On the Edge of Eternity
We are at the brink of a change in value attribution worldwide that will lead to a transformation of information, culture, and employment.
It is human nature to spend our lives building for stability but wishing for change. We make decisions out of rationalization to protect ourselves while yearning for a better future.
Change is hard to comprehend.
Gradual change is wishing for idealism without confronting the big scary idea. It does not force us to face our demons; it does not disrupt our habits.
Sudden change is frightening: it rips us up from our roots and forces us to rebuild again. Destruction of the old that leaves space for creation of the new.
Tectonic plates are now moving beneath our feet as power is shifting worldwide.
This is symbolic of a new kind of change—a change in value attribution worldwide that will lead to a transformation of information, culture, and employment.
The change in markets
Stock markets are an important barometer in shifting sentiment.
Experts have been warning for years about an inevitable end to the secular bull market. Markets can only defy gravity for so long until something has to correct.
And correct it has. 2022 saw a 19% drop in the S&P, the largest since the 2008 Global Financial Crisis, marking the end of a decade-long tech boom.
Or is it? Some are arguing that we are shifting towards the reindustrialization of Western economies. Value stock, commodity fuelled, real asset driven boom. You can forget about your tech stocks and crypto for the next 10 years.
This crash marked the end of one cycle and the beginning of another, similar to how the dotcom capitulation at the end of the 90's was followed by the pivot towards hard assets and value stocks that set off the housing bubble in the 2000s.
However, this cycle will be much shorter, soon leading to another Renaissance like revival for several reasons:
We are on the brink of the fourth industrial revolution. Multiple disruptive technologies are emerging that have the potential to change our economy forever.
The law of accelerating returns (or the exponential age). Everything is moving much faster. New inventions are coming out on tighter timelines than ever before.
Monetary policy is no longer the same. Decades of low interest rate policy depended on globalization and just-in-time supply chains, which in turn depended on peace.
When stimulus cheques came raining down during covid, giving everyone free money to throw at broken supply chains, asset prices skyrocketed and we witnessed the first “everything bubble” in history. Too much money chasing too few goods. By the time the Fed started raising interest rates, it was too late to tame inflation.
Now as the Fed is forced to hike interest rates faster than they had ever in history, everyone is left out in the cold and crying that there is no more easy money.
Previously, central banks around the world were economically incentivized to maintain low interest rates and devalue their currencies in tandem with the Federal Reserve to ensure their country’s exports remained competitive. Global trade depended on unprecedented levels of borrowing and spending.
Now most market players are making the fatal assumption that we are operating under normal monetary conditions… that the Fed just needs to raise interest rates and inflation will go down, similar to what they did in the 80’s.
But we are in a wartime economy. Kinetic war, economic war, commodity war, semiconductor war, you name it. Raising interest rates has no effect on adversarial nations and weaponized commodities.
You can print money, but not oil to heat or wheat to eat.
— Zoltan Poszar
The frightening part about disruptive change is that many will deny it until it hits them in the face. They will continue on with their old habits, expecting a reversion to the mean, writing it off as a mere blip, until the old ways no longer work. It is the unknown unknown—few will adapt, and even fewer will anticipate. Change is merciless.
One might even suspect that China had timed its lockdowns to disrupt supply chains and make it difficult for the Fed to raise interest rates at the time it should have. Which brings us to foreign policy.
The change in policy
It’s no secret that tensions have been bubbling beneath the surface in relations between East and West, most notably Russia and China relations with the USA. Until recently, these relations could be charted on a fairly stable graph with the exception of a few minor blips. Peace, globalization and trade, with a few minor spats. But the real monumental change happened when Russia invaded Ukraine.
What followed was not only devastating war but a series of policy changes that sent a very powerful signal to other foreign interests: if the US can freeze over $500 billion of Russian assets, they can very well do the same to other foreign entities and billionaires if their leaders engaged in any unsavoury foreign policy tactics.
In recent history rich folks around the world have kept the majority of their wealth in Western financial systems out of trust in our separation of powers (and fear of confiscation by their benevolent leaders).
However, we have just proven that system wrong through aggressive appropriation of oligarch yachts. And now the rest of the world is hedging.
This is not to say that punishment was not due. It’s more of a question of how we appear on the world stage by forcing our will upon other nations.
Global superpowers recognize the tide is turning and are moving to form alliances. In the West we take it for granted that our economy has been strong for so many years. We assume that others are struggling to keep up because our media focuses only on the problems of other nations. We assume that our sanctions are all-encompassing and unfriendly nations will not organize themselves behind our backs.
We also make the assumption that many of these countries are still “emerging economies” when in fact they now possess the wealth (and determination!) to surpass Europe.
Change always seems to happen out of nowhere when in fact it builds up slowly over a long period of time. Potential energy accumulates and stores itself within our collective veins, until the stress becomes too great and it snaps, unleashing a destructive force that no one saw coming.
President Xi met with the GCC for the first time in history to discuss a "new paradigm of all-dimensional energy cooperation" using "RMB settlement in oil and gas trade" to advance the "m-CBDC Bridge project."
In simple English? They’re courting OPEC and building an alternative global payment system for energy.
The change in money
This is not the end of the US dollar. This is the beginning of a multipolar financial world.
But we should be aware that an Eastern trade block is forming that could very well leave us out in the cold.
Picture this: BRICS forms a coin / digital currency which is a basket of currencies backed by each nation’s natural resources. As a nation commits more of its resources to the union, the value of its currency relative to the others in the basket increases. Although not yet determined, I imagine the final version to be something like IMF’s SDR meets ve-tokenomics.
This incentivizes member nations to trade with each other—resources reserved for trade within the union would get better value for a nation’s money. Some members will see arbitrage opportunities to resell commodities to the Western trade block at a premium, like India and Saudi Arabia have already been doing.
Currently the value of the USD is supported by international trade. Trust was originally established in the USD when it was made a reserve currency in 1944 at Bretton Woods and backed by gold. Once the gold standard was removed in 1971, the petrodollar and the overall strength of the US economy maintained trust in the currency.
Trust in other economies is currently not strong enough to establish a single viable alternative reserve currency, but a basket of currencies would provide enough trust within member states (and an alternative payment route around unfriendlies that previously did not exist).
A trade union like this will inevitably erode demand for USD… especially since two of the world’s superpowers, Russia and China, are no longer incentivized to trade in a currency that is financing a war against themselves.
Our understanding of money is about to be changed forever.
Two possible scenarios can emerge. One is a centralized, controlled, perhaps even dystopian version—central bank digital currencies. You could get your money supply switched off if your social score drops too low. You could be rationed on how many kilos of beef you can buy each week and have to eat insects for protein.
The other is decentralized, open-source, transparent. Yes, crypto.
Crypto represents the separation of money and state—a force so disruptive that it threatens centuries of entrenched wealth. It provides an alternative unit of exchange immune to the debasement of fiat currencies, enables the formation of localized economies, and limits the ability of entrenched institutions to extract value.
And yet we have not seen any significant real world traction outside of speculation. The hyperfinancialization of crypto has been its achilles heel. The world is convinced that it is nothing more than degenerate gamblers betting on monkey pictures and dog coins.
The FTX apocalypse marked a pivot point for the future of crypto. Not only did industry-stifling regulation die out, the world once again realized the dangers of a single point of failure organization galvanized by the values of pax-Americana.
Despite all the chicanery, crypto’s main value proposition is the ability to encode incentive structures into microeconomic structures. Imagine if businesses and communities had control of their own micro “monetary policy” so they could better incentivize loyal customers. This is what tokenomics (are supposed to) do.
Further, social tokens and NFTs are creating a crypto renaissance that enables creators and artists to better monetize their fan base. NFTs bring the 1000 true fans theory to life.
The distributed governance models of Decentralized Autonomous Organizations (DAOs) enable communities to form tokenized economies and provide distributed ownership to their members. This also opens the doors to a new form of employment (if DAOs can ever get over their coordination woes).
We are moving from an era of centralized, bureaucratic value creation firms to an era of decentralized, permissionless value creation networks.
The change in work
Nobody wants to work anymore. The Great Resignation was the beginning of a mass exodus and a change of heart of employees around the globe.
Employees are now demanding work to be better paid, more meaningful and either remote or hybrid.
Work-from-home marks the beginning of a new era of our economy where employees are able to find more autonomy and meaning in their work. Talent can be better appropriated to demand, providing more motivating work for employees while simultaneously enabling more efficient task fulfillment.
It took us years to figure out how to optimize productivity after the invention of electricity—as we learn how to create a “distributed service sector”, we may even see a Roaring 20s type of economic boom.
Covid may have been a blessing in disguise if this turns out to be the case. Although we had the tools available to shift online previously, we stubbornly refused to change until the tidal wave came crashing down. Now remote first and physical premium is the norm.
This could even lead to a doubling of annual productivity growth in comparison with the 2010’s and an additional 1% growth in 2024 due to “online channels, automated production tasks, increased operational efficiency, and sped up decision making and innovation of operating models” (keep in mind this report was written before inflation was everyone’s favourite word and there were multiple hot and cold wars roaring across the globe).
The outsource economy has already started bringing increased competition for workers as it opens the playing field to talent around the globe. A skills arbitrage is emerging—nearly a third of survey respondents believe their country “lacks people with the skills to do my kind of work.”
Corporations have already been taking advantage of this to push costs down.
The paradigm change
We are on the brink of a new era of everything. Other than a mass reorganization of resources, we are looking at entirely new value flows through global economies.
It’s been a tough couple of years. From pandemics to lockdowns to inflation to protectionism to war, we’ve just about seen it all.
But I am still optimistic about the future. As we become better at measuring productivity, we will learn to evaluate performance based on output rather than time spent. We will have more flexibility to pursue jobs that maximize our skill sets and passions.
AI will revolutionize work. Mundane tasks will increasingly become automatized, leaving us open to pursue tasks that require greater creativity or critical thinking. Education will become more humanist and curated, with students obtaining fundamental knowledge from AI and then joining socratic discussions in small focus groups.
Data is the new oil. It is an unlimited resource that we are only just learning how to utilize. It will fuel the Internet of Things (IoT), reducing inefficiencies and costs across the board. There already exists a self-powered chip that harnesses ambient energy!
Fusion power could eliminate energy wars. If there is one thing that drives innovation, it is necessity. Although this looks like it could be a while off, a new clean energy source would completely change the paradigm.
We are staring down the barrel of the biggest change the world has faced since the industrial revolution.
And yet we have not been able to acknowledge it.
This is just the beginning. The next technological revolution will change life in ways we never thought imaginable. What a time to be alive.
Further Reading: