A reflection on money, wealth and the turbulent economic times ahead


Some of the world’s most talented people spend their entire lives mastering the art of managing money. An additional 1% return separates winners from losers. But what are we really chasing? Material things? Peace of mind? Financial freedom? At which point is it enough? Is it ever enough?

Research shows that you need 75k per household to reach peak happiness .. yet, we keep pushing for more. Most people’s goal is to expand their bank account, yet few have a goal that goes beyond money itself. Its as if we’re spinning in a rat wheel too afraid to ask ourselves the questions that truly matter:

  1. Why am I alive?
  2. What was I born for?
  3. Would the world miss me if I’m gone tomorrow?
  4. What would I do tomorrow If I had all the money I wanted?
  5. What is the legacy I want to leave behind?

 

Many of us go through life without ever reflecting on this. I’ve been on this trap myself for up to 36 years. Pursuing money seemed satisfying in itself. I spent most of my life studying macro-economics, economic history, portfolio management, money management, etc .. but only recently I started questioning money itself.

And what led me to this path is the strong conviction that the next 20-30 years will be very different from the previous ones. The last 50-60 years have been the most peaceful decades in history (in the developed world). No major wars, no hyperinflation, no deflation, no money (gold) confiscation, no change in monetary system, no dictatorship, no major natural disasters, no major pandemic. Life’s been pretty good!. But it wasn’t always like that .. and most likely .. it won’t be for much longer.

Sky high debt levels (that can never be repaid), negative interest rates (how much lower can they realistically get!), central banks’ balance sheets swelling to historic levels, increasing geopolitical tensions, terrorist attacks, massive flow of refugees, resource depletion of the planet Earth, increasing levels of pollution and CO2 emissions, ever increasing healthcare costs, demographics time-bomb, poisonous foods (GMO, processed, etc), increasing infertility rates. This is an explosive mix, but sadly thats the current state of affairs.

We’re reaching a boiling point and I believe things are likely to change dramatically. I have no idea when that will happen or what the new world will look like. Metaphorically speaking, imagine today’s economy like a bridge with 1000 vehicles capacity. I look at the bridge and I see 4000 vehicles and the cracks appearing everywhere. At which point will the bridge collapse, 4001? 5000? 6000? No one knows, but it doesn’t take rocket science to understand the bridge will eventually collapse.

We can spend as much time as we want trying to make sense of the world and where its heading. Will we have deflation? Hyperinflation? Should I exchange currency (paper bills) for real money (gold)? Should I invest in Real Estate and take advantage of rock-bottom interest rates? Is bitcoin the future of money? Where are interest rates heading? But is that why your mother and father conceived you for? To spend your life collecting little domino pieces and give them all away when you die? Imagine a place where all the talented hedge fund managers, wall streeters, lawyers, physicians, consultants, etc dedicated their time to worthy causes .. rather than pursuing paper claims on future wealth?

In the last few months I came to realise that we’re all wasting too much of our lives pursuing money and worrying about the future. What if Governments confiscate all your wealth? You may think you’re hedged, but are you? And what is wealth anyway? Certainly not the money on your bank account .. that is currency at best, not wealth. At worst its a bank’s liability, as such it will be gone if the asset side of the bank’s balance sheet deteriorates.

Wealth is food, health, freedom, a shelter, friends, family. That is true wealth and that is what we should all worry about, not preserving or expanding currency because let’s face it:  The money chasers pull the levers and decide when we have crisis / recessions and ultimately all your savings can disappear if they want .. because what you perceive as “wealth”, it’s just debt .. and as such .. just promises.

Conclusion:

Don’t get carried away if you made 10% return this year or if you made 20k because unless that translates into more wealth (more friends, more knowledge, better food, better healthcare, cleaner air), it doesn’t really matter. Focus on getting real life skills (teaching, farming, handyman, connecting, travelling, hunting, etc) because they may come handy in the new world that will emerge. Don’t take many things for granted anymore: Things like electricity, energy, hot water, food in the supermarkets shelves, gasoline at the pump station. We may not have this in the coming years. Understand that an extra zero in the bank account might not do much. It’s time to stop watching TV, watching football, drinking alcohol to run away from your life. It’s time to face the music, however ugly the music may sound like. Let’s all rise to the occasion and build a world our children can be proud of.

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