Inter-generational Prisoner's Dilemma Resolution: The Nomadic Capital and Bitcoin's Inevitable Path

Original Article Title: The Generational Prisoner's Dilemma: Three Certain Truths and The Exit Liquidity Trap

Original Article Author: Jeff Park, Bitwise Advisor

Original Article Translation: Saoirse, Foresight News

The International Monetary Fund's Global Uncertainty Index (IMF) recently hit its highest level since its establishment in 2008. The lack of clear direction and coordination in policy and trade has led to a significant deterioration in market sentiment since the previous historic peak, and this trend is likely to further intensify — especially in the Middle East region, where the once precarious global alliances are now embroiled in an unprecedented conflict.

Meanwhile, the accelerated adoption of exponential technologies such as artificial intelligence has left experts and laypeople increasingly perplexed: how can a productivity-driven deflation be reconciled with a credit-driven inflationary monetary system? To make matters worse, private credit is undergoing an epic collapse, solely because it once shored up this fragile capital supply chain by manipulating asset prices at the cost of sacrificing liquidity.

Just last week, we witnessed a series of events:

· Iran appointed Mojtaba Khamenei as the new Supreme Leader, while simultaneously, the price of U.S. crude oil surged nearly 40%, marking the largest single-week gain since 1983;

· The artificial intelligence company Anthropic sued the U.S. Department of Defense citing "supply chain risk";

· BlackRock set the redemption cap of its $25 billion direct lending fund at 5%, while investor redemption requests were nearly double that proportion.

No one can accurately predict the trajectory of these complex issues, as they are all unprecedented (notably, the aforementioned three events are not mutually exclusive, as I will elaborate on later). In such moments, we need to take a step back, recalibrate our focus on the core: not getting entangled in the unknowns but anchoring ourselves in the absolute truths that are indeed the direct causes of the aforementioned events.

As Sherlock Holmes once said to Watson, "When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth." Therefore, our task is not to chase elusive unknowns but to root ourselves in the existing, indisputable fundamental facts.

Building on this idea, in a decade full of uncertainty, I believe there are three undeniable truths — and their certainty will only become more apparent in the present moment. By "undeniable," I mean these are events with a 100% probability of occurrence. The only true unknown is the specific timing of each event and, to some extent, the severity, but the catalyst for each event is destined to occur within our lifetime. By anchoring in these indisputable facts, we can transform a pervasive sense of powerlessness into a steadfast conviction of how to face the future.

Undeniable Truth One: The global population pyramid is inverting, and all asset classes built upon it will collapse accordingly

In 2019, a statement from the World Economic Forum caused a seismic shift in institutional consensus: "For the first time, the global population aged 65 and over has surpassed the global population aged 5 and under." Seven years later, following a devastating global pandemic, societies worldwide have already felt the heavy pressure and consequences of this trend, and this is just the beginning.

The global fertility rate is dangerously close to falling below replacement levels, a threshold long surpassed in developed markets. The combination of declining birth rates and an aging population will result in the highest dependency ratio in human civilization history. What is worse, the elderly ruling class in developed nations will eventually need to liquidate liquidity to fund their ever-extending lives. The result is a grand intergenerational wealth transfer: all the financial assets accumulated by an entire aging generation must exit the market on a massive scale.

The scale of this capital is staggering: The total market value of the U.S. stock market alone is about $69 trillion (with the boomer generation holding over $40 trillion), and the U.S. residential real estate market adds another $50 trillion (even though the boomer and pre-boomer population accounts for less than 20%, they hold assets worth over $20-25 trillion). In total, nearly $60-70 trillion of wealth needs to exit the capital asset system, while at this time, the pricing power of the next younger generation is rapidly diminishing, and disposable wealth is scarce.

When this aging generation is ultimately forced to sell off assets, it will almost certainly trigger long-term asset deflation.

The underlying logic of the stock market is fundamentally just a reflection of demographic trends: As the asset-accumulating saver cohort steadily grows and moves towards retirement, the market rises. The brutal collapse of "private credit" is the most vivid example — this is another $2 trillion "time bomb" lurking in pension funds, endowment funds, and life insurance companies, disguised as liquidity conversion for the younger population but bordering on fraud.

However, once the younger generation realizes that they are becoming the "exit liquidity bagholders" of their parents, they will choose not to participate. No one will willingly buy into an asset that is in a long-term downtrend. This is also why the Trump administration is aggressively promoting children's investment accounts, why the U.S. is actively pushing for stock tokenization (to make it easier for foreign capital to absorb U.S. stocks), and why registered investment advisors (RIAs) are massively adopting automated model portfolios without questioning the core issue: "Why are we doing this?"

All these measures are aimed at delaying the inevitable: when the Baby Boomer generation, with inelastic pricing, starts offloading assets, unless the burden is forcibly transferred to the young, foreign capital, or machines, the market will lack any buying pressure. Just look at the design of the Trump children's account itself: The account prohibits any form of diversification, explicitly forbids bonds, international stocks, and alternative investments, and only allows allocation to U.S. stock indices. Upon turning 18, the account will convert to an individual retirement account (IRA) with a substantial redemption penalty — in stark contrast to a standard Uniform Transfers to Minors Act (UTMA) account, which allows full unrestricted redemption upon reaching adulthood.

Evidently, this is not a wealth-building tool for children but rather a one-way closed channel spanning over 40 years, intentionally or not, aimed at turning an entire generation of youth into the previous generation's "passive liquidity bagholders."

This phenomenon in the real estate sector will become even more pronounced, as it is at the epicenter of the largest asset bubble in history. A generation has intentionally, over decades, hoarded fixed-supply assets, utilizing the duration effect to completely disconnect home prices from the community's potential economic productivity. For most residential and commercial real estate (excluding high-quality assets operating in a separate economic system), "affordability" has long been a false proposition.

A generation of young people whose wages have never caught up to housing prices will never buy a home at current prices. For the fortunate, many properties will eventually pass down to their children naturally; for those with no offspring to inherit, the properties will ultimately be sold off into a market with structurally reduced numbers of homebuyers and families forming. Once again, the mathematical logic is brutal and inevitable: the substantial deflation of real estate is not a matter of possibility but a definitive conclusion.

To hasten this liquidity event, the transformation of real estate from investment assets to consumer goods, coupled with rising property taxes, will create a vicious cycle — home prices will increasingly align with government expenditure inflation, including public schools, social services, municipal infrastructure, and the overall trend of service costs consistently exceeding commodity costs. The fiscal pressure alone will drive untenable sell-offs in the market.

New York City Mayor Mamdani's push for a property tax hike is not an isolated case but a harbinger of the era of "lazy capital asset tax," signaling a grand transactional shift where wealth inequality has reached such heights that the status quo is politically unsustainable in cities. This trend will be particularly pronounced. This leads to my second certain truth.

Certain Truth II: Wealth Inequality Will Reach a Tipping Point, and Wealth Tax Will Be the Unexpected Answer

The aforementioned demographic challenge is essentially a vertical collapse: the population pyramid slowly inverts, the lower-level population shrinks, and the weight of the aging caregiving group at the top becomes unsustainable. In addition to this vertical population collapse, there is a more concerning horizontal crack globally—income inequality.

When we see headlines like "Global 10% own 76% of global wealth" (source: UN's 2022 World Inequality Report), we need to understand a crucial distinction: this is not a story of some countries getting rich first and others lagging behind but rather a narrative unfolding within every country globally: wealth disparities are widening everywhere and accelerating on all measurable time scales.

More precisely, the issue is not just income inequality but wealth inequality. Never before in human history has such a high proportion of wealth been concentrated in the hands of the top 1% of the population. Taking the United States as an example, the share of net assets held by the top 1% has continued to rise and now approaches about one-third of the nation's total wealth.

The distinction between income and wealth is crucial. Income is a transactional concept, the "fluid currency," a market-pricing measure of productivity, whereas wealth is not. Non-productive wealth is the "static currency": it lacks intrinsic productivity and in a credit-driven zero-sum game, it hampers the currency velocity needed for economic operation.

When wealth is highly concentrated as it is today, it ceases to circulate, and the consumption velocity that underpins broad economic activity silently chokes.

In this scenario, lacking significant productivity growth to create new resources, despite ongoing controversies surrounding wealth taxation, it will inevitably result in fiscal nihilism. The only viable mechanism to rebalance this structure is taxing wealth itself—no matter how rudimentary its design or illogical its rationale.

A wealth tax can be seen as a reflection of social security: the former extracts funds from the bottom to subsidize survival, and the latter extracts funds from the top to sustain survival. Both are essentially levies on unrealized value, with the only difference being the direction: one is vertical (i.e., extracting from the young) and the other is horizontal (i.e., extracting from the wealthy).

The implementation process of a wealth tax has begun. On February 12, 2026, the Dutch House of Representatives passed a landmark bill that mandates a 36% tax on the annual appreciation of stocks, bonds, and cryptocurrency, regardless of whether these assets have been sold. The bill is currently awaiting approval from the Senate, where parties in support hold the majority, making it almost certain to pass. The morality, mathematical rigor, and legal enforceability of this policy are irrelevant—those fixated on these questions will entirely miss the bigger core issue. The truly critical question, simple yet far-reaching, is: What happens when other countries worldwide follow suit?

Look at the birthplace and final bastion of capitalism—the United States. A public opinion poll by The New York Times on attitudes toward a wealth tax revealed that, apart from college-educated men (a demographic in rapid decline), support for a wealth tax is nearly uniform across all population groups.

This is precisely the crux of understanding capital's "citizenship." While the liberalization of capital accounts is widely seen as a hallmark of the modern world, marginalized groups are keenly aware that capital can be restricted by the state at any time—examples from countries like China and Russia already demonstrate this. The historical issue has been one of "betrayal": when any single country imposes a wealth tax, capital simply flows to other jurisdictions. But as global fiscal nihilism intensifies, with political wills across nations gradually converging on the only choice, collective bargaining arrangements will become inevitable, and those havens benefiting long from a prisoner's dilemma will no longer be allowed to sit on the sidelines.

Following the Dutch decision, the EU is actively coordinating a tax framework to prevent capital flight among member states. By the mid-21st century, the global passport of capital will be revoked, replaced by a "Schrodinger's Visa"—valid and invalid simultaneously in the eyes of different regulators. Local constraints on capital will only heighten the demand for "external funds" that can circumvent compliance layers. Welcome to the era of hard asset-backed price-species economic revival.

Building upon David Hume's 1752 essay "Of the Balance of Trade," modern investors have long viewed "external funds" as assets like gold, bitcoin—an asset without a state, jurisdiction, or sovereignty. But today, four centuries later, a new class of "external funds" is emerging, poised to fundamentally redefine the concept of comparative advantage. It's time to draft a new paper for international relations: "Of the Intelligent Balance."

As Hume stated, trade surpluses and gold flows determined a nation's relative power; and now, the new determinant of comparative advantage will be the concentration of productive artificial intelligence infrastructure—who holds the computing power, who controls the data, who sets the model rules underpinning all other systems' operations. Capital will flow toward intelligent supremacy as it once flowed toward manufacturing supremacy. The countries, institutions, and individuals who grasp this trend earliest will define the new wealth hierarchy. This brings me to my third ascertained truth.

Truth #3: Artificial Intelligence Will Destroy the Relative Value of Labor and Redefine Capital Value for an Intent-Driven Economy

Karl Marx described capital in “Capital” as “dead labor, which, vampire-like, only lives by sucking living labor, and lives the more, the more labor it sucks.” This famous quote highlights the socialist view that capital, existing in the form of accumulated labor, will continue to appreciate by consuming workers' living labor.

However, Marx made a key mistake in his analysis: he believed that capital itself inherently lacks vitality and must continually consume human labor to profit. But with the rise of credit and now the explosion of artificial intelligence, we are on the brink of entering a new paradigm where the “vampire” not only has full agency but can even bypass human labor, only needing to continuously consume energy to profit. As shown in the figure below, the trend of capital income rising and labor income decreasing has been brewing for over a decade, and artificial intelligence will drive this trend past an irreversible tipping point.

Since 1980, labor income as a percentage of the US GDP has dropped from about 65% to below 55%, and this is even before the widespread adoption of Large Language Models (LLMs). Goldman Sachs estimated in 2023 that Generative AI could put 300 million full-time jobs at risk of automation.

In other words, artificial intelligence is not just a capital-intensive technology but also a labor-displacing technology. The rise of artificial intelligence will permanently alter the underlying economic principles of societal operation, reshaping the irreversible relationship between capital and labor. More specifically, as labor costs converge with computational costs, a new “capital war” will erupt globally, requiring unprecedented government subsidies, aggressive industrial policies, and fiscal measures. In this world, capital will reign supreme: asset ownership will be the sole barrier between dignity and a permanent underclass. This is also what the International Monetary Fund predicts: in an AI-dominated economy, the tax base will shift from labor income to corporate income tax and capital gains tax.

However, capital itself will also be redefined because asset ownership is no longer limited to financial assets. The vast artificial intelligence industry relies on another element, whose value is even more precious and irreplaceable than pure energy: data. Specifically, the data footprint you leave behind every day provides the background for model inference and learning.

The world is moving towards a new paradigm: human thought, behavior, commands, preferences, especially intent, will hold immense value. When intent itself becomes capital, a completely different economic order will emerge—asset ownership will take on a “non-custodial” strange form, detached from the familiar frameworks of KYC/AML financial institutions. Intelligent agent systems have begun to equip themselves with cryptocurrency wallets, autonomous payment capabilities, application programming interfaces (APIs), and data. In a world where value needs to flow seamlessly between intelligent agent systems, emphasizing transactional use of preferences, labor and capital will exist in a superimposed “Schrodinger state.”

Historically, financial assets have always been clearly within the regulatory boundaries defined by the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Financial Industry Regulatory Authority (FINRA), Financial Accounting Standards Board (FASB), and other financial regulatory bodies.

However, as assets evolve into a form with "active attributes" — where your data footprint becomes collateral, intent becomes a monetizable output (enabled by a consumption-based pricing model realized through open, API-driven products embedded in context) — artificial intelligence systems will blur regulatory boundaries from all directions. The Federal Communications Commission (FCC) has jurisdiction because your cognitive information is transmitted over the spectrum; the Federal Trade Commission (FTC) has jurisdiction because intent collection falls within consumer protection; the Department of Defense (DoD) has jurisdiction because data sovereignty is a national security issue.

In other words, this overlay effect not only stays at the asset level but extends upward to the entire regulatory system. When no single entity can clearly define the boundaries of "financial assets," the definition of money (issued by whom, protected by whom, confiscated by whom) will become the most contentious geopolitical issue of this century.

Welcome to the era of intelligent currency.

Three Verities, Two Convergences, One Conclusion

If you've read this far, you may feel unsettled — perhaps finding yourself once again in immense uncertainty. But remember: the sole purpose of this article is to find clear answers. Let's restate the most core conclusion together: The three forces of demographic collapse, wealth inequality, and AI-driven labor displacement are all inevitable. They are not separate risks to be individually weighed and hedged but are logically and convergently simultaneous. The demographic pyramid will collapse vertically, the foundational wealth levels will tear, and amplifying these two is a tech revolution that favors only capital.

Many investors attempt to address this uncertainty by tackling localized problems with piecemeal solutions: shifting assets here, hedging there, betting on AI infrastructure themes, or holding blind hope for cryptocurrency. The most seductive and potentially pacifying argument for traditional investors is the "escape pod" of technological optimism: AI-driven productivity growth will rapidly expand the wealth pie sufficiently to outweigh the effects of demographic collapse. This viewpoint may sound convincing, but it is precisely a seemingly complex logic that deviates from the core issue.

Throughout human history, the pace of productivity gains has never been swift and equitable enough to avoid the political and social ruptures caused by inequality. The Industrial Revolution not only failed to prevent labor uprisings but instead became the spark for those uprisings — despite creating unprecedented total wealth. Crucially, AI is not a neutral productivity multiplier: architecturally, it is a capital concentrator in itself. Every unit of productivity it creates will first and most durably accrue to those who control the computing power, data, and models. Optimists do not argue against the wealth pie growing; they err on who gets to have a slice of that pie — and that, at its core, is the entire contention.

When you take a macro view of these truly irreversible global phenomena, a surprisingly clear direction of conviction emerges:

· Global aging and shrinking of the population, worsening demographic conditions are a 100% certainty;

· Wealth inequality will expand to trigger a global capital squeeze—both internationally and domestically, this is a 100% certainty;

· Artificial intelligence will structurally favor capital, giving rise to a new form of transitional global capital never seen before, this too is a 100% certainty.

Most crucially, the common core feature of these three points points to one word: global. Intergenerational demographics, asset allocation, capital costs are now more highly related historically and this relationship is only growing stronger. Moreover, this relationship transcends not only space but also time—because the demographic evolution of wealth is unidirectional and irreversible. This means that this convergence is not only global but also synchronous.

In conclusion, this forms what I see as the central collective bargaining issue of the modern century: the prisoner's dilemma of generational liquidity exit. It raises questions such as:

· When the younger generation also sees the government's directive as "picking up the pieces for the older generation," will they still willingly participate in "American capitalism's ownership"?

· As wealthy friends increasingly turn to "tax-efficient" planning, will top billionaires still willingly bear a heavy tax burden?

· When profit-driven competitors ignore capital costs, continue to expand, will AI companies voluntarily slow down their development?

A Nash equilibrium will thus emerge: All participants will choose to betray in this rational dominant strategy—regardless of what others choose, because the cost of inaction is too heavy. Therefore, when a key juncture arrives, everyone will rationally seek liquidity exit simultaneously.

This Faustian-style liquidity trade should not be seen as a potential risk, or a tail risk requiring modeling hedging, but should be viewed as the most predictable large-scale coordinated event in the history of human capital markets. Some may say that in a deflationary environment, you should hold assets such as bonds with nominal interest instruments or ride the wave of AI stocks. Perhaps. But my core principle is simpler and more structural: you should hold assets that will not allow you to become a liquidity exit receiver for others. In this framework, the assets you should least hold in order are: real estate, bonds, U.S. stocks. These are all duration manipulation tools, intentionally designed or not, and are arguably the most significant intergenerational wealth plundering in history.

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

1. Currently held at the lowest rate in the population structure but expected to become the highest held asset in the future;

2. When capital liquidity is strictly taxed, restricted, or confiscated, it is most likely to become a jurisdiction-free safe haven;

3. The closest to the autonomous intelligent world will seamlessly use a form of capital that can replace human labor in the productivity function without intermediaries.

When the Ottoman Empire breached the walls of Constantinople in the 15th century, the Byzantine merchant class lost all assets priced in imperial credit: land, titles, government bonds. None were spared. However, those young promising scholars and enterprising merchants carried portable wealth such as manuscripts, gold, and knowledge westward to Florence, eventually igniting what later became known as the Renaissance.

Among these individuals was a young Byzantine scholar named Johannes Bessarion. Born in 1403 in Trabzon on the Black Sea, he fled Constantinople with several crates of irreplaceable Greek manuscripts that contained nearly the entire intellectual heritage of the ancient world. He was the individual in the 15th century who provided the most books and manuscripts to the West, thus creating one of the earliest forms of "information technology": the Biblioteca Marciana — the first open-access knowledge base in Latin Europe (i.e., a public library). The collection of books housed in Venice became direct source material for Aldus Manutius, who used it to print the complete works of Aristotle and dozens of Greek classics, sparking the printing revolution. This revolution, in turn, led to the Reformation, Scientific Revolution, and Enlightenment. The movable, autonomous, jurisdiction-free capital carried by Bessarion, after five centuries, ultimately nurtured Western civilization.

Capital that can flow across time and space endures, while that which cannot moves towards extinction.

This leads us to our ultimate conclusion — the only radical decision worth considering when faced with many traditional choice traps:

What you truly need to hold is nomadic capital. This type of capital can freely migrate across generational demographics, political borders, and AI-native ecosystems; it can circumvent the currency's "Hormuz Strait." In the 21st century, nomadism is digital.

The specific investment tools vary from person to person, and the radical investment theory provides a viable framework: allocating 60% to compliant assets and 40% to anti-fragile assets. However, if you rigorously adhere to the above three conditions for prudent decision-making — holding assets that young people will ultimately need, holding assets that the government finds hard to reach, and holding assets that are actually tradable in an autonomous economic system — the outcome is no longer a prediction but a certainty. Uncertainty will eventually turn into a constant.

After all, there has only been one truly disruptive asset in history that has satisfied all three conditions from its code's inception. For highly motivated individuals, this step has been simple enough.

The rest is merely a matter of timing.

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