Bitcoin: Conclusion Of The Debt Cycle

In this article, I will detail why the incumbent global financial system is irreversibly broken, how it got to this point, and what the world will look like coming out the other side of the present crisis. I will use the frameworks presented in Ray Dalio’s Principles for Navigating Big Debt Crises along with my own analysis to contextualize the global economic landscape, and I will detail how the emergence of bitcoin as a global monetary asset will serve as a release valve.

For an abridged version of Principles for Navigating Big Debt Crises, watch this excellent 30-minute video produced by Dalio himself.

The Cyclicity Of Debt

To put it simply, debt is cyclical. When you borrow money today, you increase your buying power today at the expense of the buying power of your future self. Buying something you cannot afford today means that you are spending more than you make: you are borrowing not only from the lender but also from your future productivity/output. In an economic system built on credit, expansions and contractions of credit availability serve as drivers of economic growth/activity and contraction/recessions, respectively.

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