Thanks to China's "one child only" policy adopted 30 years ago, and a cultural preference for children who grow up to become family safety nets, there are now 32 million more boys under the age of 20 than there are girls.

Large-scale interference with the natural male:female ratio has been tracked with some fascination by demographers for years and is constantly generating unintended consequences.

Until early in the last century, starving rural mothers abandoned unwanted female newborns in the hills to be taken away by "spirits."

Today, pregnant women resort to the modern day equivalent by getting ultrasounds and undergoing abortions when they learn they are carrying girls.

Millions of children are "little emperors," spoiled male-only children who have been raised to expect the world to revolve around them.

The resulting shortage of women has led to an epidemic of "bride kidnapping" in surrounding countries. Stealing of male children is widespread in Vietnam, Cambodia, Laos, and Mongolia.

The end result has been a barbell-shaped demographic curve unlike that seen in any other country.

The Beijing government says the program has succeeded in bringing the fertility rate from 3.0 down to 1.8, well below the 2.1 replacement rate.

As a result, the Middle Kingdom's population today is only 1.2 billion instead of the 1.6 billion it would have been.

Political scientists have long speculated that an excess of young men would lead to more bellicose foreign policies by the Middle Kingdom.

But so far the choice has been for commerce, to the detriment of America's trade balance and Internet security.

In practice, the one-child policy was only applied to those who live in cities or had government jobs. That is about two thirds of the population.

On my last trip to China I spent a weekend walking around Shenzhen city parks. The locals doted over their single children, while visitors from the countryside played games with their three, four, or five children. The contrast couldn't have been more bizarre.

Economists now wonder if the practice also will understate China's long-term growth rate. Parents with boys tend to be bigger savers, so they can help sons with the initial big-ticket items in life, such as an education, homes, and even cars.

The endgame for this policy has to be the Japan disease; a huge population of senior citizens with insufficient numbers of young workers to support them. The markets won't ignore this.

In the latest round of reforms announced by the Chinese government was the demise of the one-child policy.

But no matter how hard you try, you can't change the number of people born 30 years ago.

The boomerang effects of this policy could last for centuries.

Yes, that's right, you read it correctly, almonds.

By now, many of you have figured out that I like calling my paid subscribers to find out how they find the service. I always ask for suggestions for improvements. Then I ask what they do besides trade the markets.

I get an amazing array of answers. One reader flew helicopters in Alaska to inspect oil pipelines, executing trades on his cell phone in between flights. Another ran a Russian hedge fund in Moscow.

The sheep farmer in Australia relied on me as his connection with the rest of the world. The family office in Spain valued my American view of the world.

Then I called a subscriber in Modesto, Calif., who said he was in the almond business.

My interest piqued, so I proceeded to grill him. And with that, I obtained a fascinating insight into an obscure corner of the global economy.

If you thought marijuana, estimated by the Drug Enforcement Administration to be at $6 billion a year, was California's largest cash crop, you'd be wrong.

Grapes used to be our largest legal crop, at $5 billion a year. But almonds will beat all this year, possibly reaching as high at $8 billion.

You can blame the six-year California drought, which was then followed by a year of flooding of biblical proportions.

This has driven the price of almonds from $1/pound a few years ago to as much as $4/pound today.

The price spike has ignited fierce water wars across the state, with increasingly desperate farmers battling over an ever-diminishing commodity.

Those located in the eastern half of the Central Valley (which you will remember from your freshman English class in The Grapes of Wrath) are sitting pretty.

They have long-term contracts to buy water from federal public works projects at subsidized prices that date back to the Great Depression.

These rights can make or break the value of a farm, and are passed down from one generation to the next.

The eastern half of the valley is another story. When construction of Interstate 5 was completed in 1979, most of it was still barren desert, a rain shadow effect of the state's coastal mountain range.

Only the oil industry was there in force, especially around the Elk Hills oil find (watch the Daniel Day Lewis movie, There Will Be Blood). I know because my grandfather worked there for Standard Oil during the 1920s.

So when large-scale farming developed there during the 80s, they had to buy water on the spot market.

The problem is that during a drought, there is very little water for sale. So parched farmers have turned to drilling to irrigate their fields.

This has led to an even bigger headache. In the 19^th century, you could drill 100 feet and find all the water you wanted.

Today, they have to go as deep as 1,200 feet, and even these ancient deep aquifers are drying up. And that's assuming you have the $1 million it costs to drill such a well.

Indeed, the elevation of the Central Valley has fallen by 10 feet over the past century because of the underground water that has been withdrawn so far.

Destruction of rural buildings through catastrophic subsidence is becoming widespread.

The only alternative is to let your crops die. You see this in abundance while making the drive from San Francisco to Los Angeles, withered trees frozen in tortured and grotesque death throes.

Also plentiful are irate billboards attacking the government for depriving local farmers of their cheap water.

Even if you have plenty of water, it is still not smooth sailing in the almond business these days.

China is the world's largest buyer of almonds. The demand there has been so great that the Chinese have become major buyers of almond farms throughout the state, at premium prices.

However, the Middle Kingdom's recent anticorruption campaign is starting to take a big bite out of sales.

In years past, individuals would buy dozens of boxes of almond cookies to pass out to friends, customers, employers, government officials and regulators during the Lunar New Year celebrations.

Not so today. The difference has led to the cancellation of a few shiploads of the prized nuts.

My friend kindly invited me to tour his roasting and packaging facilities the next time I was in the neighborhood.

I was left thinking, this really is a global economy that is so integrated that, when a butterfly flaps its wings in Brazil, it causes a typhoon in Japan.

It also is a great example of how information about one asset class can provide insights about all the others.

With that, I opened a fresh bag of healthy unprocessed Nut Up almonds that I picked up at Save Mart and grabbed a fresh handful. I hear they're going to sponsor a NASCAR driver soon to bring healthy food to the hinterlands.

Another Batch for China

To the dozens of subscribers in Afghanistan and the surrounding ships at sea, thank you for your service!

I think it is very wise to use your free time to read my letter and learn about financial markets in preparation for an entry into the financial services when you muster out.

Nobody is going to call you a baby killer and shun you, as they did when I returned from Southeast Asia four decades ago. In fact, employers have been given fantastic tax breaks and other incentives to hire you.

I have but one request. No more subscriptions with .mil addresses, please. The Defense Department, the CIA, the NSA, Homeland Security, and the FBI do not look kindly on private newsletters entering the military network, even the investment kind.

If you think civilian spam filters are tough, watch out for the military kind! And no, I promise that there are no secret messages embedded with stock tips. "BUY" really does mean "BUY." "Sel" means "Sell" too.

If I did not know the higher ups at these agencies, as well as the Joint Chiefs of Staff, I might be bouncing off the walls in a cell at Guantanamo by now wearing an orange jumpsuit.

It also helps that many of the mid-level officers at these organizations have made a fortune with their meager government retirement funds following my advice. All I can say is that if the Baghdad Stock Exchange ever becomes liquid, I'm going to own it.

Where would you guess the greatest concentration of readers of The Diary of a Mad Hedge Fund Trader is found? New York? Nope. London? Wrong. Chicago? Not even close. Try a ten-mile radius centered around Langley, Virginia, by a large margin.

The funny thing is, half of the subscribing names coming in are Russian. I haven't quite figured that one out yet. Did we hire the entire KGB at the end of the cold war? If we did, it was a great move. Those guys were good. That includes you, Yuri.

So keep up the good work, and fight the good fight. But please, only subscribe to my letter with personal Gmail, Yahoo, or Hotmail addresses. That way my life can become a lot more boring.

Oh, and by the way, Langley, you're behind on your bill. Please pay up, pronto, and I don't want to hear whining about any damn budget cuts!

I Want My Mad Hedge Fund Trader!