Trump’s recent attacks on Amazon imply that he really doesn’t know what currently ‘Making America Great’ is (and backing the US Dollar)! The eDollar has trumped the Petro-Dollar! Data is worth more than Oil! Someone please tell Donald Trump (and the Chinese)!
You see, the U.S. dollar has long been underpinned by the “Petro-dollar”. Oil is traded as a commodity; and historically it has always been priced in U.S. dollars and traded in U.S. dollars. This ensured that vast sums of dollars were deposited in U.S. banks to complete energy related transactions. This in turn, has enabled the U.S. government to issue treasury bills to absorb these deposits – i.e. borrow and print money without limits.
“To some extent [the U.S. is] living like a parasite off the global economy and their monopoly of the dollar,” gripes Vladimir Putin. But the rest of the world has been looking over U.S. shoulders with jealousy and have schemed challenges to the supremacy of the U.S. dollar, without any real success.
First, the “Euro” rose to 30% of the world’s trade transactions but fell precipitously below 20%, as peripheral countries in the European Union seemed ready to default on their debt. And so, the whole ‘concept of a European Currency’ remains under review globally.
Then, we had China’s rise and the creation of its own version of the world bank. And now China is insisting that all its oil purchases be paid for with the Chinese Yuan. China’s currency was finally admitted into the world’s basket of reserve currencies. So, the Chinese Yuan too is challenging the supremacy of the Dollar. But still, the Yuan only accounts for a small percentage of world transactions (compared to the dollar).
What? Yes, the value of transactions conducted in Petrodollars diminished by 75% and the U.S. dollar keeps rising!
It’s simple. The eDollar has trumped the Petrodollar.
One key difference between this century and the 20th century that we left behind is that the whole basis of the world’s economy has actually – yes truly – changed. There has been a tectonic shift in the world’s economy. A revolution no less.
Information as a commodity is now more valuable than any energy related commodity.
Don’t believe me? Here are the facts.
If you look at global lists of the 100 most valuable companies at the end of last year, internet driven enterprises on the list (companies like Apple and Google) accounted for $2.7 Trillion dollars in market value versus energy companies at $1.9 trillion. While energy companies have lost $1.3 Trillion in value. As of today, Google’s market value was $718 Billion, Apple is now worth $851 Billion US Dollars, and Amazon was worth $799 Bn! All three could hit $1 Trillion in valuation within a few years or so!
The Petro-dollar has become the basis of the “Old World Economy”. The world has changed: Revenues and trade from the Internet economy are greater than revenues and trade from energy!
In terms of the US GDP: Energy accounts for less than 4% of the U.S. economy, while internet services account for 6% and growing fast. As reported by McKinsey: The Internet accounts for a significant and growing portion of global GDP. Internet-related consumption and expenditure, if measured as a sector, is now bigger than agriculture or energy.
The Internet’s impact on global growth is rising rapidly. The Internet accounted for 21 percent of GDP growth over the last five years among the developed countries. Internet is growing day by day, and internet has become a global source of communication all over the world. The world is now called a ‘Global Village’ because of Internet.
Recently, it was reported that the number of globally online users was 3.2 Billion in 2015, as compared to a report in 2014, in which Internet Population was 3 billion. It means 200 million new people have recently joined the internet community. In past the 10 years, 200 to 300 million people per year have connected to the internet. Facebook alone has over 2 Billion monthly active users!
Well, I visit china often. And I can’t tell you how frustrated I get when I finally get to my hotel room (wherever I go – Shanghai, Beijing … you name it) and carelessly (thoughtlessly) type in google.com repeatedly and see nothing pop up. First, I think there’s something wrong. Then I remember…. the Chinese have banned google. They have also banned Facebook, and many other sites.
If you look at the world’s top 20 sites (in terms of traffic), you see a bunch of Chinese companies that no one has heard of in the West, like Badu.com …etc. Yes, the Chinese are creating their own eCommerce systems and undermining Western internet giants. There is a Chinese Uber equivalent, there are Chinese Hotel booking sites, there is a Chinese Amazon equivalent (Alibaba.com), etc. There are Chinese versions of all major site. It’s easy to do this, if you want to undermine Western Internet dominance.
In the internet age, what rules is connectivity. It’s all about the “network”. With internet site, there are serious advantages in “Network Effects”. Anyone can create another Facebook site, BUT, you can’t instantly establish Billions of users like Facebook. So, if you own the network, then you have control. The users, establish site dominance.
And if, American companies own the users, then they control major internet networks. By supplying online account holders, American companies in turn control the internet and eCommerce.
It’s much more than Google, or Facebook. It’s about Amazon too. It’s about Apple’s iStore. eCommerce now accounts for a fast rising 25% of ALL transactions. The Chinese are investing heavily in this space too. And the beauty of it all is that the Network becomes more powerful with greater international engagement, exchange and travel.
When I flew to Amsterdam, I stayed at an Airbnb booked apartment. When I landed in Vegas, I got a ride to downtown using Uber.
But it doesn’t stop here. The trends now in the world of energy are to shift energy systems to ‘smart’ systems that can exchange information for energy. Smart homes, smart cars … the industrial internet of things (IOT) … You can save energy by exchanging information. Don’t heat and cool a whole house, just control the climate where people are sitting or working … and save energy. Don’t drive alone, share a ride … find out who is going where you are … and save energy. Watch your industrial equipment closely and service it early … before it starts operating poorly … and save energy.
And think about this one: Energy efficiency itself is another energy commodity or resource. It takes one third the investment to “reduce” energy consumption than to add new energy production capacity. If you are running a utility – you are better off investing and ‘sharing’ in efficiency gains with your customers than to spend the same dollars building new plants.
“Information” is replacing “energy” in the context of energy use. Google paid over a billion dollars in a start-up called NEST several years ago – that sells intelligent home thermostats that save energy.
Now intelligent appliances, new vehicles, new sensors, …you name it… will be replacing energy with unlimited information processing.
The eDollar has replaced the Petro-dollar. This my friends, is the quiet, cold revolution that the Clinton and Obama administrations have engineered… to undermine oil companies and the Petro-Economy. There was a short-term push back by “W”, but it’s now truly too big to stop… even for the Trump administration, Israelis, Saudis and Russians.
There should be electric power networks, telecom networks, transportation networks, internet based social networks, defense networks, etc. It’s all about alliances.
In the end, a network will only succeed if its parts come together, find value in the network, and participate in the network. No one put a gun to anyone’s head to set up a Facebook or Amazon account. No one can truly control network participation! The Networks thus become more powerful than the central governments that try to regulate them or even physical borders of nations.
The Petro-dollar has already been trumped by the eDollar. You must embrace technology – not fight it.
So far, with his team’s direct involvement, Trump is responsible for the loss of $60 Billion in market value for Facebook, since the Campaign data scandal broke out. He is now directly attacking Amazon – that is a ‘key’ entity in establishing the eDollar’s supremacy over the Petro-Dollar. Trump needs to tread carefully. If he undermines Google, Apple, Amazon, Facebook, Netflix, etc. he WILL in fact undermine the US economy. Chinese companies like Huwei, Koreans in the form of Samsung … will take over and dominate.
More dangerous than China’s shift to paying for oil with the Chinese Yuan, is the fact that China is setting up huge transportation infrastructure across Asia to Europe. Very soon, you will be able to buy a product on the internet from a Chinese company, and have it delivered in Europe, India or West Asia in about a day or so! This will make a Chinese “amazon” the defacto trader of internet goods. The eYuan, is more dangerous than the Petro-Yuan. And Donald Trump is doing NOTHING but undermining US internet companies! Why is he focusing on North Korea, instead of pushing China to let Facebook operate in China? Why is he undermining Amazon?
He doesn’t get it. He is an old economy leader, causing a lot of damage to America.