3 Trends That Are F*cking Up Our Future (And 3 Trends That Can Fix It)
- Real Vision
- March 7, 2023
This is a special guest post from Raoul Pal, our co-founder and CEO at Real Vision, and founder at Global Macro Investor. It might actually be the first blog post he’s written for us, and the reason for the special occasion is that we have just launched How to Unf*ck Your Future, a 2-week limited series that aims to do exactly what the name says.
Take it away, Raoul…
We Need to Talk About the Future
As you may know, one of the reasons we set up Real Vision back in 2014 was because of what had happened in 2008 (and 2012 in Europe), when the issues of debt and demographics came to the forefront of everybody’s mind, and we realized we were stuck with a broken system.
It was a wake-up call for all of us to take control of our own finances and our own lives. And that’s what Real Vision was all about, democratizing access to information to give us all a chance in a world where the middlemen had let us down.
Now it’s 2023. And here’s what we know…
- There are some massive issues with the world economy today, particularly the Western economies. And they’re dragged down by debt, aging demographics, broken political systems, broken geopolitics, and a very complicated world.
- The average real adjusted wage in the United States has not gone up since the 1970s. The American dream of everybody participating in a growing economy has just never materialized. So, wages didn’t go up, but asset prices kept going up, and to fund the difference, people took on debt to try and make their American dream of their happy retirement happen.
- As wages stagnated, people got angry and frustrated and populism rose on all sides (hello, the last decade or more…!).
The Big Issue: How Do You Make GDP?
The big issue for me is, how do you make GDP? GDP is a magic formula. It’s basically population growth + productivity + debt growth. Those 3 things are how economies grow.
Well, I think you know by now that almost every single population in the Western world, including Japan and China, is shrinking. So that is an unprecedented thing for us to have to deal with.
Next, we’ve got debt growth. Debt growth has been the engine on which we’ve driven everything. And we got to a point where debt in the U.S. is around 220% of GDP.
So, we’ve got a very indebted world.
Now, let’s look at the productivity side. This is the only dial that I think we can actually move now. If we can’t really move debt growth in any meaningful way and we can’t move population growth, then productivity has to be the answer.
And that is the focus, I think, of where this is all going: solving productivity.
That’s what we have to solve to unf*ck our future.
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3 Trends That Could Unf*ck Your Future
Where you actually make money is once you’re in a secular trend, when the tailwinds are behind you and the business cycle is also in your favor.
And I’ve identified 3 key trends that could counteract the headwinds we all face…
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The Exponential Age
We’re experiencing the fastest change in technology in all human history. And it’s all interconnected and all happening at the same time. I think this is going to solve our productivity issues. It will solve for the lack of population. But we have to get there first, and we’re not there yet, and it certainly brings problems of its own. -
Digital Assets
Digital assets solve 2 things here. One is the issue of debt and the broken financial system. I’ve talked at length about why this is so important, and why having a new parallel financial system we can transition across to is incredibly important. It also solves productivity because it is a very efficient way of transferring ownership and value and brings new sources of value onto global balance sheets such as brand, community, and other intangibles. - The Monsoon Thesis
If the world is struggling from high debt, slow growth, and an aging population, well, let’s look for countries that have the opposite — young populations, low debt, and high growth. India is at the center of this. The sweet spot for any economy is when the average age of the population is between 30 and 40. That’s when things really explode. And the average age in India is 28.
Why Now?
I believe we’re at the nexus where the cyclical trends driven by the business cycle have reached the bottom of the secular trend. And that is when things get really interesting.
Can markets go lower? Possibly. My view is the bottom is in markets, but I can be wrong…!
The point is that we have a generational opportunity to buy into all of these themes.
And Finally…
I know these trends come with problems of their own (AI taking our jobs, anyone?), and I can’t deal with the problems. I’m not a politician. But I can deal with the opportunity.
The TL;DR is that I’d rather invest in the future than ignore it.
This has been a short excerpt of my thinking, and I hope you found it helpful. If you want the full hour-long episode where I go into this in more detail (and talk about specific investments), you should join us for How to Unf*ck Your Future. We’ve extended our free trial to 14 days, which gives you plenty of time to decide whether it’s a good fit.
I guess the only question to ask is, what would future you say is the right decision?