When global markets struggle to interpret a shifting macro-order, investors instinctively reach for historical parallels. The 1970s, with inflationary surges, fiscal strain and energy shocks, often appear as the closest comparison.
Yet this analogy misleads more than it guides. The economic structure of the 2020s is fundamentally different, shaped not by the scarcity of physical inputs but by the near-limitless scalability of digital intelligence. For ultra-high-net-worth investors (UHNIs) – whose portfolios span continents and time horizons – recognising this shift is essential to understanding where value will accumulate in the decade ahead.
Despite rising fiscal pressures and a federal debt stock now exceeding $38 trillion, the US retains a singular position in global finance. It continues to operate the deepest, most liquid capital markets in the world, offering an exit environment and trading depth that no other region can rival. Liquidity itself has become a strategic asset and the American market remains unmatched in this respect.
Much is said about the concentration of US indices in a handful of technology giants, but this concentration reflects a structural reality: the companies best positioned to exploit declining computing costs, whether through AI, cloud architecture or advanced semiconductors, overwhelmingly remain American. Far from being a vulnerability, this concentration illustrates where global economic value is migrating.
Inflation, too, is not what it once was. While headline inflation in the US sits near 3.0 per cent, the composition underlying that figure is highly uneven. Unlike the broad, supply-driven inflation of the 1970s, today’s pressures are concentrated in housing, healthcare and regulated services, while the cost of producing intelligence – analytics, software, design and decision-support – continues to fall. This duality creates an environment in which traditional inflation hedges lose their reliability and firms that can leverage automation widen their advantage over those bound to physical inputs.
This raises a central strategic question: how should UHNIs weigh U.S. exposure against opportunities in the rest of the world? The answer lies in understanding the capability premium. Global competition is no longer defined by access to raw materials or cheap labour; it is defined by computational capacity, data networks, resilient supply chains, advanced manufacturing and innovation ecosystems.
In these domains, the US remains far ahead of Europe, which struggles with structural rigidity, and of China, which faces capital-flow restrictions and political risk premiums that discourage large-scale commitments of private wealth, although China has made rapid progress in the last decade. India and South East Asia offer growth, but neither yet provides the institutional depth or liquidity demanded by UHNW allocations. The implication is not that global diversification is unnecessary, but that the US still represents the ultimate anchor for globally scaled portfolios.
This is especially important as investors reconsider the balance between private equity and public markets. Over the past two decades, private equity has generally delivered a clear performance premium over public markets. Across long-horizon datasets from major pension funds and index-based comparisons, private equity generated roughly 10–11 per cent annual returns net of fees, while the S&P 500 and comparable public-equity benchmarks delivered about 6.0 per cent over the same period. That 4–5 percentage-point gap was substantial enough to justify the illiquidity and leverage inherent to the asset class.
However, a large share of this outperformance was attributable to a macroeconomic environment that no longer exists. Ultra-low interest rates, abundant liquidity and generous credit markets made leveraged buyouts easier, cheaper and more profitable. Those structural tailwinds helped drive the golden decade of private equity returns.
Today, the equation has changed. Higher interest rates, tighter credit conditions, slower exit markets and greater competition for quality assets have eroded the industry’s once-privileged premium. Recent pooled returns for private equity have already fallen sharply compared to the long-term average. This doesn’t mean private equity is finished. It just means the game is different. Future returns will depend far more on manager skill, operational value creation, disciplined selection and pricing power – and far less on the leverage-fuelled wind at the industry’s back.
Importantly for UHNWIs, public markets offer the liquidity needed to navigate an environment defined by frequent policy shifts and episodic volatility. Select private opportunities will remain attractive, but the presumption of automatic outperformance is gone.
This brings us to the question most often posed in different investment circles: what is the outlook for the US dollar? Fiscal stress warrants long-term caution, yet the medium-term outlook is more resilient. The dollar continues to benefit from global demand for safe, liquid assets and no credible alternative reserve currency has emerged with the same institutional strength. Political and economic turbulence in Europe and many emerging markets and China’s cautious and gradual approach to the liberalisation of Renminbi amplify the dollar’s role as the world’s default risk-off asset.
The US continues to attract substantial capital flows into its technology and advanced manufacturing sectors, with tech stocks projected to receive a record $75 billion in inflows in 2025, alongside global venture capital investments reaching $97 billion in Q3 2025 – much of it directed towards AI and tech innovation. In advanced manufacturing, foreign direct investment (FDI) has surged, with $236 billion pledged for domestic manufacturing capacity through 2026, while hyperscalers alone spent an estimated $371 billion on data centre capital expenditures in 2025.
These inflows, which have boosted the US share of global FDI from roughly 15-25 per cent in recent years – with manufacturing as the top recipient at $380 billion – reinforce its currency even when macro fundamentals appear stretched, as evidenced by portfolio inflows of approximately $1.2 trillion supporting the $1.3 trillion current account deficit and the dollar’s decade-long dominance amid exceptional capital attraction. The dollar may experience episodes of volatility, but the structural case for continued strength remains intact.
Taken together, these forces define the new investment regime. The global economy now operates at two speeds: one slow, rooted in asset-heavy and rate-sensitive industries; the other fast, driven by the exponential scalability of digital intelligence. Investors who continue to view markets through the lens of past cycles – where sectoral rotation and mean reversion guided allocation – risk missing the deeper structural divergence. The compression in intelligence costs is not a passing trend; it is the economic equivalent of falling energy costs in the early industrial era. It reshapes productivity, corporate strategy and the very basis of competitive advantage.
For UHNW investors, whose time horizons extend across generations, this moment requires clarity rather than nostalgia. The US will remain the core of global capital markets, not because it is flawless, but because it still hosts the ecosystems that define the frontier of technological capability. Opportunities outside the US will matter – especially in energy transition, global commodities and selected emerging markets – but they will complement, not replace, the centrality of the American market.
Intergenerational wealth thrives when it keeps pace with where value is created, not where it once was. As intelligence becomes the cheapest input in the global economy, the task for investors is to position capital where this new abundance translates into enduring returns. The age of vanishing intelligence costs is not merely an economic backdrop; it is the defining investment reality of our time.
The writer is former head of Citigroup’s emerging markets investments and author of ‘The Gathering Storm’.
