From sky-high tariffs to bunker-busting bombs, the second quarter of 2025 built a new wall of worries. By the book, investors should have adopted a risk-off stance. Yet global equities moved towards record highs while the dollar tumbled to its lowest level in three years, another reminder that trading on headlines is rarely a profitable strategy.

Nowadays, governments are increasingly shaping markets, introducing an era of fiscal dominance. Gone are the days of aggressive central bank activism from the early 2000s, when institutions like the Fed and the ECB worked on stabilising the economy through quantitative easing, forward guidance, and rapid rate cuts. These actions were largely technocratic and independent of elected governments.

Monetary debasement has been a recurring process throughout economic history, with governments and central banks seeking ways to manage mounting debts and economic crises. In its simplest form, debasement refers to the reduction in the value of a currency, historically through lowering the precious metal content (such as gold and silver) in coins, and in modern times through excessive creation of money. While these measures have sometimes provided short-term relief, they carry hidden costs that can have profound long-term implications.