"Today, capital owners collect a disproportionate share of profits relative to laborers. There is no intrinsic reason that this degree of inequality cannot persist. But in modern history it never has."
"I suspect the failure of Soviet communism led western free-market capitalists to imagine every element of our system to be superior. I imagine someday we will regard that black-and-white conclusion as foolish. China's unprecedented economic rise and breathtaking technological advances should prompt Western self-reflection. So far it has not. I can imagine this bein forced upon us. Perhaps abruptly."
"Investing is...principally about the identification of macro mega-trends. The two dominant trends of recent decades are now obvious: (1) breathtaking technological advance and (2) deepening global trade...the advance gave each curious mind access to the collective discoveries and knowledge gained since the dawn of time."
"Population growth has been slowing, inexorably...these trends have interacted in complex ways to produce a disinflationary environment that naturally favored capital owners over laborers. Governments mostly ignored this growing imbalance and its corrosive social consequences. In fact, they implemented policies that amplified the problems, reversing each economic interruption with lower interest rates, greater debt, increased leverage, and this inflated asset prices, widening inequality. The process was reflexive in that each crisis required a more aggressive dose of monetary stimulus that had itself contributed to the economic fragility in the first place. Such stimulus works by pulling demand from the future to the present and it therefore required no imagination to foresee that the process would ultimately deplete the former to sustain the latter. This end point was reached during the economic depression of early 2020. In response, western governments embarked on a new form of policy stimulus, issuing unprecedented quantities of bonds and then buying that debt with money created by their central banks."
"...an asset that has finite supply, but no intrinsic value, could become priceless, if only we imagine it so."
"As people poured their energy into this new system (Bitcoin et al.), it s promise extended far beyond a simple alternative to digital dollars. This has drawn new investors, innovators, and with each addition, it becomes more difficult for the government to destroy the system. Rather, the incentive to allow this new technology to coexist alongside digital dollars grows. As investors observe these trends emerge, they become more willing to invest, and as they do, it becomes harder still for the government to tear it down. The process is also reflexive. And this creates yet another great inversion in today's inverted world: an asset that has no intrinsic value becomes increasingly safe to hold the more its price rises."
"...Investor portfolios are most exposed to the precise outcome that governments are aggressively trying to produce (inflation)." — especially since most investors are short volatility (i.e. invested in assets that are harmed by volatility; e.g. a 20% down payment on a home is a 5x levered bet on short volatility)
"In a recession accompanied by inflation, portfolio losses are catastrophic. Most people cannot imagine that. But it is not as hard as you might think. An inflationary recession can happen when people lose faith in fiat."
"...it is hard to imagine the long-term trend of ever more aggressive policy stimulus failing to achieve its inflationary objectives now that governments are unconstrained by the fear of monetary/fiscal policy coordination. And what is attractive about the addition of digital assets to a portfolio is that they help mitigate this debasement risk without requiring you to pay negative carry while waiting...but digital assets also provide exposure to the promise of humanity's latest [positive] Black Swan...a highly convex, bullish bet on the promise of a brighter future that simultaneously protects you from suffering the severe consequences we face for our poorly managed past."
"...Owning these assets is a mere toehold to the future, a deposit on the view that everything we know about financial intermediation and its relationship to centralized policy will change in ways we cannot yet foresee. Holding these assets over the long-term aligns yourself with the macro mega-trends of technological advance [deflationary, together with population shrinkage] and currency debasement [inflationary], both of which appear to be accelerating. And naturally, where this all leads, and to what valuations, will be determined by our collective imagination."