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We cherish independent and rational analysis. 

BFI Perspectives 

  • Bernarda Pesantez

Facing a More Indebted and Less Free World

The inescapable truths we are all facing today in the aftermath of the Covid-19 crisis, will have something to do with an overly indebted world and the “fixing” or unraveling thereof. For wealth planning purposes, the challenges we will face will emanate from an increasingly regulated landscape, and an increasingly creative variety of wealth transfer mechanisms and financial repression.


As we’ve mentioned here before, the Covid-19 crisis was merely the straw that broke the camel’s back. The trends and forces building before the lockdown have not changed, but they have accelerated and intensified.


The economic collateral damage is only now becoming clear and, while optimism is a good thing and there is always room for hope, this is most definitely a good time to consider risk management and to review how well you are protected from the implications of more and more debt in an economically challenged world.

Wealthy individuals and families will have to consider the threat of higher taxes and financial repression. Savers of all kinds should consider the growing probability and impact of inflation further down the road. While the current outlook - for the next few months at least - looks rather deflationary, inflation protection should not be neglected.


Finally, we should accept the possibility of a further increase of centralist powers, bureaucracy, regulations, protectionism, and all kinds of state intervention. At this point, it does appear that our western societies have been all too happy to accept and even demand more of all of the above, and to trade key elements of their freedom and self-responsibility for illusive perception of a risk-free life.


Someday in the future, we will look back at this Covid-19 pandemic with astonishment and possibly regret. Regardless of what the health-related statistics will show, the economic and fiscal bill will have to be paid. Clearly, the perceived ignorance of epidemiologists may well rival that of economists, and it is possible that Sars-Cov-2 may turn out to be an endemic virus that returns periodically. Either way, the economic implications cannot be magicked away by Modern Monetary Theory. Advanced economies have loosened the fiscal and monetary reins most spectacularly…because they can.


We strongly recommend you review your wealth planning, both from a legal structure as well as an investment perspective, and consider the following three trends first and foremost:

  • More debt

  • Economic hardship

  • Digitalization

As you consider these trends and their implications, the need for adjustments in your financial planning and investment strategies should become clear. Based on lessons learned from the past, you should see the current state as an opportunity to prepare your portfolio and financial plan for the unexpected.

This requires thinking structurally, strategically, and managing your liquidity and risk exposures intelligently, all while keeping a focus on safety, asset protection and longevity. In cooperation with our international network of planners and attorneys, we do precisely this and invite you to contact us for guidance and support.


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