[Editor’s note: I’m making the Weekly available to all readers this week, as I think it’s an important topic]
I remember back in the George W. Bush years hearing faculty around campus fantasize about becoming expats. “I don’t want to be here anymore.” And so on.
If you asked them where they’d go, they’d tell you “anywhere.” There are plenty of “better” places than America, they’d insist, particularly if the country’s inclined to idiocracy and determined to engage in bloody foreign boondoggles on false pretenses.
They weren’t wrong. But they weren’t going anywhere. In fact, some of them still teach on those very same campuses today. If they were threatening to abandon the good ship America when the captain and chief mate were W. and Dick Cheney, I have to believe they’re saying the same thing now, probably at the same coffee houses and microbreweries.
The problem — one problem — with leaving permanently is that the world’s a dangerous place outside of America. Once you’re “over there,” so to speak, you’re on your own, no longer protected by two vast oceans and, just as importantly, your neighbors and their 300 million firearms.
I realize a lot of readers travel abroad regularly, and that a meaningful share live abroad. Good for you. And better for you all the time, it seems. But — and I say this regularly — in a world of multiplying existential threats, America has a lot going for it, and not just the oceans on either side and a private arsenal formidable enough to face down the North Korean army with no help from the Pentagon.
Although recent events have made it more than clear that the US isn’t any sort of climate change safe-haven, America certainly isn’t the most exposed place in the world to climatic oblivion. Sure, there’s Florida but… well, I can take Florida or I can leave it. (Sorry, Florida, but you’re expendable. If we have to sacrifice you to appease Mother Nature such that she’ll spare the rest of the country, we’ll put you on the altar.)
By and large, America’s self-sufficient in most things we need, and where we’re not we can be (and have been) if absolutely necessary. We have plenty of natural resources, highly advanced healthcare (if you can afford it), there are comparatively few places that are genuinely unsafe for anyone minding their own business and crazy as this sounds in today’s political environment, if you’re determined to get along with your fellow countrymen and women, you can.
(Let’s not pretend we aren’t ourselves to blame for most of the societal rancor we regularly pin on politicians. It’s not Donald Trump’s fault that you brought up Donald Trump while chatting with the other parents in the bleachers at your child’s soccer game. Or while talking to a stranger in the checkout line at the grocery store. That’s your fault. You did that.)
I say all of that to say this: Odds are — still are — America will be the last country standing when it all falls apart. Don’t misconstrue that assessment. Those odds may still be quite long. Empires fall. If human civilization lasts another millennium, American empire may well sunset and give way to a new hegemon. We could have a civil war — a real one — that splits the country in two, resulting in dueling dollars. Yellowstone could erupt. And so on. I’m not saying the odds of America surviving the next 250 years mostly intact — let alone the next 1,000 years — are especially good. All I’m saying is that those odds are at least as good, and almost surely better, than the same odds for any other place.
While there are certainly places where Liberal (large “l”)-minded people can live happier, more fulfilling lives than they can in America currently, the inescapable bottom line is that if you’re an American and you leave the country voluntarily, you’re taking chances (risks) you wouldn’t be taking if you stayed. Depending on where you go, the nature of those risks varies widely (and wildly), and depending on who you are, you can easily make the case that the trade-offs are worth it. But if and when you find yourself in some manner of “situation” or “jam” — whether it’s trivial or life-threatening — you’ll have to grapple with the reality that if you’d just stayed home in Ohio (or wherever), you “wouldn’t be in this mess.”
That’s the lens through which we have to assess sundry “buyers’ strike” narratives and de-dollarization doomsaying in 2025. God knows I’m sympathetic to such narratives in the context of Trump’s ongoing efforts to subvert the rule of law at home and dismantle the institutions, frameworks and architectures which underpin US hegemony and dollar dominance around the world. And as regular readers are apprised, I once “worked” on the other side of this debate too, which is to say a decade ago I regularly helped craft anti-dollar counter-narrative of the sort that co-opted (and still co-opts) unwitting market “contrarians” into foreign propaganda campaigns.
Suffice to say I can pen any kind of de-dollarization narrative you could ever want or need. Are you a liberal media outlet in need of an intelligently-argued exposition centered around the idea that Trump’s jeopardizing the exorbitant privilege? I could pen that for you. But I won’t, because I’m not for hire.
Are you a sock puppet for a hostile foreign power in need of a Sputnik-style Op-Ed arguing that Treasury’s capricious use of sanctions and other manifestations of dollar “weaponization” are eroding faith in the greenback as an impartial unit of account and that as such, dollar hegemony’s doomed? I could write that for you. But I won’t, because f-ck you.
There’s a lot of truth to both sorts of de-dollarization narratives, just like there’s a very good case to be made for living in, say, Norway. Or Switzerland. But in either case, if the question’s whether a given asset or a given locale is an actually viable alternative, at scale, for USD assets or for America as a place to live — the answer’s “no.” The bar for mass abandonment of USD assets — and particularly Treasurys, given their role as collateral — is as high as the bar for a mass exodus of people from America.
Sure, for some people it makes all the sense in the world to pack up and leave for Denmark. Or New Zealand. Just like if you’re a PM or a reserve manager, it makes all the sense in the world to allocate a bit more, at the margins, to other G7 claims. But to suggest that reserve managers and PMs around the world are likely to abandon US assets en masse “because Trump” is every bit as far-fetched as suggesting two-thirds of people who voted for Kamala Harris in November are going to pack up and scatter, creating a 50 million-strong American diaspora.
The motivation for this weekly came from two places. As most of you know, my sell-side diet is considerably leaner than it was some years back. In the simplest terms, the vast majority of sell-side content is worse than useless, so I’ve stopped reading almost all of it. One of the exceptions is BMO’s Ian Lyngen, who’s infallibly incisive and, at least in his professional capacity, unflappable. So, I still read Ian. In his weekly, he mentioned the latest TIC data, which showed foreigners bought the second-most Treasury notes and bonds of any month on record in May. (Remember: The TIC release comes on a two-month delay.)
There’s the chart. Between them, private and official foreign investors bought $146.3 billion of Treasury notes and bonds in May, second only to August of 2022 in data back to 1978.
“While investors remain on guard for any indication of flagging foreign demand for Treasurys, the reality is that such a trend has failed to materialize and until there is convincing evidence otherwise, we’re content to observe that the risk of overseas investors walking away from US debt has been overstated,” Lyngen wrote. “This isn’t to suggest there’s no risk of declining foreign demand for Treasurys in 2H25 or 2026, rather that any shift in investor behavior will likely be a much more gradual process than the buyers’ strike rhetoric implies.”
No sooner had I read Ian’s weekly than I was alerted to Ed Yardeni’s take on the same May TIC release. He cited the same $146.3 billion in note and bond buying that Lyngen flagged, but he also noted that foreigners bought a net $114 billion in US equities during the month. The total net inflow to US securities for the month after Trump’s unfortunate “Liberation Day” unveil was nearly $320 billion.
As Yardeni went on to point out, total US net capital inflows were $1.76 trillion using a rolling 12-month lookback (shown above). That’s a record, and it’s “quite impressive given that Trump’s tariff turmoil was widely and mistakenly blamed for turning foreigners off to investing in the US in recent months,” as he put it.
Ed’s interpretation is a little sunnier than my own. “Foreigners remain very kindly disposed to buying US securities,” he wrote. I think it’s more that they don’t have a choice. I think they’re like all the professors who were going to move to Europe if the war in Iraq went on for another six months. And all the people — like me — who were going to move to Switzerland or Denmark if Trump was re-elected.
Looking out my window right now, I see Sabal palms set against an electric blue sky. The neighborhood swan’s gliding across the mini-lake that abuts my backyard. Picturesque to be sure. But it ain’t St. Moritz.
And also, as Americans, you are taxed worldwide anyways…
Except in Puerto Rico, no income taxes.
But… PR is in many respects rather 3rd world. It definitely does have palm trees, tradewinds, tropical seas and (I think) bananas – so, perhaps is a good banana republic option!
I can see your argument about staying in the good old USA, from an American’s perspective, especially when you weigh investing as a major component. However, when you look at the full spectrum of criteria, regarding quality of life, as a non American, I’ll stay where I am now, thank you. In Canada today, our main threat in the foreseeable future is the USA, not China. That threat not withstanding, I can’t ever see living in the USA due to the level of racism, inequality, gun culture, political division, etc. Any interaction I ever had with America police or border agents, over normal matters, ran chills down my spine. I have real doubts about getting a fair shake there now. Normal people from other countries are literally terrified about getting caught in some web there. Maybe the biggest mistake being made by America now is alienating your allies, whom you are going to need someday. Don’t bank on us. Sorry (a Canadian thing to say), for my show of emotion: You might read it as an indication of how strongly your neighbors feel looking from the outside in, even knowing our country has big problems as well.
Yeah, but you need nukes up there. You don’t have any nukes. Hopefully, you can always depend on ours, but as you note, we’re becoming not-so-dependable vis-à-vis our neighbors to the north.
Of course, there’s obviously no scenario in which we wouldn’t defend Canada. Even though big brother’s cruel right now, we’re still big brother. If anybody were to come along and pick on you guys, they’d have to deal with us. Only we can pick on Canada.
I like your stuff, Walt. Maybe Americans feel that nukes are everything; but there has got to be more to life than nukes. Remember, many people felt we had entered a new post war era – the end of history. And, at one point, very few people in the West could foresee how the US would suddenly turn and change their world view. Canada had different priorities then – helping people with health, child and dental care, etc. It worked for 50 years. Okay, we got caught off guard. We can be fooled once. Never twice – we will do what we need to do to lesson our military reliance on the US.
nukes aren’t everything until you get into a fight with someone who has them, just like money’s not everything until you don’t have any.
Well, the interaction I “enjoyed” with post-pandemic border guards in Point Roberts, WA was certainly as stressful as I’ve ever heard told by a Canadian on the other side. My Canadian friends on the Pacific NW idyllic island I used to call home told me they could share “lots” of similar anecdotes from their American friends crossing into Canada. Beware of the histrionics employed by the eyeball-seeking “churnalistic” media.
Probably ok in Canada. Nobody will mess with them , except maybe us, and not seriously, but it makes headlines.
The trail of my genes started in Quebec and Wales. The start of both those trails moved here.
So your house is finally completed, I assume. With respect to the article, I pourdly bought many dips.
Yes, the USA is nice if you are a relatively well-paid WHITE Christian.
Don’t worry, derek. I’m going to force-feed everybody a hefty serving of this angle in the next Monthly Letter.
Even for well paid white anti-organized-religion reformed catholic agnostics!… Just as long as the Fuhrer’s neighborhood watch toadies don’t report me}!
Oh, America! I’m afraid I’m here for the duration. At 75, I’ve got kids, grandkids, and a 96 year old mother. Also, enough expat experience to know how difficult it is to pull up stakes.
But the USA, for all its faults, provides plenty of amusement. Visiting said mother in the deepest red region of Pennsylvania this week, I popped into the local hardware store for an assortment of supplies, including a new US flag for the front porch. The store owner showed me a cotton model with sewn on stars for 39.00 or a printed polyester one for $10.95. “Go with the cheap one,” he said. “The current design’s only temporary.”
How much of that foreign buying is due to the thought that non-US countries may well fare worse under Trump, so re-investing in American treasuries is even more of a no-brainer then ever. If the ROW trades with each other in bigger numbers in response to Trump, it would take time and probably some miracles (we think WE have problems getting along?!?).
As for me, I agree with you wholeheartedly. I’ll probably stay in NYC area for the rest of my life, happy in my liberal bubble.
“ It’s not Donald Trump’s fault that you brought up Donald Trump.” Sounds a bit like the Sgt. Schultz defense. Not sure I’d want to find out what happens if everyone just shuts their mouth and puts their head down.
It’s not a defense, it’s the truth. More or less every interaction we have with each other in America today is just an effort — tacit or otherwise — to determine whether the other person’s a Trump supporter or not. You’ve just (accidentally) admitted as much with the “if everyone just shuts their mouth” bit. That’s tantamount to saying the only reason any of us opens our mouths is to talk about Trump.
Fun fact: I don’t care about the guy more than I don’t care for him. When I step away from my monitors, I’m focused on trying to be present, where that means being cognizant of the fact that I’m alive in the moment, breathing, running, enjoying a heirloom tomato, or whatever it is. Because this is all going to be over in the relative blink of an eye, and assuming I’m conscious and cognizant of what’s going on in the moments before it is over for me, I’m going to wish I spent more time being aware (in the purest sense of the term) and less time trying to convince everybody that Trump’s an accidental autocrat.
Plainly, there’s a limit on that strategy. If he (Trump) turns into Hitler, then we all need to focus on the problem at hand, but short of that, it ain’t worth it. Just ask any regular Russian who, while surely preferring greater autonomy, free political will, a better standard of living and so on, is fine with drinking some vodka and reading some of the best literature in the history of the written word versus ending up like Alexei Navalny who, while surely a hero, is now unable to enjoy his own legend by virtue of being dead, and thereby lost to eternal, unconscious nothingness.
My wife decided it was time to start the process for moving to Canada. Seriously. Not because we’re actually going to move there, but because it’s a time consuming process so you want to start early. And you always need a backup plan. We would absolutely be on team Stay-And-Fight but for the fact that we have a dependent. A dependent who happens to be on the list of things Trump’s Secretary of Science Things You Shouldn’t Entrust To A Moron has Opinions about. Opinions involving therapy farms or some shit.
And so, I have some insights for those of you who might be thinking along similar lines:
1) It’s harder than you think. We’re lucky in that my wife has one of those jobs that’s on the list of high priority professions. [Pro-tip for all you single guys out there: Marry. A. Physician. Trust me on this one. It’ll be the best decision you ever make.]
2) You have to pass an English exam. Luckily, there’s no French requirement so long as Quebec is not your destination.
3) The exam is administered in-person only at consulates and embassies, and they book up months to years in advance. So get the ball rolling now.
In other news, one of my biggest flexes is that I’ve actually vacationed in St. Moritz. Wife (girlfriend at the time) and I stayed at a relatively spartan hotel in town while Greg & his wife, the instigators of our trip, stayed at a the Badrutt’s Palace Hotel.
It was nice.
The skiing there is better than any I’ve enjoyed anywhere else in the world, and I’ve been around. Still, I wouldn’t say it was worth the price tag. The dinner we had at Nobu was though. Holy shit that was good. It was was the most expensive meal I’ve ever had, and totally worth the price tag of zero francs. Greg’s broker paid for it all. There was actually a funny moment involving the matre d’ on the phone with the aforementioned broker as he read his corporate card out (It was 2007, they didn’t have Venmo, but they did have a lot of patience for overpaid commodity bros).
I guess what I’m saying is, if you can afford it, Switzerland is where it’s at. And if you can’t (you can’t), get the ball rolling now, because unlike the glacier just uphill from Veuve Clicquo’s apres ski tent, Canada’s bureaucracy is not built for speed.
Honestly, some of these prices (in St. Moritz) aren’t nearly as high as I thought they would be: https://www.stmoritzsir.com/en/buy
You have to click past the first couple of pages, but once you get to pages 4, 5 and 6 it’s really not all that crazy price wise.
This one is “only” $4 mil or so: https://www.stmoritzsir.com/en/for-sale-attic-flat-5-rooms-lugano/3751673?search_id=b8745a5bd717ca12c4158670f297b5dc
You could spend that (rather easily) in some of Nashville’s nicer neighborhoods. And I, um, think I’d rather have the St. Moritz “attic flat” than the mini-mansion in a TN suburb.
There are a lot of rules and regulations regarding which houses you can purchase and how many months/year you can stay there.
H, your best bet is to find and marry a Swiss heiress. 🙂
Holy sh!t I can’t believe that’s only ~$4 mil, that place looks amazing! I have to imagine the equivalent somewhere like Palo Alto would be at least 2-3X that.
Something similar in Malibu, only $5mm: https://www.zillow.com/homedetails/10715-Yerba-Buena-Rd-Malibu-CA-90265/130117483_zpid/
If you’re willing to go slumming in Remsenburg, you can have a house on the water in the Hamptons for just 2.6mm. https://www.danielgalehamptons.com/listing/mlsid/137/propertyid/L3542618/
I really thought these prices would be higher.
LMK if anyone wants to go halfsies on that place on Lake Lugano. I mean, I can’t afford it, but I know a guy.
If you give it a go in Switzerland, you should make sure you are handy (whether it is fixing things or food prep to save money). The rules are more tightly administered especially on the road with speed cameras (I believe the fines are income based). They are a generally welcoming people, but not sure there is room for 50 million disappointed Americans. It is safe, clean and surprise the trains really are nice and on time. Would be nice if we did more for those last three items here.
About 4 years ago, I actually got 2 speeding tickets on a trip to Switzerland ( I am a hiker/skier – so Switzerland is “mecca”). At the time I was speeding, I didn’t realize I had been ticketed (now I know where they put the cameras).
Four months later, a letter showed up at my home in the US- with all the information and fines. I ignored the letter. Two months later, I received another letter with all of the information on the speeding and the fines. The second letter included a paragraph stating that I would be arrested and jailed if I did not pay the fines before I tried to enter the country on any future visit.
I drove straight to my bank and wired the fines (plus late penalties).
Switzerland is a very, very expensive country to live in, from my observations.
A million years of evolution and we get Trump.
“a private arsenal formidable enough to face down the North Korean army with no help from the Pentagon”
Except to ensure that the patriots could recharge their mobility scooters?
derek, five years ago your irascibility level was about a 6 on a scale of 1-10. Now it’s roughly 30.
Wow! That’s an unexpected honor. Thank you.
I think …
H-Man, it appears you have regained your senses and retreated to the southern coastal islands you once thrived in before your sojourn to the city. Spend some time in the space you did some great writing in what I will call the “Pre-City Period”. Meanwhile, on no matter what metric you measure, USA is still best in class.