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"Stocks, gold, Bitcoin, real estate - why have they all been mooning in recent years? Well, many are attributing all of these moves to a single trade thesis - the debasement trade.
The idea is that mounting sovereign debt and expansionary monetary policy has pushed people to dump their fiat for other assets. But is this true, or just narrative? Does it matter?
We dive into all of that and more as we consider the hottest trade thesis around right now. If you haven’t considered it before, this is one video you really need to watch."
~ Coin Bureau
The video investigates "The Debasement Trade," a thesis suggesting that mounting sovereign debt and expansionary monetary policy will erode the purchasing power of fiat currency over time, forcing investors to rotate out of idle cash and government bonds into productive or scarce assets like stocks, gold, Bitcoin, and real estate. This trade is seen as accelerating due to "fiscal dominance," where large government deficits and rising debt servicing costs (especially in the US, where interest costs are projected to exceed defence costs) box in central bank policy, forcing a bias towards keeping real interest rates low and leaning inflationary to manage the debt burden. This structural shift is viewed as a long-term trend making the holding of cash less attractive.
The bull case for the trade's continuation rests on historical precedent—governments tend to rely on policies that lower real rates to chip away at heavy debt, which economists call financial repression. Structural flows, such as massive automatic equity buying via US ETF flows, 401k auto-enrolment, and corporate buybacks, create a standing bid under stocks. For crypto and gold, institutional access via spot Bitcoin and Ethereum ETFs, along with central banks consistently buying gold, provides further structural support, reinforcing the "hard money" narrative. While critics argue the market rally is just euphoria, momentum, and liquidity-driven, the video concludes that both sides can be right: short-term market cycles create local tops, but the multi-decade structural incentives continue to push people away from idle cash and towards real and productive assets.
0:00 Intro
0:57 What Is The Debasement Trade?
4:58 Why Has It Intensified?
7:55 Bull Case For Continuation
12:44 Criticism of The Trade Idea
16:36 Who’s Right?
Source - Coin Bureau YouTube: https://www.youtube.com/watch?v=txu_NClAPdQ
Disclaimer: This video is provided for informational purposes only, and not offered or intended to be used as legal, tax, investment, financial, or any other advice.
