The great unwinding
It was an incredibly eerie moment for me, because not quite two years earlier, I had sat in the Lehman building on 7th Ave and been interviewed by a financial controller and a trader in Singapore. (I failed that second interview extremely badly, by the way.)
And just two years after its collapse, I sat in that same building again, when it was owned by Barclays Capital (as it was known back then), on the fixed-income trading floor, watching some of the very same people who had done so much wrong during the Crisis itself, going about their business one day, and then they were gone the next - because they had been fired over their role in the manipulation of the benchmark LIBOR rate during the crisis.
Looking back through those crazy days, more than 11 years ago, I have to tell you that I don't think we've learned a single damned thing in the entire period in between:
Despite all of the great good that the God-Emperor has done for the US economy, let us be under NO illusions about one very important fact.
The global financial crisis absolutely IS NOT over.
Global debt levels have absolutely exploded. We aren't looking at a mere catastrophe now - we're looking at the complete destruction of every major government.
In order to understand why, you have to know a little something about basic economics - and it is basic, you don't need a PhD to understand this stuff.
Essentially, governments and monetary authorities are significantly limited in terms of how much they can do for an economy in times of crisis and turmoil. When economies go into severe recessions, governments typically respond by increasing spending in order to cushion the impact of the drops in private spending, investment, and consumption.
Economic history over the past 10,000 years - not just the past 150 or so, but over a much longer span than that - has shown us that these big public works projects don't really do much to improve an economy, because the money has to come from somewhere. And, inevitably, the money has to come from the people in the form of taxes, or from future generations in the form of debt.
A far more effective way of reducing the impact of an economic downturn is to cut taxes - but any fiscally responsible government will then have to cut spending as well, because otherwise, a new tax will be imposed on future generations, again in the form of debt.
By the 1970s it became clear that, outside of significant and permanent income tax cuts, fiscal stimulus wasn't particularly useful and didn't accomplish what its biggest advocates believed it would.
So the world's economic pointy-heads turned to monetary methods instead - essentially debasing the currency in order to control economic output.
This does work, because the method that monetarists use to control the economy effectively involves changing people's time preferences.
By altering short-term and eventually long-term interest rates to encourage consumption, central banks and monetary authorities essentially alter people's preferences for deferring gratification and consumption.
I don't have the time or ability (or, quite frankly, desire) to give a lecture about Austrian Economics 101, but think of time preferences this way:
Would you prefer a cup of coffee right now, with no effort? Or would you prefer to put in a bit of work and save some money and have two cups of coffee tomorrow?
To most Westerners, and virtually all East and South Asians, the answer is simple: you'll take the two cups tomorrow and work today.
But this is not a universal attitude. In much of the world - most of it, in fact - the attitude is radically different. Live for today, screw tomorrow.
That difference in attitude largely separates the civilised from the barbaric.
The mechanism by which you "save" money from your efforts and reward yourself for your labours, is the rate of interest on money that you earn. If the rate of interest on your money is sufficiently high, you will prefer to save it for tomorrow rather than consume it all today.
But if you look at the markets and realise that the rate of return on your money is too low to bother with saving it, then you will spend it today - and to Beelzebub with the consequences.
That is an entirely non-Biblical, non-Scriptural, non-sensible attitude. And that is PRECISELY what the world's central banks have encouraged, not merely for 10 or 12 or 20 years, but for FIFTY years.
Ever since the USA, and therefore the world, officially decoupled itself from the gold standard in the 1970s, the world's central banks, led by the Federal Reserve, have debased their domestic currencies to the tune of ninety percent or more. That is to say, a dollar today can (barely) buy the same amount as ten cents could fifty years ago.
What does this mean for us in terms of financial crises and stability?
Nothing good, at all.
You see, there is a limit to how much central banks can do to encourage people to consume. Sooner or later the bill ALWAYS comes due, because every time a central bank lowers benchmark interest rates to encourage short-term and long-term debt, that debt itself has to come due eventually.
And when it does, the results are spectacularly horrifying.
Right now the world is in the midst of the biggest debt-driven bubble in human history - far, far greater than the debt bubble of 2008. This time, though, the debts are not private or corporate in nature, because if you look at the balance sheets of most of America's biggest companies, they are actually flooded with cash. They have so much damn cash that they don't even know what to do with it. Never mind the Teslas and Netflixes and Ubers that all burn through billions of dollars every year and don't make a profit (Netflix is the exception), many of America's biggest corporations are quite cash-rich.
No, the problem right now is government and central bank insolvency.
The US government alone is completely insolvent no matter how you look at its future liabilities. It is still paying interest on bonds issued 30 years ago that bear a coupon of 10% or so. And its interest payments are ballooning, because the US government has to keep issuing debt in order to finance its spending - and much of the revenues gained from issuing new debt to the markets, is simply going to servicing the interest from existing debt.
And that is before we get to the fact that the US government faces some $75-150 TRILLION in unfunded liabilities over the next 100 years.
Nobody actually knows what the true number is, because nobody knows exactly what goodies the government will give away next. While His Most Illustrious, Benevolent, August, Noble, and Legendary Celestial Majesty, the God-Emperor of Mankind, Donaldus Triumphus Magnus Astra, the First of His Name, has done a tremendous job thus far of reducing regulations and reorienting government priorities to what the people actually what, he has made virtually no progress whatsoever in the crucial task of cutting government spending and getting a budget passed.
That isn't his fault. It is not his responsibility to pass a budget. That is on Congress, which has singularly failed to perform this most vital Constitutional duty for years.
The plain fact is that the government can't do much to prevent another financial catastrophe of the kind that crippled the entire world economy in 2008. The next crisis will be worse by orders of magnitude than what we saw before, and next time, governments will be virtually powerless to stop it.
What should scare the shit out of us, each and every one, is the fact that central banks will also be virtually powerless to stop the next crisis too.
Think about it. There isn't much room for them to manoeuvre anymore. Central banks cannot really lower rates much, because you can't really go below zero - if you do, you end up with the situation that you have in parts of Europe, where people get charged money to park their own funds in the bank.
This is a galactically stupid thing for central banks to do, because if people don't put money in the bank, the bank can't lend money out to others, and an absolutely critical element of the transmission mechanism of capitalism is simply destroyed.
But central banks can't raise rates either. The Fed tried to do so in 2018 and got absolutely hammered by the God-Emperor and the markets for doing it, because this resulted in a slowdown of (debt-based) economic growth. So they had to climb down from that policy, and long-term interest rates are now at... about 2% for a 30yr Treasury bond.
Imagine saving your money for THIRTY YEARS, and getting a pathetic 2% return on it. Once you account for inflation, you've ended up with precisely zero growth. Your money may even have shrunk in value.
When you combine this fact with the fact that 30 years ago, the same interest rate on the 30yr bond was about 10%, you will realise what a dreadful situation we're in right now.
I am as delighted as anyone else is to see the God-Emperor doing so well to push the American economy forward. He is doing exactly what is needed to give power and wealth back to the people who generate it. But that does not mean that he alone can fix the deep-rooted problems within the American, or world, economy. Those problems are beyond his ken.
Those problems start and end with you, and me.
Our lifestyles have been financed almost entirely through debt. (When I say "our", I use this in a global sense. I have made a LOT of stupid mistakes in my life, and I'm paying a very high price for them right now. But one stupid mistake that I never, ever, EVER made, was to go into debt.) And that debt-based living has allowed us to buy lots of nice things.
But life is about far more than just having nice things. And once you go into debt, make no mistake - you are a slave.
Walk away from the debt-based economy. Insulate yourself from the horrendous shocks that will come when, not if, that false construct comes crashing down. And be ready for the day it happens, because when it does, you will probably realise it only when you wake up one morning and realise that the very same titans of industry and capitalism that promised you that they were strong and healthy, have gone bankrupt.
Just like I realised it, on that September morning in 2008.