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Blowback has its own dynamics, as we’ll learn in the decade ahead.
One of the most durable expectations in the financial sphere is that inflation will drop sharply in a recession and the Federal Reserve will lower interest rates back to near-zero.

In a real recession, what seemed safe and rock-solid melts into air.
We haven’t had a real recession in forty years (1981-82) and so only those who were in the workforce back then have any experience of how far and how fast things we think are solid can unravel.

So what’s changed? Everything, but mostly beneath the surface churn of circus and theater.
2023 is echoing 1973 in potentially consequential ways.

Everything’s abstract until it happens to us.
Dominoes falling are abstractions until one falls on you. Lines of dominoes toppling are an apt analogy to highly centralized systems that are tightly bound, that is, all the transactions that flow through the centralized hubs are interconnected, so when one domino falls, it topples chains of dominoes that then topple other chains.

In the real-world, the costs are all we know for sure and profits remain elusive and contingent.
No one knows how the flood of AI products will play out, but we do know it’s unleashed a corporate frenzy to “get our own AI up and running.”

One Deep State is bad enough, but a renegade, predatory private-sector Deep State is intolerable. In 2007, well before the term Deep State entered the common lexicon, I sketched the interconnected public-private pieces of the Deep State, which I termed the elite maintaining and extending global dominance.

We can all pretend to be fantastic until the floor collapses beneath us. At that point, complacency / denial gives way to panic, but it’s too late to effect any realistic reversal of fortune.

Now that the overlapping crises are upon us and the banquet of consequences is being served, we’ll see just who our elites and leadership really are. The erosion of trust doesn’t require intent, it only requires the blind pursuit of self-interest above all else.

The Fed has trained the trading-rats all too well, and there is no way to avoid the unintended consequences of the Fed’s large-scale human behavioral experiment.

When this bubble bursts, there will be no fourth or fifth bubble, there will only be rubble.
The US economy and its financial system operate under the implicit belief that the Federal Reserve controls the direction of the economy and finance.

As long as we mint millions from a Never-Ending Bull Market, we’ll always stay one step ahead of the Debt Monster.

When we lose small businesses, we lose More than tax revenues.
Small businesses receive plenty of lip service but very little appreciation–until they’re gone. By then it’s too late to do anything but mutter, “you don’t know what you’ve got until it’s gone.”

Nobody seems to be wondering what happens should the real world no longer respond to the Perpetual Motion Finance Machine.
Scrape away the hand-wringing about interest rates and we find a bedrock of complacency.

The Social Contract is broken not just by wealth inequality per se but by the illegitimate
process of wealth acquisition

Extremes keep getting more extreme, but for those at the top of the heap, it’s all fine. For everyone else slipping down the ladder, all that FINE adds up to Fragile, Insecure, Nonsensical, Expensive.

Together, these factors generate a self-reinforcing cycle of debt saturation, declining collateral and credit contraction.

Who’s left to buy overvalued houses? Too few to prop up bubble valuations. If as many posit the Federal Reserve has an unstated mandate to generate a “wealth effect” by propping up housing, they’ve managed to create a no-win situation.

And what happens next? Bubble symmetry: valuations fall at the same rate as they rose, declining back to the starting point over a roughly equivalent time duration.