I don’t think it’s just about the easy money. I think it’s about confidence and a bubble. Crypto is the biggest bubble of all, and everyone knows a bubble is going to pop. It lasts until the big guys lose their nerve and start pulling out, which is what we’re seeing now. They’re losing their nerve because they can see the economic tsunami coming from a variety of directions.
I’m concerned that the decadence of the west has now led to a series of get rich schemes that create bubble after bubble, providing successive paper booms that are bailed out by governments. The problem is that the consequences of each bail out accumulates, so this broader cycle seems itself unsustainable.
Western economies need to get back to real wealth creation. A good test of that is - can your economy solve real physical problems? Can it feed itself? Can it produce what you need in a pandemic? Are there goods and services that are universally in demand over the long term, which you produce better than anyone else?
It’s like growth of GDP has become this silly KPI that our governments obsess over whilst ignoring what’s making that happen. You can grow GDP by destroying the environment or running a Ponzi scheme, but what you really care about is the underlying strength of the economy.
The U.K. was heavily exposed by covid, in terms of its manufacturing capability and its managed response. We looked weak and disorganised. Now we need to learn from that and focus on growing a diverse and solid economy that is powerful and flexible enough to respond properly to challenges like the energy price hikes.
But I suspect the next bubble will grow just like crypto and our government will continue to pretend everything is ok.