Change is inevitable in all aspects of life, and in the paradigm of winners versus losers, those who embrace innovation and ride the curve of progress consistently come out ahead. History demonstrates this as a guiding principle of a “North Star” for investors, innovators, and world powers. It rewards those who push humanity forward through bold adaptation rather than clinging to safe, well-trodden paths.
The Financial Services Shift
The transformation of financial services is already underway. Companies like Monzo, Starling Bank, and Moneybrain are redefining how finance operates, aligning with new rules of the road that favour innovation over outdated regulations (e.g., Choke Point 2.0 in the U.S., which has stifled progress). These entities are preparing for the future of finance rather than resisting change. This shift is evident in three seismic trends:
- Open Finance
Open finance breaks down the exclusivity of traditional banking, turning it into a free market where the best products—not just those prioritised by financial institutions—rise to the top. This ensures superior user experiences and cutting-edge technology, focussing relentlessly on product quality rather than being a “side desk department” of a larger institution. - Decentralised Finance (DeFi)
The rise of blockchain technology has ushered in an era of decentralisation. Whether fully or partially decentralised, financial power is shifting from banks to individuals and peer-to-peer networks, empowering the “person on the street.” - Changing Monetary Order
The monetary system evolves in cycles: minor shifts every 20–40 years and major upheavals every 60–90 years. These changes reflect new economic and social realities, aligning the monetary order with the demands of consumers and businesses. Far from static, it’s a delicate, dynamic continuum often misunderstood by surface-level thinkers. Below are key historical and projected shifts:
Major Shifts (60–90 Years)
| Date | Event | Description |
| 1873 | Coinage Act of 1873 | Demonetised silver, enforcing a gold standard, dubbed the “Crime of 1873” by silver advocates. |
| 1945 | Bretton Woods Agreement | Pegged the dollar to gold ($35/ounce), making it the world’s reserve currency. |
| 2025 | Shift to Crypto Begins | A pro-crypto U.S. administration and Saudi Arabia’s 2024 non-renewal of the petrodollar deal spark a transition to digital assets. The dollar retains ~80% of oil trade settlements, but diversification accelerates. |
| 2085 | Multi-Planetary Era | A thriving Mars colony leads to the complete phasing out of fiat currencies in favour of a new monetary system. |
Minor Shifts (20–40 Years)
| 1893 | Panic of 1893 | Railway bust and gold reserve decline cause ~583 bank failures (~6% of ~9,000 banks). |
| 1933 | Gold Suspended Domestically | Executive Order 6102 bans private gold ownership; dollar devalued to $35/ounce. |
| 1971 | Gold Standard Ends | Nixon Shock ends gold convertibility, ushering in the fiat dollar era. |
| 1974 | Petrodollar System Begins | U.S.-Saudi deal prices oil in dollars, adopted by OPEC. |
| 2008 | Petrodollar Tested | Global financial crisis, Lehman collapse, QE, and oil at $40/barrel challenge the system. |
| 2048 | Fiat Currencies Decline | Cryptocurrencies, CBDCs, and multipolar reserves reduce reliance on fiat systems. |
The above is both a historical timeline using the forementioned rules and a prediction of what comes next in the cycle of monetary systems evolution. The leap from 2048 to 2085 envisions a world where space exploration fuelled by private enterprises like SpaceX and Blue Origin, creates a need for interoperable, digital monetary systems to support interplanetary trade and settlement, phasing out Earth-bound fiat entirely and asettign the stage for the next monetary order.
Ray Dalio’s Debt Cycle: An Example
Ray Dalio, renowned for his book Principles and his deep understanding of economic patterns, outlines a debt cycle that complements the monetary evolution described above. His model focusses on the interplay of credit, debt, and economic activity. For example:
- Short-Term Debt Cycle (5–10 Years): Economic growth drives borrowing, increasing spending and inflating asset prices. When borrowing peaks, central banks raise interest rates to cool the economy, leading to a recession as debt servicing becomes burdensome. This cycle repeats as rates are later cut to stimulate growth.
- Historical Example: The 2001 dot-com bubble burst led to rate cuts, fuelling borrowing until the 2008 crisis triggered another contraction.
- Long-Term Debt Cycle (50–75 Years): Over decades, debt accumulates faster than income, creating an unsustainable burden. When repayment becomes impossible, a deleveraging event occurs—either through defaults, inflation, or austerity—resetting the system.
- Historical Example: The Great Depression (1930s) followed years of credit expansion in the Roaring Twenties, ending with widespread defaults and a monetary reset.
Dalio’s framework highlights how debt amplifies economic booms and busts, favouring institutions that control monetary levers. The current fiat system, built on these principles, prioritises banks and governments over consumers, often leaving individuals unaware of the risks—such as bank failures wiping out deposits despite their perceived safety. This structure inherently risks banks going insolvent and defaulting on deposits, but since such failures would have a widespread impact, it forces governments or other bodies to bail them out, perpetuating a debt cycle that further entrenches the system’s biases toward those in control.
The Future: A Low-Debt Monetary System
The emerging monetary future may prioritise low tolerance for debt to curb inflation and unmanageable debt-servicing costs. Unlike the current system where banks leverage consumer deposits to generate wealth, invest in high-return assets, and return minimal interest to depositors—the shift towards decentralisation and digital assets could redistribute power. Historically, bailouts like those during the 2008 crisis propped up banks because they held the reins of a system designed to fuel jobs and industry. In contrast, the next era may empower peer-to-peer finance, reducing reliance on centralised institutions and fostering a more equitable economic landscape.