalization. Mercantilism, in the end, is the coping mechanism between businessmen and the nations they work in. That will be used to survive political idiocy. Chapter five, what else is mercantilism? It is an approach necessitated by the absence of long-term credit as a manifestation of weak trade partner trust. It prefers gold and other SOVs, like Bitcoin, that have no nation-state allegiance or controllability as settlement mediums.

Due to mistrust, commitment timeframes are shorter, and the pie is viewed as the sum of its parts, putting less value on things like intangibles and abstract values. It manifests in an absence of rolling or evolving long-term credit due to protectionism and some distrust. Chapter six, about globalist hate. Neokinesians hate mercantilism and view it as short-sighted and a regression from globalism. They are wrong. Mercantilism was a manifestation of trust growing as feudal times ended. It is currently a fallback as globalism recedes now. Specifically, mercantilism and its current resurgence is a response to shrinking globalism now. In the past, it was capitalism’s training rails out of feudalism’s collapse, no mistrust, and inter-globalism, complete trust.

Back then, it was a stepping stone towards globalism. Right now, it is all that stands between the world-risking world war and a possible neo-feudalistic state. It is an economic line in the sand for nations who wish to exist while hopefully working out problems with unhappy global neighbors. Chapter seven, Europe is ashamed of its past. Mercantilism will continue to be demonized along with gold and its younger cousin, Bitcoin. That is stupid. Why? Because blaming a pet rock for your mistakes is easier than admitting them. Gold isn’t the problem. Aside from the obvious, Europeans are ashamed of their colonial days and resulting world war as they had a hand in causing.

This guilt and the greed of incumbents with too much to lose, like Klaus and company, is destroying the Western world. Colonialism, as horrific as it was, was the forefather of globalism. Colonialism necessitated growing trust between semi-willing partners. Buoyant and internationally neutral store of value was used to enable that trust. Mercantilism creates separate chains. The collapse in global trust and resulting supply chain shrinkage has necessitated rebuilding those chains closer to home. This is much discussed as onshoring and French shoring of supply chains. It is crucial to keep commerce flowing while maintaining trust in the people delivering the goods.

However, what is not discussed at all in this context are the mere images of supply chains, the payment chains. One such payment chain is Swift, another is Enbridge being built by the BRICS. The Enbridge platform is being branded as an alternative to Swift. That is nonsense. It is intended a replacement for Swift in regional commodity trade. In summary, Enbridge is the payment chain the BRICS have built for themselves while the West has been rebuilding its supply chains. It is an onshored or French shored payment chain, pure and simple, that complements the supply chain. From Zoltan Pozar says value investing is dead.

Recall that payment chains mirror supply chains. The world is retooling supply chains and payment chains simultaneously. Next, chapter nine, why do payment chains matter? In teaching athletes to stretch, physical traders say strength creates the ability to move. Flexibility permits the movement. Strong muscles are limited by poor range of motion. And so we stretch. Using this analogy, if supply chains are the muscle creating economic strength, then payment chains are the sinew that creates flexibility permitting that movement. Payment chains permit range of motion. Without independent payment chains, the BRICS would not be able to execute their trades without involving the West and the dollar.

Thus, Enbridge or BRICS bridge was created. The Enbridge platform is simply a French shored payment chain needed under Mercantilist economies. Gold is the payment chain money of choice. And currently, in the mindset of central banks acquiring it, the only store of value that will universally be able to cross platforms. To add, Trump’s presidency will force Bitcoin to be seriously considered as an alternative. Keeping in mind, if you are a non-United States country, you are concerned that Bitcoin, as decentralized as it is, can be controlled by the United States simply by having enough market share in it and having financial mechanisms to project pricing, much as it does with gold.

Anyway, the point is Mercantilism is about a finite money supply or a measurable money supply. Additional reading. Birth of the Mercantilism thesis, comment, Mercantilism is dangerous, but Globalism is dead. That’s a zero hedge edit. We’d recommend reading that. Robobank, Globalization is Dead, Long Live Mercantilism, by Michael Avery. Gold, Mercantilism, and the end of Pax Americana, by us. How Mercantilism brought Europe’s fragmented economy together, we recommend reading that. BW3 or Bretton Woods III, gold replaces dollars in Mercantilism. Gold is useless, and that’s why it is perfect, is a compendium of notes on gold itself written in 2022.

The end. Thank you for listening. Please contact your financial advisor before making any decisions, and thanks for watching. [tr:trw].

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