Intergenerational Prison Fragmentation Bureau: the necessary path for nomadic capital, Bitcoin

Original title:The General Prisoner's Dilemma:

Original by Jeff Park, Bitwise Consultant

This post is part of our special coverage Syria Protests 2011

 

THE GLOBAL UNCERTAINTY INDEX (GFI), CONSTRUCTED BY THE INTERNATIONAL MONETARY FUND (IMF), HAS RECENTLY REACHED ITS HIGHEST LEVEL SINCE ITS CREATION IN 2008. LACK OF CLEAR DIRECTION AND SYNERGY IN THE AREA OF POLICY AND TRADE, AND A MARKED DETERIORATION IN MARKET SENTIMENT SINCE THE HEIGHT OF PREVIOUS HISTORYAnd this trend is likely to increase even further, especially in the Middle EastThe old, rocking global coalition is being caught up in an unprecedented conflict。

At the same time, the accelerated spread of index-level technologies such as artificial intelligence has increased the confusion among experts and ordinary people: how can productivity-driven deflation reconcile with credit-driven inflationary monetary systems? To make matters worse, private credit is suffering an epic collapse that has underpinned this fragile capital supply chain by manipulating capital prices at the expense of liquidity。

Just over the past week, we have witnessed a series of events:

• While Iran has designated Mojtaba Khamenei as the new supreme leader, the price of crude oil in the United States has soared by nearly 40 per cent, representing the largest single week increase since 1983

• Anthropic, an artificial intelligence company, sued the United States Department of Defense for “supply chain risk”

• Belet set a 5 per cent cap on its $25 billion direct borrowing fund, while investors' demand for redemption is almost double that percentage。

No one can predict with precision the course of these complex issues, as they are unprecedented (notably, these three matters are not independent of each other, and I will elaborate on them later). At a time like this, we need to step back and redefine the core:It's not about the unknown, it's about anchoring the facts that you are absolutely certain, and indeed are the direct cause of these events。

As Holmes said to Watson, "When you rule out all the impossible, no matter how incredible the rest, that is the truth." Our task, therefore, is not to pursue the sheer unknown, but to root out fundamental facts that already exist and are irrefutable。

With that in mind, in the decade to come, which is fraught with uncertainty, I believe that there are three sets of facts to be established — and their certainty will only become more apparent now. What I'm saying is "yes" is that these are all incidents with a probability of 100%. The only thing that is really unknown is the concrete timing and, to some extent, the severity of the event, but the catalyst of every event is destined to appear in our lifetime. And when we anchor these undisputed facts, we can turn a general sense of weakness into a firm belief in how to deal with it in the future。

Truth One: The global population pyramid is being reversed, and all asset classes that build it will collapse

In 2019, a statement issued by the World Economic Forum triggered a huge shock in the institutional consensus:"For the first time, the number of people over 65 exceeds the number of people under five years of age."Seven years later, after a devastating global epidemic, societies around the globe have felt the heavy pressure and the negative consequences of this trend, which is only just beginning。

Global fertility is dangerously approaching replacement levels, a threshold that has long been in place in developed markets. A combination of declining birth rates and ageing populations will create the highest dependency ratio in the history of human civilization. Worse still, the dominant age class in developed countries ultimately needs liquidity to finance the longer life span。The result is an ambitious intergenerational transfer of wealth: financial assets accumulated by an entire generation of ageing groups must exit the market through large-scale liquidity。

The scale of this capital is impressive:The total market value of the United States stock market alone amounts to approximately $6.9 trillion (of which the baby tide generation holds more than $40 trillion), while the United States residential real estate market value has increased by $50 trillion (although the baby boom generation and previous generations account for less than 20 per cent of the population, they hold over $20-25 trillion of assets). At a time when wealth totalling nearly $60-70 trillion needs to be withdrawn from the capital asset system, the income-pricing capacity of the next generation of young people is diminishing, and few assets are at their disposal。

When this age group is eventually forced to sell assets, it is almost inevitable that long-term asset deflation will occur。

The bottom logic of the stock market is essentially a reflection of demographic trends:The market rises when the group of savers that accumulate assets grows steadily and moves towards retirement. The collapse of private credit is the most intuitive example of this: This is another $2 trillion "time bomb" hidden in pension, endowment fund and life insurance companies that are close to fraud under the guise of mobility conversion for young people。

BUT ONCE THE YOUNGER GENERATION REALIZES THAT THEY ARE BECOMING THEIR PARENTS' "EXITORS" OF THE MOBILITY SWITCH, THEY WILL CHOOSE NOT TO ENTER. NO ONE VOLUNTARILY BUYS A LONG-TERM DOWNSIDE ASSET. THIS IS WHY THE TRUMP GOVERNMENT PUSHED FOR THE CHILDREN'S INVESTMENT ACCOUNT, WHY THE UNITED STATES IS ACTIVELY PUSHING FOR EQUITY MONETIZATION (IN ORDER TO MAKE FOREIGN CAPITAL MORE EASILY AVAILABLE TO TAKE OVER US EQUITIES), AND WHY REGISTERED INVESTMENT ADVISERS (RIAS) ARE USING THE AUTOMATED MODEL PORTFOLIO ON A LARGE SCALE, RATHER THAN ASKING THE CENTRAL QUESTION: "WHY DO WE DO THIS?"

These initiatives are designed to slow down the inevitable: When the infant boom generation is not flexible in pricing and selling assets, the market will have no buyout unless young people, foreign capital or machines are forced to take over。The design of Trump's children's accounts is obvious:THE ACCOUNT PROHIBITS ANY FORM OF DIVERSIFICATION, EXPLICITLY PROHIBITS BONDS, INTERNATIONAL EQUITIES AND ALTERNATIVE INVESTMENTS AND ALLOWS ONLY THE ALLOCATION OF UNITED STATES EQUITY INDICES. UPON REACHING THE AGE OF 18, THE ACCOUNT IS ALSO CONVERTED INTO A PERSONAL RETIREMENT ACCOUNT (IRA) WITH A HIGH RANSOM FINE - IN STARK CONTRAST TO THE STANDARD UNIFIED TRANSFER OF THE MINOR'S ACCOUNT (UTMA), WHICH ALLOWS FOR TOTAL FREEDOM TO BE REDEEMED AS ADULTS。

Obviously, it's not a value-added tool for children at all, but a one-way closed passage for more than 40 years, intended to transform an entire generation of young people into a generation beforePassive Handheld MobilityI don't know。

This phenomenon will become more evident in the real estate sector, which is at the centre of the largest asset bubble ever。A generation uses long-term effects by deliberately hoarding fixed supply assets for decades to completely separate housing prices from the potential economic productivity of communities. For the majority of residential and commercial real estate (excluding high-quality assets operating in another economic system), "affordability" has long been hypocritical。

A generation of young people whose wages have never kept up with the price of the house would never buy it at current prices. For those fortunate, many properties will eventually pass on naturally to their children; if they are not inherited by children, they will eventually be sold to a market in which both the buying population and the family form structurally reduced numbers。Once again, mathematical logic is cruel and inevitable: large deflation of real estate is not a matter of possibility, but of necessity。

To accelerate this liquidity event, the transition of real estate from investing assets to consumer goods will be a vicious addition to the rise in property taxes — housing prices will increasingly be linked to inflation in government spending, including public schools, social services, municipal infrastructure, and the overall trend of generally higher service costs than commodity costs. Financial pressures alone can force markets to sell unaffordable。

The New York City Mayor, Mamdani, has promoted an increase in property taxes, not as a case in point, but as a sign of a huge deal in the era of “inert capital asset taxes”, a trend that will be particularly marked in cities where wealth inequalities have reached levels that make the status quo politically unsustainable. This leads me to my second determination。

Establishing Truth II: Inequality of wealth will break the threshold and wealth taxes will be unforeseeable answers

This demographic challenge is essentially a vertical collapse:The population pyramid is slowly reversed, the bottom population is shrinking, and the weight of the upper age group is becoming unsustainable。In addition to this vertical demographic collapse, there is a much more worrying global horizontal fracture — income inequality。

When looking at headlines like "Global 10% of the population owns 76% of the global wealth", (data source: UN 2022 World Inequality Report), we need to understand a key difference: this is not the story of some countries that are leading the way, while others are lagging behind, but what is happening in every country on a global scale:The global gap between rich and poor is widening and accelerating in all measurable time dimensions。

More precisely, the problem is not just income inequality, but wealth inequality. Never before in human history has such a high proportion of wealth been concentrated in the top 1% of the population. In the United States, for example, the top 1 per cent of the population holds a rising share of net assets, which is now close to one third of the country's total wealth。

The distinction between income and wealth is crucial。Income is a transactional concept, that is, a "current currency", a market pricing measure of productivity; and wealth is not. Non-capitalized wealth is a "silent currency": it does not have the intrinsic productivity and, in credit-driven zero-sum games, it slows down the flow of money needed for the economy to run。

When wealth is as concentrated as it is today, it ceases to flow and the speed of consumption, which sustains broad economic activity, is suffocated。

In this context, and in the context of the lack of significant productivity growth to generate new resources, despite the continuing dispute over wealth taxes, it will eventually become a corollary of fiscal nihilism. The reason is that the only viable mechanism for rebalancing this pattern is to tax the wealth itself — no matter how crudely designed and logically untenable。

Wealth taxes can be seen as mirrors of social security:The former draw funds from the bottom to support their survival, while the latter draw funds from the top to sustain themselves. Both are essentially imposed on unrealized values, the only difference being direction: the former is vertically (i.e. extracting from young people) and the latter is horizontally (i.e. extracting from the rich)。

The process of implementation of the wealth tax has begun. On 12 February 2026, the House of Representatives of the Netherlands passed a landmark bill providing for a uniform 36 per cent tax on the annual value added of shares, bonds and encrypted currencies, whether or not the assets were sold. The bill is currently awaiting approval by the Senate, and the political parties that support it are in the majority and are almost firmly sanctioned. Whether or not this policy is morally reasonable, mathematically rigorous and legally enforceable, it is irrelevant — those who dwell on these issues simply ignore the larger core。The real key questions are simple but far-reaching: what happens when other countries around the globe follow suit

Look at where capitalism originated and the last bastion — America. The New York Times poll on public attitudes to wealth taxes shows that, with the exception of men with university degrees, whose population is rapidly shrinking, the rate of support for wealth taxes is almost uniform across all population groups。

This is at the heart of the understanding of "citizenship" of capital. Capital-account liberalization is widely recognized as an inherent feature of the modern world, but vulnerable groups are well aware that capital can be restricted at any time when countries choose — examples have been provided by countries such as China and Russia. The historical problem is "treachery": any single country imposes a wealth tax and capital flows simply to other jurisdictions. But as the global sense of financial nihilism increases, and political will gradually converges on the only option, collective bargaining arrangements will become inevitable, and safe havens that have long benefited from prisoners ' plight will no longer be allowed to remain outside。

Following this decision by the Netherlands, the EU has been actively harmonizing the tax framework aimed at preventing capital outflows between member States. By the middle of the twenty-first century, the global pass on capital will have been revoked and replaced by a "Shertingham visa" – valid and invalid in the eyes of different regulators. Local capital constraints only exacerbate the need for "external funds" that can bypass compliance. Welcome to the price of hard currency-backed species economic revival。

According to the framework set out in David Hume's 1752 paper, The Trade Balance, modern investors have for a long time acquiesced in treating “external funds” as assets such as gold, bitcoin, an asset that has no State, no jurisdiction and is not subject to any sovereignty. But now, 400 years later, a new category of “external finance” is emerging that will fundamentally redefine the concept of comparative advantage. The time has come to write a new paper on international relations: On Smart Balance。

As Hume saidTrade surpluses and gold flows determine the relative strength of the countryToday, however, the new determinants of comparative advantage will be the concentration of the productive artificial intelligence infrastructure — who has the ability to calculate, who controls the data and who sets model rules for the operation of all other systems. Capital will flow to smart hegemony, as it did to manufacturing hegemony. The first countries, institutions and individuals to grasp this trend will define a new wealth hierarchy. This leads to my third determination。

Establishing truth III: Artificial intelligence will destroy the relative value of labour and redefine the value of capital for an economy driven by intent

Karl Marx described capital as"Death work, like vampires, can only survive by sucking live labour, the more they suck, the longer they live."。This famous statement highlights the socialist view that capital, which exists in the form of accumulated labour, adds value by consuming the living labour of workers。

However, there is a key error in Marx ' analysis: In his view, capital itself was naturally insufficiently dynamic and must continue to consume human labour in order to be profitable. But with the rise of credit, and now the outbreak of artificial intelligence, we are about to enter a completely new paradigm — that vampires are not only fully dynamic, they can even bypass human labour, they can only profit from the constant consumption of kinetic energy. As can be seen from the figure below, the trend of increasing the share of capital income and declining labour income for more than a decade has already been set in motion, and artificial intelligence will drive the trend beyond the irreversible tipping point。

SINCE 1980, THE SHARE OF LABOR INCOME IN US GDP HAS DECLINED FROM ABOUT 65% TO LESS THAN 55%, WHICH IS BEFORE THE LLM MODEL BECAME WIDESPREAD. GOLDMAN SACHS ESTIMATED IN 2023 THAT GENERATING ARTIFICIAL INTELLIGENCE COULD EXPOSE 300 MILLION FULL-TIME JOBS TO AUTOMATION RISKS。

In other words, artificial intelligence is not only a capital-intensive technology, but also a labour-destructive technology. The rise of artificial intelligence will permanently change the underlying economic principles of social functioning and reshape the irreversible relationship between capital and labour. More specifically, when labour costs go hand in hand with costing, there will be a new “capital war” worldwide that will require unprecedented government subsidies, radical industrial policies, and fiscal policies. In this world, capital will become the master: ownership of assets will be the only barrier between dignity and the permanent lower classes. This is what the International Monetary Fund predicted:In an artificially intelligent economy, the federal tax base will shift from labour income to corporate income tax and capital gains tax。

However, capital itself will also be redefined — as ownership of assets is no longer limited to financial assets. Large artificial intelligence industries also rely on another element, whose value is even more valuable and irreplaceable than pure energy: data. Specifically, your daily data footprint provides the background for model reasoning and learning。

The world is moving towards a new paradigm in which human thoughts, behaviours, instructions, preferences and, above all, intentions will be of great value。WHEN THE INTENTION ITSELF BECOMES CAPITAL, AN ENTIRELY DIFFERENT ECONOMIC ORDER WILL EMERGE — ASSET OWNERSHIP WILL EMERGE IN A STRANGE FORM OF “NON-TRUSTED” OWNERSHIP, SEPARATE FROM THE FRAMEWORK OF THE KYC/AML FINANCIAL INSTITUTIONS THAT WE KNOW WELL. THE SMART AGENT SYSTEM HAS BEGUN TO BE EQUIPPED WITH ENCRYPTED CURRENCY WALLETS, AUTONOMOUS PAYMENT ALGORITHMS, APPLICATION INTERFACES (API) AND DATA. THIS IS A PRACTICAL NECESSITY FOR A WORLD IN WHICH VALUES NEED TO FLOW SEAMLESSLY BETWEEN SMART AGENTS, FAVOURING A TRADE-IN-TRANSACTION MODEL — IN WHICH LABOUR AND CAPITAL WILL BE IN A SUPER-HEAVY “SHARTING STATE”。

HISTORICALLY, FINANCIAL ASSETS HAVE BEEN CLEARLY WITHIN THE REGULATORY BOUNDARIES OF FINANCIAL REGULATORS SUCH AS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC), THE COMMODITY FUTURES AND EXCHANGE COMMISSION (CFTC), THE UNITED STATES FINANCIAL SERVICES REGULATORY AUTHORITY (FINRA) AND THE FINANCIAL ACCOUNTING STANDARDS BOARD (FASB)。

But as the asset evolves into a form of "activeness" - – Your data footprint becomes collateral with the intention of becoming a realizable output (consumable-based pricing model will be achieved through open, API-based products and embedded in context) – artificial intelligence systems will blur regulatory boundaries in all directions. The United States Federal Communications Commission (FCC) has jurisdiction because your cognitive information is transmitted through the spectrum; the United States Federal Trade Commission (FTC) has jurisdiction because the intent to collect is a consumer protection domain; and the United States Department of Defense (DoD) has jurisdiction because data sovereignty is a national security issue。

In other words, the multiplier effect extends not only to the asset level but also to the entire regulatory system. The definition of currency (by whom, by whom, by whom, and by whom) will be the most controversial geopolitical issue of the century。

Welcome to the age of smart currency。

Three truth-building, two convergences, one conclusion

If you read it here, you might be upset — perhaps you might find yourself once again in great uncertainty. But remember: all this is about finding clear answers. Let us together reaffirm the central conclusion:The three forces of population collapse, wealth inequality and artificially driven labour substitution are bound to occur。They are not a stand-alone risk that needs to be weighed separately, but are logically convergent. The population pyramid collapsed vertically, while the bottom wealth level was torn apart, magnifying both as a technological revolution that favoured capital only。

Many investors have attempted to address this uncertainty through local solutions to local problems: one asset rotation, one hedge, a thematic investment in artificial intelligence infrastructure, or blind hope for encrypted money. The most tempting, and most likely to hold traditional investors hostage to the status quo, is the techno-optimistic “evacuation pod”:Artificial intelligence-driven productivity growth will rapidly expand wealth cakes enough to transcend the effects of population collapse。This view sounds persuasive, but it is precisely a logic that seems complex and detached from the core。

Throughout human history, productivity gains have never been rapid and sufficient to avoid political and social divisions caused by inequality. Instead of stopping the labour uprising, the industrial revolution became the trigger for it — despite the fact that it created unprecedented aggregate wealth. Crucially, artificial intelligence is not a neutral productivity multiplier: from its structure, it is itself a capital centralizer. Every cent of productivity it creates is attributed, first and most enduringly, to those who possess the power, data and models. Optimists do not think that the wealth cake will not grow, but that it is the fault of who gets the cake — and that is at the heart of the whole debate。

When you look at these truly irreversible global phenomena at a macro level, the firm belief in the direction becomes unexpectedly clear:

• The global ageing and contraction of the population will inevitably worsen, as determined by 100 per cent

• Wealth inequalities will be extended to trigger capital restrictions on a global scale — whether at the cross-border or domestic level, determined by 100 per cent

• Artificial intelligence will be structurally biased towards capital, generating new forms of transition capital that the global economy has never seen before, which is equally 100 per cent determined。

Most critically, these three common core features point to one word: the global. Intergenerational demographic structures, asset allocation, capital costs have never been more relevant than they are today, and this is increasing. Moreover, this correlation transcends not only space but also time — because the demographic composition of wealth is one-way and irreversible. This means that such convergence is not only global but also synchronized。

In conclusion, this has created the most central collective consultation issue of the modern century in my view: the plight of mobile prisoners for generations. It raises the following questions:

• Will the younger generation volunteer to participate in American capitalism when they also feel that the government's directive is "to take over for parents"

• Will the top wealthy voluntarily bear the high tax burden when the friends of the rich turn to "tax efficiency" planning

• Will artificial intelligence companies voluntarily slow the pace of development when profit-driven competitors ignore capital costs and continue to expand

The Nash balance will result in:All participants will choose to betray this rational dominant strategy — whatever others choose — because the cost of inaction is too high. Therefore, when the key nodes arrive, all will seek to exit mobility at the same time, rationally。

This liquid, Faustian trade must not be seen as a potential risk, or as a tail risk that needs to be modelled, but rather as the most predictable large-scale synergetic event in the history of human capital markets. One would say that in a deflation environment, you should have a nominal interest-bearing tool such as a bond or a dynamic artificial intelligence stock. Maybe so. But my core norm is simpler and more structured: you need to hold assets that do not turn yourself into someone else’s exit from the liquidity switch。Within this framework, the assets you least deserve are real estate, bonds, United States equities. These are long-standing instruments of manipulation, which, whether deliberate or not, amount to the greatest intergenerational plundering of wealth in history。

On the contrary, your ideal asset should meet three reverse conditions simultaneously:

1. The current population structure has the lowest holding rate, but is expected to be the highest in the future

2. When capital movements are subject to strict taxation, restriction or confiscation, they are most likely to be safe havens without jurisdiction

3. The closest to an autonomous and intelligent world would be a seamless capital form that would replace the productive function of human labour without intermediaries。

When the Ottoman Empire broke the walls of Constantinople in the 15th century, the Byzantine business class lost all its assets denominated in imperial credit: land, titles, national debt. None have been spared. But young and talented scholars and pro-businessers who moved their manuscripts, gold, knowledge and the like to the west to Florence, finally ignited what was later known as Renaissance。

Among them is a young Byzantine scholar named Johannes Bessarion. Born in 1403 in Trabzon, Black Sea, he fled Constantinople with boxes of irreplaceable Greek manuscripts carrying almost all the intellectual heritage of the ancient world. He was the 15th century author of the largest books and manuscripts in the West and thus created one of the first "information technology": Marcianana Library - the first open-source knowledge base in Latin European history (i.e. public library). This collection in Venice became the direct material of Aldous Manutius. By doing so, he printed the entire collection of Aristotle and dozens of Greek classics and launched the printing revolution, which in turn gave rise to religious reform, the scientific revolution and the Enlightenment movement. The mobile, autonomous and unincorporated capital that Besarión carries with him, after five centuries, eventually breeds Western civilization。

Capital that can move across time and space survives, and it does not go away。

This leads to our final conclusion — and the only radical decision worth considering in the face of many traditional choice traps:

What you really need is nomadic capital. This capital can move freely in intergenerational demographic structures, political boundaries and artificially intelligent primitive ecology; the Strait of Hormuz, which bypasses the currency. In the twenty-first century, nomadicism is digital。

Specific investment instruments vary from person to person and radical investment theory provides a viable framework: 60 per cent of compliance assets and 40 per cent of risk-resistant assets are configured。But if you follow the three conditions carefully — holding the assets that young people ultimately need, holding assets that are difficult to reach by the Government, holding actually tradable assets in an autonomous economic system — the end is no longer a prediction, but a necessity。Uncertainty will eventually be fixed。

After all, there is only one subversive asset in history, which has met these three conditions simultaneously from the very beginning of the code. This step is already simple enough for those who are able to act。

The rest is just a matter of timing。