The previously denied areas to American business. So the iron curtain, Poland, Romania, Soviet Union, China, Mongolia, et cetera, they were denied areas, all of a sudden, they’re opened. So all the – third miracle, all these geographies that were previously closed we’re now opened. And there are a lot of other countries, while they weren’t really properly speaking, iron country nations, they were quasi socialist nations like many in South America that also opened up their markets. So I’m going to put that under the third miracle. Three huge miracles for 40 years, more or less. That’s the story of the market, for 40 years. Now we’ll come to the croupiers in a minute. Those are the three miracles. So those three miracles together, once a millennia aberration.
Now let’s add a fourth, I wouldn’t call it a miracle, but I would call it an aberration. So sometime around late ’90s, there were a handful of people on the Internet globally. And by 2023, there were 5.4 billion, maybe 5.5 billion people in the Internet. So you went from a handful to 5.5 billion, and that creates business opportunities for the likes of Apple, and Amazon and Facebook and Google and Microsoft and I can keep going, but you get the idea. So now we’re four miracles. So now you can’t take almost nobody on the Internet, and a quarter century later, take 5.5 billion people in the Internet and say that’s going to continue because there’s only 8 billion people in the world. it can’t continue. It has to be an aberration. There’s only Soviet Union.
It collapsed. Dumped their commodities in the marketplace, now they cannot do that anymore. China offered 1.4 billion people. By the way, it’s not just China, it’s India, it’s Malaysia, it’s Thailand, it’s Vietnam, it’s the Philippines. I don’t think it’s an exaggeration to say the 3 billion people actually enter the global labor market. But it’s a once in a millennium event, those are aberrations. Now China, to take one country, its companies are rising to challenge the American companies. So forget about interest rates. The movie is starting to run in reverse. So China, I don’t know if they are successful or not, China has something called the Kirin 9000 chip. And they have Huawei, one of their private companies make a phone that, it looks to me, and I’m not an expert, looks to me, it’s very competitive with Apple.
And a week or two ago, they created a phone known as the P70, the upgrade of the Mate 60. So it looks like it’s even more competitive with Apple. And 1/3 of Apple’s business is in China. Now the Chinese company, Huawei, has an allocation. What does that mean? They can’t even satisfy the demand. They keep cutting the prices and keep adding features to it. Apple just cannot respond. And the entire – so you can’t expect China to be, which it was for some number of decades, low-cost manufacturing hub, low-margin hub of the planet forever. You have to anticipate that they’re going to move into higher-margin businesses and higher-margin businesses are going to be in direct competition to all the major companies of S&P 500. Now, how do you find the quantitative expression of that?
Well, all you need to do is look at the MSCI equity index. These are round numbers, but I think they’ll do. You can look them up and get the exact numbers. In that index, I think the weighting of American stocks is something like 63%, something like that. The weighting of Chinese stocks is something like 2.7%. There’s not that much different distance between the Chinese economy and the American economy. On a purchasing power parity basis, which some would argue is the correct way to measure economies, Chinese economy is bigger than the American economy. So now the aberrations are in all the other way. That’s going to correct. In my mind, there’s no doubt about that whatsoever. So if people keep behaving as of the last 40 years, we’re not an aberration, which is essentially what everybody is saying is the case.
What does that mean? That means that all these great technology companies are going to keep growing, even though they more or less wired the world for the Internet. Does that mean that the Russians are going to keep dumping commodities in the marketplace? They’re not going to keep dumping commodities in the marketplace. Those commodities are going to go to China. And whatever the problem was sustaining Chinese growth and again, the kind of value they need to really grow. China is moving into higher-margin businesses. There’s no question about whatsoever. None. As one example, just one, the Chinese company, BYD, makes electric cars, is now making more electric cars in Tesla. So China Aviation, they only made one plane, but they made a plane, an airliner, from the look of at it, it looks competitive with Boeing and Airbus.
And why would we not expect China to do that? So now as the Chinese companies – if the Chinese companies as I assert they will, if they move into the high-end margin businesses from low-end margin businesses, which they occupy themselves for the last 30 or 40 years, then everyone’s going to say, the last three, four years was an aberration. And it’s going to wreak havoc in the marketplace. That’s the danger. So now enter crypto currency. The answer from the Western countries is not to have more engineers, invest more money in technology, et cetera. The answer, unfortunately is, spend more money and maintain a secure living, and that means borrowing and it’s just unsustainable. So money is being debased. Cryptocurrency is the answer to debasement.
It’s the answer to centralization. And it has the prospect of becoming the biggest asset class the world ever was, why? Because stocks themselves are an aberration. For most of history, the big markets were gold and money claims like letters of credit. Stock is a relatively new thing. If you were to look at – you get a Wall Street Journal, just go to a library and get a Wall Street Journal from 1923. I’m not saying get a paper from ancient times. I’m saying get a newspaper from 1923, and see, in the New York Stock Exchange, how many stocks are preferred stocks and how much – how many stocks were common stocks. You will see people are not interested in common stocks, they’re interested in preferred stocks because they’re interested in income bearing securities.
And that’s what’s going to happen in cryptocurrency. So cryptocurrency, the next evolution in cryptocurrency is going to become interest-bearing. So how is it going to become interest-bearing? Because there, I think there are roughly 689 different exchanges, they’re really brokers than exchanges, in cryptocurrency and there are massive differentials and how they trade. So market is developing for what’s called a flash loan. What’s a flash loan? You borrow, let’s say, a bitcoin for 10 minutes, literally 10 minutes. The idea is to sell that bitcoin in the market that bitcoin is most expensive of the 689 exchanges, and buy it back in the least expensive market, thereby reaping a benefit and paying it back before the bitcoin block actually gets written to the blockchain.
