Raoul Pal · Oct 26, 2026 · 11 min
The Everything Code: Debt, Demographics and Liquidity (Ch. 1)
Raoul Pal lays out his 'Everything Code' framework: demographics drive debt, debt drives liquidity, and liquidity drives the cycle and asset prices through currency debasement. He argues assets rise roughly 8% a year with debasement, and only technology and crypto have consistently outrun it. He reviews past calls, including a miss on crypto's 'banana zone', which he calls a hiatus in a longer bull market. He ends by setting up technology as the only way to lift productivity.
Where they stand
Structural debasement driven by debt and demographics keeps pushing asset prices up at around 8% a year or more, with tech-heavy indices outpacing it.
Medium conviction · years
Crypto is in a mid-cycle bear market that he sees as a hiatus in a longer bull market, and it is one of the few assets that outruns debasement.
Medium conviction · years
Technology is the one force that can lift productivity and bend the debt and demographics line, and AI is arriving at the right moment.
Medium conviction · years
Key takeaways
- GDP growth equals population growth plus productivity growth plus debt growth. Population growth is fading and productivity is too weak, so debt has become the fuel. 2:13
- US labor participation peaked in early 2000 at about 67% and is now about 62%. The falling birth rate means the gap is already locked in, and federal debt has gone from under 60% to over 120% of GDP. 2:46
- Global debt of about $350T with roughly 5-year maturity means about $70T must be refinanced each year. The business cycle is now driven by the debt refinancing cycle, and liquidity leads ISM by about 6 months. 4:27
- Debasement or liquidity lifts asset prices by about 8% a year over time. Wages track GDP, so assets outrun wages. 8:58
- Only technology and crypto (Bitcoin, Nasdaq, S&P via tech giants) have consistently outrun the 8% debasement hurdle. 10:05
- Pal admits his October 2024 'banana zone' crypto call failed because US liquidity was cut off by the shutdown and the Iran war lifted rates and the dollar. He calls the current crypto bear a mid-cycle hiatus in a longer bull market. 8:26
- Productivity growth minus inflation is currently below zero, and technology is the only way to change the debt and debasement equation. 10:05
Views expressed
- Debt of this scale cannot be repaid, only refinanced, so the roll depends on ever more liquidity.
“debt like that can't be repaid. It can only be refinanced.”
- US government interest payments lead liquidity by about 3 years, so today's interest bill signals the liquidity needed around 3 years out.
“interest payments lead liquidity by about 3 years”
- Liquidity leads the ISM business cycle survey by about 6 months.
“liquidity leads the ISM, the survey”
- Debasement lifts every asset by around 8% a year over time, depending on starting point and cycle position.
“Over time, I think that's around 8% a year, but it depends on your starting point and where you are in the cycle.”
- Only technology and crypto have consistently outrun the printer, with Bitcoin, the Nasdaq and the S&P clearing the debasement hurdle.
“Only two things have outrun the printer with any consistency, technology and crypto.”
- The current crypto mid-cycle bear market is a hiatus in a longer bull market.
“I think it's a hiatus in a longer bull market.”
- His 2024 call that the next 12 months would be wild for crypto failed because US liquidity was shut off and the dollar rallied.
“That call failed.”
- Productivity growth minus inflation is currently below zero, and only technology can turn it positive.
“This line is the engine, productivity growth minus inflation, and right now it's below zero.”
- Debt and demographics pull bond yields lower over time.
“Debt and demographics pull yields lower over time.”
Companies, projects and topics mentioned
More from Raoul Pal
Summary generated by AI from the video's captionsand checked against it; quotes are verbatim. Processed Oct 29, 2026.
Read on Risk summarises what other people said in public videos and podcasts. Summaries are generated by AI and checked by code against the transcript, but can still be wrong; follow the source links before relying on anything. This is not investment advice and nothing here is a recommendation to buy or sell. Disclaimer ·How this works