Viktor Shvets argues that despite recent inflationary spikes, the long-term trend is disinflation, driven by technology. He warns that political and geopolitical shocks are creating transient inflation that could become permanent if expectations shift. He introduces his concept of rolling bubbles in AI, where value rotates from commodities to infrastructure to applications, rather than a single asset bubble.
Summarized by Podsumo
Disinflation is the long-term base case, but political and geopolitical shocks (Iran war, tariffs) create transient inflationary spikes that risk becoming permanent if repeated.
The US is now at +2.3 on the V-Dem polarization scale, the highest ever recorded, with no clear solution other than violence, redistribution, or very fast productivity growth.
AI is not a single bubble but a series of 'rolling bubbles'—value will rotate from commodities to infrastructure to applications like robotics and biotech.
Gold is the ultimate safety asset for a total dollar-reset or societal collapse, but it underperformed during the Iran war as USD and Treasuries offered superior liquidity.
China is building global dominance in electrification and AI but is plagued by a 45% national saving rate that causes massive capital misallocation and export dependency.
"A lot of the sayings that Kevin Warsh is discussing—reduce communication, return risk to the market—very few people will disagree, and ultimately it might not be a better idea to do. But none of them, as I said, is relevant. If you wanted to debate the role of monetary policy, the train left the station long ago."
— Viktor Shvets
"The killer to me is not unemployment, but drip by drip, like a Chinese torture chamber, of declining marginal utility and usefulness and marginal rewards."
— Viktor Shvets
"I still think we're in a disinflationary world, but we do have back and forth of inflation created through our fiscal, monetary policy, and military means."
— Viktor Shvets