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This gives an extreme advantage to those few who move first, long before they must. The financial advantage for first movers is equally extreme. Moving is a difficult decision, so we hesitate. But when the window to do so closes, it’s too late. We always think we have all the time in the world to ponder, calculate and explore, and then things change and the options we once had are gone for good.

Revolutions have a funny characteristic: they’re unpredictable. The general assumption is that revolutions are political.The revolution some foresee in the U.S. is the classic armed insurrection, or a coup or the fragmentation of the nation as states or regions declare their independence from the federal government.

Try to find a developing-world kleptocracy in which the top few collect more than 97% of the income from capital. There aren’t any that top the USA, the world’s most extreme kleptocracy. We’re Number 1. Imagine a town of 1,000 adults and their dependents in which one person holds the vast majority of wealth and political influence. Would that qualify as a democracy?

If we no longer have the capacity to distinguish between moral legitimacy and self-serving corruption, then we might as well eliminate the Middleman and vote directly for Pfizer or Merck. There’s a fancy word for cutting out the Middleman: disintermediation. Removing intermediaries who take a cut but neither produce nor add value makes perfect sense, reducing costs and increasing efficiency.

So one index or asset or another hits a new high, wow, more proof everything is so robust and healthy, we never had it so good–right up to the seizure and collapse. Some readers occasionally make the point that I’ve been predicting a market crash for ten years and been dead-wrong for ten years.

What seemed so permanent for 13 long years will be revealed as shifting sand and what seemed so real for 13 long years will be revealed as illusion. Magical thinking isn’t optimism, it is folly. Predictions are hard, especially about the future, but let’s look at what we already know about 2022.

In other words, our economy and society have been optimized for failure. If we look at the fragility and instability of essential systems, it’s clear that 2022 will be the year of breakdown. Let’s start by reviewing how systems break down, a process I’ve simplified into the graphic below.

The interesting feature of the ‘last chance to get out’ is nobody sees it until after the crash has done its damage. Every asset bubble has a last chance to get out before the crash point that becomes obvious in the aftermath. But at the time, this last opportunity to exit before the wipeout is difficult to identify for a number of reasons.

What would be truly optimistic would be to surrender our dependence on asset bubbles and malinvested debt to prop up an unstable delusion of effortless “wealth.” The most sacred liturgy of American culture is to always be positive and optimistic.

Christmas Eve seems like a good time to release my anthem for 2022, You Owe Me.

Go ahead and become dependent on asset bubbles and the free spending of the top 5%, and optimize your economy to serve this “growth,” but be prepared for the consequences when the costs of this optimization and dependency come due. Here’s the problem with concentrating most of the income and wealth in the top 5%:

How vulnerable is your personal supply chain? For the average American, the answer is: very. Americans consider abundance and ready availability as birthrights so basic they’re like the air we breathe. The idea that shelves could become bare and stay bare is incomprehensible. yet that is the world we’re entering, for a number of complex reasons.

But when the Fed’s fundamental powerlessness is revealed and the buy-the-dippers have been forced to liquidate, the true meaning of “mild” contagion will become apparent. Since I’d rather not be renditioned to a rat-infested, freezing cell in an unnamed ‘stan, I’m circumspect about viruses in general.

Are we smart enough to keep our oh-so-easily conjured riches? If we continue to believe that doing more of what’s failed spectacularly will deliver permanently expanding riches, then the answer is no.

When the market goes bidless, it’s too late to preserve capital, never mind all those life-changing gains. Everyone with some gray in their ponytails knows the stock market has ticked every box for a bubble top, so everybody get in crash positions:

If Xi’s gambit succeeds, China could become a magnet for global capital. If success is only partial or temporary, China may well struggle with the structural excesses that are piling up not just in China but in the entire global economy. As noted here last month, the Chinese characters that comprise “crisis” are famously–and incorrectly–translated as “danger” and “opportunity.”

We have an extraordinary opportunity to transform our unsustainable “waste is growth” economy and toxic inequality to sustainable systems that optimize well-being rather than collapse. The possibility that the United States could fragment is no longer a marginalized topic.

So here we are, witnessing the switch from risk-on to risk-off in real time. All bubbles share common characteristics: during the euphoric expansion, participants are richly rewarded for buying every dip and for confidently embracing the belief that this time it’s different.

But alas, humans do not possess god-like powers, they only possess hubris, and so all bubbles pop: the more extreme the bubble, the more devastating the pop. Long cycles operate at such a glacial pace they’re easily dismissed as either figments of fevered imagination or this time it’s different.