The author, a financial expert, diagnoses that the global economy is at a turning point from an 'era of credit' to an 'era of real assets.' As indicated by the subtitle 'The Currency Order Reshaped by Real Assets and Technology,' he argues that the question of 'What does money now serve as collateral for?' reflects a shift where real assets and technology are replacing the credit that has underpinned the global economy for decades. He asserts that the power of money in the future will depend on access to energy, minerals, semiconductors, electricity, and key technologies.
The global economy has operated on the belief that nations repay debts, central banks maintain currency value, and that money printed based on these principles can purchase necessary goods. The author sees cracks forming in this long-standing engine. During the COVID-19 pandemic, even with money, people could not obtain masks and vaccines. The ongoing Russia-Ukraine conflict has shown that natural gas and grain can be more powerful weapons than the dollar through financial sanctions against Russia. To advance AI, physical foundations such as GPUs, HBM, data centers, power grids, and key minerals are essential.
The author predicts that gold, energy, key minerals, power grids, and manufacturing capabilities, along with the technologies that control them, will become the new collateral of this era. He claims, 'The extent to which a nation holds essential materials and technologies for survival will have a greater impact on the value of currency.'
Capital is already on the move. Major asset management firms and sovereign wealth funds are securing stakes in key infrastructure such as ports, railroads, and gas pipelines. Instead of burying money in financial assets like dollars or government bonds, they are acquiring ownership of the pathways through which energy and goods flow. The case of NVIDIA paying large upfront fees to SK Hynix to secure HBM production capacity during the semiconductor shortage illustrates this trend.
The book uses various examples to explain these concepts clearly. For instance, it highlights that those who sold picks and shovels, made work clothes (Levi's), and provided services to transport gold and cash (American Express) during the American Gold Rush ultimately emerged as the winners, emphasizing the importance of controlling the pathways of gold. This perspective can also be applied to the current competition over AI among big tech companies and major powers.
The book also discusses how countries like the U.S., China, and those in the Middle East are responding to this new order. It illustrates the problems that arise when nations like Japan and Germany lack the physical foundations necessary for new competition. In Japan, despite a sharp rise in government bond yields, the yen has depreciated. The government's efforts to redirect domestic savings into investments through various policies, such as tax-exempt investment systems, have seen significant funds flow into U.S. stocks, indicating a loss of confidence in the yen.
'Sovereign AI must possess the power to determine its own operational costs and GPU time—interest rates and money supply—at least within the scope of essential national industries and public services. With monetary sovereignty, a nation can adjust interest rates and money supply to independently steer its economic direction and pace. Losing monetary sovereignty means losing a crucial shield that protects citizens' lives from external shocks. Sovereign AI should be viewed in the same context.'
The Temperature of Exchange Rates=Kim Myung-sil, Hans Media.
The macroeconomic expert states, 'Exchange rates are the most honest map showing where money flees and where it accumulates.' Recently, the value of the Korean won against the dollar has plummeted to around 1,500 won. The author diagnoses that the current weakness of the won differs from the situation during the 1997 financial crisis. While that crisis was an acute condition caused by a lack of dollars, the current situation is a chronic issue stemming from a strong dollar, increased overseas investment, interest rate differentials between South Korea and the U.S., geopolitical instability, and changes in industrial structure. 'In the past, the question was, 'Can we trust Korea?' Now, the question is, 'Why should we hold onto won?''
The forces driving exchange rates have also changed. Previously, it was believed that an increase in exports and a favorable current account would strengthen the won. However, now, the dollars earned from semiconductor sales may be outpaced by the dollars that domestic investors, pension funds, and companies send abroad to invest in foreign assets. This trend is exacerbated by U.S. protectionism. As the U.S. demands local production through semiconductor legislation, investments from Korean companies are increasingly directed to the U.S. Dollars earned locally are also being reinvested there. The author notes, 'Capital has no patriotism.'
The new growth drivers for the Korean economy are also in question. Key industries such as automobiles, smartphones, and steel, aside from semiconductors, are not demonstrating explosive growth. The weakness of the won reflects doubts about the growth potential of the Korean economy. The author discusses investment strategies for the high exchange rate era, methods for investing in dollars, the potential of a post-dollar era, and the implications of a 1,500 won exchange rate.
'The problem is that there is no visible sub-engine to replace or supplement this engine. As key items that once supported our economy, such as automobiles, smartphones, and steel, fail to show the same explosive power, market skepticism is turning into certainty. Global investors are now coldly asking, 'What remains of the Korean economy if the semiconductor engine stops?' If a clear answer cannot be provided, trust in the won will inevitably crumble like a sandcastle.'
* This article has been translated by AI.
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