STEVE DUBIED HAS BEEN mainly engaged IN RISK MANAGEMENT ON INSTITUTIONAL PORTFOLIOS
LISTED IN THE "BETTER INVESTMENT" RANKING AS ONE OF THE BEST ASSET MANAGERS IN 2008, 2009 AND 2010
THE GREAT DEBASEMENT
The feeling that we are gradually losing our purchasing power is growing. Conservative financial theories advocating safe investment in government bonds are proving to be a slow and pernicious drain on our long-term financial capacity.
The current ‘technical’ vocabulary disseminated by the authorities avoids being clear and precise about the increase in banknotes in circulation and the growing money supply to cope with the increase in public debt. We are talking above all about an increase in the money supply to finance economic growth.
The emblematic example of this monetary situation is the United States. If we analyse the current figures, they are indicative of an uncontrolled slide:
The US federal government holds a debt of USD 38,000 billion. Servicing this debt costs USD 1,000 billion a year. Its annual deficit is close to 6%, or around USD 1,775 billion a year.
The balance sheet of the US central bank (the FED) has expanded from USD 80 billion to USD 8,000 billion, a 100-fold increase in just over 50 years! At the same time, the country's gross domestic production has increased 25-fold over the same period.
These amounts are staggering. Indeed, reversing such a chronic debt trend has becomeimpossible unless the State starts printing money.
The State has a monopoly, a privilege, and through its central bank it can issue money without any counterpart. This is the equivalent of a private individual photocopying a USD 100 note as many times as he or she likes and spending it in the shops!
This process is harmful for several reasons. The history of lax monetary policy since antiquity and right up to the last century demonstrates this. In reality, printing money to meet the needs of a debt that itself finances chronic deficits is nothing more than a race to the bottom that can only end in a monetary system that collapses. In the long run, money loses all its value.
A monetary system that collapses brings considerable hardship and suffering to the population of a country. It can provoke social upheaval, even civil war, and instability within a society that has to look for ways to survive.
Below are a few examples of monetary debacles that have marked history:
In the 20th century, the Weimar Republic experienced an unprecedented collapse in the value of the German mark as a result of the debt and reparations to be paid to the victors of the First World War. So much money was issued that inflation could no longer be controlled.
Way back in history, in the days of the Roman Empire, the ‘denarius’ currency underwent a lengthy devaluation following the issue of coins containing less and less pure silver in favour of more abundant metals. From the 3rd century onwards, the Roman Empire was sinking deeper and deeper into debt to finance its armies, which were spread throughout the empire. Currency devaluation was a major cause of the fall of the empire in the 5th century.
More recently, the collapse of the Venezuelan bolivar is an example of lax and excessive monetary management that caused the currency to lose almost all its value in just a few years. Printing money to finance the public deficit was the main reason for the collapse. The resulting impoverishment of the population led to mass emigration.
These cases are far from exhaustive. Up to now, sharp, gradual devaluations have created safe havens in strong currencies such as the USD, EUR, CHF and JPY. But what happens when these hard currencies also suffer chronic deficits and rising debt ?
The globalisation of trade, not only in goods but also in capital, means that countries with trade surpluses can finance the debts of countries with deficits. This balancing act benefits both parties, since everyone has an interest in ensuring that the situation remains stable economically and monetarily.
If any country, such as the United States, wants to change this balance at the beginning of 2025, then the financial markets will start to worry and exit the US debt market in anticipation of a deficit financing problem if creditor countries such as China are no longer the source of funds to finance US debt requirements.
Conversely, China has an interest in stabilising the situation if it wants to maintain its level of exports to the United States. Otherwise, it risks falling into recession. Because its domestic demand is tending to fall for demographic reasons.
China exports its goods to the United States and America exports its debt to China.
There is, however, a limit to this process. Continuing to increase the debt could lead to a loss of control over US budgetary finances and create a global financial fiasco, as US debt is exported all over the world. Successive US governments have always gambled on the fact that diluting the debt on a global scale would allow them to continue to increase it while betting on economic growth and becoming the world's leading military power.
We note that this situation is becoming increasingly fragile. And it is very difficult to reverse course, as this would require substantial budget cuts, involving equally significant political changes.
In 2009, at the end of the financial crisis that began in 2007, the US central bank set up a money-issuing ‘accelerator’. Billions and billions of dollars were produced to cushion the impact, this time not of the debt but of the financial markets. The head of the FED at the time of the crisis, Mr Bernanke, had studied in detail the causes of the profound financial crisis of 1929 and why its repercussions lasted for so many years? According to him, the remedy would have been to flood the market with capital in order to minimise the impact of the crisis. So Mr Bernanke and his peers in the major central banks chose to flood the market with liquidity under a system known as ‘quantitative easing’. This involved buying government and other investment-grade bonds and paying out ‘new’ money in return.
So the debts have been ‘monetarised’, money that comes from nothing is injected by the central bank to buy government bonds. This is an elegant way of coming to the rescue of the markets while reducing the value of a debt by increasing the money supply
The 2008 crisis triggered a general awakening to the monetary drift put in place by the authorities for the benefit of the financial markets, major banks and insurance companies.
The very actors of the crisis, those who had caused the financial crisis, were assisted and financially aided by the State to stabilise the markets. If we were to draw up a list of the victims of the crisis, we could quickly eliminate the banks, even though they were largely responsible for the 2008 subprime crisis. The victims are investors, family homeowners, savers and the general public.
All these categories of citizens have been penalised by a fall in the value of their assets on the stock markets, by the devaluation of their homes, by the depreciation of their savings and, ultimately, by a loss of purchasing power for the vast majority of the population.
The subprime crisis of 2008 reached a level of injustice between the financial powers and the people that was hard to sustain. Then, in 2009, a seemingly innocuous event occurred. A ‘white paper’ (a description) was circulated among ‘computer coders’: a digital currency that could be transferred in complete confidence from one person to another, without having to use a financial intermediary. This was BITCOIN.
The news is spreading like wildfire in the IT world. And the first exchange transactions are taking place among insiders.
Very quickly, those interested in BITCOIN understood that it was not just a technological revolution, but above all a monetary and social one. Ideologically, the principle of BITCOIN brings a wind of freedom where state and bank control is no longer required. Socially, it enables unbanked people to have a wallet on a smartphone and thus to own a currency that is stronger than the national currency, which is devaluing by the day.
BITCOIN brings an undeniable and totally new added value to our capitalist world: scarcity.
Not only is it rare, it is transferable, it has the most secure and powerful network in the world, and its characteristics remain unchanged because there is no centralised governance. It is completely decentralised in its processing and in the application of its protocol. Changing the way it operates would require control of its global network, which is growing every day and requires enormous computing power to achieve it.
21 million BITCOIN (BTC) is the maximum possible supply. 93% of BTC are already on the market, so there are 1.3 million BTC left to mine with a mining system that automatically decreases its quantity approximately every 4 years. The last token will be mined around the year 2140.
Its scarcity is therefore a major asset in a period of currency devaluation. Long-term confidence in its characteristics is another important asset, particularly at the financial level.
Given the monetary and budgetary situation of governments and the debts that will continue to grow in the coming years, the issuance of fiat money (USD, EURO, YUAN, GBP, etc.) can only increase. Governments themselves are mentioning the creation of monetary reserves in BTC in order to maintain a strong asset as an anchor of stability and a means of reducing debt in the long term.
In this context, it is important for everyone to assess the situation and protect themselves against what is now an inevitable decline in the purchasing power of their own national currency.
November 2025
