Of Two Minds

If we can’t discern the difference between doom-porn and investing in self-reliance, then solutions will continue to be out of reach. I’m often accused of calling 783 of the last two bubble pops (or was it 789? Forgive the imprecision).

This may be one of many revaluations of capital vis a vis labor and resources and core vis a vis periphery. You’ve heard the expression “cash is king.” Very true. But it’s equally true that “crash is king:” when speculative excesses collapse under their own extremes, the crash crushes all other narratives and becomes the dominant dynamic.

So sorry, but “you’ll own nothing and be miserable–oops, we mean happy, yes, deliriously happy” doesn’t count as a solution. The global economy is perched on the edge of an abyss, and averting our gaze doesn’t actually lessen the risk, it increases it because problems which aren’t faced directly and addressed directly fester and rot the system from within.

Nothing unravels quite as dramatically as systems which are presumed to be rock-solid and forever. Here’s the default Bullish case for stocks and the economy: let’s call it Plan Zero. 1. The economy and equities can grow forever (a.k.a. infinite grow…

Let’s ask “cui bono” of the $33 trillion in added debt and the $9 trillion added to GDP: to whose benefit? I’ve been thinking about how hard it is to get our heads around big numbers. Technical analyst Sven Henrich (@NorthmanTrader) recently provided one method to grasp the immense wealth of Elon Musk: How to become as wealthy as Elon Musk?

When the system can’t borrow more and distribute the insolvency, it implodes I started writing about debt saturation back in 2011. The basic idea is we can continue to borrow and spend as long as one of two conditions hold: 1) real (inflation-adjusted) income is rising, so there’s more income to service additional debt, or 2) the cost of borrowing declines so the same income can support more debt.