Author: mikeykremer, Messari Researcher

Translation: ChatGPT

A quick overview:

• Globalization has ended, and your financial assets have been liquidated.
• Non-traditional assets are your salvation.
• Bitcoin may reach a million dollars.

From the outbreak of World War II (1939) to Trump's second election victory (2024), we have experienced an unprecedented super bull market. This prolonged rise has shaped generations of passive investors who habitually believe that "the market will never have problems" and "the market only goes up." However, I believe this feast is over, and many are about to face liquidation.

How Did We Get Here?

The super bull market from 1939 to 2024 was not accidental; it was due to a series of structural changes that fundamentally reshaped the global economy, with the United States always at the center.

Rise as a Global Superpower Post-WWII

World War II propelled the United States from a middle power to the undisputed leader of the "free world." By 1945, the U.S. produced more than half of the world's industrial goods, controlled a third of global exports, and held about two-thirds of the world's gold reserves. This economic hegemony laid the foundation for decades of growth.

Unlike the isolationism of the U.S. after World War I, post-WWII America actively embraced a global leadership role, promoting the establishment of the United Nations and implementing the "Marshall Plan," injecting over $13 billion into Western Europe. This was not merely aid—by investing in the reconstruction of war-torn countries, the U.S. created new markets for its products while establishing its cultural and economic dominance.

Labor Force Expansion: Women and Minorities

During World War II, approximately 6.7 million women entered the labor market, increasing the female labor participation rate by nearly 50% in just a few years. Although many women left the workforce after the war, this mass mobilization permanently changed societal views on women's employment.

By 1950, the trend of married women entering the workforce became increasingly evident, with labor participation rates for women across most age groups rising by an unprecedented 10 percentage points. This was not just a wartime anomaly but the starting point of a fundamental shift in the American economic model. The "marriage ban" (policies prohibiting married women from working) was abolished, part-time work increased, household labor saw technological innovations, and higher education levels encouraged women to transition from temporary workers to long-term participants in the economy.

Similar trends occurred among minority groups, who gradually gained more economic opportunities. This labor force expansion effectively enhanced America's productive capacity, supporting decades of economic growth.

Cold War Victory and the Wave of Globalization

The Cold War shaped America's political and economic role after WWII. By 1989, the U.S. had formed military alliances with 50 countries and stationed 1.5 million troops in 117 countries worldwide. This was not just for military security but to establish America's economic influence globally.

After the Soviet Union collapsed in 1991, the U.S. became the world's sole superpower, entering an era many viewed as a unipolar world. This was not only an ideological victory but also the opening of global markets, allowing the U.S. to dominate global trade patterns.

From the 1990s to the early 21st century, American companies expanded aggressively into emerging markets. This was not a natural evolution but the result of long-term policy choices. For instance, in countries where the CIA intervened during the Cold War, U.S. imports significantly increased, especially in industries where the U.S. had no clear competitive advantage.

The victory of Western capitalism over Eastern communism was not solely due to military or ideological advantages. The Western liberal democratic system proved more adaptable, effectively restructuring the economy after the 1973 oil crisis. The "Volcker Shock" of 1979 reshaped America's global financial hegemony, making global capital markets a new engine for growth in the post-industrial era.

These structural changes—the rise to superpower status post-WWII, the inclusion of women and minorities in the labor market, and the victory in the Cold War—collectively drove this unprecedented super bull market in financial assets. However, the core issue is that these changes were one-time events that cannot be repeated. You cannot have women re-enter the labor market en masse again, nor can you defeat the Soviet Union again. Now, both parties are pushing for de-globalization, and we are witnessing the final supports of this long-cycle growth being withdrawn.

What Will Happen Next?

I like Tom; he is my TradFi sentiment indicator in the Crypto circle.

However, unfortunately, everyone is praying for the market to return to historical norms. The market consensus is: things will get worse, then the central banks will ease again, and we can continue to make money… but the reality is: these people are walking to the slaughterhouse.

The bull market of the past century has been built on a series of non-repeatable events (the bull market cannot continue), and some of those factors are even reversing.

Chumba is right on this point​

• Women will not re-enter the labor market en masse: In fact, with Musk and pro-natalist elites pushing for higher birth rates, female labor participation may decline.
• Minorities will not be absorbed back into the labor market in large numbers: In fact, the Democratic Party's stance on immigration policy is nearly as tough as the Republican Party's, which has become a bipartisan consensus.
• Interest rates will not decline again: In fact, every elected leader knows that inflation is the biggest threat to their re-election. Therefore, governments will strive to avoid lowering interest rates and reigniting inflation.
• We will not further globalize: In fact, Trump is pushing in the completely opposite direction. Moreover, I expect the Democratic Party to replicate this policy in the next election (don't forget, most of Biden's policies directly copied Trump's first-term policies).
• We will not win another world war: In fact, it seems we may even lose the next war. In any case, I do not want to verify this hypothesis.

My point is simple: all the global macro trends that have driven the stock market up over the past century are now reversing. What do you think will happen to the market?

Goblin Town

When an empire enters decline, life becomes really tough—just ask Japan. If you bought at the historical peak of the Nikkei 225 index in 1989 and held on until now, 36 years later, your return is about -5%. This is the typical "buy and hold, suffer endlessly." I believe we are on the same path.

Worse yet, you should prepare for capital controls and fiscal repression policies. Just because the market is not going up does not mean the government will accept reality. When traditional monetary policy fails, governments will turn to more direct financial control measures.

Upcoming Capital Controls

Financial repression refers to providing savers with returns below the inflation rate so that banks can offer cheap loans to businesses and governments, reducing debt repayment pressure. This strategy is particularly effective for governments clearing domestic currency debt. In 1973, Stanford University economists first used this term to criticize the policies of emerging market countries that suppressed economic growth, but now these strategies are increasingly appearing in developed economies like the U.S.

This may sound like a joke, but you should seriously consider why the K-line chart of Monero looks so perfect right now.

As the U.S. debt burden surpasses 120% of GDP, the likelihood of repaying debt through traditional means is increasingly diminishing. The "playbook" for financial repression has already begun to be executed or tested, including:

• Direct or indirect restrictions on government debt and deposit interest rates
• Government control of financial institutions and establishment of competitive barriers
• High reserve requirements
• Creation of a closed domestic debt market, forcing institutions to purchase government bonds
• Capital controls limiting cross-border asset flows

This is not a theoretical assumption but a reality. Since 2010, the U.S. federal funds rate has been below the inflation rate for over 80% of the time, effectively forcibly transferring wealth from savers to borrowers (including the government).

Your Retirement Accounts: The Government's Next Target

If the government cannot rely on printing money to buy bonds and lower interest rates to avoid a debt crisis, they will set their sights on your retirement accounts. I can easily imagine a future where tax-advantaged accounts like 401(k)s will be mandated to allocate more and more "safe and reliable" government bonds. The government no longer needs to print money; it just needs to directly appropriate existing funds in the system.

This is precisely the script we have seen in recent years:

• Asset freezes: In April 2024, Biden signed a law authorizing the government to seize Russian reserve assets in the U.S., setting a precedent for the government to freeze foreign exchange reserves at any time. In the future, this practice may not only target geopolitical adversaries.
• Canadian Freedom Convoy protests: The government froze about 280 bank accounts without court approval. Financial officials admitted that this was not only to cut off funding but also aimed to "deter" protesters and ensure they "made the decision to leave." When asked how freezing accounts affected innocent families, the government's response was, "They just need to leave."

Gold Confiscation and Surveillance

It is not surprising that American history is filled with similar actions:

In 1933, Roosevelt issued Executive Order 6102, mandating citizens to surrender gold or face imprisonment. Although enforcement was limited, the Supreme Court supported the government's right to confiscate gold. This was not a "voluntary buyback program," but a "forced wealth expropriation," merely packaged as a transaction at "fair market prices."

The government's surveillance capabilities rapidly expanded after the 9/11 events. The FISA Amendments granted the NSA nearly unlimited power to monitor the international communications of American citizens. The Patriot Act allowed the government to collect the phone records of all Americans daily. Section 215 even permitted the government to collect your reading records, study materials, purchase history, medical records, and personal financial information without any reasonable suspicion.

The question is not "Will financial repression come?" but "How severe will it be?" As the economic pressures of de-globalization intensify, government control over capital will only become more direct and severe.

Gold and Bitcoin

The monthly chart of gold since 1970 is currently the strongest K-line chart in the world.

By process of elimination, the most suitable financial asset to purchase has become evident—you need an asset that has no historical correlation with the market, is difficult for the government to confiscate, and is not controlled by Western governments. I can think of two, one of which has already increased by $6 trillion in market value over the past 12 months. This is the most obvious bull market signal.

Global Gold Reserve Race

Countries like China, Russia, and India are rapidly increasing their gold reserves in response to changes in the global economic landscape:

• China: In January 2025, increased gold holdings by 5 tons in a single month, net buying for three consecutive months, totaling 2,285 tons.
• Russia: Controls 2,335.85 tons of gold, becoming the fifth-largest holder of gold reserves globally.
• India: Ranks eighth globally, holding 853.63 tons, and continues to increase its holdings.

This is not random behavior but a strategic layout. After the G7 froze Russia's foreign exchange reserves, central banks worldwide took notice. A survey of 57 central banks showed that 96% of respondents viewed gold's credibility as a safe-haven asset as a motivation to continue investing. When dollar-denominated assets can be frozen with a stroke of a pen, physical gold stored within one's own country becomes extremely attractive.

In just 2024, Turkey increased its gold reserves by 74.79 tons, a rise of 13.85%. Poland's gold reserves increased by 89.54 tons, nearly a 25% rise. Even small countries like Uzbekistan added 8 tons of gold in January 2025, bringing its gold holdings to 391 tons, which constitutes 82% of its foreign exchange reserves. This is not a coincidence but a coordinated effort aimed at escaping a potentially weaponized financial system.

Governments are most reassured by gold because they have established systems for using gold for reserves and trade settlements. The total gold holdings of BRICS central banks account for over 20% of global central bank gold holdings. As the Governor of the Central Bank of Kazakhstan stated in January 2025, they are transitioning to "monetary neutrality of gold reserves," aiming to increase international reserves and "protect the economy from external shocks."

Bitcoin

This gold-dominated era may last for months or even years, but ultimately, its limitations will become apparent. Many small and medium-sized countries lack sufficient banking systems and navies to manage the global logistics of gold, and these countries may become the earliest adopters of Bitcoin as a substitute for gold.

• El Salvador: Became the first country to adopt Bitcoin as legal tender in 2021 (later announced its cancellation), and by 2025, its Bitcoin reserves had grown to over $550 million.
• Bhutan: Mining Bitcoin using hydropower, with reserves exceeding $1 billion, accounting for one-third of the country's GDP.

As the world becomes more chaotic, countries are less likely to entrust gold to allies. The risk of confiscation is too great, as evidenced by Venezuela's failed attempts to retrieve gold from the Bank of England. For smaller countries, Bitcoin offers an appealing alternative—it can be stored without a physical vault, transferred without ships, and protected without an army.

This transitional period will propel us into the next phase of Bitcoin adoption, but you must be patient. The world will not change overnight, nor will the monetary system. By 2025, we have already seen the beginnings of this shift, with increasing Bitcoin adoption rates in countries like Argentina, Nigeria, and Vietnam, as people seek protection against inflation and financial instability.

The path forward is clear: first gold, then Bitcoin. As more countries realize the limitations of physical gold in an increasingly digital and fragmented world, Bitcoin's proposition as digital gold becomes more compelling. The question is not whether this transition will happen, but when it will happen—and which countries will lead the way.

A $1 million Bitcoin is on the horizon, but you must be patient. Prepare to first face a severe bear market.

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