The explosion of risk assets during covid was but an amuse bouche for what is going to happen this decade and probably beyond.
GME and Dogecoin and Rolexes and Air Jordans were just a precursor for a world where just about every imaginable asset (of *some* value and duration) has a real-time price and is traded on a global digital marketplace. This will include trading of people (their income streams, anyway), memes, all forms of property, prediction markets, and much more.
The financial casino isn’t over. It’s still in the early innings. Everyone is becoming an investor, and they have no choice.
Some trends driving this:
1. Given the enormous debt and lack of real (productivity driven) growth constraining the world’s richest nations (especially the US), currency debasement is the only practicable long-term political choice; thus, the money printers will continue to brr brr, and probably at an accelerating rate. Liquidity won’t be the problem; capturing and retaining real value will be
2. Software is steadily creating digital representations of all physical assets; once digitalized, these assets are easily financialized, securitized, traded, whatever. Trust isn’t the issue here, since physical assets ultimately derive legitimacy from the meat world of local governments and law enforcement
3. Blockchain (encompassing NFTs and tokens) is creating trustworthy representations of all digital assets. And as is pretty clear from what’s happening in cryptos thus far, the financialization of these assets will blow peoples’ minds. These digital assets will explode in quantity and aggregate value as the world increasingly moves its economic, political, and social activity onto the digital layer (ie the metaverse)
So we’ve established that there will be a lot more capital in the system (1). There will be a lot more assets (2 and 3). The arena will become increasingly global (despite all this recent talk of de-globalization which largely benefits conservative politicians and onshore industries, aggregate human self-interest will win out eventually and that is towards a better, faster, and cheaper global marketplace). And all of this will be enabled and accelerated by software and digitization.
Yes I sound like an off rocker tech permabull. I’ve also placed my bets accordingly.
There’s a lot more to write about here, mostly downstream effects of (1), such as widening income inequality and sustained real inflation (due to financial repression) growing the number of have-nots, and forcing those have-nots to make ever riskier financial choices.
I’ve been on cold medicine for the past few days and my head is foggy so there may be more nonsense here than usual, and as before, these thoughts are worth what you’re paying for them
cheers I love you