The End of Globalization and the Clearing of Financial Assets

From the outbreak of World War II to 2024, we have experienced an unprecedented super bull market. This prolonged rise has shaped generations of passive investors who habitually believe that "the market will never have problems" and "the market only goes up." However, this feast has come to an end, and many are about to face liquidation.

How to get to this point

The super bull market from 1939 to 2024 is not a coincidence, but rather due to a series of structural changes that have completely reshaped the global economy, with the United States always at the center.

rose to become a global superpower after World War II

World War II pushed the United States from a moderately powerful nation to the undisputed leader of the "free world." By 1945, the U.S. produced more than half of the world's industrial products, controlled one-third of global exports, and held about two-thirds of the world's gold reserves. This economic hegemony laid the foundation for growth in the decades to come.

Unlike the isolationism of the United States after World War I, the post-World War II United States actively embraced a global leadership role, promoting the establishment of the United Nations and implementing the "Marshall Plan," injecting over $13 billion into Western Europe. This was not just simple aid—by investing in the reconstruction of war-torn countries, the United States created new markets for its own products while establishing its dominant position culturally and economically.

Labor Force Expansion: Women and Minorities

During World War II, approximately 6.7 million women entered the labor market, resulting in a nearly 50% increase in the female labor participation rate in just a few years. Although many women left the workforce after the war, this large-scale mobilization permanently changed societal views on women's employment.

By 1950, the trend of married women's large-scale employment became increasingly apparent, with labor force participation rates for women in most age groups rising by an unprecedented 10 percentage points. This was not merely a wartime exception, but the starting point of a fundamental shift in the American economic model. The 'marriage ban' (a policy prohibiting married women from working) was abolished, part-time jobs increased, innovations in household labor, and higher education levels all contributed to women transitioning from temporary workers to long-term participants in the economic system.

Similar trends are also occurring among minority groups, who are gradually gaining more economic opportunities. This expansion of the labor force has effectively enhanced the productive capacity of the United States, supporting decades of economic growth.

The Victory of the Cold War and the Wave of Globalization

The Cold War shaped America's political and economic role after World War II. By 1989, the United States had formed military alliances with 50 countries and stationed 1.5 million troops in 117 countries worldwide. This was not just for military security, but to establish America's economic influence globally.

After the dissolution of the Soviet Union in 1991, the United States became the world's sole superpower, entering an era that many see as a unipolar world. This was not only a victory of ideology but also an opening of the global market, allowing the United States to dominate the global trade pattern.

From the 1990s to the early 21st century, American companies made significant expansions into emerging markets. This was not a natural evolution, but rather the result of long-term policy choices. For example, in countries where the CIA intervened during the Cold War, the volume of U.S. imports increased significantly, particularly in industries where the U.S. had no apparent competitive advantage.

The victory of Western capitalism over Eastern communism was not solely due to military or ideological advantages. The Western liberal democratic system is more adaptable and was able to effectively adjust its economic structure even after the 1973 oil crisis. The "Volcker Shock" of 1979 reshaped America's global financial hegemony, turning the global capital markets into a new engine of growth for the U.S. in the post-industrial era.

These structural transformations—the rise to superpower status after World War II, the entry of women and minorities into the labor market, and the victory in the Cold War—have collectively driven this unprecedented super bull market in financial assets. However, the core issue is: these transformations are one-time events that cannot be repeated. You cannot have women enter the labor market again, and you cannot defeat the Soviet Union again. And now, both parties are pushing for de-globalization, and we are witnessing the last support of this long-term growth being withdrawn.

What will happen next?

However, unfortunately, everyone is praying for the market to return to its historical norm. The market consensus is: the situation will worsen, then the central bank will inject liquidity again, and we will be able to continue making money... But the reality is: this group of people is heading towards the slaughterhouse.

The bull market of nearly a century has been built on a series of non-reproducible events (the bull market cannot continue), and some of these factors are even reversing.

• Women will not re-enter the labor market on a large scale: In fact, as pro-natal elites push to increase the birth rate, female labor participation may decline.
• Minorities will not be massively absorbed into the labor market again: in fact, the Democratic Party's stance on immigration policy is almost as tough as that of the Republican Party, which has become a bipartisan consensus.
• Interest rates will not fall again: In fact, every elected leader is well aware that inflation is the biggest threat to their re-election. Therefore, governments will do everything possible to avoid cutting interest rates and reigniting inflation.
• We will not further globalize: in fact, Trump is moving in the completely opposite direction. Moreover, the Democrats are expected to replicate this policy in the next election.
• We will not win another world war: in fact, it seems we might even lose the next war. Anyway, I don't want to verify this conjecture.

My view is simple: all the global macro trends that have driven the stock market up over the past century are now reversing. How do you think the market will move?

Goblin Town

When an empire enters decline, life is really hard to bear – just ask Japan. If you bought at the historical peak of the Nikkei 225 index in 1989 and held until now, after 36 years, your return would be about -5%. This is the typical "buy and hold, suffering endlessly". I believe we are on the same path.

Worse still, you should be prepared for capital controls and fiscal repression policies. Just because the market isn't rising doesn't mean the government will accept reality. When traditional monetary policy fails, the government will turn to more direct financial control measures.

upcoming capital controls

Financial repression refers to the practice of allowing savers to earn returns below the inflation rate, so that banks can provide cheap loans to businesses and governments, and reduce the pressure of debt repayment. This strategy is particularly effective for governments in clearing domestic currency debts. In 1973, economists at Stanford University were the first to use this term to criticize the policies of emerging market countries that suppress economic growth, but today, these strategies are increasingly appearing in developed economies, such as the United States.

As the U.S. debt burden surpasses 120% of GDP, the likelihood of repaying debt through traditional means is increasingly diminishing. The "playbook" of financial repression has already begun to be implemented or tested, including:

• Directly or indirectly restrict government debt and deposit interest rates
• The government controls financial institutions and establishes competitive barriers.
• High reserve requirements
• Create a closed domestic debt market, forcing institutions to purchase government bonds.
• Capital controls, restricting the cross-border flow of assets

This is not a theoretical assumption, but a real case. Since 2010, the U.S. federal funds rate has been below the inflation rate for more than 80% of the time, which is effectively forcing the transfer of wealth from savers to borrowers (including the government).

Your retirement account: the government's next target

If the government cannot rely on printing money to buy bonds and lower interest rates to avoid a debt crisis, they will target your retirement accounts. I can easily imagine a future where tax-advantaged accounts like 401(k) will be mandated to allocate more and more "safe and reliable" government bonds. The government no longer needs to print money; it can simply divert existing funds within the system.

This is exactly the script we have seen over the past few years:

• Frozen Assets: In April 2024, Biden signed a law authorizing the government to confiscate Russia's reserve assets in the United States, setting a precedent for the government to freeze foreign exchange reserves at any time. In the future, this practice may not only target geopolitical adversaries.
• Canada Freedom Convoy protests: The government froze about 280 bank accounts without court approval. Financial officials acknowledged that this was not only to cut off the flow of funds but also aimed to "deter" protesters and ensure they "make the decision to leave." When asked how the freezing of accounts affects innocent families, the government's response was: "They just need to leave."

Gold Strong Enforcement and Monitoring

This is not surprising, as American history is filled with similar actions:

In 1933, Roosevelt issued Executive Order 6102, which mandated citizens to surrender their gold or face imprisonment. Although enforcement was limited, the Supreme Court supported the government's right to confiscate gold. This was not a "voluntary purchase program," but rather a "forced wealth expropriation," merely packaged as a transaction at "fair market prices."

The government's surveillance capabilities rapidly expanded after the 9/11 events. The FISA Amendments Act granted the NSA nearly unlimited power to monitor the international communications of American citizens. The Patriot Act allows the government to collect the phone records of all Americans every day. Section 215 even allows the government to collect your reading records, learning materials, purchase history, medical records, and personal financial information without any reasonable suspicion.

The question is not "Will financial repression come?" but rather "How severe will it be?" As the economic pressure of de-globalization intensifies, government control over capital will only become more direct and severe.

Gold and Bitcoin

The monthly gold chart since 1970 is currently the strongest candlestick chart in the world.

Based on the process of elimination, the most suitable financial asset to purchase has become evident — you need an asset that has no historical correlation with the market, is difficult to be confiscated by the government, and is not controlled by Western governments. I can think of two, one of which has already increased its market value by $60,000,000,000 in the past 12 months. This is the most obvious bull market signal.

Global Gold Reserve Race

Countries like China, Russia, and India are rapidly increasing their gold reserves to respond to changes in the global economic landscape:

• China: In January 2025, increased gold holdings by 5 tons in a single month, net purchases for three consecutive months, total holdings reached 2,285 tons.
• Russia: controls 2,335.85 tons of gold, becoming the fifth largest gold reserve country in the world.
• India: Ranked eighth in the world, holding 853.63 tons, and continues to increase its holdings.

This is not a random act, but a strategic layout. After the G7 froze Russia's foreign exchange reserves, central banks around the world took notice. A survey of 57 central banks showed that 96% of respondents view the credibility of gold as a safe-haven asset as a motivation to continue investing. When dollar-denominated assets can be frozen with a single stroke, physical gold stored within one's own country becomes extremely attractive.

In just 2024, Turkey increased its gold reserves by 74.79 tons, an increase of 13.85%. Poland's gold reserves increased by 89.54 tons, with an increase close to 25%. Even a small country like Uzbekistan increased its gold by 8 tons in January 2025, bringing its gold holdings to 391 tons, which accounts for 82% of its foreign exchange reserves. This is not a coincidence, but rather a coordination.