Research Summary
The report provides an in-depth analysis of the historical and current trends in the global financial markets, with a focus on the performance of Bitcoin, gold, and stocks. It discusses the impact of geopolitical and global monetary situations on these assets and predicts a shift towards a multipolar world order.
Key Takeaways
Historical Cycles and Asset Performance
- Local vs Global Periods: The report identifies two types of periods in financial history: Local and Global. Local periods are inflationary and involve financial repression to fund wars, while Global periods are deflationary and promote deregulated finance and global trade. These periods significantly impact the performance of Bitcoin, gold, and stocks.
- Bitcoin’s Superiority: Bitcoin has outperformed gold and stocks since its inception in 2009, thanks to its stateless nature and speed of transaction. The report suggests that Bitcoin is a better store of value in an inflationary period.
Future Predictions and Investment Choices
- Continued Inflation: The report predicts a continuation of the current inflationary period, driven by government spending and wars. It suggests that Bitcoin will continue to outperform other assets in this environment.
- Investment Choices: The report categorizes investment choices into three: stocks (for those who believe in the system but not those governing it), government bonds (for those who believe in both the system and those governing it), and Bitcoin or gold (for those who believe in neither).
Government’s Role in Credit Allocation
- Financial Repression: The report suggests that governments will increasingly resort to financial repression to fund their expenditures, leading to lower returns on capital or savings. This makes Bitcoin an attractive investment option.
- Monitoring Fiscal Deficits and Bank Credit: The report advises investors to monitor fiscal deficits and the total amount of non-financial bank credit, as these will be crucial in the new cycle.
Actionable Insights
- Consider Bitcoin as a Store of Value: Given the predicted continuation of the inflationary period and the potential for financial repression, Bitcoin could serve as a reliable store of value.
- Monitor Fiscal Deficits and Bank Credit: Investors should keep a close eye on fiscal deficits and the total amount of non-financial bank credit, as these factors will significantly impact the financial markets.
- Understand Historical Cycles: A deep understanding of historical financial cycles can provide valuable insights into future market trends and investment opportunities.
