For 718 years, the Roman-Persian wars raged on. The confrontation between these two ancient superpowers remains the longest international conflict in human record.

Countless individual battles erupted between intermittent truces and longer periods of cooperation. But the core dynamics, competition over land, between East and West remained unchanged.

Adrian Goldsworthy's book Rome and Persia: The Seven Hundred Year Rivalry is considered an accurate read on this period of history.

It’s shocking how little coverage the Roman-Persian wars get in modern geopolitical discourse:

Both the Parthians (247 BCE until 224 CE) and the Sassanids (224 CE until 651 CE) resisted for so long, they outlived the fall of the city of Rome in 476 CE to barbarian hordes.

The Persians then continued battling Rome’s eastern successor state, the Byzantines. The rise of Islam, of course, permanently shattered this historic rivalry:

Beginning with Crassus’ ill-fated invasion in 53 BCE, the Parthians commenced a successful strategy of seeking strategic stalemates through scorched-earth tactics and asymmetric warfare. Sounds familiar?

Rome possessed the unmatched heavy infantry (legions) of the classical world, complemented with engineering capabilities for prolonged siege warfare. Persian doctrine prioritized mobility, environmental attrition and “defense-in-depth.”

Paramount to Persia’s survival was denying the enemy an opportunity to engage in a prolonged field battle. It was crucial to avoid coming to “Roman terms.” That is, agreeing to an hours-long attrition contest between foot soldiers.

Had the Parthian Shahs learnt a costly lesson from centuries prior, when their predecessors, the Achaemenids, fought the Greeks? Darius III’s defeat to Alexander the Great’s Macedonian forces at Gaugamela in 331 BCE showed how pitched battles against dense, phalanx-style infantry worked entirely against Darius’s more heterogeneous forces.

The legions, however, did have one weakness: they relied on the local land to survive while campaigning. The central Persian desert basins continue to be brutal operational theaters for heavy, logistics-dependent armies:

Persian dynasties have turned the terrain itself into a weapon, in the Sassanid’s case by denying the legionaries foraging opportunities or access to water. Whenever Rome advanced beyond the fertile flood valley formed between the Euphrates and Tigris rivers, Persian forces systematically burned crops, poisoned wells, destroyed grain silos and drove away livestock just miles ahead of the enemy’s vanguard.

In one more half-baked Roman blitz into West Asia in 363 CE, the Persians set out a trap for Emperor Julian: once the legions (80,000 men) were deep within Sassanid territory, they were denied the opportunity for a fight, and eventually marched around in a dusty circle by King Shapur II:

Instead of lining up and fighting, the Sassanids flooded irrigation canals to create impassable mud. Facing starvation and heat exhaustion, Julian was forced to retreat under constant harassment. He eventually died in a skirmish and his successor Jovian was forced to sign a humiliating surrender, yielding key frontier fortresses.

Crucially, the Parthians built their military power around composite-bow horse archers, who would circle slower-moving Roman foot soldiers, raining arrows from just outside the range of pilum javelins.

Particularly deadly was the “Parthian Shot.” This fighting style involved drawing in the Roman infantry to charge. Then, the horse archers would feint a panicked rout, only to complete a hairpin turn in their saddles while at full gallop to unleash lethal volleys into the broken enemy ranks. Mobile rapid hit-and-run tactics were brutally effective:

The vast arid expanses of Mesopotamia, Armenia, and the Syrian desert further acted as natural defensive moats. Even when Rome managed to capture Ctesiphon (the Sassanid capital near modern Baghdad) as Trajan did in 116 CE or Septimius Severus in 198 CE, they could never maintain supply lines across hundreds of miles of hostile desert.

Sassanid forces over time developed reliable camel supply trains carrying thousands of spare arrows to keep their horse archers constantly prepped in the field. Whereas Roman legions relied on river routes and fortified grain depots that were easily cut off. Mobile logistics outlast predictable fixed lines of communication.

Through deliberate environmental devastation, the Persians ensured that any Roman incursion into their heartland ended in supply collapse, forcing eventual withdrawal. Wars are won on logistics, not sprints.

Persia finally exhausted the Byzantines by 628 CE, bringing an end to a bloody seven centuries of intense competition. This isn’t to say that Persia decisively “defeated” or subdued Rome. It’s simply that neither power ever gained a permanent advantage over the other. The Sassanids “waited out the clock” until their aggressors ran out of silver and collapsed internally.

With the arrival of Islam in (633–651 CE), Arab armies defeated the Sassanids, permanently ending Zoroastrian rule. Iran was transformed into a fundamentally different society.

However, Persia lasted only two centuries under the Rashidun, Umayyad and ultimately Abbasid foreign-rule, after which it regained political power, contributing to the rise of five massive empires.

Through it’s cultural hegemony, Iranian high culture birthed the “Turco-Persian tradition:” rulers used the Turkic sword and horse to expand violently, but adopted the Farsi language and administration to govern conquered peoples.

This fusion of Persianized traditions governed the Islamic world from the 11th to the 19th centuries, stretching from Southeastern Europe under the Ottomans all the way to Mughal India:

Linking this historical background to today’s world, the United States has only celebrated its 250th birthday this year. Washington has run an informal empire for even less time: arguably, under a century since the end of the Second World War. The current US-Iran deadlock has lasted 47 years, not even a full two human generations.

Does America have another 50 years of ammunition and debt-fueled deficits left to draw out this conflict? Could this on-and-off war last an eternity?

Persia survives through its current iteration, Iran. Where is Rome today?

The above is my street in 1961. During the 1950s, eastern Madrid physically ended right there. Beyond an arbitrary line of nine-story buildings were open fields, Romani shanty towns and grazing livestock.

After the long depression of the post-war period (1939-1950), Spain witnessed an “economic miracle.” Driven by construction-fueled growth, the undemocratic regime implemented a National Housing Plan.

One company, Urbis, master planned the entire Madrileño District of Moratalaz (100,000 residents) as if it were a consolidated construction site, expanding the city a full two kilometers eastwards in a single stroke:

This almost Soviet-style approach to central planning was unprecedented. Towers rose vertically, isolated from the city center, in between landfills from previous urban expansions. New streets lacked trees and public transport. The metro only arrived a full two decades later to this area, in 1980. That all changed over time as the city grew wealthier and neighborhood associations demanded basic services.

Looking for contrast in other countries, most of England and Ireland never achieved dense suburban areas. Both London and Dublin have sprawling rows of two-story semidetached homes for miles. Single-family homes are both a waste of space and energy, as central heating spreads costs over 20 households rather than one.

Some parts of the UK (e.g. Glasgow) did pursue an “apartment-blocks-before-services” model. The final result for society, however, was more mixed than in Madrid.

The “schemes” or council estates as they are called in Scotland had so little going on for fun — let alone a single shop sometimes — that they became dangerous areas, roamed by anti-social youth. Glaswegian housing blocks became associated with negative connotations of inner city madness:

Madrid thus embraced a type of brutalism uncharacteristic of its original aesthetic as an imperial court, previously dominated by palatial parks, an Opera House and Royal Palace.

Simplicity and efficiency in the modern era trumped elegant façades, which had been seen in prior and posher city expansions, such as Barrio Salamanca in the late 1800s:

So… which exact policies allowed 4 million government-funded flats to be built in just under 15 years?

The landmark 1956 Land Law authorized the government to cheaply seize rural land on city outskirts to create massive new urban zones. A clever re-zoning trick to capture value in the coffers of the state rather than for private investors.

The simple act of changing an acre to urbanizable increases the value instantly, before any construction begins, to x3-x6 times the original price per m2. The idea of using “eminent domain” type rules for seizing land to build social housing seems unthinkable currently.

Founded in 1957, the Ministry of Housing centralized oversight under one government body. The state-run Bank of Credit for Construction followed suit, providing massive, low-interest public loans directly to developers and cooperatives.

State-approved protected housing (VPOs) received exemptions on land and construction taxes. Conglomerate companies abandoned slow stone masonry in favor of rapid reinforced concrete frames and standardized brickwork.

Rent control laws made traditional renting unprofitable, pushing landlords and the state to sell these newly built flats directly to workers via affordable monthly installments.

Ultimately, the state ensured the government would buy unsold housing units, in a sense underwriting operations by putting “skin-in-the-game” and setting the price floor. The result was a virtually low-risk business model for developers, so long as they built solid foundations and followed basic regulation.

The combined effect of these policies allowed many Spanish families to rapidly become homeowners, cementing lasting generational wealth. High rates of homeownership have lasted until today, with 73% of the population not renting.

In the 1960s, Spanish mortgages were paid off in 8-15 years. Today, it often takes 20-25 years to fully amortize a home.

According to a Bank of Spain study, the country has suffered a housing “deficit” of 750,000 units between 2021 and 2025. Global real estate advisor Savills notes:

Fewer new homes were built in 2025 than in any other calendar year since 2015. 202,800 homes were built last year, nearly 3% fewer than in 2024 and 18% fewer than in 2019, according to Energy Performance Certificate (EPC) data. This is nearly 100,000 homes short of what is needed on average to meet the Government’s policy target, and accounts for a little over half (55%) of what is required according to the Government’s Standard Method for calculating housing need.

This shortage can partially be explained by recent arrivals of people drawn to Spain’s safe streets, great lifestyle and growing opportunities presented by its economic growth, now outpacing all Western European countries. Therefore, 2024 alone saw a +600,000 net population increase.

Under current legislation, a new-build home now carries a series of both explicit levies and implicit taxes baked into the final price:

For a standard €300,000 new-build apartment, at least €78,000 goes straight to the state. But how does a single property accumulate such a massive tax bill? The truth is that the 26.1% figure is a compounding total stacked across three distinct phases of development… the land purchase… licenses & construction… and the final sale VAT.

What is preventing the government from setting out a 10-year plan to end the deficit?

Talk to any young person; housing is the number one issue.

Admiral Mike Mullen, former Chairman of the Joint Chiefs of Staff, once famously declared national debt was the single biggest threat to US security.

The argument is simple: fiscal imbalances (not foreign terrorizers) would inevitably erode American power.

Higher borrowing costs could inevitably cut into military procurement. The Pentagon’s gigantic annual budgets underpin “Primacy,” the fancy word describing Washington’s obsession with maintaining its #1 position in hard power.

Since the Bill Clinton Administration’s short-lived era of surpluses ended in 2001, Congress hasn’t balanced a budget. Driven by the 2026 War on Iran energy shock and persistent US fiscal deficits, long-dated Treasury yields have climbed to levels not seen since 2007.

While this dynamic has not yet triggered a market crisis, it signals a structural shift: investors are repricing the baseline return expected from risk-free sovereign debt:

Historical data and Congressional Budget Office (CBO) projections show that net interest payments consumed roughly 18.5% of federal revenues at the end of last year, and are on track to climb to around 25% by 2036.

The US military is now replenishing all the “smart bombs” and guided missiles which supposedly hit 13,000 targets in Iran. High-end weapons stockpiles are running extremely low, such as the vital ATACMS missiles, just at the time America should focus on boosting Taiwanese deterrence.

Wasn’t pivoting towards the Asia-Pacific region to contain a more “assertive China” a reason for the withdrawal of troops from Afghanistan? Fully abandoning Bagram Air Base (which at its peak housed 40,000 personnel) had signaled a long-term drawdown from West Asia. American voters must be thinking:

But if we treat the federal budget like a giant swear jar that might run empty, we forget that the United States cannot go “bankrupt” in its own unit of account. This is a factually indisputable statement for those who believe in Modern Monetary Theory (MMT).

MMT supporters say it describes how a monetary system actually works, rather than use axiomatic theories and neoclassical philosophy to justify a narrative.

This unorthodox school of economics introduced the “trillion-dollar coin” into mainstream political discussion. The US Mint could stamp out one or several platinum coins for the Treasury Department, which would then assign an elevated face value and deposit it in the Federal Reserve.

Thus, the Treasury can continue to pay military salaries, pensions and interest payments without issuing new debt through an accounting trick:

This seemingly gimmicky policy proposal is currently sitting right on the border of the Overton Window of what’s taboo. It’s still a radical approach to the debt question that could realistically tank the US Treasury market if executed poorly. If investors lose confidence, a massive sell-off in debt could spike yields. However, the trillion-dollar coin is still “legally possible” to execute without rewriting laws.

All physical notes from $1 bills all the way to the $100 Benjamins are created by the US Mint for a fraction of cost when compared to their face value. “Seigniorage,” far from being a feudal economic reality, continues to matter nowadays.

In medieval Europe, the revenue from producing money (like silver coins) went to a country’s “seigneur,” from the French word describing a ruler:

Seigniorage refers to the interest we earn, minus the cost of producing, distributing and replacing bank notes. These earnings are used to cover our operating costs. The money left over goes to the government and becomes part of its revenue (Bank of Canada).

What the trillion-dollar coin exposes is how “the availability of money” within a country which issues its own sovereign currency is never the ultimate constraint.

According to MMT, the true danger lurks in the scarcity of physical resources. The Pentagon can buy 10 more aircraft carriers by 2040 by printing money. Dollars do not build a ship; steel and microchip supply chains do.

The limit can also be labor. Are there sufficient naval engineers and shipyards available? If the government spends money when the economy is already at full employment, the result is inflation.

Hyperinflation is thus understood by MMTers as a symptom, not a cause, of the underlying problem of input availability. “Inflating away the debt” is an attractive policy as governments can choose to silently erode the working class’s purchasing power rather than vote to increase the explicit, personal income tax.

While the US government withdrew support for shipbuilding in the 1980s, embracing a free market to magically forge steel ships without subsidies, South Korea’s government designated shipyards as a strategic export industry.

Through state-backed conglomerates like HD Hyundai and Samsung Heavy Industries, South Korea supported infrastructure and workforce training:

A single modernized Korean shipyard typically features a network of hundreds of localized suppliers right outside its gates. This allows for the just-in-time delivery of components within hours, creating unmatched efficiency by leveraging robotics.

Some US Congressmen love to argue over the national debt digits entering the danger zone (e.g. Rand Paul) as if this alone is condemning the economy. While the real threat to empire could well be material deficit and a lack of engineering know-how.

Jalal Al-e-Ahmad is best remembered for his polemical book Gharbzadegi. Yet his lesser-known travelogues are filled with rich observations.

These diaries reveal a deeply empathetic researcher who favored raw, on-the-ground human interactions over detached, cold theory. Apart from their literary merit, they remain valuable field notes on tribal structures for the academic world.

As an anthropologist, Al-e-Ahmad spent weeks in remote areas, immersing himself amongst the nomads and ethnic minorities of Iran, which is far from a homogenous nation-state:

Published in 1954, Al-e-Ahmad’s monograph Owrazan was the product of an extended period spent in his ancestral village, tucked away in the remote Alborz mountains. He praised the valiant lifestyles of peoples who remained untouched by economic development.

Mount Damavand (Alborz range)

Al-e-Ahmad wished to show the stark reality of rural life, how people survived cut off from the booming petrodollar modernization of Tehran. He documented communities so isolated that basic staples of everyday city existence were luxury items, or even went missing altogether:

Owrazan is one of several thousand Persian villages where ploughing is done in a primitive way, and the villagers often fight over the water supply and are deprived of public baths and sufficient supply of sugar for their tea.

Al-e-Ahmad’s 1960 visit to Kharg Island, however, plunged his worldview into real despair. It was this foundational catalyst, not the poverty of the mountain-dwelling tribes, that crystallized his most famous theory on the “toxicity” inherent in the subordination to Anglo-American power.

Observing Kharg, he watched traditional pearl-diving communities of the Persian Gulf being replaced by corporate infrastructure, with pipelines and silos erected directly on top of local heritage.

Millennia of rich, diverse human history, including a 7th-century Christian monastery and ancient Achaemenid cuneiform inscriptions, were being completely overshadowed, abandoned to the cold machinery of energy production.

Colossal crude carriers docked on a pier over a mile long, protruding unnaturally into the open sea. These ships were 100 times the size of local dhows, and dominated the view of a once quiet corner of the world.

The oil industry was destroying what came before it:

In Farsi, the title of his travelogue Dorr-e Yatim translates to “The Orphan Pearl.” The beautiful metaphor implies Kharg is one of a kind: it shares neither oyster nor origin with any other, making it the most prized treasure. It captures the island’s invaluable multi-faith history and its tragic, isolated abandonment in the pursuit of material exploitation.

Today, Kharg remains the object of four decades of US geopolitical fantasy, controlling Iranian oil revenues. The island’s proximity to the energy-rich Khuzestan Province makes it the ideal export facility for 90% of the country’s crude, as the coast of the mainland is too sandy and shallow for shipping berths.

Washington’s aggressive strategy of financial encirclement of Kharg, which has been blockaded twice in 2026, mirrors the interventionist playbook implemented countless times before. The current headlines resurrect the enduring relevance of Al-e-Ahmad’s anti-colonial warnings.

The Financial Times reported the US Treasury has siphoned off most of the $13 billion in Venezuelan crude oil sales since implementing a neo-colonial administrative model. This same blueprint to action is put forward as replicable in Iran.

Ultimately, it is these more forgotten, innately humanistic travel diaries that paved Jalal Al-e-Ahmad’s intellectual path toward his 1962 magnum opus Gharbzadegi, demonstrating how an author must spend years documenting raw realities of the ground before articulating any sweeping critique.

Beyond the industrial coastlines of the Persian Gulf, Al-e-Ahmad expanded his harsh gaze to institutional authority in his famous Hajj travelogue, visiting the holy land in 1964:

Khas-i dar Miqat or “Lost in the Crowd” deals with the contradictions of a man who all but lost his religion, forgetting to pray starting in his university years, yet remaining a Muslim at heart.

The literal translation of the title is “a straw in the Miqat.” It expresses the microscopic feeling of a single pilgrim, disoriented in the sweltering heat amongst hundreds of thousands of other believers:

Can you keep your wits in the midst of such self-abandon? And act as an individual? The pressure of the crowd drives you on.

Far from an abstract concept, the Miqat is a sacred geographic area in Saudi Arabia bounded by five points. Muslims cannot cross inside it without entering the spiritual state of consecration, known as Ihram:

In the days of camel and horse travel, the point of Dhat Irq was the Miqat delimitation for those pilgrims arriving from the northeast (Iraq or Iran). Following the introduction of commercial flights, this border became an uncomfortable reality to reconcile with.

Al-e-Ahmad describes a strange feeling while dressing in all-white garments directly inside Mehrabad Airport Terminal. Preparing spiritually inside the airplane before landing in Jeddah. It all feels detached. Modern development contradicts tradition.

Beyond esotericism, this diary transmits the sociological observations of a secular thinker who shifts his cynicism toward the corporate commodification of Islamic sacred spaces.

Al-e Ahmad was just as quick to critique the sterile administration of Eastern religious hypocrisy as he was to denounce Western consumerism. Rather than finding a pure sanctuary in Saudi Arabia, he encounters a heavily bureaucratized environment. Islam is managed like a process, rather than a mystical encounter.

Saudi Arabia in the 1960s was not prepared to handle mass influxes of people, resulting in endless lines and a severe shortage of drinking water in the plains of Arafat. Poor pilgrims suffered the worst, sleeping out in the open.

Al-e-Ahmad ironizes about the first attempts at chaotic urbanization, where luxuries began to filter in for elites, breaking the traditional sense of equality inherent to the Hajj. Into the 2010s, sporadic stampedes continue to occur where hundreds of pilgrims are crushed, mostly affecting the unregistered working-class left exposed to the bottlenecks of unplanned itineraries.

The perceived Saudi neglect and even deliberate destruction of historical sites is condemned in “Lost in the Crowd.” Al-e-Ahmad contrasts this approach with how the previous custodians, the Ottomans, made efforts to preserve heritage and improve access.

The Turks notably constructed the Hejaz Railway connecting Damascus to Medina to ease travel, repaired Tabuk Castle to secure water pools, and built rest stations like Al-Mu’azzam Fort, which then fell into a period of functional neglect:

In the 1960s around the two Holy Mosques, concrete jungles rose from rushed, low-quality constructions. The environment is thus alienating and hostile, perhaps devoid of original authenticity.

One can easily guess what scathing remark Al-e-Ahmad would have for the 600-meter Royal Clock Tower overlooking Mecca’s Grand Mosque, finished in 2012:

Thinking of saving for retirement also awakens the unsettling thought of death. So naturally, the anxiety around this subject can lead to procrastination, and kicking the can down the road money-wise.

But today, we aren’t talking about getting old. We are talking about legally lowering your taxes while also funding a high-growth stock account. Or as Ricky might say…

If you want to avoid the trailer park life and teaching hydroponics to your best friend Julian just to pay the bills, starting to invest in your 20s is the simplest way forward. No Freedom 35.

However, historically getting a pension plan (plan de pensiones) in Spain was more of a trap. You’d walk into your local bank branch and they’d aggressively push a mediocre product that was conjured “in-house” by their own team.

Spanish banks treated their captive pension assets as an internal liquidity landfill, aggressively dumping undersubscribed IPOs and overpriced corporate listings into long-term retirement accounts. Engineering successful book-building for their underwriting desks. A massive conflict of interest flowed downwards to the asset management division:

To juice corporate earnings, internal broker-dealers also systematically milked these retirement portfolios through artificial portfolio churning, prioritizing trading commission generation over any fiduciary duty to maximize client returns.

The explicit fees were just so high, they ate up a good chunk of your returns. Buying a plan de pension was partly financing your branch director’s summer vacations.

Even in negative years during financial crises, they were allowed to charge you, the client, up to 2.5% in combined management fees plus custodianship.

After laws changed, the maximum legal fee fell to 1.5%, which is still high when compared to the 7 basis-point total expense ratio offered by Vanguard’s VUAA (accumulating dividend) ETF on Revolut:

Mind you, between 2015 and 2022, Spain’s government systematically slashed tax-deductible personal contributions to individual pension plans through three budget reforms: the annual limit has progressively dropped from €10,000 in 2014 to the current, measly €1,500 ceiling.

General Budgets 2022: Montero will reduce aid to individual pension plans to €1,500

The argument given for this dramatic curtailment of rights was that a €10,000 limit allowed rich people to avoid contributing to the state, which wasn’t socially just, and ultimately led to “regressive” fiscal avoidance.

Yet the state promised to create new options for alternative pension savings vehicles to complement the contributive public “pay-as-you-go” system. However, no alternative “pillar” (EU jargon, excuse it) has been successfully promoted since. Currently, only 14% of working Spaniards have a company pension plan.

MyInvestor’s app is an easy-to-use, retail-oriented platform. It’s the child of the Andorran lender “Andbank,” which also has a division focused on wealth services.

Instead of forcing you to choose between a couple of terrible options, MyInvestor gives you direct access to 100+ different Spanish pension plans.

Think about it this way: you earn an immediate return of between 10% and 30%+ just for the act of socking money away, safe from your habitually high-spending self. Zero “risk-free” assets will hand you that kind of guaranteed gain in under 12 months. By not playing, this is money left on the table.

If you made €30,000 last year, €1,500 invested could save you upwards of €400 in personal income tax for the fiscal year 2026.

After 38.5 years of compound growth — the work years needed to retire with full benefits — you can finally “rescue” this investment (rescatar).

To further play smart, you can even split the withdrawals over two or more fiscal periods, say 50% on October 15th and another 50% on January 15th. Therefore, you spread out the impact on your general income base. Remember, the returns are treated like postponed labor income, not capital gains. Mental note for geezer self.*

I personally have bought these three plans, which have the 5-year average returns displayed in the green circles:

As this money is locked up long-term, going high risk with a 7/7 option is a totally rational decision. Cobas and Azvalor are both highly reputable and regulated independent “author-managers.” Their pension funds are globally diversified, rotating across sectors to avoid the risks of cyclicality.

Pension plans managed by independent fund managers offer three times the returns of those offered by banks (El Economista).

Take Cobas’s Global PP fund: in 2022 it returned +9.73% versus the -9.80% of its benchmark index (MSCI Europe Total Net Return). With a heavy allocation to energy & commodities, Cobas entered the year with a substantial position in oil & gas, maritime LNG shipping, and energy infrastructure.

When energy prices surged following the War on Ukraine, Cobas’ holdings generated substantial cash flow and capital appreciation.

This was a classic “value” versus “growth” divergence. As the broader markets were dragged down by tech stocks, high PE ratio growth companies adjusted to higher discount rates. Cobas meanwhile held deeply discounted “value” European and international cyclicals. Which proved far more resilient.

MyInvestor is not peddling its own “in-house” products as it used to happen back in the day. The retail client now has access to quality funds from 3rd parties with fewer ulterior incentives driving their stock picking behavior. This trend of expanded access to “Open Architecture” fund distribution is likely to continue growing across Europe.

Additionally, you will be less likely to make irrational decisions during market sell-offs because there is a minimum lock up period for at least 10 years. Early withdrawal is also justifiable in sickness, neediness, or chronic unemployment.

This format of “no early selling” naturally forces discipline and evens offers the opportunity to monitor markets for “buying the dip.” For those who struggle with the temptations of day trading on their smartphones, this forced long-term approach can teach market stoicism.

The sketchiest part of placing your first plan de pension order is that MyInvestor refuses to give you an executable quote. This, however, can be explained: you are simply allocated the end-of-day Net Asset Value.

If your chosen plan fails to deliver expected returns for several years, you can choose to rebalance. With Spain’s favorable and unique traspaso rule, a fund can be switched for another using a share-per-share conversion without triggering a taxable event. Something ETFs still don’t benefit from:

If you have an extra €1,500 sitting idly… why not?

No specific investment advice has been given. I recommend everyone becomes aware of this option to invest in Spain, and takes advantage of this unique feature of the local tax code… some real “low hanging fruit” for the average person.

A European Long-Term Investment Fund, or ELTIF, has a “2.0” EU regulation attached. If it meets certain quality criteria, is eligible for distribution:

Investment rules – ELTIFs must invest at least 55% of their capital in “eligible investment assets” and must not invest more than 20% of their capital in any single asset. Additionally, ELTIFs that are marketed to retail investors may borrow no more than 50% of their respective Net Asset Value (NAV) and must disclose all borrowings.

Prohibitions – ELTIFs may not engage in short selling, securities lending, securities borrowing or repo transactions, purchase commodities, or use derivatives for anything other than hedging.

Revolut acts as an “omnibus” aggregating hundreds of thousands of retail orders, which can be as small as one-euro investments. But why now?

Take Ares’s “European Strategic Income ELTIF.” This company is struggling to convince institutional players to stomach its new “private credit” offerings. Per the FT, this niche segment of financial markets is not currently living its hottest moment:

Private credit firms have been hit by troubles in the private equity sector, since many of the loans they made were to finance buyout deals. Buyout funds have struggled to exit their investments since interest rates rose in 2022, leaving private credit funds stuck with the loans for longer than they anticipated.

German insurance group Allianz also warns about the rationale behind expanding access to these instruments, which have lent heavily to leveraged buy-out firms in an overly saturated market:

The return story is compelling at face value: buyout funds have delivered 12-14% annually against 7-9% for public equities. But strip out leverage and most of the private-equity advantage disappears, leaving manager selection as the real driver of outperformance.

The eternal dynamic between “smart money” versus “dumb money” exists in a repeating cycle: once a new asset class has been exploited to the maximum by insiders, the smart money moves on. Crucially, this requires someone to be left “holding the bag” while the institutional sharks quietly depart the party, through the back door.

So… are retail tranches being used simply as “exit liquidity” for larger investors during market stress? This possibility is suspicious, at the very least, if occurring just at the point when PE’s returns are lagging or even matching those of public markets.

And to call tapping into retail liquidity a “democratization” drive helping the average person is rich. This Stanford article claims that democratizing access in fact can create systemic risk by bringing neophytes into the PE sphere.

Retail app users can have false expectations of “trading” and ease of access, as buying a security on your phone allows instant subscription. Therefore, this can engender a false expectation that an equally instant exit would be possible. When the timelines for redemption for these investments are usually 5+ years.

Revolut’s app, however, does give a strict suitability test to weed out the unsuitable.

Dutch-American author Nicholas Spykman is often called the “godfather of containment”

Modern geopolitical strategy owes a debt to the intellectual dialogue between Halford Mackinder and Nicholas Spykman (1893-1943), whose work at the Yale Institute of International Studies later influenced US Cold War posturing.

Rather than discarding the Heartland Theory, Spykman used it as a foundational framework. Yet he famously inverted Mackinder’s ultimate conclusion, arguing that in fact the Eurasian coastal periphery held the true key to global hegemony, thus transforming the original thesis:

Who controls the Rimland rules Eurasia; who rules Eurasia controls the destinies of the world.

— The Geography of the Peace (1944)

Spykman stressed that Rimland states hold a natural tactical advantage because their territory bridges land and sea power — along vital highways for commerce and naval access, tracing the arc forged once upon a time by the British Empire:

This British strategic chain began at the westernmost point of the Iberian Peninsula, through the Anglo-Portuguese Alliance of 1386, the oldest inter-state pact still in force; swept past the naval choke point at the Strait of Gibraltar and the island of Malta, dominating the Mediterranean.

The chain then cut through the Suez Canal into the waters of the Persian Gulf, reached the Malabar Coast of India, where spices were grown, and finally, onto the Far East; past the free market ports of Hong Kong, Macau, through the Strait of Malacca and onto Shanghai.

Post-WW2, the United States inherited this maritime strategy, transforming the old imperial layout into a system for defeating Communism. As London’s power receded, Washington filled the vacuum, positioning assets along this coastal crescent to encircle the Eurasian Heartland.

The US built a system of bases and alliances rather than pursuing formal control. NATO secured Northwestern Europe plus a presence in the Mediterranean was guaranteed through Rota, Cádiz.

Dominating the Persian Gulf was achieved through bases Bahrain and Qatar. Diego Garcia airstrip in the middle of the Indian Ocean allowed aircraft to reach Southeast Asia, where a now-defunct defense pact SEATO once existed. Finally, the US sealed the Rimland with heavy presence in Northeast Asia through bases in Okinawa and South Korea.

Following decades of American dominance over the seas, has Spykman’s central warning been forgotten?

If the mass of military power of the coastal region is unified under a single authority, or under a tightly knit group of allies, then the insular maritime power will no longer be able to maintain control of the marginal seas by means of localized naval superiority.

— The Geography of the Peace (1944)

Using a relief map, the absolute power imbalance in the Persian Gulf be communicated: Iran’s defensible mountain ranges stand in stark contrast with the flat deserts of GCC countries. The sheer size difference is most visible when compared to its neighbors Bahrain, the UAE and Qatar, whose capital cities lie exposed on the water:

Spykman understood the important role of strategic depth in diplomacy, or the distance between a nation’s forward borders and its population centers and industrial hubs; it ultimately measures how much territory a nation can afford to yield to an attacker while retaining the operational capacity to regroup and resist:

Size is of primary importance as an element of defense, particularly if the vital centers of a country are far removed from the border... Size is not strength but potential strength.

— Geography and Foreign Policy (1938)

Iran’s massive territory of 1.6 million square kilometers provides formidable depth. Defense centers such as Isfahan have existed for centuries, insulated in the interior hundreds of kilometers away from vulnerable borders, surrounded by mountains and deserts; the city’s name is derived from Sepahan in Middle Persian, meaning “place of the armies”.

Tehran’s second ace has also been played, a full 142 days after conflict erupted on February 28th: the Bab al-Mandeb Strait is under a blockade, declared on Saudi Arabia July 20th. Positioned at the mouth of the Red Sea, this bottleneck is twice as narrow as Hormuz, and allows Yemen’s Ansar Allah to project disproportionate control over its neighbours:

With US bases this week being actively abandoned in Iraqi Kurdistan and temporarily vacated in Qatar, has Iran wrestled away the Middle Eastern section of the Rimland from US hegemony?

“Gharb” (غرب) means West; “Zadegi” (زدگی) translates to smitten, struck or plagued by

The Iranian Revolution of 1979 was led by the clergy who eventually took power, but left-wing intellectuals paved the way there. Over prior decades, the progressive intelligentsia broke down trust in the Western-backed Shah.

Jalal Al-e-Ahmad (1923–1969) stands out among the most influential Iranian thinkers of his era. He is best remembered for his damning diagnosis of the “disease from the West” in his 1962 essay Gharbzadegi.

Husband of novelist Simin Daneshvar, Al-e-Ahmad received a secular higher education and became a famous anthropologist and ethnographer. Nevertheless, he came from a clerical family, and is best understood as an ideological bridge between Iran’s secular left and the religious populism that drove the 1979 Revolution. For some time a member of the communist Tudeh Party, his vision entered into the mainstream orthodoxy of the Islamic Republic in part through his cousin, the Ayatollah Taleghani.

Al-e-Ahmad supported Ruhollah Khomeini’s movement when it was still nascent, writing a letter in 1963 to the future Supreme Leader mentioning that he was “awaiting any command or assignment”. This letter was posted days after Khomeini was released from house arrest and returned to the holy city of Qom, following his open opposition to the Shah's White Revolution during the “Khordad 15” uprisings.

Khomeini Addresses Crowd in Feyziyeh Madrassa (Qom), June 3rd, 1963

Al-e-Ahmad argued in Gharbzadegi that the Shah’s blind adoption of American consumerism, film and Western economic models actively eroded traditional ways of life. He labeled this abstract, foreign body-snatcher concept brought on by technological progress as “the machine”.

Al-e-Ahmad fiercely criticized the Shah's White Revolution for exalting ancient, pre-Islamic Iranian history. He viewed this state-sponsored romanticizing of the Achaemenid and Sasanian empires (e.g. Cyrus the Great) not as a genuine celebration of heritage, but as a deliberate political weapon used to strip Iran of its actual, living identity:

For instance, the entire oil infrastructure (from extraction to refining processes) was reliant on British and American labor and expertise, and caused massive internal migration patterns: dragging peasants into overcrowded tenements with an abysmal quality of life. In Gharbzadegi, he quickly identified and criticized the developing rat race:

These cities are just flea markets hawking European manufactured goods... [In] no time at all instead of cities and villages we'll have heaps of dilapidated machines all over the country, all of them exactly like American “junkyards”, and every one as big as Tehran.

Even today’s catastrophic water crisis in Tehran appears a direct consequence of the unprecedented urbanization that Al-e-Ahmad explicitly warned against over sixty years ago; forcing the desertion of over 31,000 villages led to rural collapse, unsustainable water management and depletion of aquifers.

Philosophically, Al-e-Ahmad was influenced heavily by the French Left: He translated Sartre and Camus into Farsi and shared Fanon’s views on the psychological damage of colonialism.

However, I personally have found his analytical methodology and conclusions similar to the Frankfurt School of Critical Theory, perhaps due to a common training in the Hegelian dialectical tradition. The diagnosis made in Gharbzadegi parallels what Theodor Adorno and Max Horkheimer discussed in the Dialectic of Enlightenment (1947):

Adorno and Horkheimer arrived in the 1940s in Southern California, settling in the suburbs of Santa Monica and Pacific Palisades. It was around LA where these exiles from Nazi Germany shaped their ideas, in total shock of lifestyles that dominated the capital of global consumerism.

The Dialectic can be boiled down to three central propositions:

When Gharbzadegi was published in 1962, the metropolis unfolding in Tehran shared the exact same conditions observed in Southern California. Both regions were undergoing rapid, state-sponsored modernization fueled by massive investments.

Adorno, Horkheimer, and Al-e-Ahmad identified how consumerism offers a false sense of individuality, replacing genuine choice with standardized goods, whether it be the pulp comics, televisions or catchy pop songs. They realized an effective method for pacifying populations existed through the manufactured illusion of happiness.

The landscapes of both LA and Tehran were restructured, prioritizing automobile-centric design and wide boulevards over community-driven space: eliminating cable cars that ran between the Downtown and Huntington Beach to make lanes for highways, or bypassing tight-knit walking neighborhoods known as mahallehs. Tehran today still has some of the worst pollution and traffic jams in the world, fostering social alienation.

Kuy-e Narmak (1952–1958): the growth and change of an urban community in Tehran

Finally, both perspectives argue that the “liberation” of women was largely a commercial façade, transforming them into “fashion dolls” rather than allowing for true political or intellectual emancipation.

When Al-e-Ahmad attacked the Shah’s regime for importing American lifestyle aesthetics, he was specifically targeting the “California dream” exported by Hollywood. He believed that Iranians should instead build their own version of “the machine” and control it.

Iranian universities currently produce over 200,000 engineers per year, 70% of them being female. The state’s perspective of freedom is achieved through owning the process and product, not being devoured by it.

The obsession with domestically-sourced technology in Iran can be seen in the development of an indigenous nuclear program, defense systems and a focus on a self-sufficient industrial base.

For Al-e-Ahmad, once a population mastered the “know-how” to progress, they could treat technology as a harmless tool for welfare rather than a foreign cultural master.

Arguably the first novel ever published by an Iranian woman, “Savushun” firmly belongs within the country’s canon of anti-colonial struggle

Savushun is a work of fiction inspired by the life experiences of its author Simin Daneshvar (1921-2012). Born in Shiraz, Simin grew up during the British-Soviet occupation of Iran in the Second World War.

The plot of this novel revolves around the character of Yousef and his wife Zari. Yousef is a wealthy landowner with vast holdings located around Fasa, just outside Shiraz. This fertile region in the southern Fars Province produced ample wheat harvests and was rich in citrus and walnut trees, making it strategic to the nation’s food supply.

The Allies invade Iran to secure oil fields and roads to supply Russia, and Yousef chooses resistance over collaboration: Although a feudal lord who rules over peasants tied to his land, he stands up for the rural poor, Qashqai nomads and villagers alike, refusing to sell grain to the invading armies.

Soviet and British Spheres of Influence, Iran, 1946

In 1942-43, the massive diversion of food to Allied soldiers caused a man-made famine in Iran. With few formal records, there could have been up to several million casualties according to local historians.

Yousef’s own brother Khan Kaka, who is obsessed with securing a seat in the parliament in Tehran by being a collaborationist, urges him to sell their agricultural harvest to the occupying British Army (embodied by Officer Zinger).

While his brother does not pull the trigger, alignment with the corrupt political system creates the hostile environment that allows local henchmen to assassinate Yousef. On the allegorical level, his life follows a modern retelling of an ancient myth about an Iranian prince:

SEDUCED AND SLANDERED, then vindicated only to be unjustly murdered in exile, Siyavash is unquestionably one of the most tragic figures in Iranian lore, if not the most tragic. Mentioned in Zoroastrian scripture, occupying a central place in Iran’s national epic, the “Shahnameh” (Book of Kings), and ritually mourned by Iranians since the Sasanian era (224–651 AD), Siyavash unsurprisingly also lies at the heart of a major work of modern Persian literature (Joobin Bekhrad).

When Siyavash flees the corruption of the Persian court, he seeks asylum in the Kingdom of Turan. The foreign ruler Afrasiab initially welcomes him with open arms, treats him like a son, and even gives his daughter, Farangis, in marriage.

Spurred by the intense jealousy and lies of his brother Garsivaz, Afrasiab grows paranoid. He becomes convinced that Siyavash is a secret agent plotting a coup against him.

Yielding to his paranoia, Afrasiab orders his soldiers to brutally capture and behead the innocent prince. Siyavash’s unjust execution is what triggers a generation-spanning war of vengeance between Iran and Turan.

Siyavash Faces Afrasiab Across the Jihun River

Across Greater Persia, Zoroastrian priests have historically mourned this innocent mythological prince-hero: 7th-century wall paintings attesting to the widespread practice of his cult have been found in Samarkand, Uzbekistan.

Iranian willingness to fight on, even if accepting ultimate sacrifice, is nowadays notably linked to the Shia conversion in the 16th century. Under the Safavid dynasty, the country was unified under a new religious identity; since then, Imam Husayn's martyrdom undeniably dominates the trope of resisting a superior adversary, even when vastly outnumbered (Battle of Karbala).

However, this pillar of Shia belief may have gained particular acceptance in Iran because Husayn’s life story follows a character arc strikingly similar to that of Siyavash, effectively superimposing itself upon an older, pre-Islamic tradition of ritual mourning. This interpretation forms the basis of a well-documented scholarly argument advanced by Ehsan Yarshater.

Despite the heavy contact between ancient Persians and Greeks, the tragic fatalism associated with Hellenistic mythology did not slip into Zoroastrian scripture. The fundamental worldview of Zoroastrianism is opposed to the idea of a preordained, inevitable outcome.

Zarathustra's teachings are rooted in absolute free will and personal responsibility, a concept later adopted by Nietzsche's philosophy. Evil is not God’s doing or an inescapable fate. The world’s first monotheistic religion is built upon the absolute supremacy of good thoughts, good words, and good deeds. Human suffering is viewed as caused by the deliberate, temporary intrusion of a destructive spirit (Ahriman).

In the novel, Yousef’s character consciously steps into the archetype of Siyavash. He knows that resisting colonial pressures and local corruption puts his life in mortal danger. Exercising free will, he accepts the consequences of his righteousness rather than folding into comfortable subjugation. His final expression of human agency shows an openness to death over accepting capitulation in life.

Following Yousef’s death, his brother Khan Kaka and the corrupt authorities attempt to suppress his funeral to prevent an anti-British uprising. They demand a quiet, hidden burial.

Zari refuses to comply. In a profound moment of psychological awakening, her fear evaporates. She realizes that compromise with oppressors is impossible. She insists on a public, dignified funeral procession through the streets of Shiraz, defying both her brother-in-law and the occupying forces.

She accepts her husband’s martyrdom and consciously prepares their son, Khosrow, to inherit his father’s struggle. The myth ceases to be a sad story about the past and becomes an ancestral blueprint for resistance against foreign tyranny.

The Eurasian World Island

Controlling oil, seizing Kharg Island, removing nuclear “dust”, defeating the Shia proxy network… and another dozen reasons are cited when explaining US intervention in Iran. Yet the country’s unique geopolitical value is glossed over in the media.

Iran will always be a natural “pivot”. A crossroads territory linking Asia and the Middle East.

If one can find a historical parallel to current China-US competition, it could be during the 19th century: Great Britain constructed a maritime empire with choke points established from Gibraltar to the Strait of Malacca; its adversary was Tsarist Russia, a continental landmass which had expanded for centuries on horseback.

The creeping influence of Russia southward and eastward was interpreted as a threat to the British Raj in India. These tensions were dubbed the “Great Game” and frequently boiled over into conflicts: two Anglo-Afghan Wars and the Crimean War.

This struggle between competing styles of empire-building, sea vs land-based, was observed by Halford Mackinder. This British statesman developed his famous “Heartland Theory”, arguing that control over the landlocked core of Eurasia would ultimately lead to global dominance:

Who rules East Europe commands the Heartland; Who rules the Heartland commands the World-Island; Who rules the World-Island commands the World.

— The Geographical Pivot of History (1904)

If you look at a world map, this Heartland corresponds approximately to the territory of the former Soviet Union plus parts of Western China.

The Heartland

Mackinder noted two specific physical and geographical traits that defined this core region: river drainage systems and impassable natural barriers, such as deserts. All great rivers in Asia emptied into the frozen Arctic or into landlocked salt lakes like the Caspian and Aral.

Because no navigable river emptied into the open ocean, it was geographically impossible for the Royal Navy to sail into the Eurasian interior. This made the land power that controlled the Heartland the master of the Eurasian Continent.

Mackinder also issued a warning that the age of unchallenged sea-power was drawing to a close. For four centuries, empires that controlled the oceans ruled the world because moving goods by ship was vastly cheaper than by horse.

Transcontinental railways had changed everything, allowing a land power to bypass the oceans entirely, connecting the resources of the interior faster than a steamship could circle the continents:

Railways are now transmuting the conditions of land-power, and nowhere can they have such effect as in the closed heart-land of Euro-Asia... The ocean fighters would find themselves outbuilt as regards ships and outmanned as regards seamen, if the Great Continent were at some future time to become a single and united base of sea-power.

— The Geographical Pivot of History (1904)

Observing the contemporary world through Mackinder’s lens, Iran’s position is as significant as ever, being both where the Heartland meets warm-water ports (Bandar Abbas, Bushehr) and a vital land corridor leading to Europe. Tehran was built just north of Ray, an important stop along the Silk Road.

Growing railway integration represents exactly what classic British containment strategists feared: a tightening web of overland infrastructure across Eurasia that operates entirely independent of Western maritime control.

Data shows that freight from China and Russia into Iran tripled during the most recent conflict as maritime trade was replaced with overland supply lines during the blockade.

The Trans-Iranian Railway

Iran sells China high-value, dense mineral reserves like copper, zinc, chromium, and high-grade iron ore northward. While China exports automotive spare parts, microchips, and electronics southward. By trading physical commodities directly, both countries bypass the US sanctions system through barter.

The Tehran-Mashhad segment has been selected for electrification and high-speed upgrades, officially to allow pilgrims access to a holy Shia site. However, heavy Chinese investment suggests a more tangible motive of transporting goods.

Shanghai-Basra Railway Corridor

Back in May 2025, freight trains began rolling from Xi’an, China, directly to Tehran’s Aprin dry port in Eslamshahr in just 15 days. Slashing the traditional 30-day transit time by exactly half.

Xi’an-Tehran Corridor Avoids US Blockade

The US has moved to hitting Iran’s bridges, perhaps trying to “re-bottle” China, forcing it back into Central Asia:

The area around the Aq Taqeh Khan railway bridge in Aq Qala County was targeted by US cruise missiles early on July 9… The bridge sits on the Gorgan-Incheh Borun railway line, which reaches the Incheh Borun border crossing with Turkmenistan and links onward to Kazakhstan (Times of Central Asia).

Will China fulfill Mackinder’s prophecy, converting the Eurasian World Island into a single base of sea-power? It is closer to achieving this reality than Russia or the Soviet Union ever were.

The three pillars of the Swedish pension system work together to provide opportunities for long-term growth and added retirement security throughout life: Inkomstpension, Premiepension, and Tjänstepension

Germans have traditionally complemented their public pensions with insurance products that pay life annuities upon retirement. However, with the return of inflation and higher living costs, locking in a perpetual fixed benefit is a less secure proposition. Retirement plans with public equities exposure could be a solution.

Berlin has announced it is reforming the country’s pension system taking inspiration from Sweden’s state-owned fund. As described in their 2025 Annual Report, AP7 “Safa” is run by a small team of 74 employees in Stockholm who jointly oversee the savings of 6 million of their fellow citizens. Swedes by default contribute automatically into their Premiepension, the focus of this post:

Each month, employers pay 18.5 percent of an individual’s salary… to the public pension system. Of this contribution, 2.5 percentage points go into the premium pension while the remaining 16 percentage points go to the income pension.

For the average person who has neither the time nor the interest to actively select investments, it’s the ideal solution. Swedes have earned on average an 11% yearly return since the year 2000. Gains are amplified with a gentle use of leverage, permitted by up to 25% of assets under management:

2025 saw an depreciation of the dollar that harmed savers in Krona. However, with holdings in a wide range of index funds, years such as 2021 and 2024 have resulted in phenomenal returns, 31.5% and 27.3% respectively. Not bad for civil servants!

Beyond age 55, a Swedish worker’s exposure is gradually shifted to bonds to preserve capital and reduce risk, applying “The Rule of 100” logic:

For EU countries, an expansion of a state-run fund on the Swedish model would relieve pressure from the “pay-as-you-go” contributive pensions. A transitionary period where an entire generation is expected (and educated) to invest more of their wages into index funds could move a cohort into a more fiscally sustainable “hybrid model”. Avoiding a sudden, unjust cut to their welfare.

The inherent scalability of asset management demonstrates an important economic principle: Pension administration grows volume extremely efficiently. Managing €50 billion is not five times harder than managing €10 billion. Adding millions of savers does not require hiring hundreds of additional portfolio managers. With blockchain technology existing, the back office cost reductions to mutual fund ownership. Germany is eight times more populous than Sweden, benefitting from economies of scale.

Could Spain also follow suit? Companies already contribute on average 30% of their employees’ paycheck directly to social security, which goes entirely uninvested and covers the growing black hole of monthly outflows to retirees.

Spain’s starting point for supplementary pension pillars is modest… pension providers’ assets amounted to 10.8% of GDP at the end of 2024, far below the European Union average of 32% and the levels recorded in countries with well-established multi-pillar systems… they represent 206.4% of GDP in Denmark (BME Exchange).

The core problem of demographic change across Europe is unavoidable: a falling Spanish worker-to-pensioner ratio is projected to go from 2.1 currently to 1.3 in 2050. But a default pension fund does create new incentives, rewarding higher earning jobs, and can spur a financial markets investing culture in a society where most wealth is questionably locked away in brick and mortar.

With an entire generation not being able to afford homeownership, no “forced savings mechanism” exists for most aged 18-35, a strict fiscal discipline previously imposed by unmissable mortgage installments. Instead, the youth could transform the housing crisis into building wealth aggressively in growth stocks while still living at home or renting.

Solana is a global network of computers that processes transactions and apps instantly, for almost no cost

Europe’s largest Open Architecture mutual fund distribution platform Allfunds announced on June 23rd an expansion into the tokenised blockchain space:

Tokenised funds currently available on Allfunds and Solana will be accessible through both networks, ensuring consistent availability in both traditional and on-chain environments…an important milestone for the global fund sector, establishing a direct commercial bridge between traditional financial networks (TradFi) and public decentralised finance (DeFi) ecosystems.

Why is Solana a strong candidate for putting securities on-chain?

Whereas Ethereum produces “blocks” every 12 seconds by executing transactions sequentially, Solana reduces this latency down to every 400 milliseconds. Furthermore, its Sealevel parallel execution engine completes multiple transactions simultaneously. To avoid overlooking errors, a Proof-of-History (cryptographic clock) timestamping is applied to transactions before validation, enhancing the baseline Proof-of-Stake validation process.

A Security Token is the result of converting sensitive information, financial or physical assets into secure digital substitutes. Mutual funds may be among the best candidates for tokenisation because they are already pooled, standardized, and fractional structures with periodic flows. They map cleanly onto digital systems to subdivide ownership without extra work in the back-office.

The main innovation lies in a “Distributed Ledger Technology” (DLT) with multiple participants (nodes) to securely propose and validate changes across a network. DLT eliminates the need for a central administrator, utilizing cryptographic principles and consensus algorithms to guarantee synchronization:

Source: BlogCFTE

A meaningful benefit of tokenisation in fund infrastructure for the retail client is reducing the cash drag and treasury capture. In traditional settlement processes, client money often sits idle (T+1,T+2…) generating short-term interest for intermediaries at central bank deposit facilities, currently 2.25% in the Eurozone. Lowering latency allows for a cleaner execution of a client order in almost real-time.

No significant overhaul of the mutual fund structure is envisioned with tokenisation, which simply acts as an enhanced distributions mechanism, streamlining operations which rely on legacy systems.

The ECB claims that tokens could enhance bond market liquidity. Fixed income trades less frequently than funds in a fragmented OTC environment, such as Bloomberg Terminal chat rooms. A fractional claim on the coupon payment allows hundreds of owners to have exposure to a single fixed income instrument. These tokens being freely exchanged amongst investors without selling the underlying. Minimizing explicit fees of brokers — reducing the cost of issuing — and avoiding implicit fees like slippage .

A debt token could be an ownership claim with programmable “Smart Contracts” automating yields paid to holders. A bond with face value €1000, 100 equal-weighted investors, and an 5% annual coupon could imbed an instant routing of the €50 coupon to a central registry. Then, forwarding each investor €0.50. With no added overhead, apart from the energy and maintenance to upkeep the blockchain software.

The obvious benefit is diversification. Building a portfolio with hundreds of slices of bonds from different issuers and exposure to laddered durations across the yield curve. An improvement upon bond ETFs, which already hold a basket of a couple dozen instruments replicating an index.

What about tokenising physical assets?

With real estate the picture is entirely different. The buzzword of “democratizing” access by allowing the small guy to participate is suspect.

Increased financialization of homes has historically led to hard speculation and moral hazard. Tokens could shift society away from home ownership and towards owning slivers of housing. With a 1% stake, would you even remember the address?

Firstly, there is a liquidity illusion. Tokens look tradeable, with near-instant settlements. But real underlying assets are still very illiquid. Flats take months or years to sell and subject to local law. The token would not default by design, but the underlying asset could develop an unhealthy level of debt, making ownership effectively worthless.

Take the case of Florida’s “RealT” which accepted investor fiat deposits in exchange for tokens on the Ethereum blockchain. These rights representing claims on cash flows from housing. With zero leverage and structuring each home within a LLC, RealT limited liability of each unit to a single special purpose vehicle.

Unlike in public markets, with ample information coverage of listed companies, tokenised real estate is highly opaque. Investors place blind trust in the issuer. Would the average retail client pull up the land registry and double check? Or fly across the country to do a site inspection?

As it turned out, RealT operated 400-odd dilapidated units in deindustrialized Detroit which are now tied up in court until rent money goes to improving habitability. With payments blocked since February 2026, burnt investors have left their damning reviews on TrustPilot:

To purchase a token, you have to pay liquid stable coins (USDC, XDAI, FIAT-currency). If they have sold a property, you would get play money called REUSD (not liquid, no market, only to lock you in the REALT-ecosystem).

While cryptocurrencies are in a bear cycle wiping out trillions of dollars in market cap, the blockchain technology that emerged alongside continues making inroads into traditional securities. For better or for worse.

VUAA and LSMC (Acc)

The VUAA ETF (linked prospective document) is simple: it tracks the S&P500, representing approximately 80% of the total US market capitalization.

Meanwhile, LSMC is a niche semiconductor tracking fund (holds NVIDIA, TSM, AMD, ASML, etc) with very bullish momentum in the last 12 months. LSMC has so far returned 34% YTD:

Source: Bloomberg Terminal comparative line chart, period Oct 9th 2024 - Oct 9th 2025; Lyxor LSMC versus VanEck SMH (chosen semis benchmark)

Both of these ETFs automatically reinvest dividends (“Acc” behind the ticker, short for accumulating) letting compounding work behind the scenes.

Choosing accumulating share classes avoids dividend-withholding friction, which can make a real difference over decades. Minimal management costs are a plus, with total expense ratios (TERs) of 0.07% and 0.35% for VUAA and LSMC respectively.

UCITS

Many European-based ETFs now operate under the UCITS framework — short for Undertakings for Collective Investment in Transferable Securities.

UCITS funds are authorized and regulated in one EU country — Ireland for VUAA and Luxembourg for LSMC — and can subsequently be marketed freely across the European Economic Area. This “passporting” structure gives investors access to a new class of diversified and professionally managed portfolios.

The UCITS Directive sets strict limits on portfolio concentration, such that a compliant ETF cannot invest more than 10% in securities or money market instruments issued by a single entity. Thus, making diversification a strict requirement.

UCITS also enforces rules on liquidity and transparency to prevent excessive risk-taking. It serves as a safety hallmark, requiring clear Key Information Documents (KIDs), full cost and performance disclosure, and crucially segregated accounts to protect investors from fund-company insolvency.

It’s an “A-grade” rating for the consumer on regulatory quality — such as you would see in the supermarket on packaged food — allowing a potentially less-informed retail client to pick potentially higher quality funds.

In Spain, one can also switch between UCITS funds (traspaso) without triggering a capital gains tax — provided certain conditions are met:

• Both funds are UCITS-compliant,

• Both are registered with the CNMV (Spain’s securities regulator),

• The investor is an individual resident in Spain,

• The reinvestment (the switch) happens directly between the fund managers (crucially, no cash payout to the investor).

Lowering One’s Taxable Base

Moving beyond Revolut, for Spanish retail investors the brokerage provider “MyInvestor” is another option (service from Andorran lender Andbank). They have launched in collaboration Fidelity an S&P500-tracking ETF with a TER of 0.06%.

MyInvestor also have an Indexado S&P 500 pension plan (DGS N5394):

This pension plan fund’s composition is a similar in exposure to the US market as the VUAA, but wrapped in a tax-advantaged format: contributions will reduce one’s general taxable base for the IRPF (personal income tax) by up to €1,500 per year.

For example, if one earns a gross €30,000 salary in 2025, then a €1,500 purchase in the MyInvestor pension plan would lower your total base to €28,500. Translating ultimately to around €450 in savings in the April 2026 income tax filing, in this hypothetical case.

These income tax savings comfortably covers the extra fees, which is one drawback: the management fee is much higher 0.38%, plus an implicit 0.11% fee (that is not mentioned in the above document) which covers audit, settlement, banking, derivatives clearing/operating costs.

Additionally, MyInvestor won’t clearly quote an execution price before placing an order and it takes days for the order to go through on their platform. Getting “the best price” or sending a limit order is therefore not achievable. Yet one will buy this plan with a 20-30 year goal in mind — only redeeming the pension at retirement age — making this a smaller issue within the context of past S&P500 returns over such horizons.

Summary Risk Indicator

One big question is:

Why does the Vanguard VUAA score a 4/7 risk rating while the MyInvestor S&P Indexado a 6/7? After all, in theory they both track the same index…

Vanguard’s method is the traditional one, following physical replication — it directly owns the underlying US equities, making its performance closely aligned with the real market and limiting what is called “counterparty risk” to simple custody and market risks.

In contrast, the MyInvestor exposure is achieved through “synthetic replication” using swaps, more common in Europe. Instead of holding the 500 stocks, it relies on derivative contracts (swaps) with banks to receive the S&P index’s return. This method exposes the fund to a default by its counterparties on their obligations in times of financial stress.

Swap-Based Performance

Functionally, Merchbank which manages the Indexado plan buys iShares and Xtracker S&P500 swaps, as seen in the KID, instead of actually owning the underlying assets. It also holds a basket of safe assets (like German bunds and maybe some equities) which serve as collateral and generate a return:

• Marchbank pays the counterparty (e.g a bank) the return from its substitute basket.

• The counterparty pays the fund the total return/performance of the S&P 500 index, possibly to hedge their own position shorting the US stock market.

  → As a result, investors in the fund receive S&P 500-like performance.

Every day, the swap is re-valued (marked to market). If the S&P 500 rises, the counterparty owes the Indexado found money; if it falls, the differences are also settled.

Collateral moves each way on a regular basis, which helps to keep the exposure balanced. UCITS rules limit exposure with daily netting.

On the Bloomberg Terminal, you can easily find the largest institutional owners of these swap contracts (for iShares in this case):

You can also use advanced functions to analyze and price these instruments via de Swap Manager:

Terminal commands used:

COMP <GO> — gives comparative returns between chosen assets.

PHDC <GO> — reveals the substitute collateral basket and disclosed positions.

Source: Aftermath

Yet this “Mac mini” — barely larger than an iPhone — achieves more computing power than entire server rooms did just a decade ago; all thanks to the relentless shrinking of what is called the “nanometer process”.

A nanometer = a billionth of a meter. Each upgrade allows for tens of billions more transistors to fit onto a semiconductor smaller than a fingernail. Crucially, with starting prices at just 719 euros, the Mac mini costs a fraction of a MacBook Pro, showing a historic move to cater to middle price-range consumers.

What powers this desktop computer is the revolutionary “M4 chip” made solely by Taiwan Semiconductor Manufacturing Corporation (commonly known as TSMC, different ticker TSM). They fabricate practically all Apple’s chips physically on the island of Taiwan, using in the M4’s case the second-generation 3 nanometer process (N3E).

Security Incentive

A classic view is that Taiwan’s chip indispensability for the US digital economy functions to deter war (GIS Reports). The logic is that Washington simply must defend the island directly with the US Navy, as high-end chips are crucial inputs to the military industrial complex and the FAANGs, including the AI boom. This is not the case with Ukraine, which neither has high integration with (nor provides critical exports to) the American economy.

A skeptic view could be that the “silicon shield” Taiwan has built since the mid-1970s now leads to a trap: TSMC’s centrality tempts seizure by China, a country currently cut out of the highest quality chips that NVIDIA designs. Taking Taiwan in a swift move would give China access to vital inputs to its own AI economy.

Although arguably the main benefit of controlling Taiwan is that the island is an unsinkable aircraft carrier. The country rests in the center of a string of US military bases which create a containment perimeter for the PLA Navy, along what is known in foreign policy jargon as the “first island chain”.

An additional cynical angle is to highlight that the defense of Taiwan as a US national security concern is actively fading due to production of semis migrating abroad. That is, physically off the island (SSRN).

Trump has demanded that US allies, including Taiwan, pay for their own defense, breaking with the US “primacy” core directive held since 1945. Trump’s team also recently took a 10% minority stake in Intel, an example that America is directly supporting domestic chip production as a nationally strategic industry.

Great Game Backdrop

Chip-building operations have so far proven shock-resilient in the last three years, with Taiwanese leadership successfully navigating US-China great power politics maneuvers.

Taipei’s military has been shifting towards a “porcupine strategy” for years, a move that has only gathered pace since the Ukraine War erupted: “Many small weapons” that are cheap and expendable have delivered more defense value than a “few large systems” in the Donbas.

Taiwanese defense companies are thus developing sea drones, quadcopters, and their army is training to quickly respond to an air assault on their major airports. The ROC Army even plans to use the underground train system to launch guerrilla hit-and-run responses against invading airplanes/helicopters. Russia notably was unable to conquer Kyiv (assuming that was a real war goal and not just a feint) when the VDV failed to conquer and hold Hostomel Airport

All this training occurs within the context of China developing the largest blue-water navy in the world, including novel leviathan landing bridges captured by US satellite imaging. These interlinking boats are obviously to be used to deliver thousands of vehicles directly upon Taiwan’s rocky shores, a difficult terrain for amphibious landings:

Geology and Weather

The ASML lithography machines in Taiwan, critical for producing TSMC’s most advanced N3E chips, are concentrated in factories directly located on the seismically active Ring of Fire.

Tremors can notably de-calibrate the ASML machines which produce semiconductors. Re-calibrating is costly and manual process done by qualified engineers. This geographic reality exposes the global semiconductor supply chains directly to destructive earthquakes, and indirectly with tsunamis affecting trucking and port operations. Typhoons are also present, as seen in the last days when a large bridge collapsed in Taiwan.

Luckily for TSMC, the April 2024 earthquake barely dented their guidance, as reported by Reuters.“Seismic risk” was famously mentioned by the great visionary Warren Buffet when he justified Berkshire’s sale of an 86% stake in TSM stock back in April 11th 2023; since that exact day, however, it has returned roughly 220% at the time of publishing this article:

Bloomberg line chart Sept. 29th 2025

Beating the pessimistic overhang of an imminent Chinese invasion or blockade occurring, TSMC has already crossed the $1 trillion market-cap milestone, becoming the first Asian-listed company to ever do so.

Arizona, Dresden, Kumamoto

The world’s next great silicon temples are being built in the US, Japan and Germany. TSMC has engaged in a global expansion plan to diversify away from their home base. Although this might well be corporate risk management dressed up as politics.

In Arizona, the US threw $6.6 billion in grants (plus another $5 billion in loans) to lure TSMC into the hot desert. The first fab kicked off 4-nanometer production in 2025; the second will aim for 3 nm and then 2 nm by 2028.

In Dresden, the EU also wanted in, rolling out €5 billion in subsidies for a joint venture known as ESMC. This fab is aimed at producing auto and industrial chips, and should start output in 2027. Brussels, like Washington, shares a concern to secure their supply chains.

Yet TSMC Keeps the Best at Home

Before you think management is giving away all their secrets, here’s the catch: the cutting-edge chip factories will not migrate abroad. The 1.6 nanometer process — their first post-2 nm technology — is being developed in the northern Hsinchu site (R&D) and is expected to hit volume production in 2027–28 in the south, at Kaohsiung:

Bloomberg map of TSMC’s wafer fabs in purple, R+D sites in yellow

Arizona and Dresden will therefore be a node or two behind Taiwan based production, if ever achieving volume in the 1.6 nm process it will happen perhaps post-2030?

In conclusion, offshoring doesn’t necessarily erode the silicon shield strategy; it re-bundles deterrence by planting production in the West and Japan. TSMC converts allies into co-owners of their empire, deepening political commitment to its continuity. All the while, R&D leadership and premium chip production stays firmly anchored in Hsinchu and Kaohsiung, in Taiwan.

Buy, Hold?

While all of this geopolitical tension plays out, TSMC’s financials are eye-watering. In Q2 2025, it posted revenue of around $30.1B, up 39% year-on-year (Financial Times). This trend is predicted to continue for Q2 2026.

TSMC’s US-listed “ADR” shares are used for reference by global investors; they are calculated from the original Taiwanese listing the following way to account for the exchange rate:

ADR Price (USD) = (Taiwan Share Price in TWD * FX Rate USD/TWD) / 5

These ADR shares currently trade at $42.59. With analyst consensus expecting about $0.50 EPS per quarter in late 2025 (~$2 annualized):

Bloomberg earnings-per-share adjusted estimates Sept. 29th 2025

That puts TSM stock on a ~28x forward P/E multiple. This could be considered “good value” (neither overpriced nor trading at a discount) relative to its peers, which on aggregate have a best (forward) P/E ratio of ~53x:

Bloomberg relative valuation Sept. 29th 2025

After a dip in earnings forecasts during 2023, expectations have firmed up through 2024 and into 2025, reflecting recovery in semiconductor demand and aligning with the rebound in share price.

Sell-side analyst recommendations are overwhelmingly buy/outperform (96.6%), showing almost universal consensus that TSMC’s strong fundamentals will be followed by strong, positive future returns:

Bloomberg Intelligence’s data (in-house research and quant analyst team) shows that in Asia semiconductor earnings (in blue below) have strongly outperformed related sectors. For investor portfolios, this implies a “must” in Asian semi exposure. Software (orange) monetization has been weak and for hardware (green) it has been more stable but plateaued:

Lastly, we must consider the tariff saber-rattling by the White House, with Trump in August threatening 100% tariffs on semiconductor manufacturing outside the US. This is clearly one of the most pressing threats to the industry.

Luckily for TSMC, the Arizona fab investment shows a smart pivot to factories within American borders, a process started back in 2020 and effectively appeasing the current US Administration. Chip companies which pledge to manufacture in the US are being exempted from punitive import duties.

All the above considered, TSM is an especially attractive buy at the moment.

Terminal commands used:

EEG <GO> — produces an estimated earnings graph

MAPS <GO> — generates a map based on chosen criteria, in this case “factories”

BI <GO> — access to Bloomberg Intelligence analytics

ANR <GO> — sell-side analyst recommendations for investors

RV <GO> relative valuation to peers

As the dollar-pegged crypto industry develops in the US — after the Genius Act passed into law, as discussed in my last post — the European Central Bank (ECB) instead has continued pursuing its own central bank digital currency (CBDC). The European Union has notably been in a “preparation phase” to introduce a CBDC since November 2023, yet no concrete launch is on the horizon.

ECB official press started voicing in 2025 a greater need to guarantee “sovereignty” in the Eurozone. The Financial Times reports that EU officials are now “rushing” to rethink the process and details of implementing a euro-denominated CBDC, citing apparent American financial pressure on the Eurosystem. The FT then quotes an anonymous source “familiar with the matter” — seemingly an EU official speaking off the record — who mentions their approach is:

“much more like what the Chinese central bank is doing than what private companies in the US are doing”.

So… what is happening in China?

Digital Yuan

While the EU moves into a third year of formal planning of a euro CBDC, China is already half a decade into implementing its own version, the digital yuan (e-CNY). Since its 2020 pilot launch, the e-CNY has seen wider adoption to pay wages, transportation fares, taxes, and some business transactions.

According the Chinese government, cumulative transactions surpassed 7 trillion yuan in mid-2024 (nearly $1 trillion). The e-CNY is integrated into Alipay and WeChat Pay, two super apps with over a billion users together that offer mobile payments, digital-wallet functions and e-commerce access, amongst other functions. Crucially, the digital yuan has also entered cross-border testing through the “mBridge project”, a less publicly known side of CBDCs.

mBridge

Development of mBridge is led by the Bank of International Settlements (often called “the central bank of central banks”). It reimagines the mechanics of currency exchange:

Each central bank issues its own CBDC onto a common ledger. When a commercial bank in one country wants to pay a counterparty abroad, the FX conversion and settlement happen directly on the platform with the backing of each central bank. This allows automatic simultaneous settlement and transparency of reserves (a public-ledger blockchain model).

mBrige is advertised by the BIS as increasing the stability of a nation’s currency in FX markets; when external shocks undermine credibility, governments often have to choose between market interventions and painful fiscal adjustments. That tension underlies the ongoing question of how best to defend exchange rates.

Today, most cross-border FX trades between emerging-market currencies don’t settle directly. Instead, they typically route through the dollar. If a Nigerian bank wants to settle a dirham transaction, this involves converting naira → USD → dirham. A triangular process is standard because dollars have deep liquidity and low volatility, with tight spreads and a reliable settlement infrastructure.

Global Reserve Currencies

Chinese leader Xi Jinping has promoted the digital-yuan model most recently at the Shanghai Summit, signaling the importance of CBDCs within his foreign-policy ambitions. China already has an e-CNY operations hub in Shanghai and aims to make mBridge a tool for yuan internationalization. Perhaps initially tied mostly to “Belt and Road” partner countries in the Global South that trade extensively in mineral and energy resources with Beijing.

While mBridge is officially marketed as a way to settle transactions more seamlessly, it also aligns with a parallel attempt by the Chinese government to challenge the dollar’s dominance as the main global reserve currency (about 58% of total holdings).

It is no coincidence that the price of gold has increased dramatically since 2023. China is driving a significant portion of the demand to build an anchor of confidence in their global aspirations for the yuan. The price per troy ounce is currently hitting all-time-highs:

Source: Revolut Securities UAB, spot rate Sept. 13th 2025

The motivation to pile up gold reserves is a stark reminder that all states remain highly exposed to US sanctions, and more recently tariff risks — with 17 sovereigns currently under some level of economic restrictions and practically the entire world subject to new import duties. Also, since the start of the Ukraine War, about €210 billion in Russian assets have been frozen by Western countries; the interest generated is being passed on to fund Ukraine’s government expenditures.

Within this context, there is no shortage of countries that China could bring into its e-CNY orbit, even if initially only among developing economies. Naturally, the EU is gearing up to follow suit and defend the Monetary Union and the Euro’s global reserve-currency status — roughly 20% of global reserves — second only to the dollar.

€-CBDC

As the ECB is not at risk of a bank run in the traditional sense (commanding the power to originate unlimited euros), commercial banks could be slowly displaced in the deposit-holding segment of banking. Past working proposals mention that the digital euro CBDC would be capped at €3,000 in total holdings per person. Maybe a lower, almost token amount at the beginning, to get europeans comfortable before the project is expanded and avoid an uproar from commercial banks concerned about encroachment on their business.

90-95% of the broad money supply circulating in the Eurozone (what is called M3) already exists in the digital sphere as bank deposits and short-term debt. Central-bank-originated money is currently only 5-10% of M3, composed of paper notes and coins distributed by national central banks. A euro-CBDC would increase the amount of non-deposit money in the system, handing more currency origination control to central planners.

Outlook

The picture that emerges is of a struggle over global reserve-currency aspirations. On one side, China (via the BIS-led project of mBridge) and its trade partners pushing for a blockchain-centered Forex market. On the other hand, the US is pursuing a market-based approach to defend the USD with dollar-denominated stablecoins, incentivizing deposit flows into USD through high-yield features.

As the launch of a euro-CBDC continues to drag on, the EU has yet to propose a bold plan with international ambitions — unlike China’s e-CNY which already has a global infrastructure set up via AliPay integration and the Shanghai operations hub. Additionally, the digital euro plan does not offer radical improvements to depositors in the form of higher-yielding accounts. Nor would protection from bank runs be a likely outcome of CBDC adoption: a €3,000 individual holding cap seems totally insufficient to prevent runs from occurring in the future, which occur when large amounts of deposits are withdrawn instantly.

It appears the narrative behind why CBDCs are needed continues to be reframed. Back in 2021, it was about digitizing currency and optimizing transfers as cash usage declined. But Europe already had digital money then, in the form of bank deposits, and near-instant transfers worked mostly fine with SEPA. The original rationale has been replaced with a fresh argument.

Policymakers say a CBDC is needed to defend the Eurosystem’s sovereignty. Is that a fundamental truth, or simply another pitch to make adoption more palatable to European depositors?

Amid the flood of executive orders signed early this year — 26 on Trump’s first day in office alone — it was easy to overlook significant changes that went less reported. Back on January 23rd, the US Executive Branch effectively terminated the “digital dollar” before it even came into existence. That is, legally unplugging further development of a USD–denominated “central bank digital currency” (or CBDC).

A CBDC was firmly in the drawing rooms of the Federal Reserve for several years. However, with Executive Order 14178 in place, US law now:

“…prohibits agencies from undertaking any action to establish, issue, or promote central bank digital currencies (CBDCs).”

Genius Act and Stablecoins

More recently, the so-called Genius Act has emerged, building on the January preemptive ban. This law is a more comprehensive piece of legislation passed by Congress in July 2025, laying down rules for a regulated stablecoin market.

Stablecoins are cryptocurrencies designed to maintain a fixed value (or are“pegged”) relative to a reference fiat currency. Therefore, they are crucial in the crypto world, forming a blockchain substitute for dollars. While regulated US exchanges can still connect directly to banks, stablecoins allow for much simpler trading and liquidity across exchanges worldwide, avoiding the need to use regular banks altogether.

This peg can be maintained through different mechanisms. Initially it was sometimes algorithmic supply adjustments that were tried, such as on-chain mint-and-burn mechanisms. In the case of the Terra (UST) stablecoin, it proved to have structural design failures and led to a disaster when UST crashed to 10 dollar cents in May 2022. Therefore, the only serious way to back a dollar-pegged stablecoin is through holding equal reserves of cash and cash-equivalents (short-term bonds).

The US Government is now proposing that stablecoins take the place left vacant by what would have been a Fed-run digital dollar. The Genius Act legally obligates that:

• Stablecoins must be 1:1-backed by cash/T-Bills.

• Issuers can be banks or licensed non-banks.

• Supervision implemented by existing bank regulators.

• Clear consumer protections are provided for insolvency.

Stablecoins already existing like Circle (USDC) or Tether (USDT) can therefore be regulated more and become the “digital dollars” of the world. Notably, they are privately minted and under a yet uncertain future level of oversight.

A strict 1:1 reserve backing lowers the risk of stablecoin providers morphing into something closer to banks than to digital cash: any room for relaxing this requirement and Circle or Tether could grow supply of digital dollars well beyond actual holdings, commanding the powers of credit creation. In other words, creating new money out of thin air.

Yield

Stablecoins are being pitched as accounts where one can obtain a “yield” or percentage return for handing over a deposit. It roughly follows this flow:

fiat USD converted into stablecoins → the exchange buys T-Bills with a range of laddered maturities (3, 6, 9, and 12 months), keeps a buffer of cash for liquidity → T-Bills pay interest → some interest is passed on to the depositor and a fee kept by the exchange

One large crypto exchange, Coinbase (USDC), now offers a 4.7% APY to depositors who buy their stablecoin. But can it continue into the future to pay out this rate, when 3-month T-Bills are currently yielding around 4.23%?

Source Y-charts

Coinbase is probably advertising a teaser rate, and the APY they pay is variable: the 4.7% is not guaranteed for a set amount of time. Coinbase’s yield might still be living off the income from longer-dated T-Bills from a year ago, when rates were higher. The Fed is predicted to vote in favour of a 25 basis point cut to their benchmark in September.

Bank Runs?

With many traditional banks offering well below 1% on checking accounts, they could face historic deposit withdrawals: potentially draining trillions as savers chase higher-return stablecoins.

The Financial Times reports that commercial banks are now lobbying against the Genius Act. Perhaps their biggest problem is having to quickly maneuver to offer competitive rates after decades of paying close to zero interest to customers.

It’s important to remember, when clients deposit money in a conventional bank account, legally they are lending it to the bank, not placing it in safekeeping as a trust. The client technically becomes a lender, and a new deposit a liability for the bank. So why not demand 3-4% interest when making a loan?

The Genius Act clearly allows for licensed banks to enter the stablecoin market and offer yields. They could pitch their stablecoins as operating in a historically more regulated and safer environment, becoming providers of these digital dollar yields relatively quickly. Some are already mapping out the steps to “tokenize” bank deposits:

Incomplete Balance Sheets

In the past, stablecoins have faced criticism for being opaque: For example, Tether (USDT) has been shunned for providing vague attestations about their books. In 2021, a New York court ruled that the company had misrepresented the backing of its token and had no real reserves to support the USDT/USD peg for long stretches of time, resulting in a $18.5 million settlement.

Tether does publish quarterly reserve assurance reports, audited by an accounting firm BDO Italia. This service of providing transparency is paid in full by Tether. The assurance reports provide a breakdowns of assets, yet this is still not a full balance sheet in a GAAP/IFRS sense, and is nowhere near the extent to which a licensed bank’s financials are audited.

Circle (USDC) provides monthly reserve breakdowns, and claims reserves are held in cash at U.S. banks and owns T-Bills through a BlackRock fund. Here is their transparency page on their website. This approach is an improvement from Tether’s attestation-based reporting, but is not a real-time information service.

Outlook

Through the Genius Act’s provisions, stablecoins may become the backbone of digital finance. The positives are the higher interest paid on savings and the freedom to choose amongst private options; rather than relying on a centrally-administered CBDC which could instead charge interest to incentivize spending behavior.

However, USD stablecoins could also test liquidity or solvency of the current system, even impacting exchange rates if capturing outflows from foreign currencies like the Euro. How will the EU respond to this situation?

Rise of a Neobank

You might have heard about Revolut for their travel cards, used by those who wish to avoid being fleeced at airport currency houses. This company also has a brokerage side that has grown substantially in recent years. In 2024, Revolut obtained a full banking license in the UK and is regulated by the Bank of Lithuania, a member of the Eurosystem.

Revolut’s super-app is truly the company’s biggest strength: a simple platform which puts the outdated software of traditional banks to shame. The app integrates AI assistance, intuitive brokerage accounts, commodities, bonds, hundreds of cryptos, money market funds in USD/GBP/EUR, and bank accounts in dozens of foreign currencies. All of this exposure offered within the same environment, and with assets secured in segregated accounts.

One of their newer features is the "robo-advisor” tool.

A Robot?

Despite the name, Revolut’s robo-advisor is not fully automated; a human manager still oversees the general strategy, though portfolio adjustments are algorithm-driven.

Algorithms are a set of instructions for a computer on how to operate to solve a puzzle or complete different tasks. Their use is nothing new: for at least some decades, algorithms have helped with high-frequency trading and scattering large sell orders over several markets (to avoid moving the asset’s price).

With Revolut’s robo-advisor, algorithms automate tasks once handled manually: that is to rebalance holdings. Portfolio weights are adjusted only slightly, often by fractions of a percent, to keep in line with your chosen risk-return profile.

Personalized Suitability Assessment

Revolut requires a risk and suitability assessment questionnaire to be completed before investing: it looks at objectives, ability to bear losses, knowledge, experience, and ESG preferences. This step is important, as choosing the wrong answers will produce a suggested portfolio that doesn’t align with your vision.

Discretionary Management

There is a low entry barrier to get started: a simple €100 minimum investment to open a robo-advisor account. The money is allocated into ETFs, generally 5-8 of them. You cannot manually choose specific geographies (like US equities) as the model emphasizes simplicity and automation over granular control. During extreme market shocks (such as a pandemic, war, or financial crash), the robo-advisor retains the ability to override the strategy to help preserve stability.

Different Portfolios

Note: historical performance is not a reliable indicator of future results. All hold 2% in cash for liquidity purposes.

In practice, the two options worth considering are the Bold Stack and Balanced Bundle: they structure portfolios with a 70/30 and 50/50 ratio of stocks versus bonds, respectively:

The Slow and Steady and Defensive portfolios instead structure with 25/75 and 0/100 ratio of stocks versus bonds, respectively:

Which to Pick?

A good rule of thumb is to subtract your age from 100 to decide what % of stocks versus bonds to hold. For a 25- to 30-year-old, this would indicate a structure of 70/30 or the Bold Stack option, which holds the following ETFs:

The design of the Bold Stack is broadly consistent with the principles of Modern Portfolio Theory (MPT), the central concept being to:

Combine assets with less-than-perfect correlations to maximize returns for a given level of risk.

On the equity side, the Bold Stack has diversification across global quality stocks, U.S. technology giants, and Japanese equities, while the bond allocation spans different credit qualities including high yield, investment grade, emerging market, and floating rate debt. Together, this structure reflects MPT thinking by blending asset classes and geographies to balance growth potential with income and risk management.

In contrast, allocating 100% to bonds the so-called Defensive portfolio is paradoxically very risky: it exposes the investor to concentration in one asset class. Falling interest rates can still generate substantial drawdowns in bonds (as occurred with –14.56% over 5 years). With the gradual unwinding of Quantitative Easing and falling rates globally, there has been a rout in bond ETFs’ net asset value in recent years. A properly diversified MPT-aligned defensive portfolio would still hold alternative assets to improve the return/risk trade-off.

The Slow and Steady option sacrifices potential long-term growth by allocating only 25% to stocks, and is thus threatened by inflation. Real inflation is increasingly described as well above the official CPI numbers.

Funding

You can add money to the robo-advisor with scheduled funding days (daily/weekly/monthly) to automate this process. Scattering purchase dates into the future allows for cost-averaging, rather than dumping in all your savings before a crash. This is a sound strategy to smoothen the impact of volatility. A manual top up requires a minimum of €10.

The “spare change” feature is innovative, rounding up debit card purchases to fund the account: if activated, every time you buy a coffee for €2.59 using a Revolut debit card, the remaining 31 cents would be invested. Additionally, there is an “accelerator” that allows multiples of that spare change amount to be invested, so up to x2 for every purchase. This function can make you build up a position over the years with minor but consistent contributions.

Fees

Revolut’s single management fee is 0.75% annually. This covers custody, transactions, and admin, plus there is no performance fee or entry/exit penalty.

One issue with fees is that underlying ETFs have their own internal expense ratios for management: if you purchase the 8 ETFs separately, you would pay a lower fee of between ~0.25-0.50% per ETF. Revolut is understandably making a small spread by selling the product.

However, when buying ETFs individually to save on fees, you need to actively monitor each position yourself, and no automatic rebalancing takes place. A robo-advisor, on the other hand, makes these adjustments seamlessly: for instance, if Japan moves toward a recession, the robo-advisor might trim the 5% allocation down to 4.5% without any input from you. Most investors wouldn’t bother making such a minor change manually, especially since it could trigger a taxable event.

Conclusion

For Revolut clients who already enjoy the user experience, the Bold Stack is a straightforward way to get into a highly-diversified product for the long haul. European countries as fiscally solid as Germany are now questioning their ability to sustain state pension systems due to demographic changes and are urging their citizens to start investing privately. Within this context, it is surely worth it to set up a recurring transfer of as little as €20 per month, the cost of eating out once.

However, these amphibious planes are too few in number to make a difference anymore. In the case of Spain, during the recent August wildfires, the government instead relied on firemen driving out to battle flames in remote mountain ranges, often with difficult access. These responders were bringing only basic firetrucks with hoses to put out fires already beyond containment. The government eventually waited for rainfall to finally restore normality to parts of the country, as little more could be done.

Crucially, there is another option that can provide surge capacity and leverage existing airplanes: equipping the Airbus A400M with a modular roll-on/roll-off (RoRo) firefighting kit. Airbus has already tested this device years ago:

Essentially it consists of a large canister that is “rolled” on wheels inside the cargo plane and secured. A nozzle is then activated in-flight to discharge 20,000 litres of foam retardant or water in a single drop. That’s more than three times the 6,000-litre payload of a Canadair.

Part of the appeal of the Airbus system is that it requires no permanent modification to the aircraft: it is entirely modular, meaning the A400M can complete a separate commitment the very next day after putting out a wildfire. It takes only three hours to equip the plane, making it mission-ready immediately. This flexibility makes the concept uniquely attractive for an EU-wide project. Below is the plane in question:

The EU could jointly fund a pool of 40 kits, a bulk order to lower the overhead of the purchase, and share them among member states during emergencies. Those states which already operate the A400M are notably Germany, France, Spain, and Belgium (48, 24, 14 and 7 units respectively).

While public price information is not available from Airbus on their RoRo system, a very similar system is used extensively in the United States, named the MAFFS. It is reportedly up to $2.2 million for servicing costs for 5-year contracts for 8 MAFFS used by the US Forest Service (installed on C-130 planes). This website runs through the economic logic of buying the MAFFs versus purchasing new planes:

“If a new company purchases the MAFFS II intellectual property and manufactures more, you could have one of your own for approximately $5.2 million.”

Assuming that costs for procuring the RoRo are somewhere in the range of its American counterpart, factoring the initial purchase price plus ongoing costs gives a rough estimate of €5-6 million per unit.

Yet for comparison, Greece’s recent order of seven Canadair DHC-515s came to a total of €361 million, or €51 million per aircraft. This is before counting mechanical maintenance costs, training pilots and similar logistical budgeting for the entire life of the aircraft. It can be inferred that the EU could readily equip a continent-wide fleet of 40 A400M planes for the same cost of just four to five new Canadair planes.

Fuel efficiency is one trade-off. A Canadair consumes less fuel and could be more cost efficient as it can do multiple runs every hour. But the A400M compensates with scale, flexibility, and geographic reach. Unlike the Canadair, the A400Ms don’t require nearby lakes or the sea and can deliver inland across mountain ranges where scoopers cannot recharge. The extensive range of this plane makes it able to fly from its home location to absolutely anywhere in the EU, even reaching Subsaharan Africa and Central Asia. In the graph below, the epicenter being Paris, the green line shows range when carrying 20 tonnes:

The A400Ms are already maintained for their main role of transport. Meaning a firefighting function presents a minor additional cost. The upfront investment of upwards of €150 million for each A400M has already been made by Member States. With only 14 Canadair aircraft (notably older models) in its inventory, Spain could double its fleet to 28 planes through this proposal, a historic upgrade.

For Germany which surprisingly lacks a single dedicated water bomber plane (relies on helicopters instead), the RoRo scheme also offers immediate benefits. During a 2022 wildfire crisis along the Czech border, Germany required airplane support from much smaller EU states. As Berlin already operates 48 A400Ms, access to the kits could vastly increase its firefighting capacity. When supporting Spain in a show of EU-wide solidarity, Germany recently sent firemen with trucks, driving 1800km which took a full day before they could even commence helping. Airplanes would instead arrive in a matter of hours and subsequently reload for multiple runs locally.

In summary, resources could be pooled to purchase this Airbus system and collectively tackle Europe’s wildfires. So why hasn’t this happened already?

…if there’s a good reason regulators should allow betting against assets that taxpayers might have to bail out?

AI art: “Depositors lining up outside a failed bank, cartoon”.

Hedge funds have reportedly made $7 billion from shorting the U.S. regional-banking sector during March, posting the highest such returns since the 2008 financial meltdown. Is this an ominous signal? 

In the aftermath of the Great Financial Crisis, regulators in the U.S. and Europe were concerned that short bets against lenders with large exposure to risky real estate assets had been the straw that broke the back of a self-supporting banking system. 

Steps for successfully betting against a stock: 

1. Borrow shares in a company.  

2. Immediately sell them on the market. 

3. Purchase the shares back at a lower price (if you correctly predicted the downside!). 

4. Return the shares to their original owner.

5. Pocket the difference.

What makes shorting deadly is the ability for a group of big investors to quickly sink a sector that’s teetering for other reasons. Take First Republic Bank, which no longer exists after 96% of its stock was borrowed to sell short. This contributed towards crashing the share price about 99% in a month. 

A stock valuation does not directly impact the current strength of a lender’s balance sheet: however, a rapidly falling price can be interpreted as a no-confidence vote on the institution, thus spooking depositors. In the case of First Republic, many customers already concerned it might be another Silicon Valley Bank panicked and transferred their cash out after seeing its stock tank. Anxiety caused a bank run, with more than $100 billion of deposits being withdrawn. 

Since JPMorgan announced its acquisition of First Republic last Monday, it appears the sharks have ganged up on another middle market lender; by Thursday, PacWest Bank’s shares tumbled 50% in after hours trading, when there is less liquidity and therefore a stock can be pushed more by speculators. 

PacWest’s management said it is now looking at all of its options. If enough short sellers continue attacking one weak regional lender at a time, could the U.S. suffer several more bank failures? And could the phenomenon spread abroad?

Regional banks are being targeted: 

Many regional lenders invested their customers’ deposits in bonds and issued loans at 1%-3% several years ago, when benchmark interest rates were near zero. The Effective Fed Funds Rate then increased to more than 5% over the last 14 months, causing these loan and bond portfolios to lose hundreds of billions in market value, should they have to liquidate. Many of the banks in trouble had weakened balance sheets because they failed to hedge against interest-rate increases. 

After former bank Signature went into federal receivership, the FDIC released a report blaming “poor management” and the loss of liquidity through “contagion effects” from another bank, among various reasons. Signature was also very heavy on real estate loans. Office space has seen falling demand since the pandemic began. Work-from-home has emptied entire downtown buildings, depressing the value of the collateral banks have liens on and pushing down the rents borrowers can charge to pay back their loans. 

Now, short sellers are focusing on this vulnerable sector riddled with devalued bonds and potentially nonperforming real estate loans: 

The exchange-traded fund shown below (ticker KRE) is composed of 145 U.S. regional lenders. The ETF has fallen in value by about 40% in the last six months: 

The amount of short interest in KRE is reported at above 70%, meaning most of its shares which track underlying bank stocks are being loaned to speculators. 

A precedent to regulating short bets? 

Post-2008 America’s main securities authority, the SEC, granted itself some power to interfere with short bets, such as: 

• Implementing a ban on “naked short” selling.

• Reserving the power to temporarily prohibit shorting stocks.

At the time, SEC Chairman Cristopher Cox spoke out against “abusive naked short selling” which allowed manipulators to force prices far lower than allowed by legitimate market conditions. 

Regulators and the media are just beginning to study the means and effects of shorting U.S. regional lenders in 2023. To what extent might “synthetic” shorts, created using a put and call option on the same stock, also be considered an abusive practice?

It’s somewhat mysterious why the authorities are not drawing on a precedent of using emergency powers to shore up the weakest lenders. This is worrisome especially after three U.S. banks (and maybe soon a fourth) have been federally taken over or sold in emergency situations. 

Privatising profits while socialising losses:    

If allowed, hedge funds and other savvy institutional investors seem poised to help sink additional commercial banks. They could pocket tens of billions of dollars while costing the FDIC heavily; $35.5 billion has already been pledged by the insurance fund to deal with the fallout of Silicon Valley Bank, Signature and First Republic. 

The FDIC must replace its warchest by charging lenders extraordinary premiums. What if the U.S. government ends up needing to intervene — if larger banks refuse to save or buy smaller failing ones — thus making taxpayers eventually liable for a semi-engineered debacle that was months in the brewing? 

Ultimately, there’s a big difference between shorting most other industries versus betting against banks. Contagion amongst peer lenders is a very real threat, and is called systemic risk. Is there any societal benefit in allowing the financial system to be tested this way?

…does the fate of Taiwanese independence hinge partly on U.S. reliance on the country’s advanced microchips?

OpenAI generated art: “silicon wafer disk”. 

A light was cast on that question when Warren Buffett recently sold an estimated $3.7 billion of Taiwan Semiconductor Manufacturing Company (TSMC) stock, just months after his company Berkshire Hathaway acquired the position. 

Buffett cited seismic risk and to some extent geopolitical tensions among his reasons for becoming bearish on the world’s sole producer of the circuits inside iPhones. As his strategy of value investing typically requires holding for the long-term, this news spooked market sentiment regarding Taiwan’s champion chipmaker.  

The tensions Buffett pointed out refer to the U.S. and China more openly disputing who will keep Taiwan within their sphere of influence. This post explores questions of whether a looming Sino-American military confrontation might occur, in part, over access to TSMC’s cutting-edge designs and products.

A unique corporation: 

Taiwan operates the world’s largest foundries for microchips and makes about 90% of the smallest circuits used in electronic devices. Taiwanese exports are thus critical in sustaining digitalised economies.

The sheer cost of the physical capital that goes into developing next-generation semiconductors is hard to comprehend: It requires up to three months of laser painting and dozens of chemical processes to create a single, ultra-compact circuit board smaller than a fingernail. 

In 2022, TSMC spent $60 billion on launching a single semiconductor factory – known as a “fab”. Few similar facilities exist outside of Taiwan which can produce chips using the 3-nanometer process, which crafts the thinnest and most advanced semiconductors available. 

Will the U.S. military defend Taiwanese chips?   

China has seen the growth of its tech sector dwindle in recent years, partly due to a punishing U.S. sanctions regime. Washington has restricted semiconductor exports to degrade the Chinese military’s ability to procure smart weapons. 

Chips are an essential component in the guidance systems of missiles and avionics. Acquiring the latest chips has furthermore become central to unlocking the potential of AI tools and quantum computing that will define the future economy. 

The former speaker of the House, Nancy Pelosi, travelled to Taiwan last August and reaffirmed bilateral security ties with the U.S. Pelosi had meetings with TSMC’s management during her visit. This entire ordeal greatly angered the Chinese Communist Party (CCP) which in retaliation launched massive war games simulating a blockade of Taiwan. 

Since then, Beijing-affiliated media have ramped up their media campaign against perceived American meddling in China’s politics. For instance, the CCP’s Global Times newspaper accused Washington of plotting to sabotage Taiwanese fabs to prevent them from falling into Chinese hands, publishing this cartoon:  

But does Washington really wish for TSMC's immediate collapse if Taiwan were invaded by China? This would surely wreck the supply chains of corporations such as Apple, Nvidia, Google and Amazon.

What we do know for certain about U.S. officials’ “advice” is they have welcomed TSMC to set up shop elsewhere, mitigating the risk of a Chinese naval embargo or full-scale invasion: the company is currently building two fabs in Arizona jointly costing $68 billion and one in Japan. 

Yet allowing semiconductor production to move abroad could harm one of Taipei’s possible deterrence strategies: the government seemingly relies on America’s self-interest in defending TSMC’s domestic fabs to save Taiwan from China. 

In several years, however, American tech firms might be less dependent on Taiwanese manufacturing. U.S. Congress’ CHIPS Act intends to “counter China” by investing $52.7 billion in semiconductors made in America. If the U.S. economy successfully transitions away from reliance on Taiwan, might Washington be less willing to defend the island?

Crucially, Taiwan continues to only manufacture its most state-of-the-art 3 nanometer products at home, which could be the ace up their sleeve that solidifies ongoing U.S. support. 

TSMC’s founder Morris Chang, 91, coldly warned Pelosi that the efforts to build fabs in America are doomed to fail. Maintaining appearances of Taiwanese exceptionalism in chip manufacturing could go a long way towards keeping U.S. politicians interested in Taipei’s survival.  

Stock outlook: 

Taiwan Semis’ shares have returned more than 30% since a recent low in early November 2022, reached a few months after China threatened Taiwan with a mock blockade. A buyer who can stomach geopolitical anxiety might make money holding on to this stock as its fundamentals remain strong. 

But with the U.S. media ramping up the rhetoric against China, we are likely heading into years of negative press that could impact TSMC’s value: the stock’s price could fall rapidly solely based on investor’s risk-aversion to thorny news. TSMC might be approaching a cheap buy point in the near future if Beijing is to continue increasing pressure on Taiwan but falling short of attacking the country.