This newsletter is intended to be an exploration of the future of civilisation; and to maybe assist readers in making wiser decisions today. As well as a place for me to just explore ideas - a Socratic dialogue with myself. Within that scope is finance and economics of course. Last week it was perhaps a little long - as pointed about by some readers because I quoted a number of sources at length, highlighting some of the risks to the global economy and financial system. I shall try to be more succinct going forwards as this is intended to be a weekly affair.
If the truth be told, I have not really been interested in making money at all since leaving the financial sector many years ago. This has definitely been to the detriment of my family. I have been far more interested in the future of our civilization - and my own spiritual development. In the last decade, I have spoken at investment conferences and guided many people on the investment environment (they made a lot of money!) but I was just jaded with the greed and corruption of our (clearly dying) system, I was not inspired to try and make money myself. At the deepest level, it felt that I would be complicit in supporting a very sick system.
Over the last decade, there have been many nascent trends which have excited me: across education, technology, ecology, governance, and of course spirituality. Of course, I could see a pathway out of the current system of finance but I was too jaded perhaps to want to put my efforts there. This might have changed recently - where a number of inner stars aligned for me.
Going to Zurich
Last week I was invited to Zurich, Switzerland, for the annual conference of Syz Capital, an independent alternative investment specialist, a spin off from Banque Syz. This bank was ranked as one of the soundest banks in the country. I was also invited to be one of the first guests their new podcast, hosted by Richard Byworth, along with a well known fund manager and author Jeff Booth. I worked with Richard many years ago in a previous life, and it was incredible to see his development - and potential role in the future of our new financial system.
I flew to Zurich thinking it would be intellectually-thought provoking to talk about the state of the world, investments and the future of finance but I really did not expect what transpired…
Investment
I will probably write a more detailed synopsis later on the investment environment but here is a very quick synopsis. I understand that most people barely have any money to make investments in this harsh environment - and thats why one of my solutions is so important (please read until the end). Money affects us all.
Global financial markets have done very well since the GFC, and despite the pull back during the early moments of the pandemic. So we are late in the cycle and hence its not surprising that its a struggle to eke out good returns. I believe we are towards the end of the ‘mother of all bubbles’ so one should be vigilant. The CEO of Syz Capital, Marc Syz, seemed to agree; highlighting that returns were becoming correlated and that this is really a time to find good managers who can find uncorrelated returns. I certainly concurred with that. In layman’s terms: its a really bad time to follow the herd now.
Syz was promoting financial products which are uncorrelated ( i.e.should do well in the event of tricky markets) from active managers in PE and hedge funds to a crypto fund of funds (the first in the. world). There was discussion of some fringe markets as well from Turkey to Argentina. Turkey was particularly interesting for me as I spent a few weeks there last year around the time of the Horasis Global Meeting. I listened to the finance Minister making the somewhat compelling case for a turn around in their fortunes. And regardless of its financial prospects, I fell in love with the country. So it was interesting to see the country mentioned.
A number of speakers warned not to bet against the USA: it had benefited from a wall of investments. Not only had it extended its technological lead (along with China) vs the rest of the world, the US was also benefiting from much lower energy costs (especially vs Europe ). In 15 years, the country had added 2.5X the energy resources of Saudi Arabia (all hydro carbons of course). But this is merely a financial argument and I am sure I will return to this later.
Inflation Destroys Civilization
Inflation is a topic which is of central interest to my forecasts and scenarios for the future. In Zurich, I think there was agreement (amongst some pretty astute speakers) that whilst some of the short-term data had seen inflation data ebb from the highs, the risks are that it could explode higher over the coming years. I have spoken ad neauseum about this. I still cannot believe that in 2020 most central banks were complaining that they did not have enough inflation! It seems utter madness. To restate my view: debt, demographics, deglobalisation, war, and ecological crisis all point to higher rates of inflation - in the Western bloc. If its not clear, governments with high levels of debt are likely to print or facilitate money creation as they are unable to balance the budget.
Those countries in the Chinese bloc will benefit from the deflationary forces overcapacity and technology and hence will probably have lower levels of inflation.
I think many people have forgotten how insidious and destructive inflation is. I lived. in - or was involved in - Japan for many years and experienced firsthand , a country in the midst of mild deflation. I assure you high inflation is much worse and less fair.
He states:
“The notion that inflation is harmful is a staple of economic science. But most textbooks underrate the extent of the harm, because they define inflation much too narrowly as a lasting decrease of the purchasing power of money (PPM), and also because they pay scant attention to the concrete forms of inflation. To appreciate the disruptive nature of inflation in its full extent we must keep in mind that it springs from a violation of the fundamental rules of society.
Inflation is what happens when people increase the money supply by fraud, imposition, and breach of contract. Invariably it produces three characteristic consequences: (1) it benefits the perpetrators at the expense of all other money users; (2) it allows the accumulation of debt beyond the level debts could reach on the free market; and (3) it reduces the PPM below the level it would have reached on the free market.”
You can actually listen to the whole booklet below (or read it above or here). I think it is an interesting booklet, but its certainly not exhaustive. I would have added that the break down in trust with the concentration of wealth destabilises society and ultimately leads to social discord and even revolution. And of course, revolution does not always result in the wisest leaders taking over - just think of the Bolshevik Revolution or Nazi Germany.
Bitcoin
Bitcoin could be a solution to my concern about the destruction of civilization - or part of it. However, I did not realise the degree to which the crypto community and the gold rush around that had confused me and dampened my excitement for the fundamental truth of Bitcoin.
I have been an observer of macro economics for a long time, taking my first class when I was 14 years old. In the 1990s I began a career in international investment starting on Wall St, which led me to spending time in various financial centres around the world. One of those places was Tokyo, Japan. Japan was suffering from the after effects of the end of the bubble and we were living through deflation. It was an amazing training ground to learn about economics, finance and human psychology; and I was exposed to the debates on inflation and deflation. During that era, I became friends with many highly regarded economists, strategists and macro investors around the world. One of my friends - with whom I chatted on an almost daily basis - even joined the board of the Bank of Japan, which was on the side of mild deflation instead of the aggressive inflation targets foreign commentators were recommending - at least until Abenomics when it all changed. As a society, Japan had completely prioritised harmony and equality , much more than the USA.
I was fairly well versed in Austrian economics, the critique of central banking, and had read the Creature from Jeckyl Island regarding the origins of the Federal Reserve.
When I first read Satoshi’s paper, in the aftermath of a crisis which I forecast (the GFC 2007-2009) and was highly forecastable, the idea of a decentralised and truthful money made complete sense to me. It was a revolutionary proposal. But then over time I got confused by all the other so-called alternatives to Bitcoin: they were either not decentralised or truthful. In fact, there were definitely times when I doubted myself and thought maybe I am not smart or young enough to get some of these coins.
In 2017 a number of well regarded futurists and myself were looking at launching a new institute and they wanted to do an ICO. The more I thought about it, the more it felt like a Ponzi scheme. Of course, its easy to say the end justifies the means: we had noble intentions to make the world a better place. But the whole thing did not feel right and I pulled out.
Since then, I have only recommended bitcoin. 20,000 plus various coins started to feel increasingly confusing and just very wrong.
My stance has been to tell clients that the likely collapse to our current system will come through inflation: whether stagflation or hyper-inflationary collapse. And in terms of investment this made it obvious to look at some hard assets such as real estate, astute technology companies benefiting from AI (if valued properly), some gold and Bitcoin. I would invariably be asked about various other coins and I would say caveat emptor on all the others. My recommendation was to have a core holding in bitcoin and then if you want to trade around the others so be it. They might go to zero though, I would warn. The only one which I had a high degree of confidence in was Bitcoin with its guaranteed fixed supply of 21 million coins and track record.
Mea Culpa and Meeting Jeff Booth
Jeff spoke at the conference and we were both on the Syz Capital podcast; we ended up having time to chat off the record for many hours. He is clearly a very astute technologist, a big picture thinker and most importantly a man with a big heart. He wants to see an end to the current oppressive economic system which currently dominates society, and actually perverts human nature. He and I both agree that humans are innately good, and in many cases its our societal system which pushes us off course as well as childhood trauma.
I enjoyed reading Jeff’s book ’The Price. of Tomorrow’ several years ago. I agreed whole heartedly with much of the text - that our current system focused on driving inflation was bad for humanity whereas the natural state of a free markets and advancing technology, was deflation. If entrepreneurs are doing their best to create things for the betterment of society, deflation seems natural . He echoed my entire career, starting on Wall St and the scarcity of financial markets (which benefited the elites) but then moving to entrepreneurship, where creativity should drive down prices for everyone. In my bio, you will also read about my path from scarcity to abundance (although it probably needs to be updating to: path from scarcity to abundance and back to scarcity and now back to abundance!)
Jeff went on to become a world-renowned thinker in bitcoin and the new economy. But it was only in the last few pages of his book where he mentioned Bitcoin.
"Bitcoin (and other cybercurrencies) is an attempt at a solution. The promise of Bitcoin was to create a system that was decentralized in nature, unable to be manipulated by anyone—including governments. As we have seen, money follows the rules of supply and demand; the US dollar goes up in value as demand for it increases relative to supply. Governments can change or manipulate this natural dynamic by increasing supply—printing more money, which lowers the value of their currency relative to others. Bitcoin attempts to change that dynamic by forever fixing supply at twenty-one million Bitcoins. In addition to that, it creates a peer-to-peer ledger without any central control: the blockchain. As an open, distributed ledger, it offers security and trust by verifying transactions with consensus instead of through a central authority"
Seeing vs thinking
I told Jeff and Richard over dinner that for years, I used to show this following image in my presentations. Have a glimpse and see what you see.
Most people can only see a rabbit or a duck. If you don’t mention the other, it does not matter how long you peer at the image you might not be able to see it. Seeing patterns, seeing the bigger picture is not easy. It does not depend on our narrowly defined intelligence - IQ. It does require letting go of the old patterns, and old ways of thinking. If you are completely immersed inside the old system, its likely you will not see it.
If the truth be told, I had some blockages. Some part of me would not let go of the old and I am embarrassed to admit that perhaps I could not see or fully stand in the new - in the case of a Bitcoin centred economy and civilization. This was as much a spiritual journey as it was a journey through finance. Remember, I was probably more qualified than any to jump into the new paradigm. Probably like most people realisation took a number of steps, not just one. Im peeved it took my longer than it should have.
If I have not articulated the vision here, I will strive to explain and make it in future newsletters and in my upcoming talks. But I am dedicated to an abundant, technologically advanced, ecological civilization. However dark it becomes in the next few years, I am confident it will happen.
Jeff
To summarise, I utterly fell in love with Jeff as a human being - so I will let him have the last word. He forwarded this recent talk to me as we parted ways so I presume that it best represents his latest thinking. My exploration continues. The most important thing I ever learnt from living in Asia was the timeless wisdom of Zen: the ancient sages encouraged us to step into the space of the unknown. What do we really know? Dropping our ego, our beliefs, other peoples beliefs, and everything else which is superfluous, we have a chance at clarity.
News
Horasis has announced its India meeting will be held in Athens on 15-16 September 2024. I will be leading a group to Delphi afterwards to digest the experience and vision the future - and maybe even meet the “Oracle”.
Pilgrimage
My dear friend and fellow collaborator, Sujith Ravindran is leading a walk across Italy to Assisi , which I was due to support. I walked it last year. As the dates overlap with the Horasis event I might not be able to attend but if feel inspired and you believe you qualify, please reach out to me. It can be a life changing event.
I will still be offering 1-1 Vision Walks or pilgrimages for those who are interested in using the mountain and nature as a way to crystallise vision.
Whispers of Merlin’s Mountain
I am convinced that for humanity to turn course on the ecological (not climate) catastrophe we are creating, we need to have the humility to learn from indigenous cultures: how can we operate within the web of life? This is part of my work with the UN. I have a big question: what does it mean to be indigenous? Can we in the industrialised world recover our indigenous knowledge. In the USA, one can consult with the wisdom-keepers of the First Nations. And I think that in Europe, we will benefit from tuning in to the old philosophies - the Celts, the Druids, the Tribes. In August I am facilitating a journey of the old ways of these British Isles.