In Episode 410 of Hidden Forces, Demetri Kofinas speaks with investors Paulo Macro and Le Shrub about the consequences of a breakdown in the international capital and trading system—and what this means for markets and investor portfolios.
The first hour revisits last year’s discussion on “EM-ification,” the breakdown of the rules-based global order, and the urgent search for a new safe asset in a world of deteriorating fiscal balance sheets. Together, Demetri, Paulo, and Le Shrub map out what investors should be paying attention to in the year ahead.
In the second hour, the conversation turns to the implications of a full-blown trade and capital war, including:
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The impact on U.S. assets—especially Treasuries and the dollar—if surplus nations redirect their capital flows away from the United States
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Resurgent inflation fueled by strategic rearmament and industrial policy
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A potential decoupling from—and even a hot war with—China
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The abandonment of fiscal restraint in the face of an economic slowdown amid persistently high or rising borrowing costs for the U.S. government
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The risk of massive wealth destruction triggered by a dramatic revaluation of the U.S. dollar
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Episode Recorded on 04/15/2025
