Of Two Minds

The mainstream holds the Fed is busy planning a return to the glory days of zero interest rates, but ZIRP is on the downside of the S-Curve; it’s done, gone, history.

Are the crowds ready for the curtain of Fed omnipotence to be pulled aside? What will push markets ever higher if the Fed’s alchemy fails?

The tricky part is distinguishing the critical dependencies–those resources the empire literally cannot do without–from longer-term sources of decay and decline.

Maybe we’ll get 1893, 1929, 1968 and 2008 analogs mixed into a heady cocktail of surprises.

Not only does everyone love getting “free money” from the state, they also love hearing the fantasy repeated endlessly that debts are no problem because we will continue to “grow our way out of debt.”

Speculation has its own expiration dynamics, and they don’t depend on us recognizing speculative excess for what it is. They will unravel the excesses regardless of what we think, hope or deny.