In recent times, many have sensed a growing undercurrent of chaos, polarization, and uncertainty swirling around the globe. This isn’t mere coincidence—historians suggest that we are currently navigating through what’s called the "Fourth Turning," a profound phase of crisis poised to reshape societies, economies, and the global order itself.
What is the Fourth Turning?
Originating from the 1997 book The Fourth Turning: An American Prophecy by historians Neil Howe and William Strauss, the Fourth Turning refers to a recurring historical cycle that spans roughly 80 to 100 years, divided into four distinct phases—each lasting about 20 years. These "turnings" function like seasons, each carrying unique societal moods and events:
- The High: A period of strong institutions, societal cohesion, and general optimism (think post-World War II prosperity).
- The Awakening: When younger generations challenge established norms, advocating personal freedom and cultural change (reminiscent of the social revolutions in the 1960s and ’70s).
- The Unraveling: Marked by growing individualism, waning trust in institutions, and rising political division (reflective of trends from the 1980s to recent decades).
- The Fourth Turning: A time of major crisis where existing systems collapse, requiring societal and economic reinvention.
Historically, Fourth Turnings include watershed moments like the American Revolution, the Civil War, and the Great Depression followed by World War II. These periods aren’t merely turbulent—they are transformative, often involving wars, revolutions, economic depressions, or intense social unrest that give rise to new social contracts and institutional frameworks.
Why Are We Experiencing a Fourth Turning Now?
How and Strauss projected decades ago that we’d enter the Fourth Turning phase between the mid-2000s and the early 2020s—and current global dynamics strongly affirm this prediction. Several critical factors are driving this crisis phase today:
- Economic Imbalances: Since World War II, the world enjoyed economic growth fueled by reconstruction, globalization, and credit expansion. However, post-2008 financial crisis, unprecedented debt levels and historically low interest rates created a fragile system reliant on continuous borrowing and policy interventions. Today, global debt has soared to unsustainable heights, pressuring governments and economies worldwide.
- Political and Social Fragmentation: Trust in governments, financial institutions, and mainstream media has eroded, while wealth inequality has ballooned. This divide feeds political polarization and populism globally. Automation and AI threaten to displace many jobs, potentially exacerbating disparities and social unrest.
- Geopolitical Shifts: The rise of China has challenged long-standing American economic and military dominance, intensifying competition and geopolitical tension reminiscent of earlier turning points in history. Such rivalries threaten global stability and cooperation.
- Generational Transition: The passing of those who directly experienced World War II and the Great Depression means the collective memory of past hardships is fading. New generations in power may underestimate the depth and dangers of crises unfolding, potentially catalyzing more radical upheavals.
Taken together, these factors have created a "perfect storm," setting the stage for profound transformation.
Potential Severity and Impacts
History teaches that Fourth Turnings can be severe and protracted. Economically, governments facing unmanageable debts typically have three imperfect remedies: austerity (cutting spending), outright default, or inflation. Inflation is often chosen politically as it reduces debt burdens quietly but harms ordinary savers by eroding purchasing power. The recent pandemic-induced inflation surge illustrated this dilemma, benefiting wealthy asset owners while widening social divides.
Geopolitically, escalations—such as a potential conflict over Taiwan—could disrupt global supply chains, spike commodity prices, and precipitate financial market panic. Increasingly polarized global alliances and domestic divisions may also result in political instability and social unrest.
Yet, amid such crises, societies historically also rediscover unity and shared purpose, albeit often at the cost of temporary restrictions and sacrifices.
How Could This Affect Markets and Investments?
Given the uncertainty and potential turmoil, markets are expected to experience heightened volatility. Russell Napia, a financial historian, warns that we are likely entering an era characterized by "financial repression," elevated inflation, and capital controls. The days of easy money fueling speculative "bubbles" might be ending, marking a shift toward fundamentals and sustainability.
- Bonds: Traditionally safe havens, bonds might underperform as inflation erodes their value. Governments inflating their way out of debt could lead to rising yields and falling bond prices—making bonds a risky holding.
- Equities: The tech-focused, growth-driven narrative powered by cheap capital might give way to sectors aligned with real-world necessities: infrastructure, defense, energy, manufacturing, and commodities. These areas may see increased government spending aimed at economic renewal and security.
- Commodities: Precious metals like gold and silver historically serve as inflation hedges and safe stores of value during systemic uncertainty. They might also become alternative reserve assets if faith in fiat currencies diminishes. Other essential commodities like oil, copper, uranium, and agricultural products will be vital in rebuilding and sustaining economies.
- Cryptocurrency: The crypto sector faces a challenging bear market ahead. Many projects built on speculative momentum may collapse. However, cryptocurrencies demonstrating real-world adoption, sustainable value, and strong fundamentals—such as Bitcoin and Ethereum and select niche players—could emerge resilient. The future likely favors crypto projects with genuine use cases in payments, gaming, or decentralized infrastructure over speculative tokens.
Preparing for the Fourth Turning: A New Investment Mindset
The unfolding Fourth Turning demands a departure from traditional investment strategies. The 2022 market downturn highlighted how conventional safe assets like bonds can fail in turbulent times. Navigating this period prudently involves:
- Prioritizing quality and sustainability over speculation.
- Focusing on sectors aligned with economic rebuilding and national security priorities.
- Emphasizing precious metals and real assets as hedges.
- Carefully selecting crypto assets with proven utility, adoption, and financial health.
- Embracing geographic diversification to mitigate risk amidst capital controls and geopolitical fragmentation.
Conclusion
The world stands at a crossroads defined by deep systemic pressures, societal shifts, and geopolitical upheavals—the hallmarks of the Fourth Turning. While this period carries risks of economic hardship, social unrest, and market volatility, it also presents opportunities for innovation, unity, and renewal.
Cryptocurrency, with its decentralized nature and growing real-world adoption, could serve as a vital safety net during these uncertain times. Investors and individuals alike must adapt, focusing on resilient assets and informed strategies to weather the storm and emerge stronger on the other side of this historic transformation.
By Wolfy Wealth - Empowering crypto investors since 2016
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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile.
