Global Macro Podcast #009 | feat. Lyn Alden

Episode Overview

• Lyn Alden presents her macro thesis for an inflationary decade, driven by significant currency devaluation as a way for governments to manage massive debt loads.
• The conversation explores the geopolitical shift from deflationary offshoring to inflationary "reshoring" of supply chains as a key structural change.
• Alden analyzes the roles of different hard assets in this environment, contrasting gold as a large-cap store of value with Bitcoin as a speculative, high-upside alternative.
• The discussion highlights how the current long-term debt cycle is converging with geopolitical and generational cycles, increasing the risk of major global conflict and economic disruption.

Key Concepts

• An Inflationary Decade: The core thesis is that the 2020s will be marked by significant currency devaluation against hard assets, leading to inflation that could manifest either in asset prices or broad consumer prices.
• Reshoring as an Inflationary Force: The geopolitical trend of moving supply chains from adversarial nations back to domestic or allied countries is reversing decades of deflationary pressure from globalization.
• Bitcoin vs. Gold: Gold is positioned as a "large-cap store of value," while Bitcoin is framed as a "smaller-cap speculative store of value" with a strengthening network effect and significant market cap growth potential.
• Intersection of Cycles: The current environment is historically unique due to the convergence of a long-term debt cycle with generational and geopolitical cycles, heightening systemic risk.
• Currency Devaluation as a Debt Jubilee: Governments are likely to reduce their real debt burdens not by defaulting, but by devaluing their currency, making hard assets, commodities, and other inflation hedges critical.
• Learning Investment Frameworks: The podcast aims to understand the mental models and analytical processes of expert investors, rather than just seeking simple trade ideas.

Quotes

• At 25:21 - "I do think we're going to see pretty significant currency devaluation by the time that 2030 comes around, let's call it." - Lyn Alden stating her core thesis for the decade.
• At 0:38 - "Gold is like a large-cap store of value. Bitcoin is a smaller-cap speculative store of value." - Lyn Alden categorizes the two assets, highlighting their different risk and size profiles.
• At 30:29 - "The worst situation you want to be in is that a fifth of your supply chains are in your adversary's country." - Alden explaining the geopolitical motivation behind reshoring, which she sees as an inflationary trend.
• At 26:16 - "My base case is much higher than 2% inflation in this decade, but I don't have really a ceiling for where we might get to." - Alden on her inflation forecast, emphasizing the uncertainty of the peak but the high probability of exceeding current targets.
• At 42:51 - "I think Bitcoin uniquely has become kind of established as a digital speculative store of value for many people." - Alden on Bitcoin's distinct position, highlighting its strengthening network effect as a reason for her increasingly bullish view.

Takeaways

• The 2020s are likely to be inflationary due to currency devaluation, making cash and nominal bonds risky assets to hold.
• The geopolitical shift towards reshoring supply chains is a long-term structural tailwind for inflation.
• A portfolio strategy for this environment should include exposure to hard assets like gold, commodities, and potentially real estate.
• Bitcoin is emerging as a credible, albeit volatile, speculative hedge against currency debasement due to its established network effect and scarcity.