Central Banks' Actions — Why Global Inflation Is Here to Stay

Over the past few months, I've repeatedly pointed your attention to the US bond market. Yields on 10-year and 30-year US Treasury bonds remain at levels that typically signal expectations of higher inflation and higher interest rates for a prolonged period of time.

But the most interesting part is that this is not just an American story.

If you look at the UK, Germany, Japan, and most other major economies 🔍
You'll notice the same trend. Long-term government bond yields are sitting near multi-year highs despite central banks spending years talking about bringing inflation back under control 💬

The bond market is sending a simple message:

Investors no longer believe we're quickly returning to the world of zero interest rates, cheap credit, and ultra-low inflation.

🤔 Why?

Because over the last 15 years, governments have accumulated enormous amounts of debt. As long as rates stayed near zero, this wasn't a major problem. Today, however, the situation has changed dramatically.

The higher rates go, the more expensive it becomes to service that debt.

This is why central banks have found themselves trapped. 🪤

On one hand, higher rates help contain inflation. On the other hand, they slow economic growth, increase government interest expenses, and create risks across the financial system.

One country stands out from the rest: China.

China faces a different problem. The economy is still dealing with the aftermath of its real estate crisis, consumer demand remains weak, and policymakers are focused on stimulating growth rather than fighting inflation. That's why Chinese bond yields haven't followed the same path as most of the world.

But today, China is the exception.

For most developed economies — and many emerging ones as well — the core issue remains the same: too much debt and increasingly expensive money.

🤖 Now add another major factor to the equation: AI.

At first glance, AI should be deflationary. Companies can produce more with fewer employees, reduce costs, and improve efficiency.

But there's another side to the story.

If AI continues replacing a meaningful share of the workforce, governments will face a new political challenge. Millions of people without stable income could mean weaker consumer spending, rising social tensions, and growing pressure on policymakers. ✊

In that environment, governments will likely face two choices:

Either allow the labor market to undergo a painful adjustment, or expand social programs, subsidies, benefits, and perhaps even move toward some form of universal basic income.

And that's where a new source of inflationary pressure emerges.

Not because AI itself creates inflation, but because the government's response to large-scale job displacement could lead to larger deficits, more debt, and eventually more money creation.

The result is a fascinating paradox:

Technology may be deflationary, while the political response to technology may be inflationary. 🤷‍♂️

📈 What does this mean for stocks and crypto?

As long as rates remain high, risk assets face headwinds. If investors can earn 4-6%+ annually in government bonds with relatively low risk, demand for growth stocks and cryptocurrencies naturally declines.

However, the long-term picture looks very different.

History shows that governments rarely solve debt problems through austerity alone. More often, debt is gradually reduced through years of moderate inflation.

Not hyperinflation.

Simply inflation that remains above official targets for an extended period of time 📈

❗️That's why I continue to closely monitor the bond market.

Today, high rates are creating pressure on stocks and crypto, but this environment cannot last forever. The longer governments operate with massive debt burdens and expensive debt servicing costs, the greater the probability that monetary policy will gradually become more accommodative in the years ahead.

If that scenario begins to unfold after 2027, investors may once again face a familiar challenge: how to preserve purchasing power in a world where money loses value faster than official inflation targets suggest.

Historically, capital tends to flow into scarce assets during such periods: stocks, gold, real estate, and Bitcoin. 💰

That's why my long-term outlook on Bitcoin remains bullish.


Not because Bitcoin magically goes up forever, but because its supply is fixed while the amount of money in the global financial system continues to expand over time.
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