Kyle Bass is busy shorting the market when it comes to Asian currencies. He believes the troubles China is experiencing economically are far from over. His strategy is to bet against the Chinese currency, the yuan, while preparing his investment portfolio for probable Asian economic issues.
Bass believes that the US dollar will continue to strengthen. Bass is optimistic that the United States is on a path for improvement. He does not like the Chinese economic decline, and is assuming that it is for the long term.
Bass is supportive of leftist policies in Argentina. He likes helping the programs of Argentina’s socialist regime, despite evidence that such governments do not have a sustainable economic path. Perhaps the recent leftward turn of the American government’s policies can explain Bass’ current enthusiasm to invest in the US economy.
Kyle Bass is neglecting Henry Hazlitt’s famous maxim, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy.” The US government currently has a total debt in excess of $19 trillion. Eventually, this will have to be repaid, either through currency devaluation (and the wrath of foreign creditors) or drastic economic re-hauls. The first seems more likely. The Chinese government, by contrast, has a large amount of capital in the form of hard currency, factories, and a healthy relationship with oil and metal producer Russia.
Bass and other investors would be wise to ignore the current economic decline of China, and invest in the economy that has the most productive capital, not just smoke and mirrors.