Thread by @DeFi_educator

@RaoulGMI is an incredible bright mind in the realm of macro econmics. So when Raoul speaks during these times of macro & geopolitical uncertainty, I listen.

Here is a thread with the most important distilled points.

Find the full video here:
realvision.com/shows/real-vis…

Economic events are much more forecastable, whereas geopolitical events have so many more variables. you have to use a decision tree structure to assess probabilities of all things that could happen and figure out how do I protect myself, can I make money out of this and

what does this all mean for the bigger picture?

I didn’t think we would get this far this fast in terms of Russia sanctions.
But I’ve already been expecting a global slowdown with the economy, so I’ve already started to position myself that way by buying bonds,some gold and US$

Where we are now:
We have a narrow window of maybe 2-3 weeks. Russians are surrounding Kiev now. What happens in the next couple of days/weeks is vital. I see three possible scenario's playing out.

Scenario 1 (best case scenario): De-Escalation

Russia and Ukraine on a ceasefire, splitting up of Ukraine. Russia has east, Ukraine keeps sovereignty of west. Or any number of variations on this scenario. Sanctions will get eased off over time, Not highest probability. Food crisis still happens. Global recession.

Scenario 2 (highest probability): Ukranians don’t negotiate and don’t surrender. The Russians level Kiev. The Russians can then either take over Ukraine, or keep Ukraine’s sovereignty intact but with a Pro-russian (puppet) government. This is a bad situation. Sanctions will not

go away. Splintering of supply chain will happen. NATO will amass weapons on the borders. Tensions will be high. food crisis & recession will be > than scenario 1. If Russia remains out of the global system, which looks increasingly likely, we will have a big liquidity problem.

(Whether that’s countries and banks trying to get access to dollars or credit spreads widening.)

Scenario 3 (Worst case scenario): Russia has made it clear if NATO oversupplies Poland with weaponry to give to ukraine they are going to consider Poland as part of the war.

With a potential invasion of Poland. I consider this low probability (but what the hell do I know?). This is then worst case scenario as this is NATO vs Russia in full blown war.

In the next 2-3 wks we'll find out if scenario 1 or 2 will play out. & After possibly scenario 3

So what are the ramifications?

The world is splitting. Deglobalisation at large everywhere and everyone has to go to localised supply chains. That means the US, Canada and Mexico will become more interdependent.
Other geopolitical issue: everyone has now learned that the US$

US$ is a liability and not an asset. So $$ can get taken away from you at will. At first it looked like a smart move to weaponize reserves and the financial system, what is actually happening is you are now forcing the de-dollarization of the world, which is a slower process.

Obviously Russia got thrown out, but it had been planning for it. They probably hadn’t imagined it this fast & apocalyptic, but China has been planning for it too. The CBDC’s of these countries are part of that. Right now the instant thing Central Banks can do is own more gold.

So I think this is a very bullish gold environment.

Another concerning geopolitical event is freezing assets of people not tried in court.
It tells people that property ownership is not absolute. If you own property not in your jurisdiction, you don’t own it. This will shift

people’s mindsets. This is bullish for Bitcoin in particular and for crypto overall over time. Crypto trades both as a risk asset & as a store of value. The store of value aspect is becoming dominant right now, the risk asset, well it’s a risky world out there so let’s wait & see

China has been moving towards separation as well. If through these events this gets accelerated, what are the consequences?

The world is a net debtor in US$ terms and the more debts you start writing off by forcing people out or by seeing defaults, the higher the US$ goes.

The US$ is big risk here. If you get a liquidity squeeze the dollar goes up. The dollar is the one thing I’m looking at. We also know that the FED is trying to stop the dollar going up too fast, because they know the dollar is the wrecking ball.
Result: They'll be supplying the

world’s banks with swap lines. In the past this eased the issue, but Russia is a very big economy. The GDP may not be that significant, but when you look at its resources & assets it’s enormous. Without that in the world, we end up with a huge loss of trade and we’ll get US$

liquidity issues, which will bite the europeans, US & everybody else.
Fed will step in and try to flood the market with swap lines, so the money printer starts in different ways. Some say that’s not moneyprinting, but it’s enough to change denominator of certain assets

In this environment I like bonds. Generally bonds should fall in yield and right now US bonds are a safe haven. bonds should come down to 1% level.

Equities
if scenario 1 happens, equities rally.
If scenario 2 happens, equities can rally if they finish the invasion and we get

some clarity. Clarity is what markets want. Is there going to be WW3 or not? Then they have to deal with possibility of recession coming. Will the markets sell off again for that? Quite possibly. Equity markets are troublesome. I’ve been waiting to buy tech and I don’t think we

can get there until we can get see the monetary spigots opening again. We'll see them in the form of transfer payments. Which was the new genie that came out of the bottle during covid, which is direct monetary handouts to people. I think they’re gonna have to do that here, cause

people are gonna get really hurt by the rising prices of food and fuel.
/w geopolitics there’s so many variables at play, it’s best not to get too clever and instead look at it from the top macro level. What are the things here that can help protect me? gold, bonds, dollars

and I like crypto, but I’d prefer it if we had the central bank printing. Crypto feels very similar to the set-up in march 2020, when we sold off really hard and failed to make a new low.
Now we haven’t made a new low. We have thrown a war at crypto, chinese bans, 8% inflation,

central bank /w “ expected 8 rate rises” (which is never gonna happn), yet crypto didn’t make a new low, so I think there’s a signal there. But again, I don’t think it’s the bet to put all your money in there right now.
The crypto situation gets interesting I think as people

start to realise that at the sovereign level this becomes a solution for them too. And the rise of CBDCs and the moving away from the SWIFT system that’s all moving away from this game.

Again, I have missed some important points, so do watch the full video if you have the time!

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