In chess, as the middle game progresses, it’s very often possible to sense who is likely to win.
A winner is awarded two points, while the loser is awarded zero points.
In case of a stalemate, each player is awarded one point.
When, during the middle game, it is obvious that one cannot win, it is perfectly appropriate to play with the intention of forcing a stalemate.
I realize the events in Europe are not literally a game. Those are real people in real places.
Nonetheless, the analogy serves a function.
Looking ahead, as soon as Ukraine resolves, the Contested Islands of the China Sea will heat up.
This is a rock’em sock’em job. We remain off-balance.
When the US can’t pivot to Asia, because there aren’t enough ships in our navy to create the overwhelming odds one should only ever go to war with, the United States will again be outplayed in the middle game.
We won’t just seem unprepared. The opening moves in that theater were made several years ago. We’ve written a big check to protect Japanese territory that everyone knows we can’t (or won’t) cover.
We’re looking at about 2 1/2 more years of this.
BTW, I’m neither advocating violence nor threats of violence.
Sun Tzu pointed out long ago that the truly superior general takes his adversaries’ territories, whole and intact, without destruction. The war is won before it’s fought with planning, foresight and stealth.
The American democracy was never meant to run an Empire. We have done so as a result of surviving victorious to the end of two world wars in the last century. We’ve always been conflicted about it, even if that’s not obvious to non-Americans.
That the United States survives in its current state is due in no small part to the gift of geography (and friendly neighbors). Geography means less in the current era, and violence begets violence.
I’m not advocating anything at all, beyond observing and learning. I am pointing out that we are looking at a long couple of years in school.
From an investment perspective, everything I’ve said before this is still true.
The USD is too deep and has way too much infrastructure to be displaced effectively. That won’t keep China and Russia from looking for ways to offer alternatives, nor other countries from looking for less expensive ways to do their business.
Mismanagement of the dollar is a homegrown affair, and probably started with the creation of the Federal Reserve and the idea that inflation is good.
So, USD-denominated assets will still be the place to store your money for a while, and I recommend holding cash during the current unrest.