The Debasement Trade
Betting on the End of Sound Money
For fifteen years, investors have been running the same playbook, the Debasement Trade. Governments spend, central banks print, deficits widen, and assets inflate. Stocks, property, and Bitcoin all thrive on the same narcotic: the relentless erosion of fiat. But like every addiction, it comes with diminishing highs and catastrophic withdrawal. We’re now entering the late stages of this experiment, and the symptoms are impossible to ignore.
The New Normal: Perpetual Deficits and Monetary Capture
Every major economy is running unsustainable deficits. The U.S. government borrows $1 trillion every 100 days, Japan’s debt-to-GDP is north of 250%, and Europe is quietly abandoning fiscal discipline. Central banks, once “independent”, are now fiscal agents, the clean-up crew for political excess.
The Federal Reserve’s balance sheet may shrink on paper, but in practice, monetary tightening has limits. With federal interest costs approaching $1 trillion annually, policy independence becomes a polite fiction. By 2026, Jerome Powell may well be replaced by someone more “cooperative” , a compliant technocrat to monetize the next wave of deficits. The illusion of restraint is fading. The U.S. fiscal path now depends on low rates and higher inflation. It’s not monetary policy anymore, it’s debt management.
The March to War and the Economics of Empire
History rhymes. Empires in decline always turn to debasement and war to delay reckoning. Rome clipped its silver coins to fund expansion. Weimar Germany printed to pay reparations. The late-stage British Empire printed to sustain its colonies.
Now it’s Washington, Brussels, and Tokyo.
The new conflicts, Ukraine, Gaza, the South China Sea, are not isolated. They’re signals. The global system is fragmenting, alliances are hardening, and military Keynesianism is back in fashion. War demands money. Welfare demands money. And when tax revenues fall short, the printing press takes over.
The “Fourth Turning”, a generational cycle of crisis and rebirth, is unfolding in real time. It’s not just political instability; it’s a monetary reckoning.
The Historical Playbook: What Worked in Past Debasements
Every fiat collapse in history has rewarded those who owned scarcity. Rome’s debasement (3rd century AD): Gold and land preserved wealth while the denarius collapsed. Weimar Germany (1920s): Hard assets, foreign currencies, and equities tied to exports surged. 1970s U.S. inflation: Gold, oil, commodities, and real estate crushed bonds and cash. So what are today’s equivalents?
Bitcoin: digital gold for a digital age.
Gold and silver: still the ultimate monetary anchors.
Energy and commodities: the backbone of any real economy.
Select equities: producers of tangible value with low leverage.
This is the modern Debasement Trade: bet against currency, buy scarcity, short the system. But Every Trade Ends. The irony is that the Debasement Trade only works while confidence in fiat remains. Once that confidence dies, liquidity dies with it. The next phase of this cycle won’t be about front-running central banks, it will be about surviving the collapse of their credibility.
When this Fourth Turning ends, the pendulum will swing back. Sound money will re-emerge, whether through Bitcoin, a gold-backed system, or a digital currency tied to production, not politics. Productive enterprise, not speculation, will again be the source of wealth. The endgame of debasement is not chaos forever, it’s reset and rebirth. But we’re not there yet.
Conclusion: Trade the Collapse, Prepare for the Rebuild
The Debasement Trade isn’t a moral choice. It’s a survival tactic. Governments will keep printing, central banks will keep accommodating, and markets will keep rewarding those who hedge against the lies. But understand what you’re playing: a late-stage cycle of imperial finance, where everything inflated is built on promises that cannot be kept. At some point, those promises implode. And when they do, the only thing that will matter is what you own when the music stops.