I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell.
There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.
I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries.
I purchase a treasury. I have zero product, zero dollars and one treasury.
At some point in future i have zero product, maybe 12 dollars and zero treasuries. Presumably i now either repeat the cycle or use my winnings to spend on us output.
GP’s version checks out, your assertion about dollars staying abroad doesnt track? What am i misunderstanding - How did these dollars get abroad, how did they repatriate to buy treasuries, how did a treasury become a reserve, how did the dollars still exist abroad after being exchanged for treasuries?
> I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries.
Or you sold something to a non-American entity in a dollar-based market, eg. oil. The dollars do come from America to begin with, but once they get "out there" they work as a medium of exchange for whoever wants to use them for that purpose.
> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries.
[0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.
He's not wrong in his conclusion, just not accurate in why. If countries start moving away from depending on the trade imbalance with the US, the demand for USD will dry up. And they are trying to move away from it because of politics, specifically because of US bullying. But more importantly, the US is increasing trade barriers in a naive attempt to reduce that trade imbalance, which is the biggest reason everybody holds so many dollars--they're paid in dollars when exporting to the US, but don't buy enough US imports (individually or collectively) to spend & exchange all those dollars, which is why they park them in treasuries and other US investments. And it won't be long before oil begins receding from the picture (at least relative to total global trade, if not absolute dollars), displaced by renewables. Though oil is odd in that while creating demand for USD to settle transactions even for non-US oil, it's also a significant US export and has the effect of repatriating dollars.
The importance of USD globally was always on borrowed time. Global GDP has exploded in the 21st century, and the size of the US economy relative to the global economy is shrinking, albeit slowly. The US share of global GDP was like 35% in 1985. By 2030 it's projected to be as low as 12%. It doesn't necessarily follow that this would change the dynamic of strong dollar demand supporting US investments and debt, but it makes it much easier for this dynamic to change as countries become increasingly less reliant in relative terms on exporting to the US. In fact, it's kinda idiotic to rock this boat unless/until we're prepared for some serious fiscal belt tightening. As global GDP increases relative to the US, in theory the rest of the world could support profligate US debt in perpetuity.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else.
A world order based on rules makes it possible to live at a much higher level of abstraction.
Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief. But these wispy and unreal ideas that everyone believes in make it possible for most people to live longer, healthier and less difficult lives.
The "rules-based order" was always partly mythical, but as long as everyone kept pretending, it mostly continued to function.
But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
People will find out that life in the real world is a lot poorer and more miserable than life at the top of the tower of abstractions, even if your brokerage account appears to double.
I generally agree with your comment except the 'back to the real world' part. This is just the difference between a world with the gains that cooperation give verses a world with just the maximized minimum return that distrust leads to. A trusting world is the real world we have seen for decades. It is a real world we can choose to keep pushing for.
Neither is 'real'. The power of might depends on belief just as much as the power of rules. You need a whole lot of compliance, even when forced by fear and terror, to just keep up a police state. The belief consists of where people think other people assign authority to, at large. But that can be just as brittle as a meme stock if the time is right.
Social reality is always constructed. No single construction is more real than any other.
The US has played by different rules, might makes right, in the western hemisphere for a long time.
Screwing around with Greenland shit, on the other hand, seems riskier.
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In practice the US could already do whatever it wanted in Greenland/Canada etc. The options for the motivation behind the theatrics I see.
1. Instill fear in the vassals->support for militarization rises there->they become more useable as proxies against RF/China
2. Just another Trump silliness
> Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief.
> But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
Many have absorbed and believe the argument of the might-makes-right crowd that their vision is 'real' and their enemies' vision is 'imaginary'. Unless people believe in what they seek, they are lost.
There's nothing imaginary about it; that theory is paper thin and doesn't survive simple examination. Obviously, humans are social animals that live in groups, have powerful intellects, and therefore have tremendous ability to cooperate and work together toward greater good; we've done it many, many times. Freedom and democracy have appealed powerfully to people worldwide, in a tremendously wide variety of cultures. That model was created by people who had experienced WWI and WWII; they knew more of your 'reality' than probably you or I ever will, and with that knowledge and experience they created this order.
And the greater good long predates that; religions and similar ethical codes based on the greater good long predate modern democracy and the rules-based order. Rules-based orders predate it. The Gospels in the New Testament are an easy, very familiar example, from 2,000 years ago (and a significant basis of modern freedom and democracy). Similar is true for abstractions like law, government, justice, etc.
We all are biologically the same, essentially, as the best of humanity and the worst - both are in all of us. It's our choice, our moral choice, what we do. That is also a fundamental that long predates the post-war order, democracy, the Englightenment, etc. Inevitability is a cheap tactic long used by those whose ideas are undesireable and don't withstand scrutiny.
Our choice is easier than those who survived WWII, and their predecessors. Our ancestors gave us the tools, the institutions, etc. They had to build them from nothing for a skeptical world.
The source of truth in fascism is not popular support or inquiry, thus they always need to channel some privileged connection to reality, or claim to voice the true will of the people and authentically represents the pure will of the nation.
Its a farce, of course, but one that can sometimes muster enough support to keep the signs in the shop with just a bit of intimidation and violence to back it up.
The rules based order is mostly a fabrication of recent history. Perhaps between the fall of the Soviet Union, China becoming more open, and the general peace and prosperity it seemed like it existed.
Politics between countries has always been around interests. Countries have no interest in giving up their sovereignty. They may pretend to respect these "rules" when it suits them and then ignore them when it doesn't. Everyone is focused on how "bad" the US is but a) the US has always more or less done whatever it wants b) Russia and China (and many others) have never even pretended to play or accept these "rules".
Canada's Carney whines about "international order" when just a few years ago China simply abducted Canadians in response to the supposed "orderly" arrest of the Huawei CFO to be extradited to the US. So Canada basically abducts the CFO of a major Chinese company and China abducts Canadians in retaliation and that's a rules based order to who exactly? And we can put together an endless list of an endless number of countries. So when exactly was there ever a rules based order except as a tool for countries to bully each other and for the poorer dictator led countries to try and get a seat at the table because they can vote in the UN general assembly.
Incorrect. The rules based order was first attempted after the first world war and then created after the second one. These are lessen that have been bought with blood. Lots of blood. Megaliters of it. The incredible stupidity of throwing that away is absolutely disgusting.
The "rules-based international order" was a fiction popularized by US policy makers who wanted to quietly substitute it for international law, so they could violate said laws, while still vaguely gesturing at moral authority.
International law was and is also a fiction. We have various conventions and agreements.
"In the 1940s through the 1970s, the dissolution of the Soviet bloc and decolonisation across the world resulted in the establishment of scores of newly independent states.[67] As these former colonies became their own states, they adopted European views of international law.[68] A flurry of institutions, ranging from the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank) to the World Health Organization furthered the development of a multilateralist approach as states chose to compromise on sovereignty to benefit from international cooperation.[69] Since the 1980s, there has been an increasing focus on the phenomenon of globalisation and on protecting human rights on the global scale, particularly when minorities or indigenous communities are involved, as concerns are raised that globalisation may be increasing inequality in the international legal system.[70]"
> In the 1940s through the 1970s, the dissolution of the Soviet bloc
There was no dissolution of Soviet bloc during that time.
"The nature of the LIO, as well as its very existence, has been debated by scholars."
Nobody is throwing anything away and that thing you think they're throwing away didn't really exist.
Whether or not a 'LIO' exists is not that interesting to me. What is interesting is what actually exists and what has happened in history. What actually exists is an enormous shock after, for instance, world war one where the question arose how it is possible that basically an entire generation of young men was slaughtered. E.g., every small village in France has a memorial of the fallen soldiers during world war one. For many decades after the war commemoration were/are still being held. It used to be that competing for territory was just the normal thing countries did. Then, it became clear that this has a potentially enormous cost in human lives. The obvious conclusion for people who are not sleepwalking through life and through history, is that any political leader who advocates for a change in country borders and does so much as hint to violent means of doing so is totally deranged and immoral. A similar shock has gone through the world after world war two, which, for instance, lead to the creation of the declaration of universal human rights. Among the decent public, it is also concluded that a violation of human rights is deranged in immoral.
> Russia and China (and many others) have never even pretended to play or accept these "rules".
This false. They have pretended to play by the rules, and when breaking them, to at least manufacture some pretext, or to deny it was a state activity at all.
One example I can give you is that when invading Czechoslovakia in 1968, the Soviet Union convinced a few Czechoslovak politicians to write a letter inviting the forces for "brotherly help", thus manufacturing a case that it's not really an invasion. They didn't have to do it, the force differential was overwhelming, but they did it because they could point at the letter on international stage.
All this may seem a bit pointless but binding them in international structures brought interesting fruit in the wake of Helsinki conference on human rights. After that they were forced to at least somewhat follow the signed documents which lead to significantly better conditions to dissidents behind the Iron Curtain. And there are many examples like this, when pointing at international rules actually made things better. So let's not throw that away.
I dislike the saying "the devil's in the details". It is the inverse of where the devil actually thrives - in the clever abstractions.
The beasts who rule this world are the banksters and their vast bureaucratic thrall. Their failing is these rulers have huffed their own degenerate anti-human messages for the past 75 years, have become deranged themselves, and now they've lost their attractiveness and persuasive power.
See what's gone almost completely by the wayside in their green agenda and lgbtqia+4g message as they struggle to cope and maintain their grip. Public, centralized AI is their great hope for control, but it won't survive the lawsuits and consumer protections that are coming. The banksters are 100% parasitical and headed for ruination.
The rules-based liberal order (liberal democracy) is quite real and has replaced any meaningful investments with speculative bubbles and rugpulls, put human life itself up for sale, and waged endless wars, psychological and kinetic. That's the brutal facts rather than beautiful abstractions.
All's well that ends.
Actually, what you're listing above is just another set of beautiful (to you) abstractions. No, "banksters" are not "100% parasitical". The percent is definitely less than 100. But, you know, as they say: the devil is in the details.
Buddy if you think financial crashes were bad today, you should see what happens when banking is not regulated (great depression). Or, if you think war is bad today, you should see what happens when the world becomes multipolar and countries start carving up the world for territory (WWII).
Like please, read a history book.
I'm sure I agree with you that there are many problems with this system but life without it can get so much worse. The green agenda? 4G? That's the worst thing you can imagine?
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What do you propose instead? Why don't the things that you condemn in "liberal democracy" happen there?
> USD still made up 57% of foreign reserves
Yes, but that's the lowest it's been since 1994, in percentage terms. In dollar terms it's been largely flat for the last decade:
> So if this time is different, I’m not seeing it yet
Compare those numbers to 5 years ago. Remember, this is the timescale of a country, not a beagle. America has run on the strength of the dollar for decades, and the symptoms of that collapsing are likely to play out over decades.
>demand is still there today
Not all demand the same. There are broadly 2 types of USD buyers
1. price insensitive: sovereign banks, who buys for liquidity/storage
2. price sensitive: hedge funds, private buyer who buys returns
Type 1 buyers are bailing out of treasury. Type 1 are marginal buyers, the close auction regardless or rate, this keeps rates low -> debt servicing low. They artificially depress yield to non market rates, without them rate go up because you have more price sensitive buyers who buy for returns. This increases borrowing costs, hence US debt repayment rising massively.
Type 1 buyers, i.e. US allies (and historically even adversaries) soaked up treasuries are now de-dollarizing / buying gold in lieu of _more_ USD. Type 1s underpin the "privilege" part of exorbitant privilege. The more they de-dollarize the more dollars become exorbitant, aka debt like everyone else. Type1, sovereign held 60% of USD to 40% in last 5 years. This large part of why interest tripled and debt servicing went from 350B to 1T in 5 years. Type1s exit to 20% in another 5 years and maybe interest goes to 5%, debt servicing 2T+. It's the difference between 10%/20%/30% debt servicing as % of federal revenue.
This not to mention USD reserve ticking down at 1% per year means meaningful changes in our lifetimes, and velocity may increase with developments like Saudi no longer locking oil to dollar. Less USD as % of global reserve = more network effects of alternate payment = increased potential velocity of USD reserve drop. This doesn't mean other currencies pickup all slack, i.e. central banks seem to be going in gold / commodities with no counter party risk for new storage. The net result is USD will still be around, in large volumes, but the cost/debt to sustain the system will be "normalized" while US budget is historically is built around USD debt being privileged. AKA difference between borrowing money from family vs payday loans.
>Nearly all commodities are still priced in USD
PRICED as in benchmarked in USD, but =/= USD is being spent to settle them. There's a fuckload of commodities where PRC alone buys 30/40/50%+ of global production, and while quoted in USD, increasingly settled in rmb/CIPS, bilateral currencies, BRI infra or other swaps mechanisms that bypasses USD. This one of the largest source of dedollarization - PRC went from single digit % to plurality of cross-border settlements in RMB/non USD. Though this is just very recent leading indicator that USD is functionally circumventable.
There is another type of demand that I rarely see mentioned. Not only does the United States owe trillions of US dollars, other nations do, as well. They hold many trillions worth of loans denominated in US dollars. They must be repaid in US dollars and not in any other currency.
And not just to the United States but to other nations, as well. South Africa owes US dollars to Australia, Australia owes US dollars to Brazil, Brazil owes US dollars to Argentina, etc.
These nations are hungry for every dollar we print. Even if every trading partner dropped the dollar for trade tomorrow, and if everyone who owned Treasuries all sold them at once, there would still be demand for US dollars to repay their loans.
The IMF made them an offer they couldn’t refuse, and spun a sticky web of a debt trap as a result.
IMO this one of those cases where dollars is ultimately benchmark than requirement, IOU/settlement forms can always be restructured/renegotiated if USD is no longer lender of last resort, i.e. alternative payment systems enables take it or leave it deals in medium/long term.
USD/reserve status snowballed because US controlled techstack postwar which US leveraged (along with military hegemony) to USD controlling primary energy (petrodollar). Civilization/modernity was locked behind USD. Money followed existential goods provider, that's the real USD / unipolarity moat. There's no take it / leave it from US company scrip because leaving eurodollar system = technical default (most usd loans hardcoded on newyork/english law) from eurodollar western financial system = death sentence. Once that lock/dependency erodes all kinds of force majeure geopolitics can rationalize breaking dollar contracts. AKA multipolarity.
If alternate techstack/payment systems pops up and reach tipping point, country A can just say to country B who only wants USD (due to alignment or whatever), I don't have enough USD, here's RMB & cips/Brics+ & mbridge basket of equivalent value. This geopolitical layer, if BRIC+ can offer fossil, food without US and PRC can offer renewable energy, capital goods, consumer goods, technology, including 80% as good semi and civil aviation... etc if chokepoint goods are no longer exclusively under USD perview, then USD enforcement mechanism simply dies.
If we're talking about loans/aid, IMF is really pittance, low hundreds of billions. It's why PRC is now using their 3T USD surplus to basically do their own shadow USD lending without IMF conditionalities... countries now don't need to buy USD from US. And somehow PRC currently lending / providing swaplines with their USD at lower rates than US treasury. Incidentally, this dollar recycling also lowers demand for new USD bonds, further reduce type1 margin buyers. This circles back to other nations own trillions of USD to each other... when you remove type1s, you're left with type2 private sector / non bank financial institutions - these are the buys where each USD bought increases triffin burden, i.e. they are the exorbitant curse / payday loans traps that makes USD reserve more expensive to maintain. Their demand is a trap, not a benefit.
> If alternate techstack/payment systems pops up and reach tipping point, country A can just say to country B who only wants USD (due to alignment or whatever), I don't have enough USD, here's RMB & cips/Brics+ & mbridge basket of equivalent value.
Alternate payment systems aren't even required for this. If other countries are trying to divest US dollars and country B is owed "US dollars" and country A wants to pay in something else, country B would want to accept the something else of equivalent value because it's trying to reduce its US dollar holdings and would just be immediately turning around to resell them anyway.
Conversely, if country B is insisting on US dollars for alignment reasons while other countries don't want them then that's only providing country A with the opportunity to divest its US dollars by using them to pay the debt. Then country B ends up with them, but now what is it supposed to do with them?
The real reason those sorts of debts result in stability is that all the countries owed a lot of US dollars are going to do what they can to prevent the US dollar's value from declining.
The end of 2026 was remarkably different to the world of today, and it that's logical it is - checks calendar - already 31 days ago. Now imagine another year of this.
> The end of 2026
Seems you didn't check you calendar hard enough ;)
hah! it was 6 am after a long night of hacking...
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Check that calendar again.
That number has been dropping by a percent every year for USD over the last 10 years. It used to be 65% USD in 2015
Sure, and in 1992 it was 46%, and in 2000 it was 71% and in 2013 it was 61%.
USD foreign exchange reserves have definitely declined from their peak, but by “declined” we’re talking about going from “overwhelmingly dominant” to “merely dominant” to potentially in a few years “equal to every other foreign currency reserve in the world combined”, and maybe USD foreign exchange reserves will decline even further beyond that point.
There's some major historical events here. It's not just random movement. Here is a sort of visualization of key points and the USD share of global reserves with the events attached. The number in percent is the USD share of global reserves.
1970 (85%) - Up until 1971 [1] the USD was backed by gold by the Bretton Woods system. Other countries could trade USD in for gold at a fixed rate and in exchange would peg their currencies to the USD and trade in the USD. The idea was to prevent the US from ever being able to exploit their power in this system because if we printed too many dollars other countries could just hoover those dollars up on the cheap, convert them to gold, and make a bunch of money. Nonetheless we did print excessive amounts of money and abuse the power this system was granting us. So France dutifully hoovered up those dollars and made a gold call. We said 'nah', defaulted on our debts, and withdrew from Bretton Woods. This led to the famous quote from Nixon's Secretary of the Treasury: "The dollar is our currency, but it's your problem."
1990 (47%) - Following those events, the USD began seeing rapid inflation, and other countries were rapidly dropping the dollar. This 'peaked' around 1990. But then in 1991 the USSR collapsed. This not only left the US as the undisputed and sole 'king' of the world, but also led to these former nations beginning to dollarize once the dust had settled. The USD suddenly again starts to see mass adoption.
2001 (72%) - The adoption reaches its peak in 2001. At this point not only was there the dotcom bubble, but the world order begins clearly shifting with China and Russia developing increasingly rapidly and looking to become viable world powers once again. And there's been a gradual process of de-dollarization since then declining to where it is today to less than 57% and very much trending to where we were right before the USSR collapsed.
2025 (57%) - Where we are today. We're very much trending towards 1990, only 10 points away, which is the level when everybody was dumping the USD, the US economy was shaky at best, and there was another major superpower in the world and nobody was quite sure who would 'win.' This is far more significant than 'random noise' you're implying.
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I am leaving out plenty of relevant happenings including the transition to the petro dollar, South American economic crisis, and so on - but these only contribute to eras I think, while the above are the main drivers.
This time is already different. It's way past the point where the US is unfriendly towards the western world
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.
I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
There is no plan. There is just chaos.
It also increases profits for multi-national US companies since they get paid in other currencies, which they then convert to dollars locally. Basically, they have favorable FX tailwinds.
Who is that "we" backed into corner? USA as such certainly not.
Maybe you mean "pro-democracy anti abuse" people? Those yes. But administration and far right are not in corner. They are in full active act achieving exactly what they wanted.
The "Mar a Lago Accord" plan [1], for those curious. The US debt is one major rationale behind the strategy.
It's a dangerous plan that relies on keeping allies happy and re-establishing hegemony via a Plaza Accords / Bretton Woods 2.0 type system.
It's not going to work if you simultaneously piss all of the allies off.
It's a flimsy back-filled rationale thrown on top the mercurial (and often sadistic) whims of an American Caligula, so the elite enablers can pretend there's something rational - or even good - about the chaos and destruction they are supporting.
There isn't. It's just chaos and destruction.
What scares me is that lots of American believe there is a plan and that the current administration is competent
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Economic crashes are hard to predict. In the end stock markets are a bit irrational. They don't crash just because there are good rational reasons. And then some irrational thing triggers a mass panic when you least expected and the whole thing crashes.
The circumstances and timing (it's been a while) suggest we are probably closer to a crash happening.
From a loan/interest point of view, the dollar de-valuating a bit is actually not a bad thing for the US. It stimulates exports and inflation. And at the same time that reduces the value of the debt (and that is paid in dollars). The downside is that inflation going up usually also means interest going up. And Trump resisting that because he wants to accelerate the economy might not be a good thing.
The big picture here is oil. The world is slowly moving away from oil as the key driver for economies and paying for it in dollars. China is well on its way electrifying large parts of its economy. To the point where it is starting to import less diesel. And they border on Russia with whom they trade in Yen, not dollars. A world that is going to trade less and less oil is going to be less dependent on dollars.
I'm not an economist though. But planning for some kind of crash/correction seems prudent.
> Economic crashes are hard to predict.
Some of them are, some of them aren't. An economic crash is pretty much guaranteed if international relations break down in such a way that international partners believe trading with the US is a liability. Dollar going down won't stimulate exports if the cause for it was an aversion to buying US products in the first place.
Whether or when that will happen, and to which extent, is another story, all we can say is that the momentum created by the current US administration moves us closer to that point. Will they come to their mind before that happen? Will they be able to restore trust? Will the lingering effect from the damage already done subside? These are hard questions.
De-dollarisation is happening, but slowly. China has decreased its US treasury holdings by about 7% a year over the last five years [1].
It won't happen quickly because no-one would want to tank the market while they're selling.
> The US economy depends on the country's position of world hegemon
Unfortunately, the data doesn't back this up. The US economy is actually one of the least trade-dependent nations in the world.
27% of GDP is trade-oriented (The value of imports and exports as a function of GDP), while the global average is 63%. The US is so developed, that even if the country was completely cut off from the world and operated as an internal economy it would still remain the world's largest.
That's mostly a result of you using percentages rather than dollars and the US being one of the largest countries. 27% of US GDP is 165% of Germany's GDP and Germany is the third largest economy in the world after the US and China.
Become a hermit kingdom to own the libs.
At a certain point we have to ask: what is the point of politics? Who are we doing all this civilisation stuff for? Is a nation an engine of prosperity to enrich the lives of its people, or a life support system for the Dear Leader?
Nonsense. If 27% of GDP is suddenly gone, how US economy could be the largest? (rest of the world can substitute US trade between itself)
The US Economy is 53% larger than the next largest, China, in terms of real GDP (Not fake PPP nonsense). 28T vs 18T.
How is PPP "fake"? Nominal only matters specifically for trade, which in this hypothetical is the thing the USA is expressly failing to do.
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Can US debt be seen as equity? We mint equity from times to times, do buy backs, allow people to tokenize it to pay with it and so on...
>The US economy depends on the country's position of world hegemon
no it doesn't.
it's much closer to "you need the best economy to be a hegemon"
This is one thing I've heard repeated - that USD needs to be spent in America - seems like other countries could just transact with it directly.
They can and they do; that's called dollarization.
It's worth observing that dollars that are never supposed to return to the US don't have the same anti-counterfeiting pressure that dollars spent in the US do. I don't know how much of a market there is in counterfeiting USD for dollarized economies.
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> The US economy depends on the country's position of world hegemon
Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
The trillion dollars a year pumped into the military support the stock prices of quite a few highly-valued companies. A sudden collapse of hegemony would be bad for "the market", but that seems unlikely unless WW3 actually kicks off instead of a few more rounds of opportunistic snatching and bullying by the big countries, and in that case few people would care about the stock market.
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world.
The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India?
Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
> I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
Yeah aren’t they just Leninist but using us as a signal of what to make? I thought rough shape of the scheme was you get to build a factory using free loans in bullshit money that buys rice and apartments but can’t leave the country, then use that to get real money you can take elsewhere by making shit Americans want to buy. You can’t trade the bullshit money for real money without the factory step.
> 'this time it's different'
I remember reading this a lot in 2000-2001 and 2007-2008
That said, overall I sort of agree with your assessment except for having any optimism that the US changes course.
The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct.
Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
>Trump has no ability to admit mistakes even to himself
Whatever happened to 'TACO'
Still, he'll be gone one day and I am going to be all in on that day. It'll all be hockey-sticks from that moment on.
How much of America’s growth since the 40s is attributable to its hegemony, stability, and the emergence of USD as the reserve currency of the world? And where other developed, stable nations started dropping in population, the US continued growing thanks to immigration and its center as a research Mecca.
All of those are being unwound as we speak, and it’ll take decades to prove to the world that any trade policy and government agreements may be kept longer than 4 years.
>growth since the 40s
The US growth trend has been fairly constant since the late 1800s. There's no real discontinuity in the trend around the time the US become hegemon.
Part of why Switzerland is so stable is because of its neutrality. Switzerland doesn't have to deal with Russia interfering in its elections the way the US does.
The US became the wealthiest country on a per capita income basis in the 1880’s, over taking the UK.
The US was quite isolationist up until the end of WW2, so I’d argue global hegemony isn’t that important when it comes to economic performance.
What about the Spanish American war (1898), the Philippine-American war(1899), and World War One (1917)
He'll be gone. The trust in the US won't come back. If your constitution and political system allow such a moron to wreak so much havoc in such a little time, why would we ever trust you again?
Trump, yes. The millions of people that voted for him multiple times despite no shortage of reports and credible allegations that he was a scumbag... Will not.
Trump isn't the problem, he's a symptom.
What you're missing is that America was always like that. And it's been extremely successful. For sure there have been some changes in social dynamics, not just in the US, but worldwide. But the recipe that made the US successful has not changed much. Market economy, geography, attracting talent, innovation, freedom.
>Market economy
The recent massive increase in the US governments direct and indirect involvement in business decisions changes things.
Trump is pushing/forcing countries and companies to invest in the US. He's added more restrictions on who they can sell their products. New significant widespread tariffs also exist that forces businesses to decide on how they can handle it while being pressured not to raise prices.
Government involvement in business decisions, even if indirect, is not a market economy. In a true market economy supply and demand should determine prices and businesses and consumers make the decisions on their respective side.
There's also background pressure on businesses to avoid angering Trump and this affects their decision making process.
>attracting talent, innovation,
Trump raised the fee for H1Bs, blocked student visas from 19 countries, and revoked 100k visas for people who were here as students, business reasons, vacation, and other. He also is removing legal status from many groups.
His inflammatory rhetoric and actions have harmed the international reputation of the US. There's also a prevalent anti-immigrant mood in the US and a much smaller
This decreases the pool of people who can choose to come here and for that smaller amount it increases the probability that smart and innovative people may look elsewhere to either study or start a company.
There are also those that had legal status, lost it, and must leave. These are another set of groups that could have contained some talented and innovative people.
Talented immigrants have done so much for our economy and standing in the world.
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He cut government funding for many scientific research endeavors and government programs. These may or may not be replaced by private industry. It's justified to cut waste as government spending is a problem but speed and extent of the cuts makes it questionable if a proper assessment was done.
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I'm sure you can point to similar actions in the past but I believe the quantity, speed, and intensity are significantly different than in recent times.
I'm also not arguing that some changes weren't justified. I just believe it's a clear change in the ingredients for the worse.
> Government involvement in business decisions, even if indirect, is not a market economy. In a true market economy supply and demand should determine prices and businesses and consumers make the decisions on their respective side.
This is true but not a novelty. The US has been doing all kinds of things to harm its markets for decades, e.g. artificially constraining the housing supply, using tax incentives and manipulating interest rates to goose consumer spending and in the process drive up consumer debt, and let's not even get into all the ways it molests the healthcare market.
That isn't to say that they're good -- those markets are very messed up -- but things like this are bad, not new.
> Trump raised the fee for H1Bs, blocked student visas from 19 countries, and revoked 100k visas for people who were here as students, business reasons, vacation, and other.
The H1B program has been widely abused for a while now and in general the US is in need of significant immigration reform. Many of the things Trump does are stupid, because of course they are, but the general premise of "hey wasn't this supposed to be for researchers and scientists rather than mechanic-level IT work" seems to have something to it here.
You can't say we're importing the best and brightest while also doing everything possible to make it so that someone who is a doctor in another country with a world-class medical system has to basically start over from scratch in order to be a doctor in the US.
And then people will have much to criticize about what Trump is doing. But okay then, so do something better instead of all the doing nothing that was happening before.
> It's justified to cut waste as government spending is a problem but speed and extent of the cuts makes it questionable if a proper assessment was done.
It clearly wasn't. The problem is we need some kind of structural reform -- a system that doesn't allow wasteful programs to accumulate and increase in number over time -- but that would require a functioning Congress, which has instead been doing everything it can for decades to abdicate their role to the executive branch. Which has term limits and therefore the attention span of a goldfish for those kinds of structural problems, and then we end up back in the situation where either no attempt is made to fix it or the attempt is amateur hour because it's attempting a contextual fix to a structural problem.
The rest of the Republican Party is completely devoid of charisma, especially the kind that drew so many voters to Trump. There is no drop-in replacement.
Lots of money will be spent trying to manufacture a replacement, though. That will be fun to watch. If you thought the last-minute rally around Kamala was tough to watch…
Isn’t the VP generally the shoe-in nominee? Vance lacks charisma and gravitas, but he only has to be better than the Democratic candidate. For every Bill and Barack, the Democrats have also given us a Kamala, Hillary, and Al. Never underestimate their ability to pick a loser.
But what the republican party has, is a lot of isolationist voters who cannot be moved by appeals to markets or international trade. They don’t care about that stuff.
Sure, the republicans will look hilarious trying to replace Trump for a while … but those Americans aren’t going anywhere and will gladly vote for the next Trump whenever they show up, same as they voted for Reagan and Bush II.
The American attitude driving this current period is much deeper and wider than one man, and people thinking it will all go away when one old man steps down are going to be “surprised” when we’re dealing with this again in ten years or twenty years or three years.
Don’t get me wrong, I’ll be the first to jump up and say there’s a deep cultural rot in America that, if it weren’t for the fortune of incredible financial success, would have us be seen as a hellhole of antisocial maniacs.
That being said, I just don’t buy into the notion that the strategy of the party from 2016-2024 (maybe 100 Trump rallies per year?) can carry over into the late 2020s / early 2030s.
If anything, this is me saying everyone is aware that the current window for reactionary politics in America is closing as Trump loses his vigor and gets closer to being too old to do what he did between 2014 and 2024. The reactionaries in the government and behind the scenes may make one last desperate grab at maintaining power.
The weird cousin of "This time it's different": "That time was different"
That's not the point: the point is America did this twice. The world is not going to deal with America radically flip flopping every policy position every 4 years, and escalating that every time.
The US has just finished (maybe?) threatening to invade a NATO allied country. The occurrence rate of that has gone from "never" to "at least once". The delta change on that is infinity: there will never be a world in several generations where that is not a strategic risk the world has to deal with every 4 years.
> That's not the point: the point is America did this twice. The world is not going to deal with America radically flip flopping every policy position every 4 years, and escalating that every time.
I’ll admit, I’m becoming confused about the point of our back-and-forth.
All I’m trying to express is that probably by the end of 2026, and definitely by 2028, the people who are trying to enact reactionary change (Stephen Miller, PayPal Mafia, Heritage Foundation, etc.) will have to adjust their strategy. They are losing their charismatic leader, if not because of constitutional limits on presidential terms, then by his very obvious reduced vigor (he will not be able to do 100 rallies in a calendar year again).
On the world stage, yes, America has stumbled. Maybe even worse, some international folks are realizing that the America that they thought existed was just a Hollywood mirage, and that we were always one recession and a few thousand votes in Florida from becoming a global pariah.
Can't all that be solved by posting ICE guards around all polling stations?
There's no law of nature that proves democracy can't be overthrown, but ICE is currently struggling against popular resistance to merely enforce immigration law in a single medium-sized city. Right now there's not much indication they have either the desire or operational capacity to pull off nationwide voter suppression. (And a number of special elections over the past year have defeated regime-backed candidates without ICE involvement.)
If they tried to merely immigration law, they would had no issue.
They were successful at creating fear and making conflict avoidant people stay home. Despite large amount of protesters, that is real effect.
And it would create real vote suppression. You would had people not voting out of fear. And the opposing side having less votes (even if they win, they win less)
I think JD Vance has plenty of charisma.
Wait. Do you really think that or are you being sarcastic?
Definitely an odd duck out in the context of Trump, Obama, Bush II, Clinton, Bush, Reagan.
Also remember it’s not just being charismatic, but charismatic enough to keep people distracted from increasingly unpopular reactionary politics that defy even conservative beliefs (e.g. gun control, speech policing, deficit spending, plenary executive).
Gun control (for minorities), speech policing (for liberals), deficit spending (when they are in charge), and a plenary executive (when Obama isn't president) are core conservative beliefs.
They say that they don't like those things, but you can't listen to what politicians and talking heads on TV say. Politicians and talking heads lie all the fucking time. You have to look at what people do.
They aren't stupid in not understanding the hypocrisy.
We are... for thinking that they don't know that they are hypocrites.
No, Trump getting elected twice is the exact reason Fox News and the like were created.
Trump is president because:
- the absolute failure of the left and the press to address Biden’s cognitive decline.
- Democrats deciding to die on the “trans women are women” hill.
The marginal Trump voter did not very much care for Trump.
I agree that the Democratic party has fumbled the ball (over and over) and deserves a lot of blame for where we are now, but all of the trans talk in 2024 was driven entirely by the right.
The Democratic party wasn't talking about trans people in 2024 (if anything the Democratic campaign was conspicuously avoiding the conversation entirely). The trans "debate" that people remember from that time period was driven entirely by right-wing ads and social media.
Obviously this is a pretty successful strategy considering how many people falsely remember who was actually talking about this.
2024 Democratic platform [1] word counts:
men: 4
woman/women: 86
gay: 3
transgender: 8
They slit their own throats by ignoring half of the voting population.
It's true, the Democratic party found themselves in a bit of a pickle during the 2024 election. But it's because the party has been obsessed with the trans culture war for over a decade, culminating in the Biden admin's demands that all womens' spaces be opened up to men who self-identify as women. Prisons, college dorms, sports teams, school locker and shower rooms... there is no place or program that a male wouldn't be able to access the instant he said he was a woman. These principles of self-identification and gender identity as a protected characteristic were being enshrined in government rules and regs at all levels, from Title IX, HUD, Department of Corrections, to countless state and local rules.
Remember Kamala telling the ACLU in that she would provide taxpayer-funded gender affirming surgeries to illegal immigrants if elected president?
If Democrats really didn't want to have that debate you mention, why do they lean so heavily into the trans stuff to begin with?
> the Biden admin's demands that all womens' spaces be opened up to men who self-identify as women
> there is no place or program that a male wouldn't be able to access the instant he said he was a woman
I find it refreshing to see this stated so plainly and without euphemism. It really does lay bare the insanity of this policy.
They talked about it because they knew the median voter disagreed with the Democrats.
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No, it's because Obama disillusioned the left, and Biden just hammered it home. Those who thought the Democrats could actually represent the "big tent" have all been disappointed over and over again by sheepdogging and ignoring popular issues with bipartisan support in favor of corporate interests with only an occasional performative nod towards liberal ideals. That's why the right showed up to vote and the left stayed home.
Biden was by far the most effective and most progressive Democratic president of the post-WWII era.
What "hammered home" the disillusionment was not Biden's actions*, but rather the media narrative built around him, particularly by the newspaper most identified with the Democratic Party: the New York Times. They were angry that he didn't give them deference early on, and that, combined with the desire of their wealthy Republican owner to push his politics, led to the constant drumbeat of stories about Biden's supposed "cognitive decline", when he's still much sharper than Trump.
ETA: ...not to mention totally ignoring all his very real accomplishments, like forgiving the student debt of millions of people (yes, despite not getting as many as he wanted, he really did achieve that) and the infrastructure bill.
* His inaction, particularly on prosecuting Trump, was a separate matter.
Yes, and also pushing identity politics down voters’ throats, selecting an inept candidate without a primary, their desperate attempts to buy votes with debt forgiveness, and opening the border, which escalated to a full-blown crisis leading into election season.
If we extrapolate Trump’s health today compared to where he was at just a year or two ago, I think Republicans will face the same dilemma the Democrats did soon. It will be interesting to see how they handle it.
But cares about something that has zero effect on them? Trans? How many of them know a single trans person?
Like somehow that's a huge thing for Trump voters but a crashing economy is not?
Lots of people know trans people (by which I mean people that have decided to take some visible action to transition) by now - the people in the boonies and flyover states have access to the same internet as everyone else, so a lot of people outside the most progressive cities have transitioned. You have to remember that trans had been at the front of the culture for 10 years (since Caitlyn Jenner) by the time of the 2024 election.
The stocks didn't really go down yet and their media sources are distraction agents.
Crashing the economy? In the past year the S&P 500 rose 14%, unemployment is at 4.4%, and inflation is around 2.7%. There are many things to criticize Trump for but the economy has not actually crashed.
The S&P 500 rose 1.04% in EUR terms only. That's basically nothing.
Of the 14% in USD terms 13% evaporated because he crashed the dollar compared to all other currencies (EUR, GBP, CHF, AUD, whatever)
Trump ran on an explicit promise to bring down grocery prices on day 1.
Grocery prices have continued to climb.
Absolutely nothing he has done could remotely be said to be aimed at bringing them down.
He has also instituted massive attacks on the power of labor, and on the offices that report on things like the unemployment rate.
"The economy" is not just the stock market; unemployment numbers literally cannot be trusted coming from Trump's BLS; and an inflation of 2.7% is, in fact, fairly high (it's 35% higher than the "target" rate of 2%).
Its standard Republican playbook.
Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy.
This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support.
A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors.
Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too.
[1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
"Soak the rich" laws were passed around a hundred years ago in the US in response to obscene wealth; worked out pretty well for a long time before they got rolled back and we got a new round of oligarchs.
> I dont think AI even factors in to this.
I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward..
AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
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Trump famously bankrupted 3 casinos. The US economy will be the 4th.
He bankrupted 4 casinos. 2 in one swoop.
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> Here’s the current price of silver.
Not shown on the chart (and which couldn't have been predicted at the time of writing) is today's crash of almost 30% in that price.
Speculative bubbles happen. The narrative of people losing faith in currency made no sense, because that should pump the prices of durable commodities as well, if not instead of precious metals.
Once the supreme court decision about Trump went out, I took all of my investments and put into a savings account.
When a dip happens, I simply take 10% of the money, buy the dip, then sell when the price hits pre dip.
So far Ive netted significantly more than any of my peers that actually do investing.
So if you had a pension mostly in all world indexed funds, you'd switch them over to "boring" investments like cash.
Interesting. Do you buy indexes, or ?
I don't see 30%. Maybe 12% from the very recent top, back to wherever it was just a few weeks ago.
There has been significant recovery in after-hours trading, but check out that "day's range". The low point was around 1:40 PM EST.
>There has been significant recovery in after-hours trading
After hours has been flat. I think what you meant to say is it recovered a tiny bit from it's regular trading hours low. It's still down over 25% on the day.
I know it was recovering in the afternoon, but I didn't think it got to ~85 by the bell. Maybe I misremembered. It doesn't help that SLV is close to, but not equal to the price of 1 oz.
it was at 120 and now it's at 85. yes it's back to where it was a few weeks ago
Why do people say this… ok so you buy at 120 and now it’s back at 85, no big deal that’s the same as a few weeks ago!?
yes, that is correct.
most people are long on silver and gold. who cares if there was a slight correction.
I bought the bulk of my silver in the $20-30 range and am still buying. I bought on the way up, I bought at $120, I'll buy at $85. The price at the time I buy really doesnt matter to me. Only when I sell will it matter.
I hope to cash out and buy ~150 acres of land with it to hunt on and live on.
Clearly very few people were buying at 120 which is why it fell back to 85. It's a highly volatile commodity. Commodities markets go through booms and busts all the time and you never even hear about most of them.
My bad. I placed a small buy at around $120, afterward it immediately tanked. Sorry folks!
For clarity: that is sarcasm.
What is different this time? Maybe:
1 Online shopping market in the range of 5 trillions
2 Electricity and energy price raise
3 Impossibility to lower interest rates
4 Tech market also in the range of multi Trillions
5 Global education and power expansion ...
Meaning that a % of all this money flow goes private pockets destroying medium class, which gets poorer.
It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes.
The real question for an economist is how much ram has the system and how much the memory has leaked?
you can couch it in tech metaphors but there is a clear path forward and it involves eating a certain class of people
You don't have to eat them. You just have to erect significant barriers to hoarding wealth, particularly in off shore devices, and you have to create constant pressure to ensure that stored wealth is best re-invested in the economy at large.
These aren't even hard problems. Until you meet someone in Congress. Then it suddenly seems hopeless.
>and you have to create constant pressure to ensure that stored wealth is best re-invested in the economy at large
I have no idea if this is true (I've asked economists-in-training, they say they'll get back to me), but I've read that the huge increases in tax rates on high income during the war was less to generate revenue (tho more revenue was certainly a need - there was also a growing focus on growing the number of people who paid taxes, which prior had been quite small), but more to ensure profits were not realized and instead kept invested in the economy and the war machine.
A kind of practical "hodl" to keep the wartime economy stock with reinvestment - or really to discourage removing money from industrial investment - to benefit the war-time economy.
Would like links to things to learn more about this line of reasoning.
ensure that stored wealth is best re-invested in the economy at large
Pretty sure the vast, vast bulk of wealth held by the richest US households is indeed “reinvested in the economy at large”.
Where do you think it is instead?
Supporting companies that profit off of misery, reduce human meaningfulness, those that innovate the surveillance state; why is it so hard to support policies like giving US school children free breakfast + lunch, medicare for all, public housing, universal childcare, federally mandated paid time off, universal higher education + vocational training, and a public jobs program (all things that have 70-90% voter approval across party lines; the new deal coalition literally had control of both houses of Congress for nearly 60 years unabated)? Programs that would literally unleash hundreds of trillions in monetary + societal benefits, why should the US population care about the wealth of the few compared to what we can do to provide meaningful lives collectively?
The idea that less than 100 people in the country have some sort of mandated right from the devil to dictate the direction of technology in our country should fill every single decent human being with disgust.
We must correct this. The fact that several hyper scale data centers could provide US school children free lunches + breakfast for a year should be the first immediate sign that something is deeply wrong with our country.
Isn’t hoarded wealth a no-op? It just reduces the supply of whatever they are hoarding.
Would the people benefit from redistributing the things they are hoarding? Corporate stock that pays little to no dividends, mainly? It’s not like they are hoarding wheat. I don’t really get what people think will happen if we redistribute the stored wealth.
All wealth is, is a claim to direct labor and materials, the magnitude of which is relative to the total amount of wealth competing to direct those at present. If some portion of the wealth is locked away, the labor and materials are still being deployed, just the total pool of wealth competing to direct them is smaller than it would be otherwise. Unlocking wealth does not actually bring more stuff into existence.
Now, it could redirect labor and materials used to built yachts or luxury homes into more practical goods. But my impression is that the labor and materials used for those things are minuscule compared to the overall economy, and most of the wealth of the very wealthy is not actually used for those sorts of things.
>> Isn’t hoarded wealth a no-op? It just reduces the supply of whatever they are hoarding.
It’s not. Wealth creates political power, which the wealthy wield to stack the odds in their own favor at the expense of everyone else.
Is that the topic of discussion? I thought it was something along the lines of “tax the rich so we can do things with the money”. That is the area I’m saying it is a no-op in. Statements without context frequently don’t mean the same as what they mean with context.
Big problems are solved by years of investment and good decision making.
Unfortunately, going after causes or correcting symptom in any kind of hurry acts as a massive destabilizer at exactly the moment systemic destabilization provides the motive/momentum for taking action.
Hard course corrections at critical pressure, in a complex system, is a value destroying reset.
Companies can do this. Mass layoffs, capitalization sell off, etc. And then recover over time, because the rest of the economy around them is mores stable and the pain gets diluted. Entire countries doing this doesn't work out so well.
But it would appear, that may be the path we are most likely to take.
They say that prediction is difficult, especially when it is about the future. Unwise economic policies may be punished quickly, slowly or might be revoked before punished severely. The question is how much risk one is willing to take. Another matter is of morality. Being invested into something means supporting its practices and being partly responsible for them.
If you predict a stock market crash every year, eventually you will be right one year.
A declining dollar will look like a good economy for those who think the economy is the stock market.
From an EUR perspective the s&p500 has flatlined over the past year while the msci Europe is up by almost 30% in eur terms.
Needless to say, as an outsider from the inflation bubble, American stocks are not a good investment.
There is a good reason to believe that us stocks will not outperform in inflation adjusted terms over the next 10 years.
This is true - all the global multinationals that essentially make the US stock market earn a good portion of their revenue in foreign currency, so their revenue and profits will increase.
In addition, they are all cheaper when priced in USD, so their stock will go up regardless.
This is just counting short term effect of currency devaluation. Long term there are also effects around trade balance and jobs.
Declining USD makes US exports more competitive.
Private equity and retirees with everything in a 401k.
Also, increasing billionaire wealth and burgeoning (but somewhat circular) market capitalizations of companies will seem like a good economy while real income and wealth for the bottom half of Americans keeps falling. The mainstream business media is a gaslight factory completely ignoring the ever-widening K-shaped economic reality that there's a very good economy for the highest income people and a rapidly declining/terrible economy for everyone else.
If you predict a crash every month and it happens after 2 years... can we call you a visionary?
I know the question is tongue-in-cheek, but I think it’s a fascinating question, so I’ll take it seriously. If you predict the crash and it happens two years later, i think you basically cannot profit off that guess, so I’d say no. Although i haven’t provided data for the two-year claim, there certainly exists some period N for which the prediction no longer pays off, given a fixed drop. But if you can predict it 6 months in advance, you probably could profit! I think a certain amount of annoying repetition is fine for profitability.
Yes and thank you in advance
ZeroHedge has correctly predicted two hundred of the last two recessions ;-)
ZeroHedge can stay irrational far longer than you can stay sane.
There's a real estate YouTube channel that's been calling for a real estate downturn for like 8 years (pre-Pandemic). Eventually they'll be right.
Maybe simultaneous with the crash of the Chinese economy, which was predicted for 40 years now
I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come.
Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs)
There were worries that they'd issued a lot of debt to build real estate that wasn't needed resulting in ghost towns and people thought prices would fall and the banks lending would collapse but they seem to have managed ok. The Chinese actually seem quite smart at managing their system.
They managed okay up until now because the Chinese gov takes a ton of revenue directly from their industry. They have very low income taxes on the public and instead make a lot of money from their huge state companies and investments in their manufacturing, industrial, and tech businesses which are still booming. That helps offset the losses from real estate, which they also make money off from land sales. They act more like a giant bank than one that simply taxes and spends.
But their fiscal deficits have been growing quite a bit, particularly their local governments and they've had some pretty bad deflationary issues recently.
The Chinese economy is indisputably strong and real, but rumor has it that its reported growth numbers have been inflated in the last couple of years. And why wouldn't they be - there is an autocratic government whose justification is that what they are doing is increasing economic success. No success is not an option.
Yeah basically every single academic and economist knows the Chinese government lies about its GDP numbers and pumps out fake stats. Its the Chinese way.
Personally I'm less and less inclined to believe in capitalism and money as a concept - we've long past moved the concept of money as universal barter, and into strange and speculative theories about how things ought to be valued, with the most valuable things either emerging from immediately unclear value propositions (impossibly valued companies, high-paid jobs that seemingly dont contribute to society) or artificially created shortages (housing, overpriced infrastructure projects due to government regulation and meddling).
If for example, BYD makes a car that's substantially similar between the China and Europe versions, and sells said car for $15k eqv RMB in China, but $30k in the EU, it makes double the revenue for the same 'value'. Even the argument of the EU being generally richer, and thus the car having higher monetary utility doesnt hold - a well-paid EU surgeon wont pay more for it than your average office worker.
So I feel money is increasingly a poor proxy for actual value/wealth etc.
A bottle of water in the desert and a bottle of water in your fridge don't have the same value.
That's only because, for some reason, people have conflated the words "value," "price," and "cost" until the terms are indistinguishable.
But politics isn't involved.
The point of tender is to represent value.
Your water in the desert costing 100 times what it costs where it rains is meant to represent its scarcity here vs over there.
Take cuban dollars vs normal dollar. In there the two tenders aren't proxy for value. Proxy for a political control so that the wealthy visitor pays 10 times, for the same bottle of water on the same shelf.
We are hoarding money to buy many bottles. The chinese are making and filling it while drilling wells that dont seem financally viable. They spoiled their entire bottle buying budget on that? What dumb communist central planners.
Much of the difference in the BYD cost is accounted for by a 27% tariff on the cars, transport and increased costs for warranty and compliance certification costs, as well as likely subsidies in the domestic market.
Of those, you’ll see that only transport costs are a function of “capitalism” the rest is government.
Economists account for the divergence you're describing with a concept known as "purchasing power parity", which does indeed result in a 2x adjustment in Chinese wealth. The intuition is that market exchange rates combine a number of things beyond the purchasing power of comparable goods. For example, if you have a 30 year horizon it makes perfect sense to trade 1 car worth of RMB for 0.5 cars worth of GBP: with the GBP, you can buy a government bond at 5.29% instead of 2.26%, and even with no reinvestment you end up with 1.794 cars worth of GBP vs. 1.678 cars worth of RMB.
Great website, not going to downplay the problem, but you can check out other countries, and see that a lot of places - particularly in the West - are f*cked. That China is too, is not much of an upside, Honestly its kinda shocking how bad things are going to get, and Im not sure what can be done if anything at this point.
China is probably the among the best countries in the world to handle so-called "demographic collapse". Elders are relatively healthy and multigenerational households more common. Leader in robotics. News flash: you don't need a billion hard-working peasants in 2026 to be productive.
People in general don't seem to look at how much "productive" population you need in the real economy to support a given population. Things look pretty fine by those metrics and if the AI claims are to believed about to rapidly get even better. How to motivate and compensate that small number of people in the real economy that supports human welfare is a different question.
Also people appear to be blind to the real material limits that really start to be pushed by large populations. You could end up making life materially worse by trying to "fix" the demographics by adding more humans.
This is a profoundly important - central, even - issue that I am very surprised to not see widely understood or acknowledged.
China is in a life-or-death race against time. A good number of their decisions are explained when viewed through this demographic implosion-bomb they are facing.
The same can be argued for Russia. Many-- myself included --believe it's the #1 reason Putin decided to invade the Ukraine as its youth are seen by the Kremlin as "Russian enough".
Roujin Z shows Japan saw what's coming over 20y ago, already.
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Depends on your definition of crash?
Real estate prices dropped 30% blowing up most people’s savings. The debt overhang is slowly bankrupting various companies. Growth is an anemic 5% (should be double for a country with China’s per capita income) and means it will never enter middle income status. Unemployment, especially for grads is very high and the lack of babies or immigration means the worker base will shrink while the demand for social services will skyrocket.
Doesn’t seem great to be honest.
Crash of the stock market != crash of the economy
Of course the market will go down at some point.
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> which will inevitably lead to Germany leaving Eurozone at some point
No chance. Unless that happens after a lots of other countries leave
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
That's not an answer. Japan and the EU can't handle those flows so again there is no other place to go.
Even if it's hopeless, the best strategy when everything is falling is to bet evenly. Whether or not those countries can "handle it" doesn't matter.
You're not betting in winning, you're betting on minimalizing losses. Huge difference in behavior.
Yeah people talk about this as though US treasuries didn't have a negative yield for a considerable amount of time.
People were literally paying the US government to hold their money because it was better then the alternatives: the options can all be bad, but some can be worse.
> When has any deal with China worked at a strategic advantage for the other side?
Australia did well out of the Australian-China free trade agreement and then won the subsequent (Australian-caused) trade war.
Turns out being able to produce iron ore cheaper than anyone else and having plenty of alternate buyers when China bans imports means the iron ore price just goes up, Australian miners make more money and Chinese manufacturers get annoyed at Chinese trade policies.
Wasn't awesome for Australian lobster fishers though.
For a "little" speech, it is all people seem to talk about; e.g., it was mentioned few times in the comments above. And, yes, one can be on the board of a public company and still make valid and consequential analyses. Hell, one can be a convicted fraudster and at the same time become the president of a superpower. My point, you could belittle Canada, EU, China etc but it is going to solve the US's intractable problems.
ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point.
I'm not even sure what you're trying to say with the rest of it but this is nonsense. The ECB policy IS German, and has been for 3 decades. All of germany's economy is organized around the existence of the eurozone with Germany controlling a unified monetary policy.
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
What is a mess about the Eurozone and reckless about the ECB?
> The incentive structure at the ECB has become distorted and favors high-debt countries [that underperform or are risky]
> What is a mess about the Eurozone and reckless about the ECB?
Without opening the article someone gave has a link I can name a few...
Not respecting the promises to go down hard on countries not respecting a yearly public deficit of more than 3% of their GDP (France is nearly at 6% since two years and going down the drain).
Having a common currency created by ideologues, not economists, and having that common currency shared between countries that do not have the same fiscal policies.
Having a shitload of ultra indebted countries in the eurozone.
Having one of the country of the eurozone, even though the Euro is one of the youngest currency of the world (only 27 years old or so) who already frigging (partially) defaulted on its public debt.
(not I just read TFA)
Ah yup: the ECB heavily manipulating the various countries' public bond rates.
My bet is that the euro shall be one of the shortest lived currency ever. It was made by ideologues and is only loved by ideologues. Economically it makes zero sense to have a common currency between country that have both different fiscal policies and different levels of public debt.
Now of course the ideologues are going to argue that the EU should have a unique fiscal policy (with of course ultra high taxes for everybody, except EU public servants who pay the lowest tax rates in the entire EU btw) and a common public debt.
Not gonna work, komrade.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
Free market, but not like that (china).
The US was in decline, a vote for Trump was a vote to accelerate that decline.
Stocks might go down if AI doesn't bring in enough revenue. The real risk seems to be currency depreciation though. The USD is already down 15% this year compared to the Euro. I'm worried about what the next FED chair appointee will do. JPow has stuck to his principles so far.
> The USD is already down 15% this year compared to the Euro.
False in every sense possible. For starters, the year is only a month old. Second, it’s been pretty stable for the past 6-7 months, and is only down 12% from a year ago - not 15%.
> The USD is already down 15% this year compared to the Euro.
It's down 12% since a year ago, but that's largely a reaction to the tariffs. It's been fairly stable since July or so and has only seen a small dip (and partial recovery) in the last couple of weeks.
What do you think he will do, given he's one of 12 votes?
The admin wants to cut rates drastically. But the FED policymakers just voted 10-2 to not cut rates. So I worry the admin will try something crazy to force a cut.
I'm kinda new into economy crashes, was a kid in 2008, is there a way to protect of it?
I’ve been through several recessions.
Painfully I’ve learnt that you want to work in an industry that is largely recession proof.
Focus on industries that sell things that people need and will try to keep buying right down to their last buck.
Food, utilities, insurance. People don’t like sitting in the dark. People need water. People need to eat. People really don’t like living without insurance cover or to let cover lapse.
They don’t need Netflix, Disney+ or Prime. They don’t need Spotify. They don’t need training or e-learning. They don’t need luxury goods. They don’t need new motor vehicles. They don’t need holidays. They don’t need new iPhones or new computers.
Try and move now to an industry that has some security.
Investment wise diversification is key. Just pray that it doesn’t get so bad that banks start to fail.
2008/2009 I was working in healthcare and just got to sit back and watch the drama. People get sick and need their medicine no matter how bad the economy is collapsing.
Live like you're already poor, reduce all unnecessary spending, adopt an ascetic mindset to support this lifestyle. That way, when a collapse comes you'll be accustomed to living frugally already and you'll have all the money you saved by getting a head start already saved up to get you through rough patches with relative ease.
Now, when I say live like you're poor, I mean do it smart. Don't grocery shop at a gas station, do your necessary purchases in bulk (actually poor people can't or won't, but would be better off if they could.). Don't but the cheapest boots, but rather the best value. But when choosing how many vacations to take, maybe pick camping locally more often than exotic vacations. Eat simple foods, don't order out fancy stuff and get accustomed to such luxuries. Don't automatically buy the latest consumer toy just because it looks fun. Don't move into a nicer apartment just because you got a raise. You get the idea.
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
Why you could not refinance when the rates went to 0%? In the US a lot of people did that in 2009/2010 and then again during COVID
Refinancing and loans work differently outside of the U.S. what I don't remember is exactly how. If I recall, you can't refinance without paying
Well, you can go to another bank so that they can cover your mortgage and open a new one with new rates/conditions.
That you can do anywhere as long as you have a collateral/guarantor.
Prepayment penalties are illegal for the vast majority of loans that consumers can get in the US, which makes it a no-brainer to refinance any time the payment saving exceeds the cost of writing a new loan.
The Trump admin has floated the idea of allowing prepayment penalties in home mortgages, BTW.
Would you mind posting a link where Trump wanted to allow prepayment penalties? This sounds unbelievable.
Every home owner in the US would be against it (especially the ones who got their mortgages in the past two years at relatively high interest rates).
Crap, I was wrong. Bill Ackman is trying to convince Bessent to do it. So while it may happen, it isn’t coming from inside the admin.
One argument is that it could allow for lower rates, BTW. (This is true, it very well could).
And also, if it happened it would be for newly issued mortgages. Existing mortgages have language in the contract that you couldn’t just unilaterally change
How would prepayment penalties lower interest rates ? I really do not see how.
The same way callable bonds command a higher interest rate than non-callable do. If the bond holder can just decide that tomorrow it’s cheaper for them to pay off the bond vs pay me the coupon on it, it’s worth less to me as a buyer. I lose if interest rates go lower (bond is paid early) or higher (I am now holding a bond worth less than a newly issued one).
If you look through the bond market you will sometimes see bonds issued by the same company or agency both as callable and non-callable, the callable bonds are usually .5-1% lower even when issued on the same date.
Your lender definitely wants to get paid back, but they don’t necessarily want to get paid back right now. Because then they have a pile of money and they need to find something to do with it.
Consumers have a tendency to pay loans back early when the bank doesn’t have any more profitable alternatives. Consumers also have a tendency to NOT pay loans back early when the bank does have more profitable alternatives.
But you know that the first situation is worse for the bank than the second situation. So they do account for this, to a degree, when they give you a loan. In theory they would be willing to give you a lower interest rate if you gave up your prepayment option. In theory. In reality? Who knows.
Sounds right but another big factor is to get some predictability.
Demand for mortgage varies over time, regulations change. It's a long term product, banks like to know with high certainty that when someone signs up it will be X earned over a period, not maybe X minus we don't know over an unknown period.
They are in the business of capital efficiency. Lack of control makes capital less efficient, or at least more expensive to keep efficient.
Overpayments (in the UK) are often not allowed, when they are, the borrower needs to arrange it when the loan is taken, and for a fee.
Refinancing is a right, but the fine prints told borrowers at what penalty.
I remember the opposite, just before we left the ERM (European Exchange Rate Mechanism). Interest rates hit 15% and one of my colleagues was gloating about how he had just taken on a fixed rate mortgage. A few days later we left and interest rates plummeted.
Skill. Knowledge. At your age, your biggest assert is your future earnings potential. The more employable you are, the better you will make iduring and after a downturn. In fact, the highest skill folks tend to even profit from hiccups in the economy.
None of that is true. Not one word of this applies anymore. Being highly skilled means you're highly paid, which puts you first in line for cuts. Talent doesn't get you hired, networks do. "Future earning potential" is just nonsense words, you can't eat "future earning potential".
This advice is from half a century ago. The times have moved on.
Are the ones newer to the workforce just screwed or is there a way out? Kinda sucks that all this went down around 6-7 years into my tenure and it's just been a few years of scraping together freelance + portfolio projects to try and climb out of tbis rut.
(This might sadly be rhetorical given what I hear of '08, but perhaps there are new channels open to take advantage of. Or at least old channels to raise awareness of).
Newer ones are definitely screwed.
6-7 years of experience make you prime material for employment in the sw industry. Experience but not too expensive/entitled yet.
Have you considered applying?
Yes. And here I am nearly 3 yesrs post last full time, 9 years of exexperience, and still looking (feel free to read my struggles in detail below).
What do you recommend applying to? I work in games so I guess I'm playing on hard mode (especially in these times), but the common wisdom of "normal software jobs love taking game programners in" hasn't rung true this time around.
----
Life story: Laid off mid 2023. I took a few months off when I got laid off, but the last quarter of 2023 wasn't kind to me.
2024 got me some freelance work, so I wasn't out on the streets, but it was a complete circus of an interview racket. Honestly worse than my first job hunt out of college. Its bad when you feel deep down there was someone better than you, but when you go 5 rounds in with good vibes to hear... Nothing back? That's truly disrespectful. And it sadly wasn't a one off.
Then in 2025 I hit some medical emergencies so I needed to urgently find anything. So I found part time work outside of tech and made due with that as I paid down those debts. That totaled up to a part time freelance gig, a part time job, and a few (failed) attempts at some hustles over 2025 only to end up making maybe a third of what I made back in 2022.
Now it's 2026 and I'll try again next month. My freelance work covers any gaps I would have had, I have a website almost ready with some personal projects to point to, and I'm overall more adjusted to the realities of this current market and will approach accordingly. I'm optimistic, but I know we're still in the thick of the weeds here. So I'll take any leads I can get.
Nothing provides complete protection, but diversification can help reduce the impact.
The person saying gold and mining stocks may or may not be correct - it's still a risky position. Precious metals could be in a commodity bubble right now (or not). It's had to predict anything with perfect accuracy, which is why diversification matters.
You probably shouldn't be jumping completely in or out of anything because that requires timing, which is also not easy to do. What you can do is change he weights withing your portfolio. For example, reducing your US equity exposure to increase your bond exposure. Or reducing your US growth exposure to increase your US value and Eurozone dividend exposure. It's best to listen to several financial companies reports to weigh what to do.
Your life should have a plan beyond tomorrow or the next hype cycle so that you progress towards your goals independently of the flow of society. This will allow you to navigate those flows instead.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Assets traditionally used for such hedge are already massively inflated (look gold an silver price charts), so I'm not sure it's worth it.
This all depends on what timelines you work on, how many assets you are trying to protect.
Alternatively you protect yourself by lowering your dependence on steady income.
Yeah, as a SWE I just got sufficient money to pay my expenses AND have some to invest quite recently (about 2/1 months ago), but I basically froze the money instead of investing because everything seems overvalued and about to fall (even silver and gold).
Be careful, I would not stay 100% invested or 100% uninvested. The market can remain in an Everything bubble for far longer than we expect (see: since 2008). It can be a lot harder psychologically to get back -into- the market when you're totally out because of sunk cost fallacy (thinking, I gotta wait just a little longer and this thing will finally crash).
I would argue that parts of the economy should (hopefully) remain healthy. I mean, AI bubble or not, people need medicine, food, internet access, energy, ... . Invest in that.
Also (not a financial advisor), when a crash occur there is a so called "flight for quality" where people move money they made by cashing out the assets to stable (A+ assets). So look for companies that have solid financials and can weather the storm.
Finally, diversify not only on the industry, but also geographically. EU, Swiss, Asian. I personally stay a bit away from emerging markets stuff as I don't have enough knowledge to make informed decisions (I don't even consider Emerging Market ETFs which should be run by SMEs).
Prices of investments will also go down - stocks certainly, although precious metals were traditionally recession proof, we've never had such a bull run on gold/silver in anticipation of recession. My guess is that it won't hold - I've heard that jewelers already refuse to take precious metals at anything near market value.
It's euphoria at this stage.
Ads from the World Gold Council are becoming very frequent, targeting consumers. That must mean something (looking for exit liquidity)
Maximize income and cash flow, when things start to crash, you want to have fresh new money coming in to start buying undervalued oversold assets.
In the meantime, keep investing to avoid eroding the value of your money as the dollar drops in value. It also prepares you for the possibility the crash doesn’t occur for a very long time, long enough to grow your net worth substantially to be better insulated.
It's difficult to draw many lessons from 2008. The people who suffered most then were over extended home owners. It's still not a good idea to be one of those people but there aren't so many of them now anyway.
A lot of people _need_ the S&P to stay where it is to keep their standard of living stable. If it drops to a rational valuation (say, 2500-3000), there will be a lot of pain.
Yes, you either marry into extreme wealth or hope that luck doesn't strike you into generational poverty. Anyone saying anything different is lying too you.
There's a common consensus in economics that bubbles are really hard to predict, and even some argument that they don't actually really exist. Great paper came out recently called "Bubbled for Farma"[0] which looks at predictability for bubbles and finds some indicators but no sure fire thing.
That sort of rules out an easy or known way to predict and avoid bubbles. That said, it's worth noting our current historic period marked by being post financialisation (taking out a bunch of investment regulation) of markets in the 80s exhibits a lot more economic crashes (the real reason we should car about bubbles) than most of history (although most of history also does not exhibit any economic growth, so be careful what you wish for).
In particular, the period between around 1930-1975 showed extremely high growth with almost no bubbles or market crashes[1].
So my semi-knowledgeable but definitely not expert view is that:
- Bubbles and crashes are not easy to predict, and therefore avoid
- That said, our existing market rules have effects on the number of crashes/bubbles we see (but there's debate around whether you actually would want an economy with less crashes/bubbles if that meant left growth)
[1] You can find this discussed a bunch of places but Ha-Joon Chang's Economics: The User's Guide talks about this very fluently.
Edit: I think your question might actually have just been about personal protection again bubbles, rather than protecting the economy as a whole. In which case, having margin in your spending so you'd be able to live if things were some portion more expensive against your earnings is probably the only sane suggestion.
Gold and silver mining stocks. And International ETF funds. It looks like the United States will be going through the depression alone.
Buy high, sell low. Excellent result when you follow the masses, especially when being a little late.
Where was I giving that advice? Gold and silver mining stocks are extremely low compared to the price of gold and silver buying mining socks right now is buying low.
AUAU ETF crashed 11% today... Ask me how I know that :(
Was thinking the same, but why would everyone be more interested in gold an silver in a couple of months than they are right now? Sure it beats holding dollars of stocks.
But, keeping both feet on the ground, I'm tempted to think that if the economy collapses I'd not be very interested in buying precious metals. I'd be looking for food, a roof to live under and safety.
You can invest in silver mining stocks, and be concerned about food at the same time. One is for long-term survival. The other is for short term survival. You can think of things like toilet paper and razors as bartering tools or actual new money, and the golden silver investments as objection of the current money you have right now.
My grandfather lives in a great depression in Manhattan. He told me some crazy stories, but you know what most people made it through. I think this time our system is more fragile, but I have no doubt that human survival is much stronger than me think as well as human socialism.
For instance, I am homeless living with schizoaffective disorder and I’m not worried so why should you be?
Coincidentally: Silver plunges 30% in worst day since 1980
Where was the news when silver was going up and having the best days it’s had since 1981?
On January 26, 2026, silver experienced its largest one-day jump in 45 years, with front-month futures soaring by 14%. Spot silver prices surged to over $109 per ounce that day, driven by heightened safe-haven demand and industrial usage. The rally continued to push silver prices toward $120 by January 29, 2026.
And regardless, silver is still at an all-time high.
When you start saying that the news is biased against certain commodities or equities, you’ll start to see how the game is played. This is a tactic of JP Morgan.
Volatility is expected. Always remember that. Volatility is expected in fragile economies.
Anyway, for now I'm primarily concerned with paying a debt for what I need (housing). While worrying somewhat about pension, I'm kind of happy I'm not too deep into where to put excess capital.
First World problems.
IMO Paying your debt always seems prudent - whether we'll see huge inflation or even deflation - when you can live in the thing you're paying for.
I saw the graphs of some silver mining stocks and it seems to just follow silver price, why don't just buy silver then?
Mini stocks were traditionally used as way to invest in asset as a security. But currently with all the ETFs that are backed with physical asset itself, I'd choose that way.
Holding asset yourself (gold) causes logistical issues and massive buy/sell split on your side, but it has some advantages too.
Mining stock are lagging, so they have the highest to go right now.
Software sector basically got cut in half just on Claude Code. You have to wonder what is next. I don’t think loss in economics is 1:1 with replacement so it’s not zero sum. Production doesn’t necessarily go up. In fact, net output is going to go down if you think about all the B2B lost too.
Whoever comes into power next better start thinking about universal income fast. We are gonna get there sooner than expected.
Software productivity doubling would be a huge boon for the economy, not a drag.
Of course it's very disruptive for people that lose their jobs, but many of them will get similar new jobs, and the overall impact is higher output.
If all companies fire 50% of their engineers, how will anybody find similar new jobs? In an ideal world software productivity doubling WOULD be a huge boon for the economy IF companies used the increased productivity of their engineers as a way to manage tech debt, R&D and other issues that were put in the backlog because historically there were no resources for this. In reality all companies look at increased productivity as a source for layoffs which does not translate in higher output but the same output done by less people. Which is a net negative because now you have 50% of all engineers without a job and no discernible increase in quality of deliverables.
The FAANG companies hoarded engineering talent for years. It was really difficult to hire in any market where they were located. What I think will happen/is happening is the combination of AI assisted development and reduction in FAANG engineering headcount will enable business transformation pretty much everywhere.
The impact of that transformation remains to be seen.
If software engineer productivity basically doubled as is being claimed in this thread, I think you'd see companies scrambling to lay off everyone else in an effort to hire even more software engineers. They'd be by far the most valuable and productive employees at every tech company and you'd be foolish not to have as many as you can. I'm being a bit facetious but throughout history when a resource or profession takes a dramatic leap in efficiency, the demand for that thing rather than decreasing as is predicted here, only increases since it has become far more valuable & effective.
You can't straight add/subtract effects that happen on very different time scales.
(1) Laying off people increases margins immediately.
(2) Creating new initiatives pays off in years, if initiatives are taken on carefully, not just thrown at walls.
That means even if (2) is happening, the signal won't show up for years, but (1) will happen immediately, regardless.
> If all companies fire 50% of their engineers, how will anybody find similar new jobs?
Why would CEOs care?
Or put it another way, if you were a CEO, would you care?
Politicians at least would pretend to care.
If all companies fire 50% of their engineers,
This is not a reasonable premise.
> Of course it's very disruptive for people that lose their jobs,
Why would the Jevons Paradox not apply here?
It does.
There will be loads more people who will want software customized to themselves and their needs!
The catch, of course, is that there are, all of a sudden, a whole lot more people who will now be able to create that software.
How will it all land? No idea. But it just feels like a bad idea to go long on software development when weighed against the opportunity cost of going long on domain expertise.
For instance, from 1980 to 1990, the number of secretaries doing all the typing and filing in the workforce severely constricted. That said, the number of actual typists in the workforce skyrocketed!
No one lost the need for typing and filing services. Tools, (PC, word processors, databases), simply became more available. Which decreased the need for people who were formerly doing the typing and filing as a service. Now people could reliably do the typing and filing on their own.
Jevon's paradox in action! Exponentially more typing and filing is happening today than was happening in 1976 or 1980. At the same time, there are infinitesimally smaller numbers of actual secretaries out in the workforce today than were in the workforce pre-1980. And the ones that are still in the workforce are doing much different work than they did pre-1980.
Why do people keep espousing such bullshit. Anthropic has terrible subscriber numbers, they are absolutely no where near profitability, a 100k people buying a product that struggles to sell itself is NOT the win you think it is.
If any of these tools did 10% of what their proponents claim they would become trillion dollar companies overnight and not you know... struggle so hard selling the amazing elixirs and perpetual labor machines.
I do really hope the AI bubble will collapse soon. The sooner it blows the less damage it will do. And hopefully we can go back to doing real work without all these leadership guys breathing down our necks to see if we are doing enough of this AI all their shareholders want us to be involved in.
It will suck even for us in europe due to shortsighted pension funds having invested in AI as well. But we'll just have to deal with it. I'm sure it will happen sooner rather than later.
PS: I'm not an AI hater as such. It definitely has its usecases where it shines. The problem is like with all hypes; it's not good at everything and it won't be all golden mountains tomorrow like the investors expect. This overhyped investor circlejerk is what screws up technology. It happened to blockchain, it happened to metaverse. All things that have their merits but somehow investors thought it would change the world overnight and make them insta-rich. Obviously didn't happen and it won't happen now.
> It happened to blockchain, it happened to metaverse.
I don't think AI is comparable to these technologies.
AI had a real impact on certain daily activities, such as search, coding, etc. While the metaverse was just a fantasy with no tangible benefit other than Zuck trying to create his own platform to take on Apple and Google.
Blockchain had some potential in certain fields, but it wasn't user-friendly or usable by many people.
> AI had a real impact on certain daily activities, such as search, coding, etc.
You aren't addressing the issue at hand, the problem isn't a total lack of impact, it's the cost of that impact, both the actual and the opportunity cost of it.
Currently, the AI "revolution" is running on pure credit - as every other bubble - even the operating costs of the AI supply chain exceed its income and economic impact. Their capital expenses are orders of magnitude higher and constitute a severe drag on the rest of the economy.
There's no indication that anything would change in the future, more AI leads to less employment, less disposable income and less income for the AI providers - it's a race to the bottom.
If this isn't reversed, it will soon end in bank bailouts, more inflation and income degradation for those bellow the top tier.
I’m not sure how I’ll feel if it actually happens, but just even entertaining the idea of LLM companies getting bailed out makes me irrationally angry. Like, really? Gonna go for the hat trick here? Housing crisis and Covid stimulus didn’t fuck everyone over enough?
It’s not like I can even leave for greener pastures, there’s nowhere to go.
It won't bail out AI ventures directly but it will bail out the banks that financed them.
Not a trick, if banks fall everything falls. what is infuriating: that we can see the value isn't there to justify the cost, yet that unprecedented amounts continue to flood into this tech segment, especially to the loudest and popular and over promising flavour of it: GenAI.
I'm willing to bet that the metaverse (defined by me as AR glasses) is a future that's coming and that Zuck was just too early, just like Palm Pilot was arguably too early. The use cases are too compelling, effectively a computer assistant that can tell you anything and everything about what you did or are doing. Yes, privacy people will hate it but the rest will eat it up just like they don't care about privacy on their phones.
An AR-glass assistant is very different from the metaverse Zuck blew tens of billions on, which was a shittier version of Second Life in VR, with a side of blockchain
He wasn't early with a good thing; he was unfathomably disconnected from reality with a bad thing
Not really, there are good applications for metaverse tech, they just need time to mature. However I don't really see it in the realm of social media. It's not something that's for everyone, at least not yet. I don't understand what meta was thinking there.
It's amazing for gaming though, and for architecture, 3D product design collaboration. I use it a lot daily and I have 5 headsets (plus two AR ones) but I also know it's not for everyone. It's also really good for porn which somehow in America isn't seen as a real industry but in my view it's a good usecase for the tech too. Anything that relies on immersion benefits from it.
AI has its niches too where it's genuinely useful (and coding really is a niche, it's not a mainstream activity) but just like metaverse they're trying to cram it in situations where it doesn't really add any value.
> It will suck even for us in europe due to shortsighted pension funds having invested in AI as well.
Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
The real problem is that when the US sniffs, Europe gets a full blown cough. We are way too dependent on the US, we have seen that 2007ff, and we haven't changed a single darn thing.
>Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
Well put, and it makes sobering reading to see the impact of what happened the last time Germany was deeply reliant on money from the US.
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"the" crash? you mean "a" crash.
Median house price / median income is at an all-time high for the US.[1]
But what that means is that the rest of the country has caught up to California's overpriced housing. Hence the call for a 50-year mortgage. Still, looks a lot like the 2008 housing bubble.
> To be honest I’m glad we are the ones getting out of that market first.
Who is "we" in that sentence?
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The Typical language of believers is to say no that wont happen and how? I learned and studied enough history and the usual narrative is to not accept something that is possibly so catastrophic that it will change their way of life.
The tech bubble is another story and to be study on it's own, but it was summarized well that is < its a cycle of delusional capital invested over and over. Along with the numerous indicators of "what ifs">
The housing market is simply stupid, im sorry i don't have another word for it that better describes the current take on this matter. Home prices are outrageous because of market driven assumptions. A house is technically worth $150 is now on the market for $350 and why is that. from 2 years ago. People truly think that home prices are expected to keep rising and to what extent and why? They couldn't tell you<< " my zip code is the place to live at the moment, the person living in the next zip code is saying the same thing about hiss home,
Homes in silicon valley were above and beyond the national average and it was the only thing on the headlines during 2021 - 2022 but for good reasons that cant be argued too much/ Today it is the rest of US in the same mindset.
All of the US economy seems to be in protection mode right now. As to say it's the mother that doesn't want you to go out again after falling of your bike and scuffing your knee on the pavement.
tariffs were used the wrong way this time around, inevitably the very purpose of them was not so effective, it backfired, Damage is done and reputation is broken in a lot of ways. Britain is renegotiation relationships with china, Canada is renegotiation relationship with China, EU is renegotiation relationships with India and China. All with successful results.
There is a lot of stake here the US has a lot to offer to the world and to use that as weapon is tends to not have a good outcome. The market is large, yes it is resilient to some factors but not all/ When collapse takes place there will be tremendous momentum and its going to be hard to stop.
> People truly think that home prices are expected to keep rising and to what extent and why?
Home prices aren't rising, the value of dollar keeps, and is expected to keep, falling.
No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come. There were a lot of people who predicted the housing crash, not the timing but the crash. There are several signs that this is happening and the one no one is talking about is gold and silver prices. Don’t worry about the timing, you’ll never get the timing right, just worry about the fundamental economics and the flaws and protect yourself.
I happen to agree just because of golden silver prices that it’s going to happen sooner than later, regardless if war breaks out with Iran.
At any given moment there is always someone predicting that the economy will crash. So someone will always have predicted it. The question is do they actually have some insight or were they just lucky.
This not a prediction. The crash is currently happening. You just do not want to see it. Can you explain gold and silver prices? can you explain why bitcoin has been flat now dropping? The falling dollar? The US Treasury yields rising since 2020? CAn you explain why consumers feel at ease even though economicsts are stying everything is great?
I mean why do you think the FED and Trump are all over each other? Because there is no way out. If they lower rates, inflation. If they raise them, assets collapse.
People have been warning about this exact secnario since 2008 and no one is listening. Back then it was a prediction, but now it is happening.
> This not a prediction. The crash is currently happening.
The stock market being at an all-time high, a crash in the usual meaning of this term is not, by definition, currently happening.
Since apparently this isn't what you mean by "crash", could you define what you mean by this term so we're all on the same page?
All time high if denominated in USD. YoY, stocks have been increasing in value as fast as USD is losing to CHF. Regardless of whether gold and silver jumps are a pump and dump, stocks, in "real" value, are at most flat.
Well it's an all time high in EUR as well for instance. I haven't checked for CHF or other currency one may cherry-pick, but in any case it wouldn't change my point: even if it was slightly below an all time high, it's not currently crashing.
I'm not the one who made the "it's crashing now" claim and I do agree that from a certain point of view, it might be seen as a stretch.
However, what I'm claiming is that "all time high" is also quite a stretch. Pretty much all nations have been printing money pretty intensely, so fiat is not a solid anchor to derive "actual value", but CHF might be among those that are less printed, so I chose it.
Even if we chose EUR, EURUSD wins YoY over S&P 500, hence, "stocks are flat". Sure, in the case of EUR, optics are fuzzier and you might pick a point or index showing a small increase over EURUSD, but I don't think it's strong enough to beat the general point, especially if your counter point is "stocks are at an all time high".
My counter point is "stocks are not crashing".
It being an all time high was just to highlight how much "not-crashing" they are, but that doesn't really matter. Even if stocks were merely flat over the past year (or even somewhat down), the general point would still be the lack of a stock market crash.
It’s funny when people just determine that a crash only happens when the stock market crashes. Things were crashing in the housing market before the stock market crashed in 2008. Do your homework.
> Do your homework.
About what though? You haven't explained what you meant by a crash so I don't have much more to go by to understand your point.
If not the stock market, what's the market you mean is currently crashing?
I'm an old guy. Some people (goldbugs) have been predicting that the debt would lead to a crash since the 1970s. I'm withholding judgement.
> No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come.
If you know it's coming but don't know when then you don't know anything. Certainly not enough to bet on.
Keep in mind that not only did people predict the housing crash, some were certain houses would be sold for pennies on the dollar.
I bought a short sale distressed town house in 2009 for 40% lower than its peak price, and many people told me it was a terrible decision because if I just waited long enough, I'd buy it for a fraction of the price.
I think prices went a bit lower in 2010, but then I gained about 400k in equity over the next 10 years and sold it.
The Economist front page illustration of the 90s .com stock market, with the heading "CRASH DAMMIT!"
Everyone knew there was a bubble. People began to get impatient for what obviously was going to happen, as you say.
Gold and silver are likely to crash. I don't think they are big enough to cause a crash of the overall economy, though.
Last 2 reported quarters have 3.8% and 4.4% gdp growth.
Next report is end of february. So it's minimum 4 months away at earliest.
Stock markets are at 10 year peaks.
Unemployment is a little bit high at 4.5%.
Inflation is a little bit high at 2.7%
US government debt is very high at 125%
PMIs are strong across the board.
Also in context, trillions in declared new investments in the usa. Probably trillions more in undeclared new investment trying to avoid tariffs.
No competitor possible on reserve currency status, Euro in about 2013 was looking like hot stuff but they regulated themselves out of it.
So I consider, the crash probability of the US economy is certainly not going to be happening.
> Stock markets are at 10 year peaks.
Put the value of gold on the X axis instead of the USD.
Is this the case with all bubbles? Might be a naive question
I don't think this proves/suggests a crash will happen, but its worth considering most of what you've said would have been true right up until both the 2008 financial crash and the dotcom bubble.
The person declaring "trillions in new investments" is Donald Trump. He doesn't understand how tariffs work, he doesn't understand how trade works, and he doesn't understand how the truth works.
So many of the stats you mention are based on potentially-untruthful statements from the Trump administration. When the facts and figures aren't favorable to Trump, his strategy is to shoot the messenger and install his cronies. Works great, right up until it doesn't.
And the person you're replying to is someone who thinks "The case where Canada must be annexed is if Greenland somehow remains part of Denmark"! The veneer of civility on this site lets some really incredible people slip under the radar.
A lot of us don't have time for all the long reads, podcasts, or in-depth videos posted in the discussion here. Able to provide a summary for us that expresses your general point? Those interested can then use your link to learn more.
LLM summary, for discussion only:
The article’s core argument is that the U.S. dollar isn’t going to lose global dominance in some dramatic, headline-friendly collapse; instead, like every reserve currency before it, it will slowly erode at the margins as users quietly reduce reliance on it. Historical transitions (sterling to dollar) didn’t happen because of declarations or crises, but because the world gradually found alternatives that were good enough for specific needs. What’s changing now isn’t that the dollar has “failed,” but that the global financial system has evolved past some of the assumptions that made dollar dominance frictionless. The freezing of Russia’s reserves in 2022 shattered the idea that reserve assets are politically neutral, prompting central banks to hedge geopolitical risk via gold, bilateral trade arrangements, and non-dollar settlement systems. The result isn’t de-dollarization as revolution, but de-dollarization as creep: a long, largely invisible process that only looks obvious once it’s mostly done.
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Who do we expect will replace Americas global leadership and will they really be better for everyone?
China seems to be the only candidate. But whatever happens it won’t be in the same way as before.
As for whether it is better for everyone, that question became a lot harder in just the last year. Who is «everyone»? And what do we mean by «better»?
With the US wanting to annex territory from its NATO allies, and engaging in extortionate tariffs, it is harder to argue that the US is good for Europe. Which is why Europe has already started to look eastward. Starting with a comprehensive trade deal with India.
What’s happening is good for Russia and China. Not so much for the rest of the world.
I disagree that something good for China is necessarily bad for the rest of the world, which you seem to imply here includes only Europe.
China alone has a higher population than Europe and the USA combined. I'd say that even if things got worse for Europe, to humanity it still constitutes a net benefit. Lives aren't of less value just because they're in a (gasp) communist country.
> communist country
New things need new words to describe them, I know people love to call bad guys "nazis" or "communists" and that everyone seems stuck with 1939 lingo but come one. 1950s china isn't 1980s china which isn't 2026 china, yet they're all ""communists""
"Socialism with Chinese Characteristics" is the official name of the ideology of the Communist Party of China.
China is ruled by the Communist Party. It does not seem unreasonable to call them a communist country.
Yes, I know, they have moved away from historical communism, and it's more of a "brand name" than an ideological description. Still, it is their chosen name for what they're doing.
Sure but this is like calling North Korea a democracy because the official name of the country is the "Democratic People's Republic of Korea"
None of these are "communism"... people who don't know better use it as a "china bad" gotcha because it's about as far as their political education allows them to think but it really is way more complex than that.
> Authoritarian. Totalitarian.
Yes these apply, but they're not synonyms of communism. The Iranian government is authoritarian, totalitarian and absolutely not communist
> Red fascism is an OLD term.
But surely you see how dumb this sounds? Fascism is by definition a far right moment, communism is by definition far left moment. By definition fascism is opposed to communism... Of course if we start using literal American propagandists buzzwords ("red fascism") as a basis for modern political discussions we're not going to get anywhere...
I'm not sure left vs right is that useful a distinction. Both the Soviet Union and Nazi Germany called themselves socialist, and both claimed to be doing what was best for their people.
The addition of "socialist" to the Nazi party's name was done in the early 1920s to appeal to socialist-leaning people. Hitler was against the change but was overruled by the rest of the party's leadership.
>Both the Soviet Union and Nazi Germany called themselves socialist, and both claimed to be doing what was best for their people.
The Nazis weren't socialist. They appropriated the term as a propaganda tactic, a means of appealing to the masses. North Korea calls itself a democratic republic, but is obviously neither. One can't simply assume political labels to be correct. In terms of their actual policies and beliefs, the Nazis were vehemently anti-socialist.
Not necessarily. But China's aggression towards Taiwan and their recent rare earth metals move last year show that China does not have the worlds best interests at heart either. We're picking between two evils and China's evil is more predictable than the US's right now.
This goes for Asia in general. Korea, Japan, and China spent centuries fighting and making them the de facto super power makes it easy to resume the Korean war or try to overtake the (military wise) crippled Japan should they be emboldened by the faltering/collapse of NATO.
How much coal do they burn? Did climate change suddenly become NOT an existential threat?
Are their global fishing fleets sustainable?
Where do the precursors for fentanyl come from?
I have to say that China will probably be a major force in reducing carbon emissions. Yes, China burns a lot of coal; but they also produce and deploy a lot of solar, wind, and soon nuclear energy. Someone else said it better: future will run on China’s batteries.
They seem to have achieved peak coal and coal use is slowly declining. Its percentage of the energy mix has been declining over the last decade.
That’s not great, but it is a positive. And certainly better than we feared a decade ago.
The world isn’t static.
> How much coal do they burn? Did climate change suddenly become NOT an existential threat?
As in any developing country, China has relied on cheap fossil fuels for rapid growth. Now, China is a global leader in reducing emissions, essentially blowing every other country out of the water.
> Are their global fishing fleets sustainable?
Is literally anything about the US sustainable?
> Where do the precursors for fentanyl come from?
You mean the legal drug that is absolutely 100% necessary for use in hospitals? Yeah, don't care.
It seems you're supremely focused on "China bad" gotchas as a desperate final gasp because you may be realizing that you don't actually have anything interesting to add to any conversation on any topic. Perhaps think more before opening your mouth.
The US is resigning the position intentionally. It's not as if someone is gearing up to replace it.
But as a trade partner? China, markets love reliability and stability. Not every 4 years wondering if there will be another trade war for reasons unknown.
You'd be very surprised the amount of malicious behavior countries will ignore to allow trade. Look at Saudi Arabia.
The single superpower thing was an anomaly which was mostly a result of one specific country being largely untouched by WW2; we're more likely heading back towards multiple regional powers with varying levels of cooperation, e.g. EU+Mercosur+India agreements that just happened.
The lines are still being drawn, but its doubtful one single power will emerge.
Seems like the rest of the world is just signing new trade deals and continuing on as normal. I hope America returns to normalcy in the next election and everything settles down. Else it seems like back to the old multipolar world.
I don't see any way we're not heading back to the multipolar world. They've managed to burn almost all of the goodwill and soft power that took 80 years to accumulate in 373 days.
Even with a "return to normalcy", the trade and military agreements being forged are permanently diminishing America's influence. Especially given that we're never more than 4 years away from this happening again.
No one, we don't need a leader. We need decentralised governance.
We have that. What has broken down is cooperation. The kind that has ensured relative peace for 80’ish years. That order is breaking down and creates instability. Instability means more conflict and less productive use of resources.
Well, cooperation with one specific player.
Cooperation among the rest of the world is rapidly progressing in response.
Yes and no. Internal cohesion is weakened (the most extreme example of which is brexit) by resurgence of nationalism and xenophobia. At the same time new trade deals and alliances are formed and deepened.
That's a good overview. As usual: things are complex, not necessarily bad overall.
That's not how it works though, is it? What you're really saying there is global governance.
Which faction that emerges as a dominant ever says "Oh no! We better stop using our advantage to improve our condition".
The EU just signed large deals with Latin America and India, binding a sizable chunk of the world to its rules. ASEAN is on the docket, Japan, Canada and South Korea have been signed for a while now.
Make of that what you will. Power isn't always tanks and soldiers. Sometimes its bureaucracy and contracts.
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China probably. No I don't think it is better but at least their leadership is actually sane. Evil, but sane and predictable.
Even the evil adjective starts to look debatable in contrast to what current hegemony is doing on its way down.
Apparently their worst offence so far was calmly outgrowing and out competing their peers while benefiting global consumers with he fruits of organized labor of their own society.
Iam sceptical whether china is more evil than the current and historic US. Both countries have commited atrocities but the US was way more involved "for their interests overseas". Maybe the western distrust towards china will make it a different power equilibrium.
If you think that's the worst offence then you should check the recent and past news more often.
What was the most grusome Chinese offence you learned about form the news recently?
Stop getting Chinese territory under your fishing boats! Leave immediately for correct and healthy harmony! Fires water cannon
As opposed to America who uses cruise missiles on fishing boats in a different continent?
Maoist protracted people's war has traditionally relied on being less of an asshole to the peasants than the enemy.
I was referring more to the millions of Uyghurs in political prisons and their overreaching surveillance of the population.
And I was just speaking of what I think about China, not saying the current US administration is any better. I don't think it will be there forever though.
Right the Uyghurs, a word we never knew before.
When faced with credible threat of islamic terror in their country China implemented some harsh, systemic ideas about what to do with it.
I'm sure if they just started two wars in the middle east instead the western community would be way more lenient towards them.
China did what it though was the correct thing and the west happily classified it as racism and religious persecution.
However when the pandemic came China had zero restraint towards applying harsh measures on the bulk of their population regardless of race and relligion. And while their solutions are harsh and possibly incorrect is it really unique on the global stage?
US, the shining city on the hill, when faced with a problem of having inadequate social support systems to help the more recent immigrants decided that it will try to build concentration camps on the teritorry of one of their closest vassals. This can't be correct or humane solution either.
And when it comes to surveillance, China is on the forefront, but US and UK closely follow. What's different is that China does their surveillance overtly and tries to make it socially useful. I don't for one second believe that technologically Palantir and such are more than one step behind.
I'm particularly annoyed that the US is for the people of Iran and not, like China, for the government of Iran. And the US putting secondary sanctions on Russian oil to starve Putin from Chinese and Indian oil revenues? Disgusting.
China wants but China won't. They lack the military capability of force projection that is the basis of the US dollar dominance, their currency cannot be used as a reserve/trading currency due to capital transfer controls (that have no sign of ever going away because otherwise everyone who has money in China will move it immediately out of the reach of the CCP), foreign investors have gotten very skeptical over the years regarding IP theft on one side and supply chain law issues (e.g. underage labor, 996 and modern slavery, environmental concerns) on the other, and on top of that China is getting rocked hard by the inevitable consequences of the one-child policy that is driving up labor costs, further reducing the attractivity for foreign investors.
China doesn’t need to project force. Economics might is sufficient.
Yes, they want Taiwan, but that’s a silly national pride thing. It would not really benefit them to take it by force.
And the US wants Greenland, Canada, random other countries here or there...
> Yes, they want Taiwan, but that’s a silly national pride thing. It would not really benefit them to take it by force.
We thought the same about Putin, and yet he went and invaded Ukraine.
We thought the same about Trump, and yet he went and abducted the president of a sovereign country.
Never underestimate nationalist BS or outright mental deficiency.
The difference is desperation. Putin was facing instability and was afraid of ending up like Khadafi. He needed a war.
Xi is not facing those challenges. He wants Taiwan, but the Chinese play long games so he can wait.
> Xi is not facing those challenges.
He is facing other challenges, a lot of chickens are coming home to roost - chiefly the demographic collapse, the inevitable result of the one-child policy, but also the rise of wages leading other countries to be the outsourcing target, decades of selling out nature / the environment, a crashing real estate sector, brain drain...
my bet is: "new" tech, emphasis on "new", will keep US on top or whatever US become after the big reveal.
I hope that after the Big Reveal, nationalism will immediately begin to fade away and we can start tackling species-level problems, like the plastic everywhere and in all of us, or dying ecosystems, or ... literally anything other than commerce.
The COVID economic depression is not accurately shown in the charts. The economy shut down for more than 2 years. Before RTO, the economy was in a depression. These charts provide indicators to what's happening on the ground. The classic indicators didn't accurately capture the Coronavirus lockdown.
The economy is still growing from the quarantine lockdown. It's why we didn't see a collapse, it would have to be worse than what happened during the lockdown for the economy to be in a recession. That's not the case, and I don't see a collapse or recession for at least 3 years.
For most of us, we work remotely and some people might be out of touch. Don't take this the wrong way, but people are just recently recovering from cottage syndrome. We're still in the transition period with the layoffs and AI doomerism being growing pains.
If you're going to chart-gaze, you need to have a healthy skepticism about the chart itself - is what it's measuring still meaningful? Every chart is an isolation of variables in an ocean of variables. The shark attack / ice cream sales chart will mysteriously stop working when everyone is on Ozempic and stops craving icecream! Likewise, there's a very real possibility that "inverted yield curve means recession imminent" logic only works during a particular era of USA dominance in the world, which we have thoroughly left behind. Food for thought, I hope.
> This is the 11th time that tariffs have happened, and it just isn’t surprising anymore.
There are tariffs everywhere, all the time. Canada just dramatically cut its 90% (or something) tariff on Chinese cars. Tariffs haven't just started happening because someone you don't like did them.
Yes but tariffs were a long-term strategic tool. Not a bullying tactic for someone who woke up the wrong way.
Knife: Surgeon. Slasher.
Results are not the same.
Nominated for the most powerful two line comment of the month.
> There are tariffs everywhere, all the time.
This neglects the scale, cost, and unpredictability. His tariffs are far from being the usual seen elsewhere. Of course, you should already understand this.
Blanket tariffs used as blackmail is obviously different.
This is incredibly disingenuous.
> Tariffs haven't just started happening because someone you don't like did them
Nobody said they have, throwing ridiculously high ones with your allies and trading partners is new though.
Otoh, tarrifs as a foreign policy / coercion method disconnected from trade and local economy impacts definitely is a new thing.
Sure, it might have been used as a delicate lever previously but in its current brazen form is just bad diplomacy.
I keep seeing soon, sliding into, moving towards.
USD Currency futures have already collapsed.
World trade will move to (not a good idea) RMB or (mistakenly) crypto.
Euro is the only real option left and it’s beautifully positioned in the center. Great leadership too.
I feel like one of the following is true (and I don't know yet which is the case):
- I'm genuinely a lot more pessimistic than is accurate around what is and isn't a bubble
- Bubbles are just slower to burst than I expect
Possibly some combination of both. But even ignoring AI which is relatively new, it seems "obvious" to me, that whatever value Bitcoin has, investment in the asset is detached completely from that value. I'd have expected to see Bitcoin crash a long, long time ago, and have been thinking it's "just around the corner" for years and year.
And yet, the bitcoin price as a whole, although it's dipped recently, and is clearly volatile, still remains something like 10x what it's value was 5 years ago[0].
Something I think people forget when it comes to the valuation of bitcoin is just how much of it is used to fund illegal activities (Betting, Drugs, anything on the darkweb,...). I honestly believe much of the valuation is linked to that, but I have no source or proof.
Any time now:
1. Market crash
2. AI bubble bursting
3. Year of the linux desktop
Have I missed something?
Half life 3
This will probably be better than duke nukem forever because they were always working in DNF but nobody has been working on hf3 in 20 years.
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Year of linux gaming being good (it isn't)
GTA VI
Beyond Good and Evil 2
I like how the last image based on "C'mon, Do something" with all the AI symbols, has hard to recognize body part shape, with Claude being right in the middle of it. Hank Green talked about it last year - https://www.youtube.com/watch?v=fIbQTIL1oCo
Ok, now that silver fell, are you going to write another article with the opposing view?
That’s how the news does it.
There's quite a few factors here that delayed what should have logically already happened.
1. All the tarriff reactions cause US companies to import a huge amount of stuff for 2025. From what I understand, we're about to exhaust all of those imports.
2. The unemployment reports (especially the U3 numbers) hide quite a bit of turmoil going on under the hood of the job market.
- If you lost your job and switched to Uber/Doordash, you're not unemployed.
- If you are riding on severance pay instead of filikg for unemployment, you're not unemployed.
- If you got tired of throwing out hundreds of apps only to get automated rejections and take a break a month, you're not unemployed.
- If you just graduated into this hellscape and can't qualify for any unemployment, you're not unemployed (you're technically not part of the workforce yet).
There's a lot of these small shifts in how jobs work that make U3 less reliable in reflecting reality. And I only touched the surface of these issues.
3. Continuing on the U3 with a point worthy of its own bullet: the unemployment appears flat, but the makeup of what's happening per industry really lays down the reality. The only industries growing are hospitality (aka food service and similar sorts of duties) and health care. And to top it off these "growing" industries shift more and more to fractional work. Pretty much every other industry is down. So people are getting laid off/fired and moving to part time work to get by. "Stable" by unemployment numbers, but very unstable on the day-to-day. Add in the recent congressional bills for healthcare subsidies and we're throwing more gas on rhe fire.
4. I'm sure it's been said so much by now, but AI in the US is the only thing holding up the GDP. Without that massive investment, the GDP would be at best, dead flat. The US isn't growing in a way that reflects actual yields to anyone outside of a select few shareholders. We're not building more houses, mining more materials (on the contrary, we've resumed ransacking others'), manufacturing more machinery, nor even producing more service value for customers and businesses. We're putting all hedges on one thing with an uncertain outcome. If that industry declines, so does the rest of the US.
5. The K shaped economy. I have to check these numbers again, but I believe that spending is indeed up, but the makeup of spending per income band is more stark than ever. The too 10% income households makes up half of US's spending. But there are signs that even many high income houses add also starting to hunker down on spending.
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That was a lot and it still only scratches the surface. But the TLDR version is that there's a lot of statistics massaging over the real struggles of life and many industries reaching a breaking point they did a good job putting off. But by this point it will only take a needle to break this camel.
Where it's gonna crash to? Where is going the capital move to when everythings going up? (except crypto apparently)
Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. Margin calls happen and increase seller volume, prices go down further. And so on.
I'm not saying all this will happen. Just that capital doesn't have to "go" anywhere for a crash to occur.
> Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down.
So the law of supply and demand just magically reverses itself?
People, or organizations, but mainly people, can just refuse to invest in stuff, parking their money in low-interest bank accounts, or the old style "stuffed into mattresses."
This was the multi-decade problem Japan ran into after its hot economy imploded, and unleashed the "lost decade" (which became decades). It was not a marginal issue, and for year the Japanese government tried everything it could think of to get people to invest in things - to little effect.
Market cap doesn’t equal liquidity. If everyone wants out of an asset, and no one wants it, supply exceeds demand and the price crashes.
No idea what you're talking about. Explain.
Statement: if AI crashes where will the capital go?
Claim: people will just choose to not invest capital at all
Response: that’s the opposite of what we know about supply/demand. When a supply of something (desirable investments), goes down, with demand steady, prices go up
It’s the same thing that happened during zero interest rate environment - huge supply of capital, few places to put it, so it piled into tech which drove up prices
So I guess my answer to “where will the capital go?” is “the next best thing” which drive up prices of that thing
Could you clarify the question? When everything's going up, it's definitionally not a crash; do you mean something like "where are people going to flee to now/soon, in anticipation of a crash, given how buoyant everything is"?
That exodus is what crash is. Yes. My question is where "they" are going flee to in anticipation of the crash to actually make the crash happen.
The banks will start to pull back on AI financing because their risk calculations are going up. That will make the news and people will sell their AI stocks and just put cash in a money market fund or something. Stock price decline confirms the bank’s calculations and now they def. aren’t lending to AI companies. That makes the news and now people are really selling their AI stocks which drives the price down further. The banks react again…
In 2008/9 people became paranoid there was nowhere safe to go and that really screwed things up on top of everything happening in the stock market.
> just put cash in a money market fund or something
So you are predicting everybody will escape into dollars. Which by themselves are extremely risky because the world is at the verge of ditching dollar as global currency.
There was already double digit inflation just because during the pandemics US overprinted dollars in relation to the size of the global economy. Imagine what the inflation will be if the dollar economic domain shrinks by half or more.
This is a great question, and one that drives right to the key issue! (oh god, that sounds like an LLM response, sorry)
Like with the implosion of the Japanese economy, people will just not invest, instead parking their money in low-yield bank accounts. It was, in some cases continues to be, an issue for that country.
They're not definitionally the same. Normally a (stock market) crash is just "everyone's assessment of expected future cash flows goes down, meaning that what everyone owns is less valuable". One thing that can cause people's assessments to drop is "everyone else is withdrawing from it, which I assume means they're assessing it as being much less valuable, so they have information I don't, so I should revise downwards", which can make a self-sustaining feedback loop, but that's certainly not the only possible cause of a crash; I wouldn't even say it was the most likely cause of an AI-bubble crash.
My guesses would be "everyone's assessments go down together because OpenAI et al's predictions of their future revenue are observed to be consistently vastly overinflated vs actual performance, but everyone was previously assuming they were roughly correct" or "some political thing happens which makes OpenAI et al's services obviously much less valuable or makes them much less able to provide services".
> Where it's gonna crash to?
You know that the reason things bubble and burst is because speculation outpaces reality at too high a rate, ie : too much "capital" is make up of hopes and dreams.
When reality hits and the numbers make sense, all that hope and dreams go pop.
Scotty doesn't know!
There is no reality in the market. All prices are speculation, always. If there was any reality involved things like Tesla would crash 3 times already. My question is where the spekulants are going to escape to. I don't think it can be even dollar this time because in this crash dollar most likely will go away as the global currency and the inflation will be devastating.
Ahhhh hehe well there will always be something to speculate on! I don't really know but I know I'm happy I've been hoarding gold. My grandad always drilled it into my mind. Became a habbit over the years!
I wonder what would your granddad say about today's gold prices. And even more curiously how fast they rose in recent years. Gold looks almost as bubbly as the stock market.
Surely the surge of predictions of an incoming crash will never end though.
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Some advice for those who are young:
If every idiot (I'm including myself in this) on HN/Reddit/Youtube/Tiktok/mainstream news/etc. thinks we're in a bubble and is crazy pessimistic and thinks economic collapse is near...it means we're not actually in a bubble.
When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying. Because that will mean the general public must be reaching 1999 levels of euphoria for a hint of optimism to show up here.
I think its like being in a horror movie - you know the axe guy is in there with you, but you don't know when he's going to get you.
>When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying.
That seems to have happened around 2023 or so as people chose to laud over AI instead of understanding the underpinnings of society coming undone in real time.
So, should I be worried?
No, because your pessimistic feelings only serve to strengthen my claim.
I find it amusing that, even when directly calling attention to the overwhelming pessimism that is the default-state on HN, I'm met with a pessimistic comment with zero self awareness.
>because your pessimistic feelings only serve to strengthen my claim.
So me pointing out optimism in discussion strengthens your claim, because it's specifically my feelings that prove your point.
Well I'm glad you can prove yourself right, if nothing else:
>When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying.
Denial sure is a worrying point.
The hourly "AI is a bubble" threads doesn't scream optimistic to me.
Its a busy site, I can also find hourly "AI brought joy back to my life" threads.
This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
> This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
Apologies for quoting all 3 sentences of parent, but the poorly-drawn conclusion depends on the full sequence of seemingly rational statements.
The context this sequence is missing is that approximately 70% of the US economy depends on consumer spending. [0][1] If the lower stroke of the K-economy diverges too much from the upper, the economy is going to grind to halt.
Consumer spending of the bottom 90% cannot (easily?) be replaced by the top 10%.
I used to think along these lines. But now I think the truth is - does it matter if the economy grinds to a halt? Perhaps the ruling class can still keep enough Americans comfortable enough, and fearful of losing more, doing largely pointless jobs, to stay passive - and that’s all they need to do to completely bifurcate the society such that they face no threat to their own position.
Some sort of an AI crash / bubble bursting is expected to be honest - now if that will take the rest of the US economy as well.... debatable. Any strong opinions on this?
I'm not an expert, my knowledge is just from reading around a lot, but I think there's some stats that would suggest the US is particularly exposed:
- At points, AI investment has actually seen more spending that US consumer spending[0], there's some debate on this[1] but if true, that leads to a narrative of the US being 'propped up' by AI investment.
- US GDP growth was strong last year, but behind quite a lot of other similar countries like the UK, Germany and Japan, which doesn't suggest a comparatively strong economy.
- The US is actively increasing it's borrowing substantially (Big Beautiful Bill) while lowering it's currencies value through trade wars and unpredictability (see bond market). That reduces its ability to use its wealth to borrow its way out of a financial crash (like with the 2008 crash, or Covid).
This could be a little overblown and is hard to tell, the US is definitely an extremely wealthy country, even if its less wealthy comparatively that a few years prior.
On (1):
Might be useful to separate investment flows from the rest of US's economic activity.
AI investment is propping up capital flows, the GDP statistic, and responsible for most of the gains on SPX, but its still a small fraction of the economy.
What else does the economy consist of these days? It's pretty much already in a recession if you exclude the big AI companies.
Besides, basically every company had been desperately shoving AI into all their products. Throwing all of that out when the bubble pops won't be pretty.
I imagine depreciated AI features will be like the soft varnish surfaces of some 90s cars after 10 years - disgustingly sticky, shedding flakes left and right, and in hindsight an obviously stupid idea that wasn't tested sufficiently before pushing it on consumers
> now if that will take the rest of the US economy as well.... debatable.
In the grand scheme of GDP, the US hasn't done much growth in anhtjjg else this decade, all while massively increasing spending to prevent post COVID recessions.
It certainly doesn't look good. But this was being setup for 30 years as we outsourced our strong manufacturing wing to make the top brass richer in the short run. So I do think the house of cards falls if AI does.
The sad part is that we may have been able to whether the storm under the right leadership. But that sure isn't the leadership in the White House right now.
Is there really a bubble though?
Most of the activity is with the same old big tech stocks, and the largest investment by far is not even market driven. Stargate is defense spending.
AI doesn't have to sway consumers, and it doesn't even have to work that well now or ever for governments to keep pumping money into it. The whole point of Stargate is to de-risk with reduced need for security clearances to handle big data (whistleblowing) and eventually get away from foreign tech. Also, there are a ton of businesses who have always done things on-premises for compliance and they can now cut costs by migrating to these government vetted data centers.
It genuinely shocks me how rarely anyone brings this up. It's been very loudly said by Trump and OpenAI since he took office, and it was going to happen regardless of who was elected.
Yes, the concentration of wealth led to the AI boom and it’s going to lead to the crash for sure. The AI boom was nothing but a crypto bubble. And since it’s making up a large majority of the investment right now I would say that’s the only reason that we didn’t have a crash last year.
This isn't a crash, it is something else comming, perhaps the "jackpot", where society/civilisation unravells, climate disaster kicks in with real persistant challenges everywhere, and some third, fourth, fifth effects that break our millenial run to the top of our planets ecosystem as the ultimate apex species.
It has been a good run, but useing the same tacticts as our stone age ancestors, is, I think, about to bite, hard.
And it is literaly this, our strategy is to keep useing the same tacticts.Jackpot.
I know HN always has its fair share of doomers, and generally the HN communities track record anecdotally regarding finance and the market is frankly terrible. Tesla (stock price wrong), Bitcoin (wrong), AI a huge dot com like bubble (wrong in my opinion - TBD though).
I’m optimistic on the US. We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year. As far as Gold and Silver I just see it being propped up by speculators. Silver spot is down 15% this mornings and gold down 8%.
I predict double digit gains in the S&P by end of year and strong financial conditions with mag 7 continuing their lead. Tesla also will be a big winner.
At this point I think Tesla could sell zero cars this year and their stock price would still be astronomical.
> We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year.
Ignoring everything else in terms of oredictions: the US simply doesn't have that spending buffer anymore to really outspend yet another crash. Its at what, 37 trillion right now? And it's only rising more and more by the month.
The only thing worse than a crash would be the US defaulting on that. And then we'd be screwed in ways that we don't recover from in any of our lifetimes. Nearly a century of trust and soft power completely down the drain.
Even if they don't default. How long there is willing investors? Even if FED drops rates. It is an auction. So rates should be set there. But maybe printing will happen via bigger and bigger market operations. Leading higher and higher rates. With probably inflation... So I suppose valuations could go even higher...
I do not understand economics and from engineer perspective whole thing doesn't make much sense.
I can't time the market worth shit - I got my first investments out before the 2008 collapse in earnest, and got into the job market at its peak. I waited through the 2010s to accumulate money to invest, only to start doing so amidst rampant speculation in crypto, then NFTs, then meme stocks, then AI.
So yeah. I am not getting a job at a financial firm anytime soon.
That said, the societal gestalt seems primed for something to go horribly wrong. AI boosters are positing their models as solving all of society's ills, which first requires acknowledgement that these are in fact problems facing society requiring solutions. Everyone is broadly on the same side - wealth inequality is a problem, climate change is a problem, energy dependence is a problem, job security is a problem, housing is a problem, etc - but we're all varied on the approach to solving these problems based on personal biases and perspectives. YouTube is infested with AI slop, social media is filled with doomers and preppers, and subcultures are simultaneously splitting off from larger groups (like those leaving Twitter/X for BlueSky or Mastodon) while also forming newer alliances and communities around shared goals or ideologies. Even those in positions of power acknowledge the polycrisis before us, while exacerbating it further by firing swaths of workers to fund their own bunkers, yachts, and contingency plans via share price bumps.
It's in the air, this horrid pit in the stomach that doom lingers just around the corner. It's been there for a decade, long before COVID, festering beneath the surface. Hell, for many of us pre-9/11 Americans, it's been a gradual decline since the heydays of the maximum-employment 1990s. So many of us feel it that it just cannot be ignored, and thus it becomes a sort of self-fulfilling prophecy: enough of us believe something bad is coming, therefore something bad must happen to quell those feelings.
There's two things that give me (and my OCD) solace of a sort:
* We'll all find out together, regardless of status or strata
* Most of us - statistically, generally, based on prior events and barring any explosive escalation - will likely be relatively fine
Yeah, the shifting of geopolitics is likely to result in more violent conflicts with the potential to kill billions if things go NBC. If we don't address climate change, millions will die from wholly preventable causes and tens of trillions of dollars of property will be destroyed over the next century. Misuse of AI could result in doomsday scenarios that Sci-Fi has warned us about for decades. Wealth inequality appears poised to create a modern version of the Coal Wars, if current events are any indication.
Technology alone won't save our asses. Neither will some mythical billionaire genius, or AGI deity. It'll have to be us, regular humans, rejecting the present and choosing to build a better future together.
And I think we can do that.
> Which is to say that no individual decision make want’s to be the first mover, so the market does not move.
Uh, that's not accurate. Hathaway is sitting all cash because of it and so far they have been the one losing. Even if you assume (and correctly I think) that the market is overvalued, their stock pile of cash is eroding: https://newzsquare.com/warren-buffett-warns-of-fiat-currency...
> A year ago there were a few signs. Right now, it feels like everything is primed to blow. Is that new?
The market is unhealthy. Too unhealthy that I think it can no longer self-heal the usual ways (recession/crash/etc.) and we'll instead move to more advanced stage of hyperinflation, global war, etc.
It is a giant Ponzi scheme and those tend to collapse at some point.
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> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
That's a bit reductive, in Europe there's a much bigger culture of saving, most people I know here are very averse on taking debt if unnecessary, only going into debt for large purchases like a house or a car. Even for cars I see many outright purchasing a used one in cash instead of going into financing/leasing.
People hold cash but also invest, it's savings in general that are high, varying between 10-25% of yearly income saved (compared to the US's ~5%).
I think this narrative of "so little innovation" is peddled very much in the software-adjacent circles but it forgets that innovation is not only from software, if you really think Europe has no innovation you are either ignorant or purposefully fostering a bad narrative. No, Europe doesn't have the VC industry, and the software companies' culture of the USA, it does innovate with a different model.
> If you insist on believing the US economy will crash without a well thought out thesis, I think that’s a beautiful thing. When you sell your positions on US companies, I’ll gladly be on the BUY side of that order.
Please do, as I've been cashing out throughout this year anything that has any direct exposure to the USA stock market I need people like you on the other side, thank you very much.
> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
BRICS, apparently
You comically self contradict yourself. If it was lack of ideas to invest in that drove holding of cash at negative interest rates, then what stops the european from just buying us stocks? US collapse is inevitable, until its NOT…
If Russia's economy is kept afloat after 4 years of full-scale war... Why would one year of Trump 2.0 do us in? Don't get me wrong, a whole lot of problematic actions have been taken in that time-frame but that pales in comparison to 1.25 million casualties and about the same number having left the country (and our population is almost triple theirs) on top of infrastructure destruction.
Entirely different cases. Russia never relied on the strong rouble for its economy to function. Or having unfettered access to most of the world's markets. So it had some know-how on weathering the storm.
But OTOH, if Trump is erratic enough to trigger a world-wide de-dollarization trend, and close down markets that were traditionaly open (e.g. Europe), then US would be facing an unprecedented storm that would be much harder to navigate.
Have we seen any signs of any limits to erratic behaviour?
Ever heard of the acronym 'TACO'?
A have a bad feeling for the US economy. A decline comes soon, then prepare for impact with a financial crisis and in the end of the tunnel the IMF. I know it's super crazy but that was also for my country 16 years ago.
Greece? How did it go after the crisis?
Yes. Until 2019 we stagnated. Since then we have the best Prime M of the last 100 years, Kyriakos Mitsotakis. He has made some incredible stuff and some mistakes, too, but they are nothing relatively to the Balkan traitors of the past. The country has rebooted and from an IMF victim it has become an exception in the current European/world shity situation. He decided to remain a third term, going to have almost a double score from the leftists in the 2027 elections, so I advise you to invest in Athens stock exchange.
I think the government is laser focused on reducing regulations, reducing energy costs, reducing interest rates, a weaker dollar that makes exports better, minimizing taxes. Technological innovation is increasing overall productivity. There are definite headwinds like upward pressure on labor by reducing the worker population, stagnating population growth, undertainty, tarriffs, a weaker dollar increasing inflation.
There’s the looming threat of geopolitical world war that has been overhanging the world since the combination of the pandemic isolating different countries and Russia’s invasion of Ukraine.
It’s really a mixed bag, but it’s not clear to me that we are headed into a total economic crash as the government is definitely focused on doing a lot of good things for the economy, but also is creating lots of different headwinds.
Hold on there, they have been very explicitly doing the opposite of reducing energy costs. The administration has been aggressively trying to cancel all sorts of energy projects, even projects that have almost been completed. At the same time they've been encouraging as much data center build out as possible. Lowering supply and increasing demand is hardly going to reduce energy costs.
They have managed to significantly lower expectations for global economic growth which brings down energy costs, but that's hardly a sane way to accomplish that goal.
I think it's a little bit more nuanced than what you say and that they generally are trying to increase energy supply while withdrawing from using heavy government subsidies or extensive regulations to pick the winners and losers.
From a demand side, they aren't looking to restrict demand, but want to have ample supply to meet the demand.
If that was true they would have let incentives for new energy infrastructure (which can be net positive, given energy is a national level concern), draw down in a way that didn't disrupt/destroy existing investment.
You can alter forward looking policy sensibly in a day. But you can't redline years of cooperative investment on the same day without destroying tremendous value (of the kind you claim to be working toward), credibility and trust.
I am baffled that performative flailing gets interpreted as progress, with such thin narratives.
The deeply counterproductive actions taken ostensibly to increase US investment in manufacturing are more of the same.
The destruction of valuable US research and capabilities, in the name of fiscal responsibility, only to continue fiscal irresponsibility is more of the same.
The destruction of diplomatic and defense alliances and influence, in the name of being stronger, is more of the same.
The private masked army roaming cities, harassing people with low relevance to their purported purpose, in the name of making the country safer: more of the same.
They all involve some truth, and then loud damaging counterproductive execution. Unless loud chaos is value.
Withdrawing permits for in construction offshore wind projects, and forcing utilities to keep operating coal plants they want to shut down is picking winners and losers.
Oil prices are VERY reasonable right now.
The thing I don’t get is that IMO Americans have a higher standard of living due to demand for the dollar. Being a net importer means they make less and the countries they’re importing from make more. Money = labor = people working, so people in other countries are working harder than Americans to benefit Americans with a higher standard of living.
It’s like a roofer working for a contractor that’s a millionaire and the contractor is upset because he’s paying the roofer while having a higher standard of living because of the profit made off the roofer’s labor.
No one is working for that rich contractor if his money is worthless. Isn’t a weaker dollar for America a disaster? The world works to serve America right now because of the dollar. Life’s going to be tough when America has to “get a job” and start earning their keep with real productivity contributions, isn’t it?
Maybe I’m just dumb, but all I can see is a massive drop in the average standard of living if the US maintains their current trajectory. It might even be too late already.
> Isn’t a weaker dollar for America a disaster?
For the majority of average Americans trying to scrape by and save enough for a dignified retirement, yes.
For the ultra wealthy, no. A weak dollar leads to an asset firesale to prop up their wealth even further.
The ultra wealthy have captured the US government completely.
You assume that these economic policies are dictated by some sort of common good. The reality is that most policies are dictated by corporations and are designed to benefit their shareholders and not the average american. In addition, the US is now pivoting towards authoritarianism which implies future policies will be determined mainly by a tight group of people who are going to use them as a means of enriching themselves.
>massive drop in the average standard of living if the US maintains their current trajectory.
Very rich people control the narrative in the US and get poor people to repeat their claims. Hence where we get statements like this from.
>“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
The thing is the billionaires/trillionaires don't care as long as they get more power. They'll eat the goose that lays the golden eggs.
You see a ton of this with Trump voters like my grandma that are getting screwed over with medicare changes and live in some kind of grand delusion that Trump is doing exactly what he said he was going to do in cutting benefits, and yet somehow it's all the democrats fault (???).
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I'd be interested to hear your idea in more detail (e.g., policy statements, metrics, etc.)
My read of the last year is that the current government's goals and outcomes are somewhat different, but I could be wrong.
>I think the government is laser focused
I'd rather say it's hell-bent.
It doesn't look like a laser focus to me... or maybe it's just all disco ball reflections dizzying me, and there is indeed a laser focus somewhere I just can't quite pinpoint.
I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell.
There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.
I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries.
I purchase a treasury. I have zero product, zero dollars and one treasury.
At some point in future i have zero product, maybe 12 dollars and zero treasuries. Presumably i now either repeat the cycle or use my winnings to spend on us output.
GP’s version checks out, your assertion about dollars staying abroad doesnt track? What am i misunderstanding - How did these dollars get abroad, how did they repatriate to buy treasuries, how did a treasury become a reserve, how did the dollars still exist abroad after being exchanged for treasuries?
> I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries.
Or you sold something to a non-American entity in a dollar-based market, eg. oil. The dollars do come from America to begin with, but once they get "out there" they work as a medium of exchange for whoever wants to use them for that purpose.
> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries.
[0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.
He's not wrong in his conclusion, just not accurate in why. If countries start moving away from depending on the trade imbalance with the US, the demand for USD will dry up. And they are trying to move away from it because of politics, specifically because of US bullying. But more importantly, the US is increasing trade barriers in a naive attempt to reduce that trade imbalance, which is the biggest reason everybody holds so many dollars--they're paid in dollars when exporting to the US, but don't buy enough US imports (individually or collectively) to spend & exchange all those dollars, which is why they park them in treasuries and other US investments. And it won't be long before oil begins receding from the picture (at least relative to total global trade, if not absolute dollars), displaced by renewables. Though oil is odd in that while creating demand for USD to settle transactions even for non-US oil, it's also a significant US export and has the effect of repatriating dollars.
The importance of USD globally was always on borrowed time. Global GDP has exploded in the 21st century, and the size of the US economy relative to the global economy is shrinking, albeit slowly. The US share of global GDP was like 35% in 1985. By 2030 it's projected to be as low as 12%. It doesn't necessarily follow that this would change the dynamic of strong dollar demand supporting US investments and debt, but it makes it much easier for this dynamic to change as countries become increasingly less reliant in relative terms on exporting to the US. In fact, it's kinda idiotic to rock this boat unless/until we're prepared for some serious fiscal belt tightening. As global GDP increases relative to the US, in theory the rest of the world could support profligate US debt in perpetuity.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else.
A world order based on rules makes it possible to live at a much higher level of abstraction.
Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief. But these wispy and unreal ideas that everyone believes in make it possible for most people to live longer, healthier and less difficult lives.
The "rules-based order" was always partly mythical, but as long as everyone kept pretending, it mostly continued to function.
But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
People will find out that life in the real world is a lot poorer and more miserable than life at the top of the tower of abstractions, even if your brokerage account appears to double.
I generally agree with your comment except the 'back to the real world' part. This is just the difference between a world with the gains that cooperation give verses a world with just the maximized minimum return that distrust leads to. A trusting world is the real world we have seen for decades. It is a real world we can choose to keep pushing for.
Neither is 'real'. The power of might depends on belief just as much as the power of rules. You need a whole lot of compliance, even when forced by fear and terror, to just keep up a police state. The belief consists of where people think other people assign authority to, at large. But that can be just as brittle as a meme stock if the time is right.
Social reality is always constructed. No single construction is more real than any other.
The US has played by different rules, might makes right, in the western hemisphere for a long time.
Screwing around with Greenland shit, on the other hand, seems riskier.
In practice the US could already do whatever it wanted in Greenland/Canada etc. The options for the motivation behind the theatrics I see. 1. Instill fear in the vassals->support for militarization rises there->they become more useable as proxies against RF/China 2. Just another Trump silliness
> Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief.
> But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
Many have absorbed and believe the argument of the might-makes-right crowd that their vision is 'real' and their enemies' vision is 'imaginary'. Unless people believe in what they seek, they are lost.
There's nothing imaginary about it; that theory is paper thin and doesn't survive simple examination. Obviously, humans are social animals that live in groups, have powerful intellects, and therefore have tremendous ability to cooperate and work together toward greater good; we've done it many, many times. Freedom and democracy have appealed powerfully to people worldwide, in a tremendously wide variety of cultures. That model was created by people who had experienced WWI and WWII; they knew more of your 'reality' than probably you or I ever will, and with that knowledge and experience they created this order.
And the greater good long predates that; religions and similar ethical codes based on the greater good long predate modern democracy and the rules-based order. Rules-based orders predate it. The Gospels in the New Testament are an easy, very familiar example, from 2,000 years ago (and a significant basis of modern freedom and democracy). Similar is true for abstractions like law, government, justice, etc.
We all are biologically the same, essentially, as the best of humanity and the worst - both are in all of us. It's our choice, our moral choice, what we do. That is also a fundamental that long predates the post-war order, democracy, the Englightenment, etc. Inevitability is a cheap tactic long used by those whose ideas are undesireable and don't withstand scrutiny.
Our choice is easier than those who survived WWII, and their predecessors. Our ancestors gave us the tools, the institutions, etc. They had to build them from nothing for a skeptical world.
The source of truth in fascism is not popular support or inquiry, thus they always need to channel some privileged connection to reality, or claim to voice the true will of the people and authentically represents the pure will of the nation.
Its a farce, of course, but one that can sometimes muster enough support to keep the signs in the shop with just a bit of intimidation and violence to back it up.
The rules based order is mostly a fabrication of recent history. Perhaps between the fall of the Soviet Union, China becoming more open, and the general peace and prosperity it seemed like it existed.
Politics between countries has always been around interests. Countries have no interest in giving up their sovereignty. They may pretend to respect these "rules" when it suits them and then ignore them when it doesn't. Everyone is focused on how "bad" the US is but a) the US has always more or less done whatever it wants b) Russia and China (and many others) have never even pretended to play or accept these "rules".
Canada's Carney whines about "international order" when just a few years ago China simply abducted Canadians in response to the supposed "orderly" arrest of the Huawei CFO to be extradited to the US. So Canada basically abducts the CFO of a major Chinese company and China abducts Canadians in retaliation and that's a rules based order to who exactly? And we can put together an endless list of an endless number of countries. So when exactly was there ever a rules based order except as a tool for countries to bully each other and for the poorer dictator led countries to try and get a seat at the table because they can vote in the UN general assembly.
Incorrect. The rules based order was first attempted after the first world war and then created after the second one. These are lessen that have been bought with blood. Lots of blood. Megaliters of it. The incredible stupidity of throwing that away is absolutely disgusting.
The "rules-based international order" was a fiction popularized by US policy makers who wanted to quietly substitute it for international law, so they could violate said laws, while still vaguely gesturing at moral authority.
International law was and is also a fiction. We have various conventions and agreements.
https://en.wikipedia.org/wiki/International_law
"In the 1940s through the 1970s, the dissolution of the Soviet bloc and decolonisation across the world resulted in the establishment of scores of newly independent states.[67] As these former colonies became their own states, they adopted European views of international law.[68] A flurry of institutions, ranging from the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank) to the World Health Organization furthered the development of a multilateralist approach as states chose to compromise on sovereignty to benefit from international cooperation.[69] Since the 1980s, there has been an increasing focus on the phenomenon of globalisation and on protecting human rights on the global scale, particularly when minorities or indigenous communities are involved, as concerns are raised that globalisation may be increasing inequality in the international legal system.[70]"
> In the 1940s through the 1970s, the dissolution of the Soviet bloc
There was no dissolution of Soviet bloc during that time.
https://en.wikipedia.org/wiki/Liberal_international_order
"The nature of the LIO, as well as its very existence, has been debated by scholars."
Nobody is throwing anything away and that thing you think they're throwing away didn't really exist.
Whether or not a 'LIO' exists is not that interesting to me. What is interesting is what actually exists and what has happened in history. What actually exists is an enormous shock after, for instance, world war one where the question arose how it is possible that basically an entire generation of young men was slaughtered. E.g., every small village in France has a memorial of the fallen soldiers during world war one. For many decades after the war commemoration were/are still being held. It used to be that competing for territory was just the normal thing countries did. Then, it became clear that this has a potentially enormous cost in human lives. The obvious conclusion for people who are not sleepwalking through life and through history, is that any political leader who advocates for a change in country borders and does so much as hint to violent means of doing so is totally deranged and immoral. A similar shock has gone through the world after world war two, which, for instance, lead to the creation of the declaration of universal human rights. Among the decent public, it is also concluded that a violation of human rights is deranged in immoral.
> Russia and China (and many others) have never even pretended to play or accept these "rules".
This false. They have pretended to play by the rules, and when breaking them, to at least manufacture some pretext, or to deny it was a state activity at all.
One example I can give you is that when invading Czechoslovakia in 1968, the Soviet Union convinced a few Czechoslovak politicians to write a letter inviting the forces for "brotherly help", thus manufacturing a case that it's not really an invasion. They didn't have to do it, the force differential was overwhelming, but they did it because they could point at the letter on international stage.
All this may seem a bit pointless but binding them in international structures brought interesting fruit in the wake of Helsinki conference on human rights. After that they were forced to at least somewhat follow the signed documents which lead to significantly better conditions to dissidents behind the Iron Curtain. And there are many examples like this, when pointing at international rules actually made things better. So let's not throw that away.
I dislike the saying "the devil's in the details". It is the inverse of where the devil actually thrives - in the clever abstractions.
The beasts who rule this world are the banksters and their vast bureaucratic thrall. Their failing is these rulers have huffed their own degenerate anti-human messages for the past 75 years, have become deranged themselves, and now they've lost their attractiveness and persuasive power.
See what's gone almost completely by the wayside in their green agenda and lgbtqia+4g message as they struggle to cope and maintain their grip. Public, centralized AI is their great hope for control, but it won't survive the lawsuits and consumer protections that are coming. The banksters are 100% parasitical and headed for ruination.
The rules-based liberal order (liberal democracy) is quite real and has replaced any meaningful investments with speculative bubbles and rugpulls, put human life itself up for sale, and waged endless wars, psychological and kinetic. That's the brutal facts rather than beautiful abstractions.
All's well that ends.
Actually, what you're listing above is just another set of beautiful (to you) abstractions. No, "banksters" are not "100% parasitical". The percent is definitely less than 100. But, you know, as they say: the devil is in the details.
Buddy if you think financial crashes were bad today, you should see what happens when banking is not regulated (great depression). Or, if you think war is bad today, you should see what happens when the world becomes multipolar and countries start carving up the world for territory (WWII).
Like please, read a history book.
I'm sure I agree with you that there are many problems with this system but life without it can get so much worse. The green agenda? 4G? That's the worst thing you can imagine?
What do you propose instead? Why don't the things that you condemn in "liberal democracy" happen there?
> USD still made up 57% of foreign reserves
Yes, but that's the lowest it's been since 1994, in percentage terms. In dollar terms it's been largely flat for the last decade:
https://wolfstreet.com/2025/12/26/status-of-the-us-dollar-as...
> So if this time is different, I’m not seeing it yet
Compare those numbers to 5 years ago. Remember, this is the timescale of a country, not a beagle. America has run on the strength of the dollar for decades, and the symptoms of that collapsing are likely to play out over decades.
>demand is still there today
Not all demand the same. There are broadly 2 types of USD buyers
1. price insensitive: sovereign banks, who buys for liquidity/storage
2. price sensitive: hedge funds, private buyer who buys returns
Type 1 buyers are bailing out of treasury. Type 1 are marginal buyers, the close auction regardless or rate, this keeps rates low -> debt servicing low. They artificially depress yield to non market rates, without them rate go up because you have more price sensitive buyers who buy for returns. This increases borrowing costs, hence US debt repayment rising massively.
Type 1 buyers, i.e. US allies (and historically even adversaries) soaked up treasuries are now de-dollarizing / buying gold in lieu of _more_ USD. Type 1s underpin the "privilege" part of exorbitant privilege. The more they de-dollarize the more dollars become exorbitant, aka debt like everyone else. Type1, sovereign held 60% of USD to 40% in last 5 years. This large part of why interest tripled and debt servicing went from 350B to 1T in 5 years. Type1s exit to 20% in another 5 years and maybe interest goes to 5%, debt servicing 2T+. It's the difference between 10%/20%/30% debt servicing as % of federal revenue.
This not to mention USD reserve ticking down at 1% per year means meaningful changes in our lifetimes, and velocity may increase with developments like Saudi no longer locking oil to dollar. Less USD as % of global reserve = more network effects of alternate payment = increased potential velocity of USD reserve drop. This doesn't mean other currencies pickup all slack, i.e. central banks seem to be going in gold / commodities with no counter party risk for new storage. The net result is USD will still be around, in large volumes, but the cost/debt to sustain the system will be "normalized" while US budget is historically is built around USD debt being privileged. AKA difference between borrowing money from family vs payday loans.
>Nearly all commodities are still priced in USD
PRICED as in benchmarked in USD, but =/= USD is being spent to settle them. There's a fuckload of commodities where PRC alone buys 30/40/50%+ of global production, and while quoted in USD, increasingly settled in rmb/CIPS, bilateral currencies, BRI infra or other swaps mechanisms that bypasses USD. This one of the largest source of dedollarization - PRC went from single digit % to plurality of cross-border settlements in RMB/non USD. Though this is just very recent leading indicator that USD is functionally circumventable.
There is another type of demand that I rarely see mentioned. Not only does the United States owe trillions of US dollars, other nations do, as well. They hold many trillions worth of loans denominated in US dollars. They must be repaid in US dollars and not in any other currency.
And not just to the United States but to other nations, as well. South Africa owes US dollars to Australia, Australia owes US dollars to Brazil, Brazil owes US dollars to Argentina, etc.
These nations are hungry for every dollar we print. Even if every trading partner dropped the dollar for trade tomorrow, and if everyone who owned Treasuries all sold them at once, there would still be demand for US dollars to repay their loans.
The IMF made them an offer they couldn’t refuse, and spun a sticky web of a debt trap as a result.
Three minute video: https://m.youtube.com/watch?v=_SaG9HVXMQg&pp=ygUQZG9sbGFyIG1...
>They must be repaid in US dollars
IMO this one of those cases where dollars is ultimately benchmark than requirement, IOU/settlement forms can always be restructured/renegotiated if USD is no longer lender of last resort, i.e. alternative payment systems enables take it or leave it deals in medium/long term.
USD/reserve status snowballed because US controlled techstack postwar which US leveraged (along with military hegemony) to USD controlling primary energy (petrodollar). Civilization/modernity was locked behind USD. Money followed existential goods provider, that's the real USD / unipolarity moat. There's no take it / leave it from US company scrip because leaving eurodollar system = technical default (most usd loans hardcoded on newyork/english law) from eurodollar western financial system = death sentence. Once that lock/dependency erodes all kinds of force majeure geopolitics can rationalize breaking dollar contracts. AKA multipolarity.
If alternate techstack/payment systems pops up and reach tipping point, country A can just say to country B who only wants USD (due to alignment or whatever), I don't have enough USD, here's RMB & cips/Brics+ & mbridge basket of equivalent value. This geopolitical layer, if BRIC+ can offer fossil, food without US and PRC can offer renewable energy, capital goods, consumer goods, technology, including 80% as good semi and civil aviation... etc if chokepoint goods are no longer exclusively under USD perview, then USD enforcement mechanism simply dies.
If we're talking about loans/aid, IMF is really pittance, low hundreds of billions. It's why PRC is now using their 3T USD surplus to basically do their own shadow USD lending without IMF conditionalities... countries now don't need to buy USD from US. And somehow PRC currently lending / providing swaplines with their USD at lower rates than US treasury. Incidentally, this dollar recycling also lowers demand for new USD bonds, further reduce type1 margin buyers. This circles back to other nations own trillions of USD to each other... when you remove type1s, you're left with type2 private sector / non bank financial institutions - these are the buys where each USD bought increases triffin burden, i.e. they are the exorbitant curse / payday loans traps that makes USD reserve more expensive to maintain. Their demand is a trap, not a benefit.
> If alternate techstack/payment systems pops up and reach tipping point, country A can just say to country B who only wants USD (due to alignment or whatever), I don't have enough USD, here's RMB & cips/Brics+ & mbridge basket of equivalent value.
Alternate payment systems aren't even required for this. If other countries are trying to divest US dollars and country B is owed "US dollars" and country A wants to pay in something else, country B would want to accept the something else of equivalent value because it's trying to reduce its US dollar holdings and would just be immediately turning around to resell them anyway.
Conversely, if country B is insisting on US dollars for alignment reasons while other countries don't want them then that's only providing country A with the opportunity to divest its US dollars by using them to pay the debt. Then country B ends up with them, but now what is it supposed to do with them?
The real reason those sorts of debts result in stability is that all the countries owed a lot of US dollars are going to do what they can to prevent the US dollar's value from declining.
The end of 2026 was remarkably different to the world of today, and it that's logical it is - checks calendar - already 31 days ago. Now imagine another year of this.
> The end of 2026
Seems you didn't check you calendar hard enough ;)
hah! it was 6 am after a long night of hacking...
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Check that calendar again.
That number has been dropping by a percent every year for USD over the last 10 years. It used to be 65% USD in 2015
Sure, and in 1992 it was 46%, and in 2000 it was 71% and in 2013 it was 61%.
USD foreign exchange reserves have definitely declined from their peak, but by “declined” we’re talking about going from “overwhelmingly dominant” to “merely dominant” to potentially in a few years “equal to every other foreign currency reserve in the world combined”, and maybe USD foreign exchange reserves will decline even further beyond that point.
There's some major historical events here. It's not just random movement. Here is a sort of visualization of key points and the USD share of global reserves with the events attached. The number in percent is the USD share of global reserves.
1970 (85%) - Up until 1971 [1] the USD was backed by gold by the Bretton Woods system. Other countries could trade USD in for gold at a fixed rate and in exchange would peg their currencies to the USD and trade in the USD. The idea was to prevent the US from ever being able to exploit their power in this system because if we printed too many dollars other countries could just hoover those dollars up on the cheap, convert them to gold, and make a bunch of money. Nonetheless we did print excessive amounts of money and abuse the power this system was granting us. So France dutifully hoovered up those dollars and made a gold call. We said 'nah', defaulted on our debts, and withdrew from Bretton Woods. This led to the famous quote from Nixon's Secretary of the Treasury: "The dollar is our currency, but it's your problem."
1990 (47%) - Following those events, the USD began seeing rapid inflation, and other countries were rapidly dropping the dollar. This 'peaked' around 1990. But then in 1991 the USSR collapsed. This not only left the US as the undisputed and sole 'king' of the world, but also led to these former nations beginning to dollarize once the dust had settled. The USD suddenly again starts to see mass adoption.
2001 (72%) - The adoption reaches its peak in 2001. At this point not only was there the dotcom bubble, but the world order begins clearly shifting with China and Russia developing increasingly rapidly and looking to become viable world powers once again. And there's been a gradual process of de-dollarization since then declining to where it is today to less than 57% and very much trending to where we were right before the USSR collapsed.
2025 (57%) - Where we are today. We're very much trending towards 1990, only 10 points away, which is the level when everybody was dumping the USD, the US economy was shaky at best, and there was another major superpower in the world and nobody was quite sure who would 'win.' This is far more significant than 'random noise' you're implying.
---
I am leaving out plenty of relevant happenings including the transition to the petro dollar, South American economic crisis, and so on - but these only contribute to eras I think, while the above are the main drivers.
[1] - https://wtfhappenedin1971.com/
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This time is already different. It's way past the point where the US is unfriendly towards the western world
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.
I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
There is no plan. There is just chaos.
It also increases profits for multi-national US companies since they get paid in other currencies, which they then convert to dollars locally. Basically, they have favorable FX tailwinds.
Who is that "we" backed into corner? USA as such certainly not.
Maybe you mean "pro-democracy anti abuse" people? Those yes. But administration and far right are not in corner. They are in full active act achieving exactly what they wanted.
The "Mar a Lago Accord" plan [1], for those curious. The US debt is one major rationale behind the strategy.
It's a dangerous plan that relies on keeping allies happy and re-establishing hegemony via a Plaza Accords / Bretton Woods 2.0 type system.
It's not going to work if you simultaneously piss all of the allies off.
[1] https://www.youtube.com/watch?v=1ts5wJ6OfzA by Money & Macro, which is a fantastic economics YouTube channel. Patrick Boyle has also spoken about this in pieces.
Eh, it's not a plan, it's make believe.
It's a flimsy back-filled rationale thrown on top the mercurial (and often sadistic) whims of an American Caligula, so the elite enablers can pretend there's something rational - or even good - about the chaos and destruction they are supporting.
There isn't. It's just chaos and destruction.
What scares me is that lots of American believe there is a plan and that the current administration is competent
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Economic crashes are hard to predict. In the end stock markets are a bit irrational. They don't crash just because there are good rational reasons. And then some irrational thing triggers a mass panic when you least expected and the whole thing crashes.
The circumstances and timing (it's been a while) suggest we are probably closer to a crash happening.
From a loan/interest point of view, the dollar de-valuating a bit is actually not a bad thing for the US. It stimulates exports and inflation. And at the same time that reduces the value of the debt (and that is paid in dollars). The downside is that inflation going up usually also means interest going up. And Trump resisting that because he wants to accelerate the economy might not be a good thing.
The big picture here is oil. The world is slowly moving away from oil as the key driver for economies and paying for it in dollars. China is well on its way electrifying large parts of its economy. To the point where it is starting to import less diesel. And they border on Russia with whom they trade in Yen, not dollars. A world that is going to trade less and less oil is going to be less dependent on dollars.
I'm not an economist though. But planning for some kind of crash/correction seems prudent.
> Economic crashes are hard to predict.
Some of them are, some of them aren't. An economic crash is pretty much guaranteed if international relations break down in such a way that international partners believe trading with the US is a liability. Dollar going down won't stimulate exports if the cause for it was an aversion to buying US products in the first place.
Whether or when that will happen, and to which extent, is another story, all we can say is that the momentum created by the current US administration moves us closer to that point. Will they come to their mind before that happen? Will they be able to restore trust? Will the lingering effect from the damage already done subside? These are hard questions.
De-dollarisation is happening, but slowly. China has decreased its US treasury holdings by about 7% a year over the last five years [1].
It won't happen quickly because no-one would want to tank the market while they're selling.
[1] https://tradingeconomics.com/united-states/foreign-treasury-...
> The US economy depends on the country's position of world hegemon
Unfortunately, the data doesn't back this up. The US economy is actually one of the least trade-dependent nations in the world.
27% of GDP is trade-oriented (The value of imports and exports as a function of GDP), while the global average is 63%. The US is so developed, that even if the country was completely cut off from the world and operated as an internal economy it would still remain the world's largest.
That's mostly a result of you using percentages rather than dollars and the US being one of the largest countries. 27% of US GDP is 165% of Germany's GDP and Germany is the third largest economy in the world after the US and China.
Become a hermit kingdom to own the libs.
At a certain point we have to ask: what is the point of politics? Who are we doing all this civilisation stuff for? Is a nation an engine of prosperity to enrich the lives of its people, or a life support system for the Dear Leader?
Nonsense. If 27% of GDP is suddenly gone, how US economy could be the largest? (rest of the world can substitute US trade between itself)
The US Economy is 53% larger than the next largest, China, in terms of real GDP (Not fake PPP nonsense). 28T vs 18T.
How is PPP "fake"? Nominal only matters specifically for trade, which in this hypothetical is the thing the USA is expressly failing to do.
Can US debt be seen as equity? We mint equity from times to times, do buy backs, allow people to tokenize it to pay with it and so on...
>The US economy depends on the country's position of world hegemon
no it doesn't.
it's much closer to "you need the best economy to be a hegemon"
This is one thing I've heard repeated - that USD needs to be spent in America - seems like other countries could just transact with it directly.
They can and they do; that's called dollarization.
It's worth observing that dollars that are never supposed to return to the US don't have the same anti-counterfeiting pressure that dollars spent in the US do. I don't know how much of a market there is in counterfeiting USD for dollarized economies.
> The US economy depends on the country's position of world hegemon
Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
The trillion dollars a year pumped into the military support the stock prices of quite a few highly-valued companies. A sudden collapse of hegemony would be bad for "the market", but that seems unlikely unless WW3 actually kicks off instead of a few more rounds of opportunistic snatching and bullying by the big countries, and in that case few people would care about the stock market.
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world.
The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India?
Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
> I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
Yeah aren’t they just Leninist but using us as a signal of what to make? I thought rough shape of the scheme was you get to build a factory using free loans in bullshit money that buys rice and apartments but can’t leave the country, then use that to get real money you can take elsewhere by making shit Americans want to buy. You can’t trade the bullshit money for real money without the factory step.
> 'this time it's different'
I remember reading this a lot in 2000-2001 and 2007-2008
That said, overall I sort of agree with your assessment except for having any optimism that the US changes course.
The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct.
Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
>Trump has no ability to admit mistakes even to himself
Whatever happened to 'TACO'
Still, he'll be gone one day and I am going to be all in on that day. It'll all be hockey-sticks from that moment on.
How much of America’s growth since the 40s is attributable to its hegemony, stability, and the emergence of USD as the reserve currency of the world? And where other developed, stable nations started dropping in population, the US continued growing thanks to immigration and its center as a research Mecca.
All of those are being unwound as we speak, and it’ll take decades to prove to the world that any trade policy and government agreements may be kept longer than 4 years.
>growth since the 40s
The US growth trend has been fairly constant since the late 1800s. There's no real discontinuity in the trend around the time the US become hegemon.
https://upload.wikimedia.org/wikipedia/commons/0/01/GDP_per_...
Part of why Switzerland is so stable is because of its neutrality. Switzerland doesn't have to deal with Russia interfering in its elections the way the US does.
The US became the wealthiest country on a per capita income basis in the 1880’s, over taking the UK.
The US was quite isolationist up until the end of WW2, so I’d argue global hegemony isn’t that important when it comes to economic performance.
What about the Spanish American war (1898), the Philippine-American war(1899), and World War One (1917)
He'll be gone. The trust in the US won't come back. If your constitution and political system allow such a moron to wreak so much havoc in such a little time, why would we ever trust you again?
Trump, yes. The millions of people that voted for him multiple times despite no shortage of reports and credible allegations that he was a scumbag... Will not.
Trump isn't the problem, he's a symptom.
What you're missing is that America was always like that. And it's been extremely successful. For sure there have been some changes in social dynamics, not just in the US, but worldwide. But the recipe that made the US successful has not changed much. Market economy, geography, attracting talent, innovation, freedom.
>Market economy
The recent massive increase in the US governments direct and indirect involvement in business decisions changes things.
Trump is pushing/forcing countries and companies to invest in the US. He's added more restrictions on who they can sell their products. New significant widespread tariffs also exist that forces businesses to decide on how they can handle it while being pressured not to raise prices.
Government involvement in business decisions, even if indirect, is not a market economy. In a true market economy supply and demand should determine prices and businesses and consumers make the decisions on their respective side.
There's also background pressure on businesses to avoid angering Trump and this affects their decision making process.
>attracting talent, innovation,
Trump raised the fee for H1Bs, blocked student visas from 19 countries, and revoked 100k visas for people who were here as students, business reasons, vacation, and other. He also is removing legal status from many groups.
His inflammatory rhetoric and actions have harmed the international reputation of the US. There's also a prevalent anti-immigrant mood in the US and a much smaller
This decreases the pool of people who can choose to come here and for that smaller amount it increases the probability that smart and innovative people may look elsewhere to either study or start a company.
There are also those that had legal status, lost it, and must leave. These are another set of groups that could have contained some talented and innovative people.
Talented immigrants have done so much for our economy and standing in the world. ----
He cut government funding for many scientific research endeavors and government programs. These may or may not be replaced by private industry. It's justified to cut waste as government spending is a problem but speed and extent of the cuts makes it questionable if a proper assessment was done.
----
I'm sure you can point to similar actions in the past but I believe the quantity, speed, and intensity are significantly different than in recent times.
I'm also not arguing that some changes weren't justified. I just believe it's a clear change in the ingredients for the worse.
> Government involvement in business decisions, even if indirect, is not a market economy. In a true market economy supply and demand should determine prices and businesses and consumers make the decisions on their respective side.
This is true but not a novelty. The US has been doing all kinds of things to harm its markets for decades, e.g. artificially constraining the housing supply, using tax incentives and manipulating interest rates to goose consumer spending and in the process drive up consumer debt, and let's not even get into all the ways it molests the healthcare market.
That isn't to say that they're good -- those markets are very messed up -- but things like this are bad, not new.
> Trump raised the fee for H1Bs, blocked student visas from 19 countries, and revoked 100k visas for people who were here as students, business reasons, vacation, and other.
The H1B program has been widely abused for a while now and in general the US is in need of significant immigration reform. Many of the things Trump does are stupid, because of course they are, but the general premise of "hey wasn't this supposed to be for researchers and scientists rather than mechanic-level IT work" seems to have something to it here.
You can't say we're importing the best and brightest while also doing everything possible to make it so that someone who is a doctor in another country with a world-class medical system has to basically start over from scratch in order to be a doctor in the US.
And then people will have much to criticize about what Trump is doing. But okay then, so do something better instead of all the doing nothing that was happening before.
> It's justified to cut waste as government spending is a problem but speed and extent of the cuts makes it questionable if a proper assessment was done.
It clearly wasn't. The problem is we need some kind of structural reform -- a system that doesn't allow wasteful programs to accumulate and increase in number over time -- but that would require a functioning Congress, which has instead been doing everything it can for decades to abdicate their role to the executive branch. Which has term limits and therefore the attention span of a goldfish for those kinds of structural problems, and then we end up back in the situation where either no attempt is made to fix it or the attempt is amateur hour because it's attempting a contextual fix to a structural problem.
The rest of the Republican Party is completely devoid of charisma, especially the kind that drew so many voters to Trump. There is no drop-in replacement.
Lots of money will be spent trying to manufacture a replacement, though. That will be fun to watch. If you thought the last-minute rally around Kamala was tough to watch…
Isn’t the VP generally the shoe-in nominee? Vance lacks charisma and gravitas, but he only has to be better than the Democratic candidate. For every Bill and Barack, the Democrats have also given us a Kamala, Hillary, and Al. Never underestimate their ability to pick a loser.
But what the republican party has, is a lot of isolationist voters who cannot be moved by appeals to markets or international trade. They don’t care about that stuff.
Sure, the republicans will look hilarious trying to replace Trump for a while … but those Americans aren’t going anywhere and will gladly vote for the next Trump whenever they show up, same as they voted for Reagan and Bush II.
The American attitude driving this current period is much deeper and wider than one man, and people thinking it will all go away when one old man steps down are going to be “surprised” when we’re dealing with this again in ten years or twenty years or three years.
Don’t get me wrong, I’ll be the first to jump up and say there’s a deep cultural rot in America that, if it weren’t for the fortune of incredible financial success, would have us be seen as a hellhole of antisocial maniacs.
That being said, I just don’t buy into the notion that the strategy of the party from 2016-2024 (maybe 100 Trump rallies per year?) can carry over into the late 2020s / early 2030s.
If anything, this is me saying everyone is aware that the current window for reactionary politics in America is closing as Trump loses his vigor and gets closer to being too old to do what he did between 2014 and 2024. The reactionaries in the government and behind the scenes may make one last desperate grab at maintaining power.
The weird cousin of "This time it's different": "That time was different"
That's not the point: the point is America did this twice. The world is not going to deal with America radically flip flopping every policy position every 4 years, and escalating that every time.
The US has just finished (maybe?) threatening to invade a NATO allied country. The occurrence rate of that has gone from "never" to "at least once". The delta change on that is infinity: there will never be a world in several generations where that is not a strategic risk the world has to deal with every 4 years.
> That's not the point: the point is America did this twice. The world is not going to deal with America radically flip flopping every policy position every 4 years, and escalating that every time.
I’ll admit, I’m becoming confused about the point of our back-and-forth.
All I’m trying to express is that probably by the end of 2026, and definitely by 2028, the people who are trying to enact reactionary change (Stephen Miller, PayPal Mafia, Heritage Foundation, etc.) will have to adjust their strategy. They are losing their charismatic leader, if not because of constitutional limits on presidential terms, then by his very obvious reduced vigor (he will not be able to do 100 rallies in a calendar year again).
On the world stage, yes, America has stumbled. Maybe even worse, some international folks are realizing that the America that they thought existed was just a Hollywood mirage, and that we were always one recession and a few thousand votes in Florida from becoming a global pariah.
Can't all that be solved by posting ICE guards around all polling stations?
There's no law of nature that proves democracy can't be overthrown, but ICE is currently struggling against popular resistance to merely enforce immigration law in a single medium-sized city. Right now there's not much indication they have either the desire or operational capacity to pull off nationwide voter suppression. (And a number of special elections over the past year have defeated regime-backed candidates without ICE involvement.)
If they tried to merely immigration law, they would had no issue.
They were successful at creating fear and making conflict avoidant people stay home. Despite large amount of protesters, that is real effect.
And it would create real vote suppression. You would had people not voting out of fear. And the opposing side having less votes (even if they win, they win less)
I think JD Vance has plenty of charisma.
Wait. Do you really think that or are you being sarcastic?
Definitely an odd duck out in the context of Trump, Obama, Bush II, Clinton, Bush, Reagan.
Also remember it’s not just being charismatic, but charismatic enough to keep people distracted from increasingly unpopular reactionary politics that defy even conservative beliefs (e.g. gun control, speech policing, deficit spending, plenary executive).
Gun control (for minorities), speech policing (for liberals), deficit spending (when they are in charge), and a plenary executive (when Obama isn't president) are core conservative beliefs.
They say that they don't like those things, but you can't listen to what politicians and talking heads on TV say. Politicians and talking heads lie all the fucking time. You have to look at what people do.
They aren't stupid in not understanding the hypocrisy.
We are... for thinking that they don't know that they are hypocrites.
No, Trump getting elected twice is the exact reason Fox News and the like were created.
Trump is president because:
- the absolute failure of the left and the press to address Biden’s cognitive decline.
- Democrats deciding to die on the “trans women are women” hill.
The marginal Trump voter did not very much care for Trump.
I agree that the Democratic party has fumbled the ball (over and over) and deserves a lot of blame for where we are now, but all of the trans talk in 2024 was driven entirely by the right.
The Democratic party wasn't talking about trans people in 2024 (if anything the Democratic campaign was conspicuously avoiding the conversation entirely). The trans "debate" that people remember from that time period was driven entirely by right-wing ads and social media.
Obviously this is a pretty successful strategy considering how many people falsely remember who was actually talking about this.
2024 Democratic platform [1] word counts:
They slit their own throats by ignoring half of the voting population.[1] https://democrats.org/wp-content/uploads/2024/08/FINAL-MASTE...
It's true, the Democratic party found themselves in a bit of a pickle during the 2024 election. But it's because the party has been obsessed with the trans culture war for over a decade, culminating in the Biden admin's demands that all womens' spaces be opened up to men who self-identify as women. Prisons, college dorms, sports teams, school locker and shower rooms... there is no place or program that a male wouldn't be able to access the instant he said he was a woman. These principles of self-identification and gender identity as a protected characteristic were being enshrined in government rules and regs at all levels, from Title IX, HUD, Department of Corrections, to countless state and local rules.
Remember Kamala telling the ACLU in that she would provide taxpayer-funded gender affirming surgeries to illegal immigrants if elected president?
If Democrats really didn't want to have that debate you mention, why do they lean so heavily into the trans stuff to begin with?
> the Biden admin's demands that all womens' spaces be opened up to men who self-identify as women
> there is no place or program that a male wouldn't be able to access the instant he said he was a woman
I find it refreshing to see this stated so plainly and without euphemism. It really does lay bare the insanity of this policy.
They talked about it because they knew the median voter disagreed with the Democrats.
No, it's because Obama disillusioned the left, and Biden just hammered it home. Those who thought the Democrats could actually represent the "big tent" have all been disappointed over and over again by sheepdogging and ignoring popular issues with bipartisan support in favor of corporate interests with only an occasional performative nod towards liberal ideals. That's why the right showed up to vote and the left stayed home.
Biden was by far the most effective and most progressive Democratic president of the post-WWII era.
What "hammered home" the disillusionment was not Biden's actions*, but rather the media narrative built around him, particularly by the newspaper most identified with the Democratic Party: the New York Times. They were angry that he didn't give them deference early on, and that, combined with the desire of their wealthy Republican owner to push his politics, led to the constant drumbeat of stories about Biden's supposed "cognitive decline", when he's still much sharper than Trump.
ETA: ...not to mention totally ignoring all his very real accomplishments, like forgiving the student debt of millions of people (yes, despite not getting as many as he wanted, he really did achieve that) and the infrastructure bill.
* His inaction, particularly on prosecuting Trump, was a separate matter.
Yes, and also pushing identity politics down voters’ throats, selecting an inept candidate without a primary, their desperate attempts to buy votes with debt forgiveness, and opening the border, which escalated to a full-blown crisis leading into election season.
If we extrapolate Trump’s health today compared to where he was at just a year or two ago, I think Republicans will face the same dilemma the Democrats did soon. It will be interesting to see how they handle it.
But cares about something that has zero effect on them? Trans? How many of them know a single trans person?
Like somehow that's a huge thing for Trump voters but a crashing economy is not?
Lots of people know trans people (by which I mean people that have decided to take some visible action to transition) by now - the people in the boonies and flyover states have access to the same internet as everyone else, so a lot of people outside the most progressive cities have transitioned. You have to remember that trans had been at the front of the culture for 10 years (since Caitlyn Jenner) by the time of the 2024 election.
The stocks didn't really go down yet and their media sources are distraction agents.
Crashing the economy? In the past year the S&P 500 rose 14%, unemployment is at 4.4%, and inflation is around 2.7%. There are many things to criticize Trump for but the economy has not actually crashed.
The S&P 500 rose 1.04% in EUR terms only. That's basically nothing.
Of the 14% in USD terms 13% evaporated because he crashed the dollar compared to all other currencies (EUR, GBP, CHF, AUD, whatever)
Trump ran on an explicit promise to bring down grocery prices on day 1.
Grocery prices have continued to climb.
Absolutely nothing he has done could remotely be said to be aimed at bringing them down.
He has also instituted massive attacks on the power of labor, and on the offices that report on things like the unemployment rate.
"The economy" is not just the stock market; unemployment numbers literally cannot be trusted coming from Trump's BLS; and an inflation of 2.7% is, in fact, fairly high (it's 35% higher than the "target" rate of 2%).
Its standard Republican playbook.
Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy.
This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support.
A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors.
Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too.
[1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
"Soak the rich" laws were passed around a hundred years ago in the US in response to obscene wealth; worked out pretty well for a long time before they got rolled back and we got a new round of oligarchs.
> I dont think AI even factors in to this.
I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward..
AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
Trump famously bankrupted 3 casinos. The US economy will be the 4th.
He bankrupted 4 casinos. 2 in one swoop.
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> Here’s the current price of silver.
Not shown on the chart (and which couldn't have been predicted at the time of writing) is today's crash of almost 30% in that price.
Speculative bubbles happen. The narrative of people losing faith in currency made no sense, because that should pump the prices of durable commodities as well, if not instead of precious metals.
Once the supreme court decision about Trump went out, I took all of my investments and put into a savings account.
When a dip happens, I simply take 10% of the money, buy the dip, then sell when the price hits pre dip.
So far Ive netted significantly more than any of my peers that actually do investing.
So if you had a pension mostly in all world indexed funds, you'd switch them over to "boring" investments like cash.
Interesting. Do you buy indexes, or ?
I don't see 30%. Maybe 12% from the very recent top, back to wherever it was just a few weeks ago.
https://www.kitco.com/charts/silver
There has been significant recovery in after-hours trading, but check out that "day's range". The low point was around 1:40 PM EST.
>There has been significant recovery in after-hours trading
After hours has been flat. I think what you meant to say is it recovered a tiny bit from it's regular trading hours low. It's still down over 25% on the day.
I know it was recovering in the afternoon, but I didn't think it got to ~85 by the bell. Maybe I misremembered. It doesn't help that SLV is close to, but not equal to the price of 1 oz.
it was at 120 and now it's at 85. yes it's back to where it was a few weeks ago
Why do people say this… ok so you buy at 120 and now it’s back at 85, no big deal that’s the same as a few weeks ago!?
yes, that is correct.
most people are long on silver and gold. who cares if there was a slight correction.
I bought the bulk of my silver in the $20-30 range and am still buying. I bought on the way up, I bought at $120, I'll buy at $85. The price at the time I buy really doesnt matter to me. Only when I sell will it matter.
I hope to cash out and buy ~150 acres of land with it to hunt on and live on.
Clearly very few people were buying at 120 which is why it fell back to 85. It's a highly volatile commodity. Commodities markets go through booms and busts all the time and you never even hear about most of them.
My bad. I placed a small buy at around $120, afterward it immediately tanked. Sorry folks!
For clarity: that is sarcasm.
What is different this time? Maybe:
1 Online shopping market in the range of 5 trillions 2 Electricity and energy price raise 3 Impossibility to lower interest rates 4 Tech market also in the range of multi Trillions 5 Global education and power expansion ...
Meaning that a % of all this money flow goes private pockets destroying medium class, which gets poorer.
It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes. The real question for an economist is how much ram has the system and how much the memory has leaked?
This Legendary site is interesting: https://usdebtclock.org/index.html Especially when combined it´s data with AI.
you can couch it in tech metaphors but there is a clear path forward and it involves eating a certain class of people
You don't have to eat them. You just have to erect significant barriers to hoarding wealth, particularly in off shore devices, and you have to create constant pressure to ensure that stored wealth is best re-invested in the economy at large.
These aren't even hard problems. Until you meet someone in Congress. Then it suddenly seems hopeless.
>and you have to create constant pressure to ensure that stored wealth is best re-invested in the economy at large
I have no idea if this is true (I've asked economists-in-training, they say they'll get back to me), but I've read that the huge increases in tax rates on high income during the war was less to generate revenue (tho more revenue was certainly a need - there was also a growing focus on growing the number of people who paid taxes, which prior had been quite small), but more to ensure profits were not realized and instead kept invested in the economy and the war machine.
A kind of practical "hodl" to keep the wartime economy stock with reinvestment - or really to discourage removing money from industrial investment - to benefit the war-time economy.
Would like links to things to learn more about this line of reasoning.
ensure that stored wealth is best re-invested in the economy at large
Pretty sure the vast, vast bulk of wealth held by the richest US households is indeed “reinvested in the economy at large”.
Where do you think it is instead?
Supporting companies that profit off of misery, reduce human meaningfulness, those that innovate the surveillance state; why is it so hard to support policies like giving US school children free breakfast + lunch, medicare for all, public housing, universal childcare, federally mandated paid time off, universal higher education + vocational training, and a public jobs program (all things that have 70-90% voter approval across party lines; the new deal coalition literally had control of both houses of Congress for nearly 60 years unabated)? Programs that would literally unleash hundreds of trillions in monetary + societal benefits, why should the US population care about the wealth of the few compared to what we can do to provide meaningful lives collectively?
The idea that less than 100 people in the country have some sort of mandated right from the devil to dictate the direction of technology in our country should fill every single decent human being with disgust.
We must correct this. The fact that several hyper scale data centers could provide US school children free lunches + breakfast for a year should be the first immediate sign that something is deeply wrong with our country.
Isn’t hoarded wealth a no-op? It just reduces the supply of whatever they are hoarding.
Would the people benefit from redistributing the things they are hoarding? Corporate stock that pays little to no dividends, mainly? It’s not like they are hoarding wheat. I don’t really get what people think will happen if we redistribute the stored wealth.
All wealth is, is a claim to direct labor and materials, the magnitude of which is relative to the total amount of wealth competing to direct those at present. If some portion of the wealth is locked away, the labor and materials are still being deployed, just the total pool of wealth competing to direct them is smaller than it would be otherwise. Unlocking wealth does not actually bring more stuff into existence.
Now, it could redirect labor and materials used to built yachts or luxury homes into more practical goods. But my impression is that the labor and materials used for those things are minuscule compared to the overall economy, and most of the wealth of the very wealthy is not actually used for those sorts of things.
>> Isn’t hoarded wealth a no-op? It just reduces the supply of whatever they are hoarding.
It’s not. Wealth creates political power, which the wealthy wield to stack the odds in their own favor at the expense of everyone else.
Is that the topic of discussion? I thought it was something along the lines of “tax the rich so we can do things with the money”. That is the area I’m saying it is a no-op in. Statements without context frequently don’t mean the same as what they mean with context.
Big problems are solved by years of investment and good decision making.
Unfortunately, going after causes or correcting symptom in any kind of hurry acts as a massive destabilizer at exactly the moment systemic destabilization provides the motive/momentum for taking action.
Hard course corrections at critical pressure, in a complex system, is a value destroying reset.
Companies can do this. Mass layoffs, capitalization sell off, etc. And then recover over time, because the rest of the economy around them is mores stable and the pain gets diluted. Entire countries doing this doesn't work out so well.
But it would appear, that may be the path we are most likely to take.
They say that prediction is difficult, especially when it is about the future. Unwise economic policies may be punished quickly, slowly or might be revoked before punished severely. The question is how much risk one is willing to take. Another matter is of morality. Being invested into something means supporting its practices and being partly responsible for them.
If you predict a stock market crash every year, eventually you will be right one year.
A declining dollar will look like a good economy for those who think the economy is the stock market.
From an EUR perspective the s&p500 has flatlined over the past year while the msci Europe is up by almost 30% in eur terms.
Needless to say, as an outsider from the inflation bubble, American stocks are not a good investment.
There is a good reason to believe that us stocks will not outperform in inflation adjusted terms over the next 10 years.
This is true - all the global multinationals that essentially make the US stock market earn a good portion of their revenue in foreign currency, so their revenue and profits will increase.
In addition, they are all cheaper when priced in USD, so their stock will go up regardless.
This is just counting short term effect of currency devaluation. Long term there are also effects around trade balance and jobs.
Declining USD makes US exports more competitive.
Private equity and retirees with everything in a 401k.
Also, increasing billionaire wealth and burgeoning (but somewhat circular) market capitalizations of companies will seem like a good economy while real income and wealth for the bottom half of Americans keeps falling. The mainstream business media is a gaslight factory completely ignoring the ever-widening K-shaped economic reality that there's a very good economy for the highest income people and a rapidly declining/terrible economy for everyone else.
If you predict a crash every month and it happens after 2 years... can we call you a visionary?
I know the question is tongue-in-cheek, but I think it’s a fascinating question, so I’ll take it seriously. If you predict the crash and it happens two years later, i think you basically cannot profit off that guess, so I’d say no. Although i haven’t provided data for the two-year claim, there certainly exists some period N for which the prediction no longer pays off, given a fixed drop. But if you can predict it 6 months in advance, you probably could profit! I think a certain amount of annoying repetition is fine for profitability.
Yes and thank you in advance
ZeroHedge has correctly predicted two hundred of the last two recessions ;-)
ZeroHedge can stay irrational far longer than you can stay sane.
There's a real estate YouTube channel that's been calling for a real estate downturn for like 8 years (pre-Pandemic). Eventually they'll be right.
Maybe simultaneous with the crash of the Chinese economy, which was predicted for 40 years now
I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come.
Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs)
There were worries that they'd issued a lot of debt to build real estate that wasn't needed resulting in ghost towns and people thought prices would fall and the banks lending would collapse but they seem to have managed ok. The Chinese actually seem quite smart at managing their system.
They managed okay up until now because the Chinese gov takes a ton of revenue directly from their industry. They have very low income taxes on the public and instead make a lot of money from their huge state companies and investments in their manufacturing, industrial, and tech businesses which are still booming. That helps offset the losses from real estate, which they also make money off from land sales. They act more like a giant bank than one that simply taxes and spends.
But their fiscal deficits have been growing quite a bit, particularly their local governments and they've had some pretty bad deflationary issues recently.
https://rhg.com/research/chinas-harsh-fiscal-winter/
The Chinese economy is indisputably strong and real, but rumor has it that its reported growth numbers have been inflated in the last couple of years. And why wouldn't they be - there is an autocratic government whose justification is that what they are doing is increasing economic success. No success is not an option.
Yeah basically every single academic and economist knows the Chinese government lies about its GDP numbers and pumps out fake stats. Its the Chinese way.
Personally I'm less and less inclined to believe in capitalism and money as a concept - we've long past moved the concept of money as universal barter, and into strange and speculative theories about how things ought to be valued, with the most valuable things either emerging from immediately unclear value propositions (impossibly valued companies, high-paid jobs that seemingly dont contribute to society) or artificially created shortages (housing, overpriced infrastructure projects due to government regulation and meddling).
If for example, BYD makes a car that's substantially similar between the China and Europe versions, and sells said car for $15k eqv RMB in China, but $30k in the EU, it makes double the revenue for the same 'value'. Even the argument of the EU being generally richer, and thus the car having higher monetary utility doesnt hold - a well-paid EU surgeon wont pay more for it than your average office worker.
So I feel money is increasingly a poor proxy for actual value/wealth etc.
A bottle of water in the desert and a bottle of water in your fridge don't have the same value.
That's only because, for some reason, people have conflated the words "value," "price," and "cost" until the terms are indistinguishable.
But politics isn't involved.
The point of tender is to represent value.
Your water in the desert costing 100 times what it costs where it rains is meant to represent its scarcity here vs over there.
Take cuban dollars vs normal dollar. In there the two tenders aren't proxy for value. Proxy for a political control so that the wealthy visitor pays 10 times, for the same bottle of water on the same shelf.
We are hoarding money to buy many bottles. The chinese are making and filling it while drilling wells that dont seem financally viable. They spoiled their entire bottle buying budget on that? What dumb communist central planners.
Much of the difference in the BYD cost is accounted for by a 27% tariff on the cars, transport and increased costs for warranty and compliance certification costs, as well as likely subsidies in the domestic market.
Of those, you’ll see that only transport costs are a function of “capitalism” the rest is government.
Economists account for the divergence you're describing with a concept known as "purchasing power parity", which does indeed result in a 2x adjustment in Chinese wealth. The intuition is that market exchange rates combine a number of things beyond the purchasing power of comparable goods. For example, if you have a 30 year horizon it makes perfect sense to trade 1 car worth of RMB for 0.5 cars worth of GBP: with the GBP, you can buy a government bond at 5.29% instead of 2.26%, and even with no reinvestment you end up with 1.794 cars worth of GBP vs. 1.678 cars worth of RMB.
> Their biggest problem[…]
is demographic in nature. https://www.populationpyramid.net/china/2024/
Great website, not going to downplay the problem, but you can check out other countries, and see that a lot of places - particularly in the West - are f*cked. That China is too, is not much of an upside, Honestly its kinda shocking how bad things are going to get, and Im not sure what can be done if anything at this point.
China is probably the among the best countries in the world to handle so-called "demographic collapse". Elders are relatively healthy and multigenerational households more common. Leader in robotics. News flash: you don't need a billion hard-working peasants in 2026 to be productive.
People in general don't seem to look at how much "productive" population you need in the real economy to support a given population. Things look pretty fine by those metrics and if the AI claims are to believed about to rapidly get even better. How to motivate and compensate that small number of people in the real economy that supports human welfare is a different question.
Also people appear to be blind to the real material limits that really start to be pushed by large populations. You could end up making life materially worse by trying to "fix" the demographics by adding more humans.
This is a profoundly important - central, even - issue that I am very surprised to not see widely understood or acknowledged.
China is in a life-or-death race against time. A good number of their decisions are explained when viewed through this demographic implosion-bomb they are facing.
The same can be argued for Russia. Many-- myself included --believe it's the #1 reason Putin decided to invade the Ukraine as its youth are seen by the Kremlin as "Russian enough".
Korea has a similar demographic shape, and Japan already passed its peak in 2005ish https://www.populationpyramid.net/japan/2024/
Roujin Z shows Japan saw what's coming over 20y ago, already.
Depends on your definition of crash?
Real estate prices dropped 30% blowing up most people’s savings. The debt overhang is slowly bankrupting various companies. Growth is an anemic 5% (should be double for a country with China’s per capita income) and means it will never enter middle income status. Unemployment, especially for grads is very high and the lack of babies or immigration means the worker base will shrink while the demand for social services will skyrocket.
Doesn’t seem great to be honest.
Crash of the stock market != crash of the economy
Of course the market will go down at some point.
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> which will inevitably lead to Germany leaving Eurozone at some point
No chance. Unless that happens after a lots of other countries leave
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
That's not an answer. Japan and the EU can't handle those flows so again there is no other place to go.
Even if it's hopeless, the best strategy when everything is falling is to bet evenly. Whether or not those countries can "handle it" doesn't matter.
You're not betting in winning, you're betting on minimalizing losses. Huge difference in behavior.
Yeah people talk about this as though US treasuries didn't have a negative yield for a considerable amount of time.
People were literally paying the US government to hold their money because it was better then the alternatives: the options can all be bad, but some can be worse.
> When has any deal with China worked at a strategic advantage for the other side?
Australia did well out of the Australian-China free trade agreement and then won the subsequent (Australian-caused) trade war.
Turns out being able to produce iron ore cheaper than anyone else and having plenty of alternate buyers when China bans imports means the iron ore price just goes up, Australian miners make more money and Chinese manufacturers get annoyed at Chinese trade policies.
Wasn't awesome for Australian lobster fishers though.
For a "little" speech, it is all people seem to talk about; e.g., it was mentioned few times in the comments above. And, yes, one can be on the board of a public company and still make valid and consequential analyses. Hell, one can be a convicted fraudster and at the same time become the president of a superpower. My point, you could belittle Canada, EU, China etc but it is going to solve the US's intractable problems.
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
What is a mess about the Eurozone and reckless about the ECB?
https://robinjbrooks.substack.com/p/the-principal-agent-prob...
Able to summarize what you mean vs just a link?
save people a click:
> The incentive structure at the ECB has become distorted and favors high-debt countries [that underperform or are risky]
> What is a mess about the Eurozone and reckless about the ECB?
Without opening the article someone gave has a link I can name a few...
Not respecting the promises to go down hard on countries not respecting a yearly public deficit of more than 3% of their GDP (France is nearly at 6% since two years and going down the drain).
Having a common currency created by ideologues, not economists, and having that common currency shared between countries that do not have the same fiscal policies.
Having a shitload of ultra indebted countries in the eurozone.
Having one of the country of the eurozone, even though the Euro is one of the youngest currency of the world (only 27 years old or so) who already frigging (partially) defaulted on its public debt.
(not I just read TFA)
Ah yup: the ECB heavily manipulating the various countries' public bond rates.
My bet is that the euro shall be one of the shortest lived currency ever. It was made by ideologues and is only loved by ideologues. Economically it makes zero sense to have a common currency between country that have both different fiscal policies and different levels of public debt.
Now of course the ideologues are going to argue that the EU should have a unique fiscal policy (with of course ultra high taxes for everybody, except EU public servants who pay the lowest tax rates in the entire EU btw) and a common public debt.
Not gonna work, komrade.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
Free market, but not like that (china).
The US was in decline, a vote for Trump was a vote to accelerate that decline.
Stocks might go down if AI doesn't bring in enough revenue. The real risk seems to be currency depreciation though. The USD is already down 15% this year compared to the Euro. I'm worried about what the next FED chair appointee will do. JPow has stuck to his principles so far.
> The USD is already down 15% this year compared to the Euro.
False in every sense possible. For starters, the year is only a month old. Second, it’s been pretty stable for the past 6-7 months, and is only down 12% from a year ago - not 15%.
> The USD is already down 15% this year compared to the Euro.
It's down 12% since a year ago, but that's largely a reaction to the tariffs. It's been fairly stable since July or so and has only seen a small dip (and partial recovery) in the last couple of weeks.
https://finance.yahoo.com/quote/USDEUR=X/
>what the next FED chair appointee will do
What do you think he will do, given he's one of 12 votes?
The admin wants to cut rates drastically. But the FED policymakers just voted 10-2 to not cut rates. So I worry the admin will try something crazy to force a cut.
I'm kinda new into economy crashes, was a kid in 2008, is there a way to protect of it?
I’ve been through several recessions.
Painfully I’ve learnt that you want to work in an industry that is largely recession proof.
Focus on industries that sell things that people need and will try to keep buying right down to their last buck.
Food, utilities, insurance. People don’t like sitting in the dark. People need water. People need to eat. People really don’t like living without insurance cover or to let cover lapse.
They don’t need Netflix, Disney+ or Prime. They don’t need Spotify. They don’t need training or e-learning. They don’t need luxury goods. They don’t need new motor vehicles. They don’t need holidays. They don’t need new iPhones or new computers.
Try and move now to an industry that has some security.
Investment wise diversification is key. Just pray that it doesn’t get so bad that banks start to fail.
2008/2009 I was working in healthcare and just got to sit back and watch the drama. People get sick and need their medicine no matter how bad the economy is collapsing.
Live like you're already poor, reduce all unnecessary spending, adopt an ascetic mindset to support this lifestyle. That way, when a collapse comes you'll be accustomed to living frugally already and you'll have all the money you saved by getting a head start already saved up to get you through rough patches with relative ease.
Now, when I say live like you're poor, I mean do it smart. Don't grocery shop at a gas station, do your necessary purchases in bulk (actually poor people can't or won't, but would be better off if they could.). Don't but the cheapest boots, but rather the best value. But when choosing how many vacations to take, maybe pick camping locally more often than exotic vacations. Eat simple foods, don't order out fancy stuff and get accustomed to such luxuries. Don't automatically buy the latest consumer toy just because it looks fun. Don't move into a nicer apartment just because you got a raise. You get the idea.
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
Why you could not refinance when the rates went to 0%? In the US a lot of people did that in 2009/2010 and then again during COVID
Refinancing and loans work differently outside of the U.S. what I don't remember is exactly how. If I recall, you can't refinance without paying
Well, you can go to another bank so that they can cover your mortgage and open a new one with new rates/conditions.
That you can do anywhere as long as you have a collateral/guarantor.
Prepayment penalties are illegal for the vast majority of loans that consumers can get in the US, which makes it a no-brainer to refinance any time the payment saving exceeds the cost of writing a new loan.
The Trump admin has floated the idea of allowing prepayment penalties in home mortgages, BTW.
Would you mind posting a link where Trump wanted to allow prepayment penalties? This sounds unbelievable.
Every home owner in the US would be against it (especially the ones who got their mortgages in the past two years at relatively high interest rates).
Crap, I was wrong. Bill Ackman is trying to convince Bessent to do it. So while it may happen, it isn’t coming from inside the admin.
One argument is that it could allow for lower rates, BTW. (This is true, it very well could).
And also, if it happened it would be for newly issued mortgages. Existing mortgages have language in the contract that you couldn’t just unilaterally change
How would prepayment penalties lower interest rates ? I really do not see how.
The same way callable bonds command a higher interest rate than non-callable do. If the bond holder can just decide that tomorrow it’s cheaper for them to pay off the bond vs pay me the coupon on it, it’s worth less to me as a buyer. I lose if interest rates go lower (bond is paid early) or higher (I am now holding a bond worth less than a newly issued one).
If you look through the bond market you will sometimes see bonds issued by the same company or agency both as callable and non-callable, the callable bonds are usually .5-1% lower even when issued on the same date.
Your lender definitely wants to get paid back, but they don’t necessarily want to get paid back right now. Because then they have a pile of money and they need to find something to do with it.
Consumers have a tendency to pay loans back early when the bank doesn’t have any more profitable alternatives. Consumers also have a tendency to NOT pay loans back early when the bank does have more profitable alternatives.
But you know that the first situation is worse for the bank than the second situation. So they do account for this, to a degree, when they give you a loan. In theory they would be willing to give you a lower interest rate if you gave up your prepayment option. In theory. In reality? Who knows.
Sounds right but another big factor is to get some predictability.
Demand for mortgage varies over time, regulations change. It's a long term product, banks like to know with high certainty that when someone signs up it will be X earned over a period, not maybe X minus we don't know over an unknown period.
They are in the business of capital efficiency. Lack of control makes capital less efficient, or at least more expensive to keep efficient.
Overpayments (in the UK) are often not allowed, when they are, the borrower needs to arrange it when the loan is taken, and for a fee.
Refinancing is a right, but the fine prints told borrowers at what penalty.
I remember the opposite, just before we left the ERM (European Exchange Rate Mechanism). Interest rates hit 15% and one of my colleagues was gloating about how he had just taken on a fixed rate mortgage. A few days later we left and interest rates plummeted.
Skill. Knowledge. At your age, your biggest assert is your future earnings potential. The more employable you are, the better you will make iduring and after a downturn. In fact, the highest skill folks tend to even profit from hiccups in the economy.
None of that is true. Not one word of this applies anymore. Being highly skilled means you're highly paid, which puts you first in line for cuts. Talent doesn't get you hired, networks do. "Future earning potential" is just nonsense words, you can't eat "future earning potential".
This advice is from half a century ago. The times have moved on.
Are the ones newer to the workforce just screwed or is there a way out? Kinda sucks that all this went down around 6-7 years into my tenure and it's just been a few years of scraping together freelance + portfolio projects to try and climb out of tbis rut.
(This might sadly be rhetorical given what I hear of '08, but perhaps there are new channels open to take advantage of. Or at least old channels to raise awareness of).
Newer ones are definitely screwed.
6-7 years of experience make you prime material for employment in the sw industry. Experience but not too expensive/entitled yet.
Have you considered applying?
Yes. And here I am nearly 3 yesrs post last full time, 9 years of exexperience, and still looking (feel free to read my struggles in detail below).
What do you recommend applying to? I work in games so I guess I'm playing on hard mode (especially in these times), but the common wisdom of "normal software jobs love taking game programners in" hasn't rung true this time around.
----
Life story: Laid off mid 2023. I took a few months off when I got laid off, but the last quarter of 2023 wasn't kind to me.
2024 got me some freelance work, so I wasn't out on the streets, but it was a complete circus of an interview racket. Honestly worse than my first job hunt out of college. Its bad when you feel deep down there was someone better than you, but when you go 5 rounds in with good vibes to hear... Nothing back? That's truly disrespectful. And it sadly wasn't a one off.
Then in 2025 I hit some medical emergencies so I needed to urgently find anything. So I found part time work outside of tech and made due with that as I paid down those debts. That totaled up to a part time freelance gig, a part time job, and a few (failed) attempts at some hustles over 2025 only to end up making maybe a third of what I made back in 2022.
Now it's 2026 and I'll try again next month. My freelance work covers any gaps I would have had, I have a website almost ready with some personal projects to point to, and I'm overall more adjusted to the realities of this current market and will approach accordingly. I'm optimistic, but I know we're still in the thick of the weeds here. So I'll take any leads I can get.
Nothing provides complete protection, but diversification can help reduce the impact.
The person saying gold and mining stocks may or may not be correct - it's still a risky position. Precious metals could be in a commodity bubble right now (or not). It's had to predict anything with perfect accuracy, which is why diversification matters.
You probably shouldn't be jumping completely in or out of anything because that requires timing, which is also not easy to do. What you can do is change he weights withing your portfolio. For example, reducing your US equity exposure to increase your bond exposure. Or reducing your US growth exposure to increase your US value and Eurozone dividend exposure. It's best to listen to several financial companies reports to weigh what to do.
Your life should have a plan beyond tomorrow or the next hype cycle so that you progress towards your goals independently of the flow of society. This will allow you to navigate those flows instead.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
Assets traditionally used for such hedge are already massively inflated (look gold an silver price charts), so I'm not sure it's worth it.
This all depends on what timelines you work on, how many assets you are trying to protect.
Alternatively you protect yourself by lowering your dependence on steady income.
Yeah, as a SWE I just got sufficient money to pay my expenses AND have some to invest quite recently (about 2/1 months ago), but I basically froze the money instead of investing because everything seems overvalued and about to fall (even silver and gold).
Be careful, I would not stay 100% invested or 100% uninvested. The market can remain in an Everything bubble for far longer than we expect (see: since 2008). It can be a lot harder psychologically to get back -into- the market when you're totally out because of sunk cost fallacy (thinking, I gotta wait just a little longer and this thing will finally crash).
I would argue that parts of the economy should (hopefully) remain healthy. I mean, AI bubble or not, people need medicine, food, internet access, energy, ... . Invest in that.
Also (not a financial advisor), when a crash occur there is a so called "flight for quality" where people move money they made by cashing out the assets to stable (A+ assets). So look for companies that have solid financials and can weather the storm.
Finally, diversify not only on the industry, but also geographically. EU, Swiss, Asian. I personally stay a bit away from emerging markets stuff as I don't have enough knowledge to make informed decisions (I don't even consider Emerging Market ETFs which should be run by SMEs).
Prices of investments will also go down - stocks certainly, although precious metals were traditionally recession proof, we've never had such a bull run on gold/silver in anticipation of recession. My guess is that it won't hold - I've heard that jewelers already refuse to take precious metals at anything near market value.
It's euphoria at this stage.
Ads from the World Gold Council are becoming very frequent, targeting consumers. That must mean something (looking for exit liquidity)
Maximize income and cash flow, when things start to crash, you want to have fresh new money coming in to start buying undervalued oversold assets.
In the meantime, keep investing to avoid eroding the value of your money as the dollar drops in value. It also prepares you for the possibility the crash doesn’t occur for a very long time, long enough to grow your net worth substantially to be better insulated.
It's difficult to draw many lessons from 2008. The people who suffered most then were over extended home owners. It's still not a good idea to be one of those people but there aren't so many of them now anyway.
A lot of people _need_ the S&P to stay where it is to keep their standard of living stable. If it drops to a rational valuation (say, 2500-3000), there will be a lot of pain.
Yes, you either marry into extreme wealth or hope that luck doesn't strike you into generational poverty. Anyone saying anything different is lying too you.
There's a common consensus in economics that bubbles are really hard to predict, and even some argument that they don't actually really exist. Great paper came out recently called "Bubbled for Farma"[0] which looks at predictability for bubbles and finds some indicators but no sure fire thing.
That sort of rules out an easy or known way to predict and avoid bubbles. That said, it's worth noting our current historic period marked by being post financialisation (taking out a bunch of investment regulation) of markets in the 80s exhibits a lot more economic crashes (the real reason we should car about bubbles) than most of history (although most of history also does not exhibit any economic growth, so be careful what you wish for).
In particular, the period between around 1930-1975 showed extremely high growth with almost no bubbles or market crashes[1].
So my semi-knowledgeable but definitely not expert view is that: - Bubbles and crashes are not easy to predict, and therefore avoid - That said, our existing market rules have effects on the number of crashes/bubbles we see (but there's debate around whether you actually would want an economy with less crashes/bubbles if that meant left growth)
[0] https://www.hbs.edu/ris/Publication%20Files/Bubbles%20for%20...
[1] You can find this discussed a bunch of places but Ha-Joon Chang's Economics: The User's Guide talks about this very fluently.
Edit: I think your question might actually have just been about personal protection again bubbles, rather than protecting the economy as a whole. In which case, having margin in your spending so you'd be able to live if things were some portion more expensive against your earnings is probably the only sane suggestion.
Gold and silver mining stocks. And International ETF funds. It looks like the United States will be going through the depression alone.
Buy high, sell low. Excellent result when you follow the masses, especially when being a little late.
Where was I giving that advice? Gold and silver mining stocks are extremely low compared to the price of gold and silver buying mining socks right now is buying low.
AUAU ETF crashed 11% today... Ask me how I know that :(
Was thinking the same, but why would everyone be more interested in gold an silver in a couple of months than they are right now? Sure it beats holding dollars of stocks.
But, keeping both feet on the ground, I'm tempted to think that if the economy collapses I'd not be very interested in buying precious metals. I'd be looking for food, a roof to live under and safety.
You can invest in silver mining stocks, and be concerned about food at the same time. One is for long-term survival. The other is for short term survival. You can think of things like toilet paper and razors as bartering tools or actual new money, and the golden silver investments as objection of the current money you have right now.
My grandfather lives in a great depression in Manhattan. He told me some crazy stories, but you know what most people made it through. I think this time our system is more fragile, but I have no doubt that human survival is much stronger than me think as well as human socialism.
For instance, I am homeless living with schizoaffective disorder and I’m not worried so why should you be?
Coincidentally: Silver plunges 30% in worst day since 1980
https://www.cnbc.com/2026/01/30/silver-gold-fall-price-usd-d...
Where was the news when silver was going up and having the best days it’s had since 1981?
On January 26, 2026, silver experienced its largest one-day jump in 45 years, with front-month futures soaring by 14%. Spot silver prices surged to over $109 per ounce that day, driven by heightened safe-haven demand and industrial usage. The rally continued to push silver prices toward $120 by January 29, 2026.
And regardless, silver is still at an all-time high.
When you start saying that the news is biased against certain commodities or equities, you’ll start to see how the game is played. This is a tactic of JP Morgan.
Volatility is expected. Always remember that. Volatility is expected in fragile economies.
Anyway, for now I'm primarily concerned with paying a debt for what I need (housing). While worrying somewhat about pension, I'm kind of happy I'm not too deep into where to put excess capital. First World problems.
IMO Paying your debt always seems prudent - whether we'll see huge inflation or even deflation - when you can live in the thing you're paying for.
I saw the graphs of some silver mining stocks and it seems to just follow silver price, why don't just buy silver then?
Mini stocks were traditionally used as way to invest in asset as a security. But currently with all the ETFs that are backed with physical asset itself, I'd choose that way.
Holding asset yourself (gold) causes logistical issues and massive buy/sell split on your side, but it has some advantages too.
Mining stock are lagging, so they have the highest to go right now.
Software sector basically got cut in half just on Claude Code. You have to wonder what is next. I don’t think loss in economics is 1:1 with replacement so it’s not zero sum. Production doesn’t necessarily go up. In fact, net output is going to go down if you think about all the B2B lost too.
Whoever comes into power next better start thinking about universal income fast. We are gonna get there sooner than expected.
Software productivity doubling would be a huge boon for the economy, not a drag.
Of course it's very disruptive for people that lose their jobs, but many of them will get similar new jobs, and the overall impact is higher output.
If all companies fire 50% of their engineers, how will anybody find similar new jobs? In an ideal world software productivity doubling WOULD be a huge boon for the economy IF companies used the increased productivity of their engineers as a way to manage tech debt, R&D and other issues that were put in the backlog because historically there were no resources for this. In reality all companies look at increased productivity as a source for layoffs which does not translate in higher output but the same output done by less people. Which is a net negative because now you have 50% of all engineers without a job and no discernible increase in quality of deliverables.
The FAANG companies hoarded engineering talent for years. It was really difficult to hire in any market where they were located. What I think will happen/is happening is the combination of AI assisted development and reduction in FAANG engineering headcount will enable business transformation pretty much everywhere.
The impact of that transformation remains to be seen.
If software engineer productivity basically doubled as is being claimed in this thread, I think you'd see companies scrambling to lay off everyone else in an effort to hire even more software engineers. They'd be by far the most valuable and productive employees at every tech company and you'd be foolish not to have as many as you can. I'm being a bit facetious but throughout history when a resource or profession takes a dramatic leap in efficiency, the demand for that thing rather than decreasing as is predicted here, only increases since it has become far more valuable & effective.
You can't straight add/subtract effects that happen on very different time scales.
(1) Laying off people increases margins immediately.
(2) Creating new initiatives pays off in years, if initiatives are taken on carefully, not just thrown at walls.
That means even if (2) is happening, the signal won't show up for years, but (1) will happen immediately, regardless.
> If all companies fire 50% of their engineers, how will anybody find similar new jobs?
Why would CEOs care?
Or put it another way, if you were a CEO, would you care?
Politicians at least would pretend to care.
If all companies fire 50% of their engineers,
This is not a reasonable premise.
> Of course it's very disruptive for people that lose their jobs,
Why would the Jevons Paradox not apply here?
It does.
There will be loads more people who will want software customized to themselves and their needs!
The catch, of course, is that there are, all of a sudden, a whole lot more people who will now be able to create that software.
How will it all land? No idea. But it just feels like a bad idea to go long on software development when weighed against the opportunity cost of going long on domain expertise.
For instance, from 1980 to 1990, the number of secretaries doing all the typing and filing in the workforce severely constricted. That said, the number of actual typists in the workforce skyrocketed!
No one lost the need for typing and filing services. Tools, (PC, word processors, databases), simply became more available. Which decreased the need for people who were formerly doing the typing and filing as a service. Now people could reliably do the typing and filing on their own.
Jevon's paradox in action! Exponentially more typing and filing is happening today than was happening in 1976 or 1980. At the same time, there are infinitesimally smaller numbers of actual secretaries out in the workforce today than were in the workforce pre-1980. And the ones that are still in the workforce are doing much different work than they did pre-1980.
Why do people keep espousing such bullshit. Anthropic has terrible subscriber numbers, they are absolutely no where near profitability, a 100k people buying a product that struggles to sell itself is NOT the win you think it is.
If any of these tools did 10% of what their proponents claim they would become trillion dollar companies overnight and not you know... struggle so hard selling the amazing elixirs and perpetual labor machines.
I do really hope the AI bubble will collapse soon. The sooner it blows the less damage it will do. And hopefully we can go back to doing real work without all these leadership guys breathing down our necks to see if we are doing enough of this AI all their shareholders want us to be involved in.
It will suck even for us in europe due to shortsighted pension funds having invested in AI as well. But we'll just have to deal with it. I'm sure it will happen sooner rather than later.
PS: I'm not an AI hater as such. It definitely has its usecases where it shines. The problem is like with all hypes; it's not good at everything and it won't be all golden mountains tomorrow like the investors expect. This overhyped investor circlejerk is what screws up technology. It happened to blockchain, it happened to metaverse. All things that have their merits but somehow investors thought it would change the world overnight and make them insta-rich. Obviously didn't happen and it won't happen now.
> It happened to blockchain, it happened to metaverse.
I don't think AI is comparable to these technologies.
AI had a real impact on certain daily activities, such as search, coding, etc. While the metaverse was just a fantasy with no tangible benefit other than Zuck trying to create his own platform to take on Apple and Google.
Blockchain had some potential in certain fields, but it wasn't user-friendly or usable by many people.
> AI had a real impact on certain daily activities, such as search, coding, etc.
You aren't addressing the issue at hand, the problem isn't a total lack of impact, it's the cost of that impact, both the actual and the opportunity cost of it.
Currently, the AI "revolution" is running on pure credit - as every other bubble - even the operating costs of the AI supply chain exceed its income and economic impact. Their capital expenses are orders of magnitude higher and constitute a severe drag on the rest of the economy.
There's no indication that anything would change in the future, more AI leads to less employment, less disposable income and less income for the AI providers - it's a race to the bottom.
If this isn't reversed, it will soon end in bank bailouts, more inflation and income degradation for those bellow the top tier.
I’m not sure how I’ll feel if it actually happens, but just even entertaining the idea of LLM companies getting bailed out makes me irrationally angry. Like, really? Gonna go for the hat trick here? Housing crisis and Covid stimulus didn’t fuck everyone over enough?
It’s not like I can even leave for greener pastures, there’s nowhere to go.
It won't bail out AI ventures directly but it will bail out the banks that financed them.
Not a trick, if banks fall everything falls. what is infuriating: that we can see the value isn't there to justify the cost, yet that unprecedented amounts continue to flood into this tech segment, especially to the loudest and popular and over promising flavour of it: GenAI.
I'm willing to bet that the metaverse (defined by me as AR glasses) is a future that's coming and that Zuck was just too early, just like Palm Pilot was arguably too early. The use cases are too compelling, effectively a computer assistant that can tell you anything and everything about what you did or are doing. Yes, privacy people will hate it but the rest will eat it up just like they don't care about privacy on their phones.
An AR-glass assistant is very different from the metaverse Zuck blew tens of billions on, which was a shittier version of Second Life in VR, with a side of blockchain
He wasn't early with a good thing; he was unfathomably disconnected from reality with a bad thing
Not really, there are good applications for metaverse tech, they just need time to mature. However I don't really see it in the realm of social media. It's not something that's for everyone, at least not yet. I don't understand what meta was thinking there.
It's amazing for gaming though, and for architecture, 3D product design collaboration. I use it a lot daily and I have 5 headsets (plus two AR ones) but I also know it's not for everyone. It's also really good for porn which somehow in America isn't seen as a real industry but in my view it's a good usecase for the tech too. Anything that relies on immersion benefits from it.
AI has its niches too where it's genuinely useful (and coding really is a niche, it's not a mainstream activity) but just like metaverse they're trying to cram it in situations where it doesn't really add any value.
> It will suck even for us in europe due to shortsighted pension funds having invested in AI as well.
Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
The real problem is that when the US sniffs, Europe gets a full blown cough. We are way too dependent on the US, we have seen that 2007ff, and we haven't changed a single darn thing.
>Only to a very small degree and systems like Germany THANK GOD do not have any AI exposure at all.
Well put, and it makes sobering reading to see the impact of what happened the last time Germany was deeply reliant on money from the US.
"the" crash? you mean "a" crash.
Median house price / median income is at an all-time high for the US.[1] But what that means is that the rest of the country has caught up to California's overpriced housing. Hence the call for a 50-year mortgage. Still, looks a lot like the 2008 housing bubble.
[1] https://www.longtermtrends.com/home-price-median-annual-inco...
> To be honest I’m glad we are the ones getting out of that market first.
Who is "we" in that sentence?
The Typical language of believers is to say no that wont happen and how? I learned and studied enough history and the usual narrative is to not accept something that is possibly so catastrophic that it will change their way of life.
The tech bubble is another story and to be study on it's own, but it was summarized well that is < its a cycle of delusional capital invested over and over. Along with the numerous indicators of "what ifs"> The housing market is simply stupid, im sorry i don't have another word for it that better describes the current take on this matter. Home prices are outrageous because of market driven assumptions. A house is technically worth $150 is now on the market for $350 and why is that. from 2 years ago. People truly think that home prices are expected to keep rising and to what extent and why? They couldn't tell you<< " my zip code is the place to live at the moment, the person living in the next zip code is saying the same thing about hiss home, Homes in silicon valley were above and beyond the national average and it was the only thing on the headlines during 2021 - 2022 but for good reasons that cant be argued too much/ Today it is the rest of US in the same mindset.
All of the US economy seems to be in protection mode right now. As to say it's the mother that doesn't want you to go out again after falling of your bike and scuffing your knee on the pavement.
tariffs were used the wrong way this time around, inevitably the very purpose of them was not so effective, it backfired, Damage is done and reputation is broken in a lot of ways. Britain is renegotiation relationships with china, Canada is renegotiation relationship with China, EU is renegotiation relationships with India and China. All with successful results.
There is a lot of stake here the US has a lot to offer to the world and to use that as weapon is tends to not have a good outcome. The market is large, yes it is resilient to some factors but not all/ When collapse takes place there will be tremendous momentum and its going to be hard to stop.
> People truly think that home prices are expected to keep rising and to what extent and why?
Home prices aren't rising, the value of dollar keeps, and is expected to keep, falling.
https://fred.stlouisfed.org/series/CSUSHPINSA I was taking this as an example.
No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come. There were a lot of people who predicted the housing crash, not the timing but the crash. There are several signs that this is happening and the one no one is talking about is gold and silver prices. Don’t worry about the timing, you’ll never get the timing right, just worry about the fundamental economics and the flaws and protect yourself.
I happen to agree just because of golden silver prices that it’s going to happen sooner than later, regardless if war breaks out with Iran.
At any given moment there is always someone predicting that the economy will crash. So someone will always have predicted it. The question is do they actually have some insight or were they just lucky.
This not a prediction. The crash is currently happening. You just do not want to see it. Can you explain gold and silver prices? can you explain why bitcoin has been flat now dropping? The falling dollar? The US Treasury yields rising since 2020? CAn you explain why consumers feel at ease even though economicsts are stying everything is great?
I mean why do you think the FED and Trump are all over each other? Because there is no way out. If they lower rates, inflation. If they raise them, assets collapse.
People have been warning about this exact secnario since 2008 and no one is listening. Back then it was a prediction, but now it is happening.
> This not a prediction. The crash is currently happening.
The stock market being at an all-time high, a crash in the usual meaning of this term is not, by definition, currently happening.
Since apparently this isn't what you mean by "crash", could you define what you mean by this term so we're all on the same page?
All time high if denominated in USD. YoY, stocks have been increasing in value as fast as USD is losing to CHF. Regardless of whether gold and silver jumps are a pump and dump, stocks, in "real" value, are at most flat.
Well it's an all time high in EUR as well for instance. I haven't checked for CHF or other currency one may cherry-pick, but in any case it wouldn't change my point: even if it was slightly below an all time high, it's not currently crashing.
I'm not the one who made the "it's crashing now" claim and I do agree that from a certain point of view, it might be seen as a stretch.
However, what I'm claiming is that "all time high" is also quite a stretch. Pretty much all nations have been printing money pretty intensely, so fiat is not a solid anchor to derive "actual value", but CHF might be among those that are less printed, so I chose it.
Even if we chose EUR, EURUSD wins YoY over S&P 500, hence, "stocks are flat". Sure, in the case of EUR, optics are fuzzier and you might pick a point or index showing a small increase over EURUSD, but I don't think it's strong enough to beat the general point, especially if your counter point is "stocks are at an all time high".
My counter point is "stocks are not crashing".
It being an all time high was just to highlight how much "not-crashing" they are, but that doesn't really matter. Even if stocks were merely flat over the past year (or even somewhat down), the general point would still be the lack of a stock market crash.
https://en.wikipedia.org/wiki/Goodhart%27s_law
It’s funny when people just determine that a crash only happens when the stock market crashes. Things were crashing in the housing market before the stock market crashed in 2008. Do your homework.
> Do your homework.
About what though? You haven't explained what you meant by a crash so I don't have much more to go by to understand your point.
If not the stock market, what's the market you mean is currently crashing?
I'm an old guy. Some people (goldbugs) have been predicting that the debt would lead to a crash since the 1970s. I'm withholding judgement.
> No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come.
If you know it's coming but don't know when then you don't know anything. Certainly not enough to bet on.
Keep in mind that not only did people predict the housing crash, some were certain houses would be sold for pennies on the dollar.
I bought a short sale distressed town house in 2009 for 40% lower than its peak price, and many people told me it was a terrible decision because if I just waited long enough, I'd buy it for a fraction of the price.
I think prices went a bit lower in 2010, but then I gained about 400k in equity over the next 10 years and sold it.
The Economist front page illustration of the 90s .com stock market, with the heading "CRASH DAMMIT!"
Everyone knew there was a bubble. People began to get impatient for what obviously was going to happen, as you say.
Gold and silver are likely to crash. I don't think they are big enough to cause a crash of the overall economy, though.
Last 2 reported quarters have 3.8% and 4.4% gdp growth.
Next report is end of february. So it's minimum 4 months away at earliest.
Stock markets are at 10 year peaks.
Unemployment is a little bit high at 4.5%.
Inflation is a little bit high at 2.7%
US government debt is very high at 125%
PMIs are strong across the board.
Also in context, trillions in declared new investments in the usa. Probably trillions more in undeclared new investment trying to avoid tariffs.
No competitor possible on reserve currency status, Euro in about 2013 was looking like hot stuff but they regulated themselves out of it.
So I consider, the crash probability of the US economy is certainly not going to be happening.
> Stock markets are at 10 year peaks.
Put the value of gold on the X axis instead of the USD.
Is this the case with all bubbles? Might be a naive question
I don't think this proves/suggests a crash will happen, but its worth considering most of what you've said would have been true right up until both the 2008 financial crash and the dotcom bubble.
The person declaring "trillions in new investments" is Donald Trump. He doesn't understand how tariffs work, he doesn't understand how trade works, and he doesn't understand how the truth works.
So many of the stats you mention are based on potentially-untruthful statements from the Trump administration. When the facts and figures aren't favorable to Trump, his strategy is to shoot the messenger and install his cronies. Works great, right up until it doesn't.
And the person you're replying to is someone who thinks "The case where Canada must be annexed is if Greenland somehow remains part of Denmark"! The veneer of civility on this site lets some really incredible people slip under the radar.
This long read by Grant Williams really helped put everything into context. https://www.epsilontheory.com/there-can-be-only-two/
A lot of us don't have time for all the long reads, podcasts, or in-depth videos posted in the discussion here. Able to provide a summary for us that expresses your general point? Those interested can then use your link to learn more.
LLM summary, for discussion only:
The article’s core argument is that the U.S. dollar isn’t going to lose global dominance in some dramatic, headline-friendly collapse; instead, like every reserve currency before it, it will slowly erode at the margins as users quietly reduce reliance on it. Historical transitions (sterling to dollar) didn’t happen because of declarations or crises, but because the world gradually found alternatives that were good enough for specific needs. What’s changing now isn’t that the dollar has “failed,” but that the global financial system has evolved past some of the assumptions that made dollar dominance frictionless. The freezing of Russia’s reserves in 2022 shattered the idea that reserve assets are politically neutral, prompting central banks to hedge geopolitical risk via gold, bilateral trade arrangements, and non-dollar settlement systems. The result isn’t de-dollarization as revolution, but de-dollarization as creep: a long, largely invisible process that only looks obvious once it’s mostly done.
Who do we expect will replace Americas global leadership and will they really be better for everyone?
China seems to be the only candidate. But whatever happens it won’t be in the same way as before.
As for whether it is better for everyone, that question became a lot harder in just the last year. Who is «everyone»? And what do we mean by «better»?
With the US wanting to annex territory from its NATO allies, and engaging in extortionate tariffs, it is harder to argue that the US is good for Europe. Which is why Europe has already started to look eastward. Starting with a comprehensive trade deal with India.
What’s happening is good for Russia and China. Not so much for the rest of the world.
I disagree that something good for China is necessarily bad for the rest of the world, which you seem to imply here includes only Europe.
China alone has a higher population than Europe and the USA combined. I'd say that even if things got worse for Europe, to humanity it still constitutes a net benefit. Lives aren't of less value just because they're in a (gasp) communist country.
> communist country
New things need new words to describe them, I know people love to call bad guys "nazis" or "communists" and that everyone seems stuck with 1939 lingo but come one. 1950s china isn't 1980s china which isn't 2026 china, yet they're all ""communists""
"Socialism with Chinese Characteristics" is the official name of the ideology of the Communist Party of China.
China is ruled by the Communist Party. It does not seem unreasonable to call them a communist country.
Yes, I know, they have moved away from historical communism, and it's more of a "brand name" than an ideological description. Still, it is their chosen name for what they're doing.
Sure but this is like calling North Korea a democracy because the official name of the country is the "Democratic People's Republic of Korea"
No words are not required.
Authoritarian. Totalitarian.
https://en.wikipedia.org/wiki/Red_fascism is an OLD term.
None of these are "communism"... people who don't know better use it as a "china bad" gotcha because it's about as far as their political education allows them to think but it really is way more complex than that.
> Authoritarian. Totalitarian.
Yes these apply, but they're not synonyms of communism. The Iranian government is authoritarian, totalitarian and absolutely not communist
> Red fascism is an OLD term.
But surely you see how dumb this sounds? Fascism is by definition a far right moment, communism is by definition far left moment. By definition fascism is opposed to communism... Of course if we start using literal American propagandists buzzwords ("red fascism") as a basis for modern political discussions we're not going to get anywhere...
I'm not sure left vs right is that useful a distinction. Both the Soviet Union and Nazi Germany called themselves socialist, and both claimed to be doing what was best for their people.
The addition of "socialist" to the Nazi party's name was done in the early 1920s to appeal to socialist-leaning people. Hitler was against the change but was overruled by the rest of the party's leadership.
>Both the Soviet Union and Nazi Germany called themselves socialist, and both claimed to be doing what was best for their people.
The Nazis weren't socialist. They appropriated the term as a propaganda tactic, a means of appealing to the masses. North Korea calls itself a democratic republic, but is obviously neither. One can't simply assume political labels to be correct. In terms of their actual policies and beliefs, the Nazis were vehemently anti-socialist.
https://www.britannica.com/story/were-the-nazis-socialists
One could argue fascism is a subset of populism.
I didn’t say or imply that.
Not necessarily. But China's aggression towards Taiwan and their recent rare earth metals move last year show that China does not have the worlds best interests at heart either. We're picking between two evils and China's evil is more predictable than the US's right now.
This goes for Asia in general. Korea, Japan, and China spent centuries fighting and making them the de facto super power makes it easy to resume the Korean war or try to overtake the (military wise) crippled Japan should they be emboldened by the faltering/collapse of NATO.
How much coal do they burn? Did climate change suddenly become NOT an existential threat?
Are their global fishing fleets sustainable?
Where do the precursors for fentanyl come from?
I have to say that China will probably be a major force in reducing carbon emissions. Yes, China burns a lot of coal; but they also produce and deploy a lot of solar, wind, and soon nuclear energy. Someone else said it better: future will run on China’s batteries.
They seem to have achieved peak coal and coal use is slowly declining. Its percentage of the energy mix has been declining over the last decade.
That’s not great, but it is a positive. And certainly better than we feared a decade ago.
The world isn’t static.
> How much coal do they burn? Did climate change suddenly become NOT an existential threat?
As in any developing country, China has relied on cheap fossil fuels for rapid growth. Now, China is a global leader in reducing emissions, essentially blowing every other country out of the water.
> Are their global fishing fleets sustainable?
Is literally anything about the US sustainable?
> Where do the precursors for fentanyl come from?
You mean the legal drug that is absolutely 100% necessary for use in hospitals? Yeah, don't care.
It seems you're supremely focused on "China bad" gotchas as a desperate final gasp because you may be realizing that you don't actually have anything interesting to add to any conversation on any topic. Perhaps think more before opening your mouth.
The US is resigning the position intentionally. It's not as if someone is gearing up to replace it.
But as a trade partner? China, markets love reliability and stability. Not every 4 years wondering if there will be another trade war for reasons unknown.
You'd be very surprised the amount of malicious behavior countries will ignore to allow trade. Look at Saudi Arabia.
The single superpower thing was an anomaly which was mostly a result of one specific country being largely untouched by WW2; we're more likely heading back towards multiple regional powers with varying levels of cooperation, e.g. EU+Mercosur+India agreements that just happened.
The lines are still being drawn, but its doubtful one single power will emerge.
Seems like the rest of the world is just signing new trade deals and continuing on as normal. I hope America returns to normalcy in the next election and everything settles down. Else it seems like back to the old multipolar world.
I don't see any way we're not heading back to the multipolar world. They've managed to burn almost all of the goodwill and soft power that took 80 years to accumulate in 373 days.
Even with a "return to normalcy", the trade and military agreements being forged are permanently diminishing America's influence. Especially given that we're never more than 4 years away from this happening again.
No one, we don't need a leader. We need decentralised governance.
We have that. What has broken down is cooperation. The kind that has ensured relative peace for 80’ish years. That order is breaking down and creates instability. Instability means more conflict and less productive use of resources.
Well, cooperation with one specific player.
Cooperation among the rest of the world is rapidly progressing in response.
Yes and no. Internal cohesion is weakened (the most extreme example of which is brexit) by resurgence of nationalism and xenophobia. At the same time new trade deals and alliances are formed and deepened.
That's a good overview. As usual: things are complex, not necessarily bad overall.
That's not how it works though, is it? What you're really saying there is global governance.
Which faction that emerges as a dominant ever says "Oh no! We better stop using our advantage to improve our condition".
The EU just signed large deals with Latin America and India, binding a sizable chunk of the world to its rules. ASEAN is on the docket, Japan, Canada and South Korea have been signed for a while now.
Make of that what you will. Power isn't always tanks and soldiers. Sometimes its bureaucracy and contracts.
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China probably. No I don't think it is better but at least their leadership is actually sane. Evil, but sane and predictable.
Even the evil adjective starts to look debatable in contrast to what current hegemony is doing on its way down.
Apparently their worst offence so far was calmly outgrowing and out competing their peers while benefiting global consumers with he fruits of organized labor of their own society.
Iam sceptical whether china is more evil than the current and historic US. Both countries have commited atrocities but the US was way more involved "for their interests overseas". Maybe the western distrust towards china will make it a different power equilibrium.
If you think that's the worst offence then you should check the recent and past news more often.
What was the most grusome Chinese offence you learned about form the news recently?
Stop getting Chinese territory under your fishing boats! Leave immediately for correct and healthy harmony! Fires water cannon
As opposed to America who uses cruise missiles on fishing boats in a different continent?
Maoist protracted people's war has traditionally relied on being less of an asshole to the peasants than the enemy.
I was referring more to the millions of Uyghurs in political prisons and their overreaching surveillance of the population.
And I was just speaking of what I think about China, not saying the current US administration is any better. I don't think it will be there forever though.
Right the Uyghurs, a word we never knew before.
When faced with credible threat of islamic terror in their country China implemented some harsh, systemic ideas about what to do with it.
I'm sure if they just started two wars in the middle east instead the western community would be way more lenient towards them.
China did what it though was the correct thing and the west happily classified it as racism and religious persecution.
However when the pandemic came China had zero restraint towards applying harsh measures on the bulk of their population regardless of race and relligion. And while their solutions are harsh and possibly incorrect is it really unique on the global stage?
US, the shining city on the hill, when faced with a problem of having inadequate social support systems to help the more recent immigrants decided that it will try to build concentration camps on the teritorry of one of their closest vassals. This can't be correct or humane solution either.
And when it comes to surveillance, China is on the forefront, but US and UK closely follow. What's different is that China does their surveillance overtly and tries to make it socially useful. I don't for one second believe that technologically Palantir and such are more than one step behind.
I'm particularly annoyed that the US is for the people of Iran and not, like China, for the government of Iran. And the US putting secondary sanctions on Russian oil to starve Putin from Chinese and Indian oil revenues? Disgusting.
China wants but China won't. They lack the military capability of force projection that is the basis of the US dollar dominance, their currency cannot be used as a reserve/trading currency due to capital transfer controls (that have no sign of ever going away because otherwise everyone who has money in China will move it immediately out of the reach of the CCP), foreign investors have gotten very skeptical over the years regarding IP theft on one side and supply chain law issues (e.g. underage labor, 996 and modern slavery, environmental concerns) on the other, and on top of that China is getting rocked hard by the inevitable consequences of the one-child policy that is driving up labor costs, further reducing the attractivity for foreign investors.
China doesn’t need to project force. Economics might is sufficient.
Yes, they want Taiwan, but that’s a silly national pride thing. It would not really benefit them to take it by force.
And the US wants Greenland, Canada, random other countries here or there...
> Yes, they want Taiwan, but that’s a silly national pride thing. It would not really benefit them to take it by force.
We thought the same about Putin, and yet he went and invaded Ukraine.
We thought the same about Trump, and yet he went and abducted the president of a sovereign country.
Never underestimate nationalist BS or outright mental deficiency.
The difference is desperation. Putin was facing instability and was afraid of ending up like Khadafi. He needed a war.
Xi is not facing those challenges. He wants Taiwan, but the Chinese play long games so he can wait.
> Xi is not facing those challenges.
He is facing other challenges, a lot of chickens are coming home to roost - chiefly the demographic collapse, the inevitable result of the one-child policy, but also the rise of wages leading other countries to be the outsourcing target, decades of selling out nature / the environment, a crashing real estate sector, brain drain...
my bet is: "new" tech, emphasis on "new", will keep US on top or whatever US become after the big reveal.
I hope that after the Big Reveal, nationalism will immediately begin to fade away and we can start tackling species-level problems, like the plastic everywhere and in all of us, or dying ecosystems, or ... literally anything other than commerce.
The COVID economic depression is not accurately shown in the charts. The economy shut down for more than 2 years. Before RTO, the economy was in a depression. These charts provide indicators to what's happening on the ground. The classic indicators didn't accurately capture the Coronavirus lockdown.
The economy is still growing from the quarantine lockdown. It's why we didn't see a collapse, it would have to be worse than what happened during the lockdown for the economy to be in a recession. That's not the case, and I don't see a collapse or recession for at least 3 years.
For most of us, we work remotely and some people might be out of touch. Don't take this the wrong way, but people are just recently recovering from cottage syndrome. We're still in the transition period with the layoffs and AI doomerism being growing pains.
If you're going to chart-gaze, you need to have a healthy skepticism about the chart itself - is what it's measuring still meaningful? Every chart is an isolation of variables in an ocean of variables. The shark attack / ice cream sales chart will mysteriously stop working when everyone is on Ozempic and stops craving icecream! Likewise, there's a very real possibility that "inverted yield curve means recession imminent" logic only works during a particular era of USA dominance in the world, which we have thoroughly left behind. Food for thought, I hope.
> This is the 11th time that tariffs have happened, and it just isn’t surprising anymore.
There are tariffs everywhere, all the time. Canada just dramatically cut its 90% (or something) tariff on Chinese cars. Tariffs haven't just started happening because someone you don't like did them.
Yes but tariffs were a long-term strategic tool. Not a bullying tactic for someone who woke up the wrong way.
Knife: Surgeon. Slasher.
Results are not the same.
Nominated for the most powerful two line comment of the month.
> There are tariffs everywhere, all the time.
This neglects the scale, cost, and unpredictability. His tariffs are far from being the usual seen elsewhere. Of course, you should already understand this.
Blanket tariffs used as blackmail is obviously different.
This is incredibly disingenuous.
> Tariffs haven't just started happening because someone you don't like did them
Nobody said they have, throwing ridiculously high ones with your allies and trading partners is new though.
Otoh, tarrifs as a foreign policy / coercion method disconnected from trade and local economy impacts definitely is a new thing.
Sure, it might have been used as a delicate lever previously but in its current brazen form is just bad diplomacy.
I keep seeing soon, sliding into, moving towards.
USD Currency futures have already collapsed.
World trade will move to (not a good idea) RMB or (mistakenly) crypto.
Euro is the only real option left and it’s beautifully positioned in the center. Great leadership too.
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https://en.wikipedia.org/wiki/Religion_in_Sweden
Not even the right order of magnitude
I feel like one of the following is true (and I don't know yet which is the case):
- I'm genuinely a lot more pessimistic than is accurate around what is and isn't a bubble - Bubbles are just slower to burst than I expect
Possibly some combination of both. But even ignoring AI which is relatively new, it seems "obvious" to me, that whatever value Bitcoin has, investment in the asset is detached completely from that value. I'd have expected to see Bitcoin crash a long, long time ago, and have been thinking it's "just around the corner" for years and year.
And yet, the bitcoin price as a whole, although it's dipped recently, and is clearly volatile, still remains something like 10x what it's value was 5 years ago[0].
[0] https://charts.bitbo.io/price/
Something I think people forget when it comes to the valuation of bitcoin is just how much of it is used to fund illegal activities (Betting, Drugs, anything on the darkweb,...). I honestly believe much of the valuation is linked to that, but I have no source or proof.
Any time now:
1. Market crash
2. AI bubble bursting
3. Year of the linux desktop
Have I missed something?
Half life 3
This will probably be better than duke nukem forever because they were always working in DNF but nobody has been working on hf3 in 20 years.
Year of linux gaming being good (it isn't)
GTA VI
Beyond Good and Evil 2
I like how the last image based on "C'mon, Do something" with all the AI symbols, has hard to recognize body part shape, with Claude being right in the middle of it. Hank Green talked about it last year - https://www.youtube.com/watch?v=fIbQTIL1oCo
Ok, now that silver fell, are you going to write another article with the opposing view?
That’s how the news does it.
There's quite a few factors here that delayed what should have logically already happened.
1. All the tarriff reactions cause US companies to import a huge amount of stuff for 2025. From what I understand, we're about to exhaust all of those imports.
2. The unemployment reports (especially the U3 numbers) hide quite a bit of turmoil going on under the hood of the job market.
- If you lost your job and switched to Uber/Doordash, you're not unemployed.
- If you are riding on severance pay instead of filikg for unemployment, you're not unemployed.
- If you got tired of throwing out hundreds of apps only to get automated rejections and take a break a month, you're not unemployed.
- If you just graduated into this hellscape and can't qualify for any unemployment, you're not unemployed (you're technically not part of the workforce yet).
There's a lot of these small shifts in how jobs work that make U3 less reliable in reflecting reality. And I only touched the surface of these issues.
3. Continuing on the U3 with a point worthy of its own bullet: the unemployment appears flat, but the makeup of what's happening per industry really lays down the reality. The only industries growing are hospitality (aka food service and similar sorts of duties) and health care. And to top it off these "growing" industries shift more and more to fractional work. Pretty much every other industry is down. So people are getting laid off/fired and moving to part time work to get by. "Stable" by unemployment numbers, but very unstable on the day-to-day. Add in the recent congressional bills for healthcare subsidies and we're throwing more gas on rhe fire.
4. I'm sure it's been said so much by now, but AI in the US is the only thing holding up the GDP. Without that massive investment, the GDP would be at best, dead flat. The US isn't growing in a way that reflects actual yields to anyone outside of a select few shareholders. We're not building more houses, mining more materials (on the contrary, we've resumed ransacking others'), manufacturing more machinery, nor even producing more service value for customers and businesses. We're putting all hedges on one thing with an uncertain outcome. If that industry declines, so does the rest of the US.
5. The K shaped economy. I have to check these numbers again, but I believe that spending is indeed up, but the makeup of spending per income band is more stark than ever. The too 10% income households makes up half of US's spending. But there are signs that even many high income houses add also starting to hunker down on spending.
----
That was a lot and it still only scratches the surface. But the TLDR version is that there's a lot of statistics massaging over the real struggles of life and many industries reaching a breaking point they did a good job putting off. But by this point it will only take a needle to break this camel.
Where it's gonna crash to? Where is going the capital move to when everythings going up? (except crypto apparently)
Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. Margin calls happen and increase seller volume, prices go down further. And so on.
I'm not saying all this will happen. Just that capital doesn't have to "go" anywhere for a crash to occur.
> Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down.
So the law of supply and demand just magically reverses itself?
People, or organizations, but mainly people, can just refuse to invest in stuff, parking their money in low-interest bank accounts, or the old style "stuffed into mattresses."
This was the multi-decade problem Japan ran into after its hot economy imploded, and unleashed the "lost decade" (which became decades). It was not a marginal issue, and for year the Japanese government tried everything it could think of to get people to invest in things - to little effect.
Market cap doesn’t equal liquidity. If everyone wants out of an asset, and no one wants it, supply exceeds demand and the price crashes.
No idea what you're talking about. Explain.
Statement: if AI crashes where will the capital go?
Claim: people will just choose to not invest capital at all
Response: that’s the opposite of what we know about supply/demand. When a supply of something (desirable investments), goes down, with demand steady, prices go up
It’s the same thing that happened during zero interest rate environment - huge supply of capital, few places to put it, so it piled into tech which drove up prices
So I guess my answer to “where will the capital go?” is “the next best thing” which drive up prices of that thing
Could you clarify the question? When everything's going up, it's definitionally not a crash; do you mean something like "where are people going to flee to now/soon, in anticipation of a crash, given how buoyant everything is"?
That exodus is what crash is. Yes. My question is where "they" are going flee to in anticipation of the crash to actually make the crash happen.
The banks will start to pull back on AI financing because their risk calculations are going up. That will make the news and people will sell their AI stocks and just put cash in a money market fund or something. Stock price decline confirms the bank’s calculations and now they def. aren’t lending to AI companies. That makes the news and now people are really selling their AI stocks which drives the price down further. The banks react again…
In 2008/9 people became paranoid there was nowhere safe to go and that really screwed things up on top of everything happening in the stock market.
https://www.investopedia.com/articles/economics/09/money-mar...
> just put cash in a money market fund or something
So you are predicting everybody will escape into dollars. Which by themselves are extremely risky because the world is at the verge of ditching dollar as global currency.
There was already double digit inflation just because during the pandemics US overprinted dollars in relation to the size of the global economy. Imagine what the inflation will be if the dollar economic domain shrinks by half or more.
This is a great question, and one that drives right to the key issue! (oh god, that sounds like an LLM response, sorry)
Like with the implosion of the Japanese economy, people will just not invest, instead parking their money in low-yield bank accounts. It was, in some cases continues to be, an issue for that country.
They're not definitionally the same. Normally a (stock market) crash is just "everyone's assessment of expected future cash flows goes down, meaning that what everyone owns is less valuable". One thing that can cause people's assessments to drop is "everyone else is withdrawing from it, which I assume means they're assessing it as being much less valuable, so they have information I don't, so I should revise downwards", which can make a self-sustaining feedback loop, but that's certainly not the only possible cause of a crash; I wouldn't even say it was the most likely cause of an AI-bubble crash.
My guesses would be "everyone's assessments go down together because OpenAI et al's predictions of their future revenue are observed to be consistently vastly overinflated vs actual performance, but everyone was previously assuming they were roughly correct" or "some political thing happens which makes OpenAI et al's services obviously much less valuable or makes them much less able to provide services".
> Where it's gonna crash to?
You know that the reason things bubble and burst is because speculation outpaces reality at too high a rate, ie : too much "capital" is make up of hopes and dreams.
When reality hits and the numbers make sense, all that hope and dreams go pop.
Scotty doesn't know!
There is no reality in the market. All prices are speculation, always. If there was any reality involved things like Tesla would crash 3 times already. My question is where the spekulants are going to escape to. I don't think it can be even dollar this time because in this crash dollar most likely will go away as the global currency and the inflation will be devastating.
Ahhhh hehe well there will always be something to speculate on! I don't really know but I know I'm happy I've been hoarding gold. My grandad always drilled it into my mind. Became a habbit over the years!
I wonder what would your granddad say about today's gold prices. And even more curiously how fast they rose in recent years. Gold looks almost as bubbly as the stock market.
Surely the surge of predictions of an incoming crash will never end though.
Some advice for those who are young:
If every idiot (I'm including myself in this) on HN/Reddit/Youtube/Tiktok/mainstream news/etc. thinks we're in a bubble and is crazy pessimistic and thinks economic collapse is near...it means we're not actually in a bubble.
When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying. Because that will mean the general public must be reaching 1999 levels of euphoria for a hint of optimism to show up here.
I think its like being in a horror movie - you know the axe guy is in there with you, but you don't know when he's going to get you.
>When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying.
That seems to have happened around 2023 or so as people chose to laud over AI instead of understanding the underpinnings of society coming undone in real time.
So, should I be worried?
No, because your pessimistic feelings only serve to strengthen my claim.
I find it amusing that, even when directly calling attention to the overwhelming pessimism that is the default-state on HN, I'm met with a pessimistic comment with zero self awareness.
>because your pessimistic feelings only serve to strengthen my claim.
So me pointing out optimism in discussion strengthens your claim, because it's specifically my feelings that prove your point.
Well I'm glad you can prove yourself right, if nothing else:
>When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying.
Denial sure is a worrying point.
The hourly "AI is a bubble" threads doesn't scream optimistic to me.
Its a busy site, I can also find hourly "AI brought joy back to my life" threads.
This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
> This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
Apologies for quoting all 3 sentences of parent, but the poorly-drawn conclusion depends on the full sequence of seemingly rational statements.
The context this sequence is missing is that approximately 70% of the US economy depends on consumer spending. [0][1] If the lower stroke of the K-economy diverges too much from the upper, the economy is going to grind to halt.
Consumer spending of the bottom 90% cannot (easily?) be replaced by the top 10%.
[0] https://govfacts.org/money/broader-economy/economic-indicato...
[1] https://www.npr.org/2025/11/23/nx-s1-5615222/consumer-spendi...
I used to think along these lines. But now I think the truth is - does it matter if the economy grinds to a halt? Perhaps the ruling class can still keep enough Americans comfortable enough, and fearful of losing more, doing largely pointless jobs, to stay passive - and that’s all they need to do to completely bifurcate the society such that they face no threat to their own position.
Some sort of an AI crash / bubble bursting is expected to be honest - now if that will take the rest of the US economy as well.... debatable. Any strong opinions on this?
I'm not an expert, my knowledge is just from reading around a lot, but I think there's some stats that would suggest the US is particularly exposed:
- At points, AI investment has actually seen more spending that US consumer spending[0], there's some debate on this[1] but if true, that leads to a narrative of the US being 'propped up' by AI investment.
- US GDP growth was strong last year, but behind quite a lot of other similar countries like the UK, Germany and Japan, which doesn't suggest a comparatively strong economy.
- The US is actively increasing it's borrowing substantially (Big Beautiful Bill) while lowering it's currencies value through trade wars and unpredictability (see bond market). That reduces its ability to use its wealth to borrow its way out of a financial crash (like with the 2008 crash, or Covid).
This could be a little overblown and is hard to tell, the US is definitely an extremely wealthy country, even if its less wealthy comparatively that a few years prior.
[0] https://fortune.com/2025/08/06/data-center-artificial-intell...
[1] https://www.cnbc.com/2026/01/26/ai-wasnt-the-biggest-engine-...
On (1): Might be useful to separate investment flows from the rest of US's economic activity.
AI investment is propping up capital flows, the GDP statistic, and responsible for most of the gains on SPX, but its still a small fraction of the economy.
What else does the economy consist of these days? It's pretty much already in a recession if you exclude the big AI companies.
Besides, basically every company had been desperately shoving AI into all their products. Throwing all of that out when the bubble pops won't be pretty.
I imagine depreciated AI features will be like the soft varnish surfaces of some 90s cars after 10 years - disgustingly sticky, shedding flakes left and right, and in hindsight an obviously stupid idea that wasn't tested sufficiently before pushing it on consumers
> now if that will take the rest of the US economy as well.... debatable.
In the grand scheme of GDP, the US hasn't done much growth in anhtjjg else this decade, all while massively increasing spending to prevent post COVID recessions.
It certainly doesn't look good. But this was being setup for 30 years as we outsourced our strong manufacturing wing to make the top brass richer in the short run. So I do think the house of cards falls if AI does.
The sad part is that we may have been able to whether the storm under the right leadership. But that sure isn't the leadership in the White House right now.
Is there really a bubble though?
Most of the activity is with the same old big tech stocks, and the largest investment by far is not even market driven. Stargate is defense spending.
AI doesn't have to sway consumers, and it doesn't even have to work that well now or ever for governments to keep pumping money into it. The whole point of Stargate is to de-risk with reduced need for security clearances to handle big data (whistleblowing) and eventually get away from foreign tech. Also, there are a ton of businesses who have always done things on-premises for compliance and they can now cut costs by migrating to these government vetted data centers.
It genuinely shocks me how rarely anyone brings this up. It's been very loudly said by Trump and OpenAI since he took office, and it was going to happen regardless of who was elected.
Yes, the concentration of wealth led to the AI boom and it’s going to lead to the crash for sure. The AI boom was nothing but a crypto bubble. And since it’s making up a large majority of the investment right now I would say that’s the only reason that we didn’t have a crash last year.
This isn't a crash, it is something else comming, perhaps the "jackpot", where society/civilisation unravells, climate disaster kicks in with real persistant challenges everywhere, and some third, fourth, fifth effects that break our millenial run to the top of our planets ecosystem as the ultimate apex species. It has been a good run, but useing the same tacticts as our stone age ancestors, is, I think, about to bite, hard. And it is literaly this, our strategy is to keep useing the same tacticts.Jackpot.
I know HN always has its fair share of doomers, and generally the HN communities track record anecdotally regarding finance and the market is frankly terrible. Tesla (stock price wrong), Bitcoin (wrong), AI a huge dot com like bubble (wrong in my opinion - TBD though).
I’m optimistic on the US. We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year. As far as Gold and Silver I just see it being propped up by speculators. Silver spot is down 15% this mornings and gold down 8%.
I predict double digit gains in the S&P by end of year and strong financial conditions with mag 7 continuing their lead. Tesla also will be a big winner.
At this point I think Tesla could sell zero cars this year and their stock price would still be astronomical.
> We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year.
Ignoring everything else in terms of oredictions: the US simply doesn't have that spending buffer anymore to really outspend yet another crash. Its at what, 37 trillion right now? And it's only rising more and more by the month.
The only thing worse than a crash would be the US defaulting on that. And then we'd be screwed in ways that we don't recover from in any of our lifetimes. Nearly a century of trust and soft power completely down the drain.
Even if they don't default. How long there is willing investors? Even if FED drops rates. It is an auction. So rates should be set there. But maybe printing will happen via bigger and bigger market operations. Leading higher and higher rates. With probably inflation... So I suppose valuations could go even higher...
I do not understand economics and from engineer perspective whole thing doesn't make much sense.
I can't time the market worth shit - I got my first investments out before the 2008 collapse in earnest, and got into the job market at its peak. I waited through the 2010s to accumulate money to invest, only to start doing so amidst rampant speculation in crypto, then NFTs, then meme stocks, then AI.
So yeah. I am not getting a job at a financial firm anytime soon.
That said, the societal gestalt seems primed for something to go horribly wrong. AI boosters are positing their models as solving all of society's ills, which first requires acknowledgement that these are in fact problems facing society requiring solutions. Everyone is broadly on the same side - wealth inequality is a problem, climate change is a problem, energy dependence is a problem, job security is a problem, housing is a problem, etc - but we're all varied on the approach to solving these problems based on personal biases and perspectives. YouTube is infested with AI slop, social media is filled with doomers and preppers, and subcultures are simultaneously splitting off from larger groups (like those leaving Twitter/X for BlueSky or Mastodon) while also forming newer alliances and communities around shared goals or ideologies. Even those in positions of power acknowledge the polycrisis before us, while exacerbating it further by firing swaths of workers to fund their own bunkers, yachts, and contingency plans via share price bumps.
It's in the air, this horrid pit in the stomach that doom lingers just around the corner. It's been there for a decade, long before COVID, festering beneath the surface. Hell, for many of us pre-9/11 Americans, it's been a gradual decline since the heydays of the maximum-employment 1990s. So many of us feel it that it just cannot be ignored, and thus it becomes a sort of self-fulfilling prophecy: enough of us believe something bad is coming, therefore something bad must happen to quell those feelings.
There's two things that give me (and my OCD) solace of a sort:
* We'll all find out together, regardless of status or strata
* Most of us - statistically, generally, based on prior events and barring any explosive escalation - will likely be relatively fine
Yeah, the shifting of geopolitics is likely to result in more violent conflicts with the potential to kill billions if things go NBC. If we don't address climate change, millions will die from wholly preventable causes and tens of trillions of dollars of property will be destroyed over the next century. Misuse of AI could result in doomsday scenarios that Sci-Fi has warned us about for decades. Wealth inequality appears poised to create a modern version of the Coal Wars, if current events are any indication.
Technology alone won't save our asses. Neither will some mythical billionaire genius, or AGI deity. It'll have to be us, regular humans, rejecting the present and choosing to build a better future together.
And I think we can do that.
> Which is to say that no individual decision make want’s to be the first mover, so the market does not move.
Uh, that's not accurate. Hathaway is sitting all cash because of it and so far they have been the one losing. Even if you assume (and correctly I think) that the market is overvalued, their stock pile of cash is eroding: https://newzsquare.com/warren-buffett-warns-of-fiat-currency...
> A year ago there were a few signs. Right now, it feels like everything is primed to blow. Is that new?
The market is unhealthy. Too unhealthy that I think it can no longer self-heal the usual ways (recession/crash/etc.) and we'll instead move to more advanced stage of hyperinflation, global war, etc.
It is a giant Ponzi scheme and those tend to collapse at some point.
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> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
That's a bit reductive, in Europe there's a much bigger culture of saving, most people I know here are very averse on taking debt if unnecessary, only going into debt for large purchases like a house or a car. Even for cars I see many outright purchasing a used one in cash instead of going into financing/leasing.
People hold cash but also invest, it's savings in general that are high, varying between 10-25% of yearly income saved (compared to the US's ~5%).
I think this narrative of "so little innovation" is peddled very much in the software-adjacent circles but it forgets that innovation is not only from software, if you really think Europe has no innovation you are either ignorant or purposefully fostering a bad narrative. No, Europe doesn't have the VC industry, and the software companies' culture of the USA, it does innovate with a different model.
> If you insist on believing the US economy will crash without a well thought out thesis, I think that’s a beautiful thing. When you sell your positions on US companies, I’ll gladly be on the BUY side of that order.
Please do, as I've been cashing out throughout this year anything that has any direct exposure to the USA stock market I need people like you on the other side, thank you very much.
> In Europe, people hold cash at negative interest rates because they have so few new ideas and so little innovation to invest in. Where exactly do you think the money will go?
BRICS, apparently
You comically self contradict yourself. If it was lack of ideas to invest in that drove holding of cash at negative interest rates, then what stops the european from just buying us stocks? US collapse is inevitable, until its NOT…
If Russia's economy is kept afloat after 4 years of full-scale war... Why would one year of Trump 2.0 do us in? Don't get me wrong, a whole lot of problematic actions have been taken in that time-frame but that pales in comparison to 1.25 million casualties and about the same number having left the country (and our population is almost triple theirs) on top of infrastructure destruction.
Entirely different cases. Russia never relied on the strong rouble for its economy to function. Or having unfettered access to most of the world's markets. So it had some know-how on weathering the storm.
But OTOH, if Trump is erratic enough to trigger a world-wide de-dollarization trend, and close down markets that were traditionaly open (e.g. Europe), then US would be facing an unprecedented storm that would be much harder to navigate.
Have we seen any signs of any limits to erratic behaviour?
Ever heard of the acronym 'TACO'?
A have a bad feeling for the US economy. A decline comes soon, then prepare for impact with a financial crisis and in the end of the tunnel the IMF. I know it's super crazy but that was also for my country 16 years ago.
Greece? How did it go after the crisis?
Yes. Until 2019 we stagnated. Since then we have the best Prime M of the last 100 years, Kyriakos Mitsotakis. He has made some incredible stuff and some mistakes, too, but they are nothing relatively to the Balkan traitors of the past. The country has rebooted and from an IMF victim it has become an exception in the current European/world shity situation. He decided to remain a third term, going to have almost a double score from the leftists in the 2027 elections, so I advise you to invest in Athens stock exchange.
I think the government is laser focused on reducing regulations, reducing energy costs, reducing interest rates, a weaker dollar that makes exports better, minimizing taxes. Technological innovation is increasing overall productivity. There are definite headwinds like upward pressure on labor by reducing the worker population, stagnating population growth, undertainty, tarriffs, a weaker dollar increasing inflation.
There’s the looming threat of geopolitical world war that has been overhanging the world since the combination of the pandemic isolating different countries and Russia’s invasion of Ukraine.
It’s really a mixed bag, but it’s not clear to me that we are headed into a total economic crash as the government is definitely focused on doing a lot of good things for the economy, but also is creating lots of different headwinds.
Hold on there, they have been very explicitly doing the opposite of reducing energy costs. The administration has been aggressively trying to cancel all sorts of energy projects, even projects that have almost been completed. At the same time they've been encouraging as much data center build out as possible. Lowering supply and increasing demand is hardly going to reduce energy costs.
They have managed to significantly lower expectations for global economic growth which brings down energy costs, but that's hardly a sane way to accomplish that goal.
I think it's a little bit more nuanced than what you say and that they generally are trying to increase energy supply while withdrawing from using heavy government subsidies or extensive regulations to pick the winners and losers.
From a demand side, they aren't looking to restrict demand, but want to have ample supply to meet the demand.
If that was true they would have let incentives for new energy infrastructure (which can be net positive, given energy is a national level concern), draw down in a way that didn't disrupt/destroy existing investment.
You can alter forward looking policy sensibly in a day. But you can't redline years of cooperative investment on the same day without destroying tremendous value (of the kind you claim to be working toward), credibility and trust.
I am baffled that performative flailing gets interpreted as progress, with such thin narratives.
The deeply counterproductive actions taken ostensibly to increase US investment in manufacturing are more of the same.
The destruction of valuable US research and capabilities, in the name of fiscal responsibility, only to continue fiscal irresponsibility is more of the same.
The destruction of diplomatic and defense alliances and influence, in the name of being stronger, is more of the same.
The private masked army roaming cities, harassing people with low relevance to their purported purpose, in the name of making the country safer: more of the same.
They all involve some truth, and then loud damaging counterproductive execution. Unless loud chaos is value.
Withdrawing permits for in construction offshore wind projects, and forcing utilities to keep operating coal plants they want to shut down is picking winners and losers.
Oil prices are VERY reasonable right now.
The thing I don’t get is that IMO Americans have a higher standard of living due to demand for the dollar. Being a net importer means they make less and the countries they’re importing from make more. Money = labor = people working, so people in other countries are working harder than Americans to benefit Americans with a higher standard of living.
It’s like a roofer working for a contractor that’s a millionaire and the contractor is upset because he’s paying the roofer while having a higher standard of living because of the profit made off the roofer’s labor.
No one is working for that rich contractor if his money is worthless. Isn’t a weaker dollar for America a disaster? The world works to serve America right now because of the dollar. Life’s going to be tough when America has to “get a job” and start earning their keep with real productivity contributions, isn’t it?
Maybe I’m just dumb, but all I can see is a massive drop in the average standard of living if the US maintains their current trajectory. It might even be too late already.
> Isn’t a weaker dollar for America a disaster?
For the majority of average Americans trying to scrape by and save enough for a dignified retirement, yes.
For the ultra wealthy, no. A weak dollar leads to an asset firesale to prop up their wealth even further.
The ultra wealthy have captured the US government completely.
You assume that these economic policies are dictated by some sort of common good. The reality is that most policies are dictated by corporations and are designed to benefit their shareholders and not the average american. In addition, the US is now pivoting towards authoritarianism which implies future policies will be determined mainly by a tight group of people who are going to use them as a means of enriching themselves.
>massive drop in the average standard of living if the US maintains their current trajectory.
Very rich people control the narrative in the US and get poor people to repeat their claims. Hence where we get statements like this from.
>“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
The thing is the billionaires/trillionaires don't care as long as they get more power. They'll eat the goose that lays the golden eggs.
You see a ton of this with Trump voters like my grandma that are getting screwed over with medicare changes and live in some kind of grand delusion that Trump is doing exactly what he said he was going to do in cutting benefits, and yet somehow it's all the democrats fault (???).
I'd be interested to hear your idea in more detail (e.g., policy statements, metrics, etc.)
My read of the last year is that the current government's goals and outcomes are somewhat different, but I could be wrong.
>I think the government is laser focused
I'd rather say it's hell-bent. It doesn't look like a laser focus to me... or maybe it's just all disco ball reflections dizzying me, and there is indeed a laser focus somewhere I just can't quite pinpoint.
The username daft is appropriate