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Brazil Is the New America: How Brazil Offers Upward Mobility in a Collapsing World


Praise for Brazil Is the New America

"This is a book about your future. If you wonder why Morgan Stanley chief investment strategist David Darst warns that Brazil is becoming more like what America used to be and America is becoming more like what Brazil used to be, look no further. James Davidson explains it perfectly."
--Donald Trump

"There's a lot that Americans can learn from other countries. In this book, James Davidson offers an insightful analysis of the surprisingly promising Brazilian economy. You will learn how 'the country of the future' holds promise whether you're an investor or an entrepreneur."
--Chris Ruddy, CEO and President, Newsmax Media

"Brazil Is the New America is far better than the title suggests. The title tells you that you're going to find out why Brazil is the next America, which you think you already know, but the book gives readers far more--the hidden role of BTUs, the Little Ice Age, and 'debtism.' In a way, it's a shame to find these tucked away in a book on Brazil. I read the Financial News and the Financial Times every day--Roubini, Ferguson, Grant, Hendry, Wolf--but Jim Davidson's macro-historical writing is the best. It is original. It is dense. It is clever."
--Bill Bonner, bestselling author

"Today's default view of the future says all prophets are false prophets: since we cannot divine determinate trends, we ought to learn to cope with uncontrollable surprises. In Brazil Is the New America, James Davidson wisely rejects this prevailing attitude, making definite forecasts with uncanny prescience. America's preeminence will give way as Davidson predicts, unless we confront and reverse the decelerating economic progress he so deftly describes."
--Peter Thiel, entrepreneur, investor, and philanthropist; cofounder, PayPal

"James Davidson has written the best account of the development of the Brazilian economy, which is now outstripping the United States. I strongly recommend Brazil Is the New America: How Brazil Offers Upward Mobility in a Collapsing World."
--Lord William Rees-Mogg, former Editor, The Times of London

James Dale Davidson is a successful entrepreneur who edits Strategic Investment. A cofounder, with Bill Bonner, of Agora Inc. and a cofounder of the media outlet, Mr. Davidson is the author of five books. He defied conventional wisdom to forecast the Japanese stock market crash of 1989, the fall of the Berlin Wall, and the collapse of the Soviet Union.

Preface xiii

Acknowledgments xv

Chapter 1 The World in 2050 1

A Preview of the Future 2

A Decrease in Productive Capacity 5

Squandering Prosperity 9

Chapter 2 The Original America Is the New Brazil 11

The Country of the Future 14

The Origins of America 20

The Mythic Brazil 24

A Difficult Dream to Realize 26

Can America’s Destiny Be Fulfilled in Brazil? 28

Chapter 3 How Brazil Became Endowed for Prosperity in a Collapsing World 35

The Impact of Topography 36

Yesterday’s Limitations as Today’s Strengths 45

Three Radical Changes 53

Predatory Government

Growth Imperatives Lead to Fiat Money and Runaway Debt

Energy Surges Alter Spatial Configurations of Economies

Chapter 4 Prosperity and Energy Density: The Hidden Role of BTUs in the Rise and Fall of Economies 67

Denser Energy Equals a Rise in Prosperity 68

Coal and Adam Smith 69

Going Forward or Backward?

The Phases of Extracting Energy 73

Phase One: An Abundance of Wood

Phase Two: An Abundance of Coal

Phase Three: The Original Petroleum Industry

The Shift from Coal to Oil and World War I 75

Peak Oil and Declining Money 79

Declining Energy and Systemic Collapse

The Real Symptoms of Peak Oil

The Competition for Prosperity 84

Expensive Oil Remains

A 665,000 Percent Increase in the Price of a BTU?

The SS Great Britain Sails Again 87

“Yes! We Have No Bananas”

Chapter 5 Malthus Again: Population Pressures, Global Cooling, and the Coming Dark Age 91

The Dynamics of Weather 93

Not Wrong, but Early 96

Waiting for Our Malthusian Moment 100

The Next Little Ice Age 104

“The Dog That Did Not Bark” 114

Putting Two and Two Together 117

A New Maunder Minimum 124

Dearth, Insanity, and Revolution 125

Chapter 6 Deficit Attention Disorder: How the Perverse Logic of Debtism Promotes the Illusion of Democratic Consensus but Devastates the Economy 131

How Debtism Changed the World 132

Debtism Helps Politicians Manipulate You 142

The U.S. Budget Deficits Would Make Greece Blush 144

Worse than the Great Depression 149

The Collapse of the Boom 156

Chapter 7 “Rome” Falls, Again: Economic Closure and Financial Repression as the United States Faces Bankruptcy 159

Slip-Sliding Down the Road to National Insolvency 160

The Destruction of the Middle Class

Pre-Industrial Growth Rates

Are You Ready for Taxes to Double?

Welcome to the Second Decline and Fall of “Rome” 167

The New Berlin Wall

Americans as the New Illegal Emigrants 172

Chapter 8 The Sunny Side of the Leverage Cycle: How Brazil’s Legacy of Hyperinflation Prepared It to Prosper in a Post-Dollar World 175

You Are in Steerage on a Sinking Ship 178

Stopping Runaway Spending 181

Important Lessons from Hyperinflation 185

Minimal Bank Capital Ratios: A Crisis Waiting to Happen

U.S. Reserve Requirements: A System Failure

The Political Roots of the Economic Crisis

How Brazilians Became the New Scots

Crash-Proofing the System Brazilian Style

America’s $104 Trillion Problem

Brazil and the Taylor Rule

Leverage and Growth 195

GDP Gains Based on Income Growth 196

Chapter 9 A Bounty of Water and Land: Brazil as History’s First Tropical Superpower 199

Brazil and Water 199


A World of Water Shortages

Renewable Water

Brazil Reinvents Agriculture 206

The New Breadbasket of the World Diversification


A History of Small and Large Farms

A Stunning Increase

Chapter 10 Reversing the Gap: Brazil as the World’s Emerging Energy Superpower 221

The Zero Sum Growth Game 222

Grim Prospects 226

Pulling the Plug 228

Submerging Economies 231

Rio Is the New Houston 233

Leading the Way in Renewable Energy 238

Let There Be Light 242

Declining Power after an Energy Transition 244

Chapter 11 Demographic Turbocharge: Brazil’s Coming Decades of Miracle Growth 247

China Takes a Dive? 251

Brazil’s Demographic Bonus 253

A Laboratory for New Products 257

A Real Cultural Melting Pot 258

Chapter 12 Back to the Future: What Could Go Wrong 261

Is Brazil Following the United States

Too Closely? 262

Weight 264

Effects on Health Care 268

Diversity Issues 270

Infrastructure 274

Corruption 277

Bureaucracy 278

Custo Brasil 281

Credit 284

Chapter 13 On the Outside Looking In: Making the Move toward Prosperity 289

Conclusions 290




“Plagiarize, Plagiarize, Why Not Use Your Eyes?” 298

Coming Soon: Financial Repression 299

“Revocation or Denial of Passport in Case of Certain Unpaid Taxes” From the Empire Settlement Act to Unsettling Choices 302

Looking at BRICs 304

Untapped Resources

Climate: Brazil Stays Warm in the Little Ice Age

U.S. Farmers Lead the Migration to Brazil

Making the Move 308

About the Author 311

Index 313