2020 - The energy and manufacturing decade

02/10/2020 in finance, economics, geopolitics using tags 2020, macroeconomics, export economy

Well, I hope I’m wrong for my sake, but I do believe that the US is at a turning point from a macroeconomic perspective. The US dollar is too strong compared to the other currencies, all while it runs a trade deficit. We’re starting to realize that it is very difficult to keep a cap on technology exports since ideas move faster than traded goods do. It typically takes 2-3 years for a competing company in another nation to catch up on tech.
Free and open source software accelerates this transfer of technology and wealth, and whether or not you believe that this is a net gain for the world, it might be a net loss for the first movers in tech. To add insult to injury, Global copyright law is non-existent so this is allowed.

Tech suffers from a first mover disadvantage, since most of the hard work is done by the pioneers. Initially, first movers will capitalize on their abstractions, but followers eventually replace them if the first movers are not careful. The IBM personal computer comes to mind, as does the Atari gaming console. Building your own abstractions is hard work, but copying someone elses abstraction is very easy in software. This is true within a nations economy, and it is also true across economies. Pioneers encounter all the problems and mistakes, and followers learn from them.

So, this has all happened before, but why have we yet to learn from this mistake? How can pioneers stay relevant when followers can create a cleaner implementation? The answer is obvious, pioneers should in-turn, learn from their followers in order to stay relevant. Pioneers can stay relevant if they create moats, and maybe those moats involve consolidating on ideas versus forcing everyone through a company or product.

For example, Tesla is attempting to create a moat through their supercharger network. This proprietary design gives Tesla leverage over other automakers, as they will have to incorporate Tesla technology into their battery charging framework. Tesla’s attempt at monopolizing vehicle charging is an attempt by Elon to become the next Standard Oil, but for electric cars. Besides this, Tesla’s vehicles are a distraction, what Tesla is really selling is a supercharger network. Of course all this makes sense if Tesla is able to pays it’s corporate debt and if it can get enough buyers in the short term for its vehicles. It’s a risky strategy but it makes a lot of sense. Tesla is a vehicle charging company disguised as a car company to fool those on the institutional side into shorting Tesla. I think it is cruel and hilarious to be honest. The amount of disinformation out there on Tesla as a company is mind boggling, as it attempts to disrupt an existing moat. This is a fine example of the creative-destructive nature of capitalism. There will obviously be big losers, and big winners, and in this situation, the losers have to adjust.

So, what should the losers in this situation do? The losers already have gone all in on infrastructure which may become obsolete in 10-20 years, and they see massive depreciation costs regarding their existing assets. How can these old giants remain relevant? Switch over to a different supply chain and cut losses.

This is where I can see a boom in the current energy and manufacturing sector. The existing fossil fuel industry can stay relevant if it goes all in on plastic and feedstock production. Rather than burning fossil fuels, we should instead burn the cleanest, cheapest and most energy efficient kind of fossil fuel (methane), while using some of the heavier feedstocks for plastic production.

Investing in manufacturing technology and industrial grade 3D printing would move us towards an export driven plastics and parts economy. As for recycling, a pyrolysis industry would help reclaim waste plastics, using the waste as a feedstock for the construction industry. Coal and oil can still remain relevant if a big enough investment is made. But it all hinges on the devaluation of the US dollar as the US braces itself in becoming an export driven economy.

Or maybe I’m not really cut out for these kinds of things. Maybe I should buy a shirt with the words “Sell Signal” written on it, as I shouldn’t be taken seriously when it comes to providing investment advice. What do I know, I just lost a great job for the very purpose of experiencing what it’s like to lose a job since I was afraid I would never experience it!

🤣 🤣 🤣

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