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“We must remember that America has always been a frontier nation…”
“Now we must embrace the next frontier: America’s Manifest Destiny in the stars.”
Do you happen to remember this prophetic speech?
It was spoken by then US president Donald Trump during his 2020 State of the Union speech.
Now, most folk would roll their eyes, label it another “Trumpism” and get on with life. Don’t be one of those.
Notice I said ‘prophetic’ in describing this speech. This is because history may very well have begun with it.
Let me explain.
We know we are at the starting line of another space race. But this is one with a twist.
This time, private companies will liaise directly with state sponsored organisations such as NASA to fulfil the goals of both nations and individuals like Richard Branson and Elon Musk.
And it’s not aspirational either.
In 2017, Donald Trump issued a policy directive that many are claiming will “change” US space policy. “Space Directive 1” was signed with much fanfare in the presence of members of his newly reconstituted National Space Council and famous US astronauts.
The timing of the signing coincided exactly 45 years to the day with the last American, Jack Schmitt, setting foot on the moon.
As ever, what is not said is more important than what is.
Read on now as I explain to you what’s really happening in this ‘space’ and how you can be one of the early movers to a trend that promises to only get bigger.
The “true” motives of the space race.
So, we need to lay out the ground rules first as they stand.
Are there any rules, treaties or laws that govern human behaviour in space? As a matter of fact, yes.
This would be the “Outer Space Treaty” of 1967. One of the rules established by this historic treaty was the acceptable uses of space.
Basically, it stated all nations can use and explore space, but there can be no appropriation of outer space. In other words, no nation can claim the moon, or the sun, or asteroid.
And due to limited number of nations that could even send a rocket into space, this treaty has endured. Until now that is.
Which brings us back to Trumps signing the “Space Directive 1”. Something less reported at the time were words from Vice President Mike Pence which went something like.
“We’ll also ensure, lastly, that the rules and values of space exploration are written with American leadership and American values.”
Excuse me? What “leadership”, and exactly what “values” are we talking about here?
Well, let’s look a little further to determine what these are. Take, for instance, a law passed by a bipartisan congressional majority in 2015 (remember this was at a time when NOTHING else had the support of both parties) which said the following.
It’s about taking our chase of the rent into space. And eventually taking our wars out there too.
These so-called “values” were enshrined in a piece of legislation passed by a bipartisan majority in Congress in 2015:
Take a look.
“A United States citizen engaged in commercial recovery of an asteroid resource or a space resource under this chapter shall be entitled to any asteroid resource or space resource obtained, including to possess, own, transport, use, and sell the asteroid resource or space resource obtained in accordance with applicable law, including the international obligations of the United States.”
So as a US citizen you will be permitted to go out into space, claim ownership of an asteroid and mine its resources – and the US government will uphold this right for you.
Or indeed you could lease the rights to mine to a third party.
These are the values that Pence was talking about. It’s all about a hunt for resources. In economics parlance this is chasing economic rent – the gits of nature that belong to everyone – and privatising them.
Incredibly the advent of technology which is now allowing much cheaper space travel has allowed the US to basically ignore the Outer Space Treaty as something which applies to others, and not them.
You simply must understand this behaviour.
No longer can we associate the speculative nature of chasing the economic rent to privately own something for nothing to a real estate cycle happening on terra ferma.
Economic rent is, very simply, a surplus that arises because of the bounty of nature (or community).
It is the gain you get over and above a reasonable return on investment.
Where economic rent is permitted to be privately captured, you eventually and invariably get asset speculation, price bubbles and dramatic collapses. All in an 18.6-year timeframe as we demonstrate.
And you also get conflict.
Can you see what will happen here? The value of the resources in space will get capitalised into a price.
A famous early 20th century Russian economist by the name of Nikolai Kondratiev discovered a rhythm or cycle, the ‘Kondratiev wave’ (or K-wave), after being ordered by Joseph Stalin to work out when western societies would next bust.
Indeed, Nikolai determined how the boom-bust nature of capitalist societies was intricately linked to a cycle within commodities.
During a commodities boom – which you get in the late stages of the K wave – commodity prices increase. We are seeing this now.
This induces speculation and it also sucks in bank credit (as they will need loans to pay for them).
A bubble is soon created – which further drives prices higher.
Other countries will enact similar legislation in time. Then an international treaty will be created or modified to govern such things as space traffic management, how to clean up space debris, and how to demarcate your patch of asteroid from a rival company.
Star Wars.
Incredible as it may sound, the real estate cycle will very soon be going into space.
And so unfortunately will our wars.
Those mineral rights will need defending, which the military will be asked to do.
And with the establishment of the US Space Corp as a separate branch of the US military this is now possible.
The enclosure of the economic rent always leads to war, eventually. Nikolai Kondratieff himself noted how the Great Powers compete for access to resources during the upswing of the K Wave.
Note we are on an upswing now.
Might some of this geopolitical tension take place in space? This is certainly a possibility – a 21st century take on Kondratieff’s original observations.
It may or may not occur this decade, but it’s coming. Human behaviour makes it inevitable. It is simply a matter of identifying when.
What’s in this for you? Well, if you have a long-term mindset then you could invest in the large space exposed companies like Space-X should it publicly list for instance. As it isn’t even listed yet, you might need to wait a while.
However, the way to play this is to research those companies that will provide supplies, parts and mission critical systems to Space X and the like.
Remember though, we are early on this trend, no need to rush out and do anything tomorrow in other words.
Source – Optuma
Aerojet Rocketdyne Holdings (NYSE – AJRD) designs, develops, manufactures, and sells aerospace and defence products and systems in the United States.
The aerospace segment provides liquid and solid rocket propulsion systems, air-breathing hypersonic engines, and electric power and propulsion systems for space customers in private and government agencies.
Ironically, it also has a real estate segment, leasing off its large land holdings. A perfect stock to gain both exposure to further space exploration and the real estate cycle!
The chart above is a weekly one. Still below all-time highs so there’s no rush to enter. But one to watch. Recently they successfully tested their RL10C-X space rocket engine using 3-D printed parts.
So, it’s clear to see that should this tech prove commercially viable then it’s a significant driver for growth.
Now we can bank on the same behaviour, the same chase for the unearned gains, new laws that protect those who seek to monopolise the resources on offer in space and a US government ready and willing to defend those same rights.
Can you see why it’s so important to understand the economic rent and the consequences of it on the way we live?
I have no issue with human beings exploring other planets. I do have an issue with how it is done.
Who does own Mars and asteroids or anything else out there in space? Should it be owned by anyone, and what kind of environmental damage will we cause across the solar system trying to exploit its resources?
If you can learn to frame the argument here in such a way, then you’ll begin to see the same thing happening all around you.
See with precision the motives behind benign statements and policy, and with further research find and take the opportunities before most will see them.
This is what the Boom Bust Bulletin can teach you.
As a member you will learn the history of the 18.6-year Real Estate Cycle and why it continues to repeat to this day.
It will also explain to you what the economic rent is, what compels us all to seek to privatize it and to spot the opportunities available for all to benefit.
All for a few cups of coffee a year. Amazing value!
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
P.S – Find us on Twitter under the username @PropertySharem1
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