You may have heard some people say:
“The crypto bull run is over.”
“I need to launch my token quickly because we are at the end of the bull run.”
“Why isn’t Bitcoin rising in lockstep with the large U.S. tech companies in the Nasdaq 100?”
This chart of Bitcoin (gold) versus the Nasdaq 100 (white) shows how both assets have moved in lockstep, but Bitcoin has been stagnant since hitting an all-time high earlier this year.
However, the same group of people would also mention:
“The world is changing from a unipolar world order dominated by the United States to a multipolar world order with China, Brazil, Russia and others.”
“To finance government deficits, savers must face financial repression and central banks must print more money.”
"World War III has already begun and the war will cause inflation."
This view of the current stage of the Bitcoin bull run, combined with their views on the geopolitical and global monetary situation, confirms my view that we are at an inflection point, transitioning from one geopolitical and monetary global arrangement to another. While I don’t know what the final stable state will look like, i.e. which countries will dominate and what the specific trade and financial architecture will be, I do know that it will be very different.
I want to step away from the current changes in the crypto capital markets and focus on the broader cyclical trend reversal we are experiencing. I intend to parse three major cycles from the Great Depression of the 1930s to today. My analysis will focus on the period of American rule, because the entire global economy is subject to the financial policies of the dominant empire. Unlike Russia in 1917, the Pax Americana did not encounter political revolutions due to two world wars. Most importantly, in this analysis, the Pax Americana has always been the best safe haven for capital. It has the deepest stock and bond markets, as well as the largest consumer market. Therefore, it is crucial to understand and predict the next major cycle.
There are two kinds of periods in history: local periods and global periods. In local periods, governments finance past and present wars by financially suppressing savers. In global periods, finance is deregulated, facilitating global trade. Local periods tend to be inflationary, while global periods are deflationary. Any macroeconomic theorist will have a similar taxonomy to describe the major historical cycles of the 20th century and beyond.
The purpose of this history lesson is to help us make wise investment decisions throughout the cycles. In an average life expectancy of 80 years, a person can go through two major cycles. I have grouped our investment choices into three categories:
If you believe in the system but not the people running it, then you invest in stocks.
If you believe in the system and the people who run it, then you invest in government bonds.
If you don’t trust the system or the people who run it, then you invest in gold or other assets that don’t rely on the existence of a state, like Bitcoin.
During periods of local inflation, I should hold gold and avoid stocks and bonds.
In times of global deflation, I should hold stocks and avoid gold and bonds.
Unless I can use them unlimitedly at low or no cost, or unless I am forced to hold them by a regulator, government bonds generally do not retain their value. This is mainly because politicians are easily tempted to distort the government bond market by printing money rather than directly taxing it to fund their political goals.
Before describing the cycle over the last century, I want to introduce a few key dates.
April 5, 1933 – This is the day that President Franklin Delano Roosevelt signed an executive order banning private ownership of gold. He then violated the United States’ commitment under the gold standard by devaluing the dollar from $20 to $35 per gold.
December 31, 1974 - On this day, US President Gerald Ford restored the right of Americans to privately own gold.
October 1979 - Paul Volcker, chairman of the Federal Reserve, changes the monetary policy of the United States, shifting the target from the level of interest rates to the amount of credit. He then begins to starve the U.S. economy of credit to curb inflation. In the third quarter of 1981, the yield on the 10-year U.S. Treasury bond reached 15%, a record high yield and a record low bond price.
January 20, 1980 - Ronald Reagan is sworn in as President of the United States. He continued his aggressive deregulation of the financial services industry. Other notable financial regulatory reforms he subsequently made included making capital gains tax treatment of stock options more favorable and repealing the Glass-Steagall Act.
November 25, 2008 – The Federal Reserve begins printing money under its quantitative easing (QE) program. This is a response to the global financial crisis, which was triggered by losses on subprime mortgages on the balance sheets of financial institutions.
January 3, 2009 – Satoshi Nakamoto releases the genesis block of the Bitcoin blockchain. I believe that our savior will save humanity from the evil clutches of the state by creating a digital cryptocurrency that can compete with digital fiat currencies.
1933–1980 The U.S. Dominion Upward Local Cycle
1980–2008 The global cycle of American hegemony
2008–Present American Rule and China’s Local Cycle
1933–1980 American ascendant
Relative to the rest of the world, the United States suffered little in the war. Taking into account American casualties and property losses, World War II was less deadly and destructive than the Civil War of the 19th century. While Europe and Asia were in ruins, American industry rebuilt the world and reaped huge rewards.
Although the United States was victorious in the war, it still needed to pay for the war through financial repression. Starting in 1933, the United States banned the holding of gold. In the late 1940s, the Federal Reserve merged with the U.S. Treasury. This allowed the government to conduct yield curve control, which resulted in the government being able to borrow at below market rates because the Fed printed money to buy bonds. To ensure that savers could not escape, bank deposit rates were capped. The government used marginal dollar savings to pay for World War II and the Cold War with the Soviet Union.
If gold and fixed-income securities that pay interest at least at the rate of inflation are banned, what can savers do to fight inflation? The stock market is the only option.
Even as gold prices rose after U.S. President Richard Nixon ended the gold standard in 1971, its returns have yet to beat those of stocks.
But what happens when capital is free to bet against the system and the government again?
Gold outperformed stocks. I stopped the comparison in October 1979 when Volcker announced that the Fed would begin a major contraction of outstanding credit, thereby restoring confidence in the dollar.
1980–2008 Peak of American Rule Global Cycle
As confidence grew that the United States could defeat the Soviet Union, the political winds shifted. It was time to move away from the war economy, to unwind the financial and other regulations of the empire, and to let those animal spirits run wild.
Under the new petrodollar monetary architecture, the dollar was supported by surplus oil sales from Middle Eastern oil producers such as Saudi Arabia. In order to maintain the purchasing power of the dollar, it was necessary to raise interest rates to curb economic activity and, in turn, inflation. That’s what Volcker did, he let interest rates soar and the economy tank.
The early 1980s marked the beginning of the next cycle, during which the United States traded with the world as the only superpower and the dollar strengthened due to monetary conservatism. As expected, gold underperformed against stocks.
2008 – Pax Americana and China’s Local Cycle
Faced with yet another deflationary economic collapse, the Pax Americana once again defaulted and devalued. This time, rather than banning private gold ownership and then letting the dollar depreciate against gold, the Fed decided to print money and buy government bonds, euphemistically known as quantitative easing. In both cases, the volume of dollar-based credit expanded rapidly to “save” the economy.
Proxy wars between the major political groups began again. A major turning point was Russia's invasion of Georgia in 2008, in response to its attempt to admit Georgia to the North Atlantic Treaty Organization (NATO).
Currently, a fierce proxy war is being fought between the West (Pax Americana and its proxies) and Eurasia (Russia, China, Iran) in Ukraine and the Levant (Israel, Jordan, Syria, and Lebanon). Both conflicts have the potential to escalate into nuclear confrontations on both sides. In response to the seemingly unstoppable march to war, countries are turning inward to ensure that every aspect of their national economies is ready to support the war effort.
#meme板块关注热点 #以太坊ETF批准预期 #美国5月核心PCE物价指数年率增幅创2021年3月以来新低 #币安合约锦标赛 #BTC☀
