Voima Weekly #36 – Lessons from the Turn of the 1990s

Most focus on the moves. Few understand the game. Purchased from a stock image library.

In the late 1980s and early 1990s, Finland underwent two significant currency adjustments: in 1991, the markka was officially devalued by approximately 12%, and in 1992 it was allowed to float, after which its value weakened by a further 30–40% in the market.

The underlying cause was mounting pressure on the fixed exchange rate — competitiveness had deteriorated, the current account was in deficit, and foreign exchange reserves were being depleted — leaving the authorities unable to defend the currency, making the move to a floating regime effectively unavoidable¹.

The change did not occur in a single moment, but it materialized quickly through balance sheets: as the currency weakened, the value of different assets began to diverge depending on their form and the currency in which they were held. This did not remain an accounting effect, but showed directly in companies’ room for maneuver — in access to financing, investment capacity, and the ability to withstand volatility.

Those companies whose balance sheets held assets other than Finnish Mark - such as U.S. dollars, Deutsche Marks, or other “hard” currencies — gained an immediate and disproportionate competitive advantage. At the same time, their costs remained in markka, while their liquid assets were in hard currency. The purchasing power of competitors’ balance sheets effectively declined by as much as half within a few years.

The real estate sector is a good example of this today: assets tied to the local economy do not detach from the surrounding macro environment. When growth, purchasing power, and capital flows weaken, value development follows suit².

This is not a historical anomaly, but a recurring feature of the fiat system. The dilution of money through monetary policy effectively acts as a hidden tax—on the order of ~10% per year—and most owners and executives do not actively account for it³. It is important to note that this occurs across all currencies: for example, EUR/USD reflects only the relative movement between two weakening currencies. The true benchmark is an undiluted base - gold⁴.

Debt moves in the same direction: it is reduced in real terms. However, if the balance sheet does not simultaneously contain strong assets, the net position still deteriorates. In practice, this means equity should be maintained in a strong form, while liabilities remain in a weaker one.

In the early 1990s, this became clearly visible: players with strong balance sheets were able to acquire competitors at a discount, expand aggressively, and negotiate with banks from a position of strength. The same phenomenon is repeating today, in a different form. As purchasing power weakens and the cost of money rises due to inflation and tighter financial conditions, differences between balance sheets begin to surface rapidly.

Today the system may look different, but the structure has not changed. The collateral base of domestic banks still relies primarily on housing, rather than on liquid, stronger asset classes. At the same time, we are talking about a country where roughly two-thirds of household wealth is tied up in real estate, the public sector is among the largest in the world relative to GDP⁵, taxation ranks among the highest globally, and economic growth has been effectively stagnant for nearly 20 years.

At the same time, the money supply has multiplied (!)⁶. This is a key observation. Growth in the money supply is not free, it dilutes. It shows up in prices, services, and asset values. It creates nominal growth, but not necessarily real wealth. If GDP does not grow at the same pace, this is not growth—it is dilution. For example: if a cup of coffee cost €1 in 2000 and €5 today, and people drink the same amount of coffee, GDP has increased—but no additional value has been created. In other words: GDP grows. Life doesn’t.

If you are a business owner—particularly in industrial or commercial sectors, you are in the middle of a quiet but inevitable shift. A redistribution of assets lies ahead, much like in the 1990s - across every sector. The difference is scale. In the 1990s, the markka effectively redistributed wealth within Finland. Today, this is not about a single currency move, but about the dilution of euros across the entire currency area. Euros are not redistributed by a single decision. They are diluted and through that, ownership is rearranged.

It is clear that a strong balance sheet alone is not sufficient to maintain competitiveness. But without it, competitiveness erodes quickly. A strong balance sheet provides room to maneuver, enables opportunistic moves, and reduces existential risk. Above all, it buys time.

This is not happening in a vacuum. AI and automation are already displacing the “middle class” of companies, much like what is happening at the individual level in the labor market. At the same time, weakening purchasing power combined with high taxation undermines customers’ ability to spend, erodes demand, and weakens the financial and psychological resilience of families. The last of these is the slowest to repair - often measured in generations.

What matters is not the political climate. What matters is not the headlines. The ship is already moving. You have two options: remain passive and adapt, or act and build a position. This is a rare moment where both can be done at once—take risk while remaining defensive.

The primary objective of wealth management is not to maximize returns. It is to preserve purchasing power and maintain liquidity. Everything else comes after. This requires an approach that looks beyond markets—to what is happening in money, structures, and society. Not just allocation, but an understanding of monetary expansion, balance sheets, and geopolitics.

The key question is not how much return you expect to achieve, but in what form your capital is held, which system it is tied to, and who ultimately bears the risk. Increasingly, the answers to these questions lie outside the financial system—through physical assets.

The greatest risk is not that you lose. It is that you play correctly, but the wrong game.

– Marko Viinikka
Founder, CEO
Voima Gold Oy

Disclaimer: Voima Weeklies are the personal writings of the undersigned. They do not necessarily represent the official view of Voima Gold Oy or any other company, nor do they constitute investment advice or a recommendation to purchase securities.