Polis
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• Countries have often had to struggle with high levels of debt in the past, especially after the world wars in the 20th century. Unlike in the past, however, the framework parameters (demographics, declining productivity, high private debt, etc.) stand in the way of debt reduction through higher tax revenue, despite major monetary policy support.
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• Over the next decade, bond investments will not be able to live up to their myth of being a safe investment compared to equities. The end of the decade-long cycle of falling interest rates means that bond investments will return to normalized performance patterns in the future.
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• Investors will switch to other forms of investment. This is logical, as the current focus of pension provision, particularly in Germany, has two serious shortcomings. It is concentrated on bond investments in the eurozone. In addition, investment decisions are made based on the 1-year risk. A completely irrelevant control variable with a decades-long investment horizon.
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Development
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• Older people's spending on consumer goods is more than offset by their spending on healthcare services as their lifespan increases. However, the highest total expenditure over a lifetime is no longer offset by earnings. Instead, enormous debt-financed state social spending is required, which ultimately has an inflationary effect.
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• Demographic problems, high levels of debt and lax monetary policy alone do not necessarily trigger high price increases. Only when an inflationary mentality becomes established in society will the price level actually rise. As in the 1960s, the combination of large government spending packages (social welfare, climate, infrastructure, etc.) and the onset of a wage-price spiral on the labor market could actually cause inflation rates to rise. There will not be a deflationary shock for the labour market, such as that caused by increasing globalization following the opening of China, the Eastern bloc and the emerging markets.
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• On the contrary, declining globalization will fuel inflationary tendencies. This is already manifesting itself in the real economy. For example, 45% of German companies are currently experiencing problems when purchasing primary products (highest figure since 1991).

• Increasing technical progress also tends to have an inflationary effect. There are deflationary effects due to substitution effects. However, more and more jobs in the service sector are being replaced by technology in a sector that was previously the engine of job creation. Additional government spending on more pensioners and more unemployed people is leading to rising inflation rates.

• The efforts of companies to make the complicated, global production chains more regional and therefore more robust, motivated by the idea of self-sufficiency, are having a stronger impact here. Slowbalization is being fuelled by an increasing geopolitical power struggle between the USA, Europe, China and Russia. As a result, these trends can also be classified as inflationary.
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Investments
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• The counterpart to government debt, fixed-interest investments of all kinds, will not be able to maintain their value in the coming decade. Ten-year government bonds in the USA or Germany will suffer real losses in the mid-single-digit percentage range per annum.
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• The gold price will benefit from the limited investment volumes as soon as investors increasingly switch from bonds to the precious metal in order to protect their own wealth from a real decline in value.
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• A similar trend can be expected for residential real estate. Although real estate prices have risen in recent years, they have not fully compensated for the potential for price increases from falling interest rates, rising wages and rents. The greatest risk for real estate prices is a rapid and sharp rise in interest rates. However, this can be classified as low, as a low interest rate level is politically desired and necessary. In addition, the limited capital absorption capacity of the residential real estate market should have a supporting effect, similar to the gold price.
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• With a price/cash flow ratio of 11-12, the global equity market is not particularly highly valued. This excludes US equities, which are very expensive with a price/cash flow ratio of 35. Due to the high proportion of (tech) growth stocks, the latter have benefited from the sharp fall in interest rates in recent years and the correspondingly high present value of future profits.
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• However, technology stocks can no longer repeat past growth figures (market share growth from 25% to 90% in some cases) and are coming under increasing pressure from various supervisory authorities.
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• In the rest of the world, shares have normal valuations. This is not where the technology developers are based, but rather the technology users, who are now increasingly integrating the new technologies profitably into company processes.
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• Increasing healthcare spending should boost healthcare stocks, which have historically shown comparatively low fluctuations with higher growth rates and are currently neutrally valued. The risk of government-imposed price cuts should be low due to the negative impact of such restrictions on future research efforts.
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• As a special form of shares, private equity has a built-in "protection against disposal" due to its illiquidity. Investors cannot easily sell their investments in times of crisis and therefore avoid selling at inopportune times, as is often the case with equity investors. This gives managers the necessary freedom to continuously improve the acquired companies without time pressure and to generate added value for investors. Private equity will therefore remain an attractive asset class in the future.
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• Cryptocurrencies are both economically and ecologically pointless. Sweden's annual electricity consumption enables 3.5 transactions per second. In contrast, credit cards generate tens of thousands of transactions with negligible energy consumption. The store of value function is not fulfilled by the inflation of the now countless cryptocurrencies. Elon Musk's behavior is strongly reminiscent of the Hunt brothers' attempts to dominate the silver market from the late 1970s onwards, but which ended in a major failure. A similar outcome can be expected for cryptocurrencies.
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Platform
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• The risk of inflation remains very high. It results from the further increase in government debt due to the coronavirus pandemic, the falling number of working people, deformed demographics, wage increases, declining globalization and low interest rates with increasing dependence on central banks.
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• Low-volatility forms of investment such as fixed-interest investments should be avoided and assets such as shares, private equity, (residential) real estate and gold should be sought.
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• Historically, equities have lost in an inflationary environment when inflation has been actively combated. Otherwise, companies should be able to expand their profits in an inflationary environment and thus guide investors through a period of purchasing power devaluation better than bond investments.
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• In the past, profitability considerations of government spending were of secondary importance. As a result, more government spending increased debt and thus fueled inflation (e.g. German reunification). If politicians make sensible and profitable use of the available financial leeway and the debt is ultimately repaid through the "additional taxes" generated, countries could grow out of the debt problem with low interest rates. If this were to happen, the outlook for the capital markets would have to be revised.