FIRST STEPS
CONTEXT
10-20′
Context Overview
Bitcoin is digital scarcity, a breakthrough discovery occurring at a key moment in History. We have entered a critical juncture. What can we say about it?
It's not the End of History
Cycles predicted it!
Let us check a few theories and approaches that describe economic, socio-cultural, and political cycles. They offer new and convincing perspectives on our current context. Given their outstanding predictive power over the past decades they deserve all our attention.
The end of a debt cycle
In The Changing World Order (2022), renowned billionaire and financial analyst Ray Dalio examines major economic and political cycles. He describes COVID as the trigger for a global economic recession on a scale larger than anything we have seen in the past 80 years, pointing out that this crisis was largely predictable, given the final stage of a long debt cycle we are in.
When debt cycles break, central banks devalue currencies by printing new money, which disrupts the entire economy, precipitating the collapse of reserve currencies and the emergence of a new monetary and financial order. The level of debt is such that a reset of the monetary system is now inevitable. But what shall we do with the debt? A prolonged austerity cure? Boost global growth? Cancel the debt? Devalue it? Raise taxes?
A major crisis precedes a new order
The Fourth Turning (1997) is another important book which deals with history, political science, sociology, demography and philosophy. Its authors claim that history unfolds in generational cycles of 80-100 years, with four “turnings”.
How the turnings unfolds:
The High marks the beginning of a cycle. It is the post-crisis phase or “season” where optimism prevails amongst the population. It is accompanied by a high degree of conformism and trust in the institutions. The latest High started at the end of the second world war.
Twenty years after the beginning of the High, awakenings begin. They are typically periods of spiritual upheaval in reaction to a challenged value system. A sense of rebellion develops. Think of the period 1964-1984.
Unravellings see increasing distrust of the population towards the institutions. Individualism is growing stronger. In this cycle, this corresponds roughly to the period 1985-2007.
Crises lead to the destruction of the old order and the emergence of a new order during the peak of the next cycle/saeculum. We are in this phase! It started with the global financial crisis of 2008 and should be completed by the end of this decade…
This complex dynamic can be summarized as follows:
The Information Age is weakening nation states
The Sovereign Individual (1999) describes the advent of the Information Age as the most significant societal transition in centuries: the latest iteration of a series of mutations that have led humanity from the time immemorial of hunting and gathering to the agricultural and then the industrial era.
The authors, who rightly predicted the discovery of crypto currencies, foresee a reduction in the returns to violence during this new era. Nation-state will be increasingly challenged by new sovereignties capable of effectively providing protection while consuming much fewer resources.
Inflationary money vs. deflationary technology
The Price of Tomorrow (2022) by Jeff Booth allows us to assemble another piece of the puzzle: it highlights the growing tension between the exponential deflationary force of technological progress in the digital age (the price of goods and services are dropping thanks to the efficiency gains produced by technology) and the headlong rush of inflationary policies inflating the money supply to counter it. The system will soon explode and will have to be replaced.
The onset of a new age of money
Kondratiev (K) cycles – Soviet economist, Kondratiev demonstrated that the growth of capitalist economies cyclically combines a phase of sustained long-term growth followed by a period of depression. The cycles that bear his name last 40-60 years and are the result of a radical innovation or an industrial revolution that leads to a virtuous cycle of investment.
The depoliticiZation of Money
State control of money
