Almost 20 years ago, in 2008, it was obvious that the infernal machine would not be stopped in time when the financial system faced the wall and the Fed decided to reflate well-connected banks instead of letting them sink due to their profligacy. We have since been living on borrowed times both figuratively and more ominously in reality.
So what comes next, as discussed below is unpredictable. What black swan, which straw breaks the camel's back is unknowable. What we know perfectly well is what comes after that. It will be time for a reset.
We, in fact, have a rather long experience of "resets" so there should be no problem. In ancient times, the kings were blaming the Jews, as they were the only ones allowed to lend money. These were the pogroms taking place more or less on regular intervals so, over the centuries, the Jews learned their trade: Get your money back as interest early enough and be in another city when the storm arrived. Later, our world became more complex and larger. It was the time of pillage and colonialism. The Conquistadors, the settling of America and Africa all helped refinance dilapidated treasuries in Europe. Then came the industrial revolution and the time of wars. The enemy would pay!
But this time, everything is different. To begin with, the scale is different: the world is broke! The Globalist elites at one stage expected to conquer Russia and its almost infinite resources. Putin, by far his greatest "crime", rebuilt the country which consequently dropped out of the menu list which suddenly became much less appetizing. Greenland? Iran? Ukraine? You need resources on a grand scale for a reset because "naked" assets need to be backed up by "something". (Naked assets being the pensions and liabilities of the system without which legitimacy evaporates and revolutions start.) None of these countries fit the bill. Too small or not rich enough. Problem! (which by the way has been explained to Donald Trump who understands perfectly.)
This is where the idea of financializing ALL the assets in the world was born as we have discussed many times in the past: The great reset. Will it work? Can it work? Nobody knows. One thing is certain: People, especially in the West cannot have an alternative otherwise it won't work. So, no BRICS, no Bitcoins, no gold, no nothing except your money, mostly in a digital form, locked in a bank nearby, distributed as the government sees fit. (Think "green" credits.) It works on paper but could it work in reality? What is certain is that every single day is a step forward towards this reality. There is simply no turning back at this late stage. So with or without BBB, the dye is cast. Trump is only buying time and selling an illusion in-between. The US will NOT outgrow its debt. Nor will anybody else. The laws of finance are for the economy what gravity is for physics. We'd love to see our "stuff" floating around. Everything would be so much easier. But it doesn't and probably never will.
Now if you really need to know more about the charade that our markets have become recently, read on:
Submitted by QTR's Fringe Finance
This weekend, I made an appearance on the Zero Hedge Podcast—a platform I’ve long loved to read and have been a friend of. The full video is below.
At the outset, I explained why I’ve mostly stepped back from doing my own podcast. “I feel like I don’t have anything of dire importance to say anymore,” I said. “Whatever I do have to say, I shoot out on my [Substack] and that’s about it. I’ve kind of done a cease and desist on my podcast.”
I feel like the truth is, a lot of what needs to be said has already been said—repeatedly.
Government overspending, monetary manipulation, and systemic fragility aren’t new topics. They just keep getting worse. And the commentary starts to feel futile when the cycle never changes.
“You have control over nothing,” I said on the podcast. “At some point it becomes fruitless.”
On the New Spending Bill: Same Movie, New Scene
We opened with the recently passed spending bill. My view was simple: it’s more of the same.
“I don't think I can offer anything new that most Zero Hedge readers or Austrian thinkers don't already know,” I said. “Every four years, we rack up debt faster. We spend more money than we have quicker.”
I touched on how both parties campaign on cutting the deficit and then, once in power, punt. “This bill is no different, sadly,” I said. “There’s still this fantasy that we’re going to grow our way out of the debt problem.”
“I know they’re at least thinking differently about money,” I said, referencing the Trump camp and rumors of eventual gold-back treasury bonds. “But then politics and pork always seem to prevail.”
And then there’s the absurdity of actual government spending. “At one point I was reading they gave Rashida Tlaib $5 billion to manage a program on subsidizing refrigerators. I’m like—what the f*** are we doing? What qualifies her to manage $5 billion, let alone $5?”
On Inflation: People Finally Get It
One thing I said I’m hopeful about is that average people now feel and understand inflation. “A couple years ago, if you were an Austrian talking about how the government's stealing your money through inflation, no one wanted to hear it. It was esoteric,” I said. “Now, people feel it at the grocery store. They go home and ask themselves: Why am I getting half as much cereal for twice the price?”
That real-world impact is pushing people to ask deeper questions. And ironically, Bitcoin has played a big role in that education. “You can’t understand Bitcoin without understanding monetary policy,” I said. “It forces the conversation. What’s fiat? What’s sound money? Why does it matter?”
That’s why, despite my preference for gold and silver, I give Bitcoin a lot of credit. “It’s like a gateway drug into monetary theory,” I joked. “You've got kids in their 20s—tattooed freaks—mainlining monetary policy because it helps them understand crypto.”On Trump’s Fiscal Pitch: Wait and See
When asked about Trump’s pitch—tax cuts plus tariffs to generate growth—I didn’t have a definitive take. “I don’t really contend with it,” I said. “We’ll see what happens. I trust that guys like Scott Bessent are smart. I think they know how out of whack the fiscal house is.”
I said I’m in a “wait and see” mode, largely because the macroeconomic compass is broken. “Bad news is good news some days. Good news is bad news other days. Nothing makes sense anymore,” I said. “We’ve distorted things so badly with money printing and QE. There’s no true signal anymore.”
Said another way: it’s f*cking impossible to predict what will happen next. (Please do not forget to renew your paid subscriptions).
On Bond Markets: Watch the Canary
I also emphasized that the bond market is the most important place to watch to see whether or not our fiscal plans are feasible. “Don’t pay attention to stocks the way you would to bonds,” I said. “The bond market will tell you the truth.”
I pointed out the strange behavior of yields rising even as the Fed eases. “It’s not normal,” I said. “We’re seeing equities and bonds sell off together. That’s something you see in emerging markets—not in the country with the reserve currency of the world.”
I also warned that nobody really knows who’s buying the debt at auctions.
“I wouldn’t put it past the Fed or Treasury to create the illusion of demand where there isn’t any,” I said. “A lot of this demand is showing up through shadowy offshore entities, I read — Cayman Islands sh*t. And that’s sketchy.”
What Breaks First?
I was asked what part of the market might crack first. “It could be anything,” I said. “Private credit, commercial real estate, auto paper, regional banks—there are rakes everywhere you step.”
I talked about how systemic risk often hides in plain sight, covered up by accounting games and delay tactics. “We don’t learn about it when the CFO finds it,” I said. “We learn about it when the market forces someone to confess.”
And I warned that a black swan could come from anywhere. “It could be some guy who notices an error on a receipt at Dunkin Donuts in Belgium. He goes to complain, and it reveals 20 years of fraud.”
How I’m Allocated: Hard Assets, Patience, and Boring ETFs
I also talked a bit about my personal asset allocation—not as financial advice, but just how I’m trying to navigate this mess.
For the 25 names I’m watching this year, read my market update from last week here.
On Wealth Inequality and the Big Lie
Then, the lede: calling out the core hypocrisy in the political rhetoric around inequality.
“Every time they print, the inequality gap widens. And the very people who scream about equity are the ones advocating for the policies that make it worse,” I said. “They’re accelerating the wealth divide and blaming capitalism.”
And I ended on this: “At some point, either enough people learn what’s actually going on—or we spiral into a full-blown collectivist mess. The longer we pretend not to see it, the worse the reckoning will be.”
I ended the podcast the same way I try to end all of my writing: by reminding people I get a lot of shit wrong, and to do your own work.
“I don’t give financial advice. I’m not a guru. I’m just trying to figure this out like everyone else,” I said. “Trust no one. Not me. Not you. Do your own research.”
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