In the era of populism, please hold onto your Bitcoin.

Author: Tulip King, Messari Analyst

Compiled by: Luffy, Foresight News

Alpha First:

• Maximize your human capital: find a high-paying job and work hard. Nowadays, your career is the best way to guard against inflation.
• Shift assets from traditional finance to uncorrelated alternative assets. The stock market may remain stable or decline over decades.
• Accumulate gold for stability and hold Bitcoin for appreciation. In the era of de-globalization and financial repression, both will outperform the market.

The legendary bull market has ended.

We have just experienced the longest bull market in history, from the ruins of World War II all the way to Donald Trump's victory in 2024. This epic bull market has benefited generations of passive investors, making them accustomed to believing that "nothing will happen" and "the market will only go up." Unfortunately, the good times are over, and many are about to suffer heavy losses. The structural tailwinds that have driven this decades-long prosperity are not only stagnating but are also sharply reversing. The populist revolution has arrived, and it will come at the expense of capital, making labor great again.

Populists are in control of the situation.

The globalist neoconservative political agenda led by the presidencies of Clinton → Bush → Obama → Biden has officially come to an end. Trump has strangled it, and its remnants will not be revived.

By the way, the shift towards populism is not something that is happening only in the United States.

A brand new populist political agenda has emerged in the United States. Today, Trump has completely taken control of the Republican Party in a way that he did not in 2016. Meanwhile, the Democratic Party is experiencing the kind of internal conflict that the Republican Party has just ended, and you can expect that the populist faction will ultimately defeat the globalist faction.

Populist politics and globalist politics have fundamental differences. You need to update your views on the goals of the two parties. There will still be differences between the Republican and Democratic parties, but they will increasingly converge on the core populist agenda:

• The admiration for blue-collar jobs. Both sides are now competing over who loves factory workers more. The era of "learning programming" is over.
• Reindustrialization. Everyone hopes that factories, supply chains, and key industries will return to the United States.
• Tariffs. The next president, whether from the Republican or Democratic party, is expected to continue a foreign policy centered around tariffs.
• Free trade has become politically toxic.
• Nationalism. The distinction between "citizens and non-citizens" is resurfacing with greater force. Both parties will continue to restrict immigration and expel illegal immigrants. The difference will only be in the scope and speed, not the direction.

The elite consensus that drove policies from the Reagan to the Obama era promised prosperity through free trade, open capital flows, and globalization under U.S. leadership. For financiers and tech moguls, this brought astonishing results. But for large areas of the U.S., particularly the industrial heartland, it resulted in community hollowing, stagnant wages, and a surge in fentanyl. Populism is not an accidental phenomenon; it is a predictable one.

The value of labor

Two strong forces are converging, driving a significant increase in wages:

Reindustrialization has led to a surge in labor demand. Even with automation, the reshoring of factories and supply chains will create a significant demand for workers. Every new semiconductor plant or electric vehicle battery factory requires engineers, technicians, construction workers, and logistics personnel. The CHIPS Act and the Inflation Reduction Act alone have injected hundreds of billions of dollars in opportunities for domestic manufacturing.

Immigration restrictions have simultaneously reduced the labor supply. Whether through border controls, deportations, or reduced visa approvals, the inflow of new workers has been restricted. Republicans want to deport all illegal immigrants; Democrats are at least conceding, agreeing to deport illegal immigrants with criminal records. In any case, the trend is clear: there are fewer and fewer workers entering the employment system.

Review the supply and demand curves in the basics of economics.

This is a basic principle of economics: when the demand for labor increases while supply contracts, wages will inevitably rise. This is not a temporary phenomenon, but a structural change that could last for decades. For the first time in many years, you will see wage increases outpace inflation rates and financial asset returns.

Even in an inflationary environment, this is the case. I expect that over the next decade, due to de-globalization, tariffs, and labor shortages, the inflation rate will be between 3% and 9%. However, if your salary grows at a rate 5% faster than the inflation rate each year, rising prices won’t keep you up at night. While asset owners watch their portfolios stagnate, your real wealth is increasing.

This means: It is now time to focus all your efforts on your career. Work hard, learn valuable skills, especially those related to domestic production and physical infrastructure. Your human capital (your ability to earn money) is appreciating. This is a generational opportunity to accumulate wealth through income rather than asset appreciation.

The trend of Wall Street has passed.

During the implementation of the globalization political agenda in the United States, Wall Street was the most important interest group. Their interests were seen as equivalent to national interests. Free capital movement, deregulation, and bailouts when necessary were all enjoyed by Wall Street. It seems that every Treasury Secretary came directly from Goldman Sachs.

Today, as the process of de-globalization advances, Wall Street is quickly falling out of favor in political and public spheres. The financial elites have not yet realized this, but they no longer have the allies and power they had 5 to 10 years ago. They are like dinosaurs looking up at the strange light in the sky, not understanding that their era is about to end.

This idea (that a shift to interest rate cuts by the Federal Reserve is inevitable) is incorrect; the Federal Reserve will not shift.

Due to Wall Street's failure to recognize its declining position, they still expect the Federal Reserve to come to their rescue when they encounter trouble. They assume that the famous "Federal Reserve put option" (the central bank's implied commitment to cut interest rates to save the market) is still in effect. But that is not the case.

Since 2021, every politician has learned a crucial lesson: if you are an elected leader and there is inflation at home, you will lose your re-election campaign. It's that simple. This has completely reversed the political motivations surrounding monetary policy. Savvy politicians are now pressuring the Federal Reserve to maintain high interest rates, as cutting rates could lead to economic re-inflation, which would jeopardize their positions.

Even in the face of a market crash, current political considerations prioritize combating inflation rather than saving asset prices. Wall Street can cry all they want, but in a populist environment, their tears won’t translate into votes. In fact, many voters will cheer for Wall Street's setbacks. This reality has not yet been reflected in market prices.

The depression of financial assets

It is time to stop pretending that the stock market and the real economy are the same thing. While financial assets and the stock market are falling, your salary and quality of life can completely improve. For those under 30, this is actually an ideal situation; you finally have the opportunity to buy housing and stocks at reasonable prices with steadily rising wages.

You may never see Apple Inc.'s stock price reach a new all-time high again.

Taking Apple Inc. as an example. In the fourth quarter of 2024, Apple's price-to-earnings ratio is about 40, and its gross margin is about 46%. This means that if Apple has a revenue of about $100 per share, a profit of about $46 per share, the stock price is about $1960.

Now let's assume they must bring production and labor back to the United States. Due to lower domestic production efficiency, their profit margins will be compressed. The gross margin falls to 20%, and in a high-interest-rate environment, the market will no longer accept such an aggressive price-to-earnings ratio, so the P/E ratio drops to 25 (still above the historical average). Assuming that over the next ten years, since Apple remains an excellent company, they manage to double their revenue. By 2035, their revenue per share will be about $200, but their earnings per share will only be $40, with a stock price of $1000.

This is how financial assets can fall into a long-term bear market (over 10 years), while companies are still profitable and giving employees raises. Even with business activity growth and rising wages, stock prices may actually drop by 50%.

This is not just talk without action; it reflects the real situation in Japan after 1989. That year, the Nikkei index reached nearly 40,000 points and then crashed. Today, 36 years later, it has still not fully recovered. If you had bought Japanese stocks at their peak and held them for a generation, you would still be in a loss when adjusted for real value. This situation occurs when a financialized economy built on loose monetary policy and globalization has to adapt to new realities.

Financial assets in the United States can easily fall into a "lost decade" (or even two decades). The passive investment strategies that worked for the Baby Boomer generation may yield dismal returns for the next generation. For index fund believers, this will be a nightmare.

So, who is the loser?

This is a useful reference on how much the Baby Boomer generation has benefited from globalist political agendas.

At this point, you may be wondering who will become the unfortunate ones in the new political and economic landscape, mainly consisting of two types of groups:

• Large companies with high profit margins. Those companies that fully enjoy the dividends of globalization (outsourcing production, optimizing global supply chains, and paying extremely low wages) face painful adjustments. Production reshoring means rising costs, labor scarcity means wage increases, and tariffs mean higher input costs. All of these factors compress their previously high profit margins. They will still be profitable, but profits will decrease, and investors will assign lower valuations to these reduced profits.
• The baby boomer generation, too old to benefit from wage growth. The real victims are retirees and those nearing retirement, who have abundant assets but meager incomes. After decades of policies catering to their interests, the advantages of the baby boomer generation have come to an end. They have exited the labor market, so wage increases do not help them. Their retirement accounts are heavily invested in stocks and bonds, and these assets may stagnate or decline for years. Meanwhile, inflation erodes their fixed income. This is a triple whammy: falling assets, rising costs, and inability to earn more income.

This is not just an economic issue; it is a matter of intergenerational fairness. The Baby Boomer generation enjoyed the fruits of post-World War II prosperity, purchasing properties at low prices and watching their stocks increase by 10% annually for decades, only to pull up the ladder behind them. Now, as they attempt to cash in on these gains, they find that buyers are dwindling. The massive intergenerational wealth transfer that many anticipated may not be as bountiful as imagined.

So, who is the winner?

In this new paradigm, the winner is clear:

• Labor force, especially blue-collar workers. Electricians, plumbers, welders, mechanics, construction workers, and anyone who manufactures or repairs physical items can expect to reap significant rewards. These jobs cannot be outsourced and are crucial to reindustrialization, and the competition for labor they face is decreasing. The era of stagnant wages for these workers is over. They will receive high salaries and regain social status.
• Young people entering the workforce. If you're just twenty years old, this shift is in your favor. Over the course of your career, you will earn a higher salary. After the asset price falls, you will eventually buy the asset (housing, stocks) at a more reasonable valuation. You have decades of money-making time to benefit from a pro-labor environment. This is much better than when I entered the workforce in 2010, when wages were stagnant but assets were already expensive.
• People who hold uncorrelated assets like Bitcoin and gold. As financial repression intensifies, traditional assets are struggling, and alternative assets outside the system are becoming increasingly attractive. For thousands of years, gold has been a classic inflation hedge and safe haven. Central banks around the world have been accumulating gold at a record pace. Bitcoin, as digital gold, serves a similar role and has greater upside potential. Both can thrive in environments of financial instability, currency devaluation, and geopolitical tensions.

Central banks around the world are buying gold in large quantities.

Regarding Bitcoin, one thing must be clear: it was created precisely for moments like these, when trust in traditional financial institutions is shaken and governments take increasingly desperate measures to manage debt. When everything else is depreciating, Bitcoin's fixed supply is extremely attractive. I expect Bitcoin will eventually reach $1 million, but you need patience. This is not a get-rich-quick scheme.

New Economic Order

We are witnessing a historic turning point: the end of the neoliberal globalist order and the rise of populist nationalism. This is not a minor policy adjustment; it is a fundamental reshuffling of economic winners and losers.

For decades, capital has dominated labor, financial assets have outperformed wages, and Wall Street has dictated terms to Washington. That era has come to an end, and we are entering a period where labor is regaining influence, wage growth exceeds asset returns, and economic policies prioritize workers over investors.

This transition will not be smooth sailing; the market will experience a sharp decline, and inflation will last longer than most people expect. As countries prioritize their own interests over global cooperation, geopolitical tensions will intensify.

But within this turmoil lies opportunity. Focus on learning skills that can earn high salaries in the new economy, shifting from overvalued financial assets to unrelated alternative assets. Prepare for a world where wage checks, rather than investment portfolios, serve as the primary tool for wealth accumulation.

Populist revolutions not only change politics, but also rewrite economic rules. Those who recognized this shift early and made corresponding arrangements will reap abundant rewards. Those who cling to old strategies will struggle. This is not the end of prosperity, but a redistribution of prosperity.