Surely the crash of the US economy has to be soon

https://wilsoniumite.com/2026/01/27/surely-it-has-to-be-soon/

by Wilsoniumite • 6 months ago

528 635 6 months ago

newsclues3• 6 months ago

Who do we expect will replace Americas global leadership and will they really be better for everyone?

wolvoleo7• 6 months ago

China probably. No I don't think it is better but at least their leadership is actually sane. Evil, but sane and predictable.

scotty799• 6 months ago

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.

mschuster914• 6 months ago

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.

ranguna2• 6 months ago

No one, we don't need a leader. We need decentralised governance.

bborud8• 6 months ago

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.

delaminator• 6 months ago

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".

bilekas4• 6 months ago

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.

bborud8• 6 months ago

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.

michaelsshaw3• 6 months ago

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.

saubeidl• 6 months ago

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.

operation_moose3• 6 months ago

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.

tock4• 6 months ago

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.

operation_moose3• 6 months ago

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.

wolvoleo7• 6 months ago

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.

Oras• 6 months ago

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.

wolvoleo7• 6 months ago

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.

bigbadfeline2• 6 months ago

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.

socalgal2• 6 months ago

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.

mschuster914• 6 months ago

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.

PeterHolzwarth9• 6 months ago

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.

captain_coffee• 6 months ago

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?

Noaidi10• 6 months ago

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.

crote• 6 months ago

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.

shmeeed2• 6 months ago

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

johnnyanmac10• 6 months ago

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.

benrutter5• 6 months ago

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-...

minimaltom• 6 months ago

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.

sublinear• 6 months ago

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.

drstewart3• 6 months ago

Surely the surge of predictions of an incoming crash will never end though.

SchwKatze3• 6 months ago

I'm kinda new into economy crashes, was a kid in 2008, is there a way to protect of it?

Noaidi10• 6 months ago

Gold and silver mining stocks. And International ETF funds. It looks like the United States will be going through the depression alone.

SchwKatze3• 6 months ago

I saw the graphs of some silver mining stocks and it seems to just follow silver price, why don't just buy silver then?

repelsteeltje3• 6 months ago

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.

teiferer4• 6 months ago

Buy high, sell low. Excellent result when you follow the masses, especially when being a little late.

czechdeveloper2• 6 months ago

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.

SchwKatze3• 6 months ago

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).

torginus9• 6 months ago

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.

teiferer4• 6 months ago

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.

johnnyanmac10• 6 months ago

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).

estimator7292• 6 months ago

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.

giantg2• 6 months ago

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.

mnky9800n2• 6 months ago

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.

mikkupikku2• 6 months ago

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.

MandieD• 6 months ago

At the very least, live like a prudent low-middle-income earner in your country, not like a Bay Area SWE.

Get used to using public transit, if it’s at all an option for you. Going down to being a one-car household instead of two saves us at least 5k EUR per year, even counting the additional cost of two unlimited local transit passes.

Avoid habit-forming conveniences like restaurant delivery, and instead learn how to grocery shop with a list and to cook things you like to eat. If you’re really pressed for time, order your groceries online and pick them up, or get them delivered (that’s an easier thing to back away from if money gets tight than restaurant delivery).

Develop non-consumerist hobbies, where you can get a lot of enjoyment out of little marginal expenditure. I’m partial to fiber arts (free/cheap sheep fleeces I clean with dish soap, then spin and crochet/knit), but there are plenty of relaxing ways to spend time that don’t involve spending much money or being convinced to spend money (like most media consumption - everyone is susceptible to advertising, to some extent)

mellosouls• 6 months ago

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.

tonyedgecombe4• 6 months ago

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.

dh20224• 6 months ago

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

tonyedgecombe4• 6 months ago

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.

sfblah• 6 months ago

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.

benrutter5• 6 months ago

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.

deadbabe3• 6 months ago

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.

junto• 6 months ago

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.

chasd002• 6 months ago

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.

mikkupikku2• 6 months ago

Broadly agree, but I'd bet on Spotify being safe (unless overtaken by a competitor.) The workers in all the robust industries you mentioned are all listening to Spotify to get through their workdays. This is one of the last things they'll give up, normies need music like they need alcohol (and/or weed.)

shimman4• 6 months ago

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.

kayamon• 6 months ago

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

Noaidi10• 6 months ago

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.

padjo• 6 months ago

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.

Noaidi10• 6 months ago

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.

AnimalMuppet2• 6 months ago

Gold and silver are likely to crash. I don't think they are big enough to cause a crash of the overall economy, though.

VirusNewbie• 6 months ago

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.

thunky• 6 months ago

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.

PeterHolzwarth9• 6 months ago

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.

tossandthrow2• 6 months ago

The issue is that you don't know magnitudes.

If the market go up 80% before dropping 20% then you want to have bought in.

philipallstar2• 6 months ago

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.

wolvoleo7• 6 months ago

Yes but tariffs were a long-term strategic tool. Not a bullying tactic for someone who woke up the wrong way.

devnonymous• 6 months ago

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.

bilekas4• 6 months ago

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.

e2le• 6 months ago

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.

tock4• 6 months ago

Blanket tariffs used as blackmail is obviously different.

Nevermark4• 6 months ago

Knife: Surgeon. Slasher.

Results are not the same.

jacquesm4• 6 months ago

Nominated for the most powerful two line comment of the month.

carabiner• 6 months ago

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.

mistersquid• 6 months ago

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...

throwaway132448• 6 months ago

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.

scotty799• 6 months ago

Where it's gonna crash to? Where is going the capital move to when everythings going up? (except crypto apparently)

Smaug1232• 6 months ago

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"?

scotty799• 6 months ago

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.

bilekas4• 6 months ago

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!

scotty799• 6 months ago

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.

triceratops4• 6 months ago

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.

refurb5• 6 months ago

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?

n0um3n4• 6 months ago

my bet is: "new" tech, emphasis on "new", will keep US on top or whatever US become after the big reveal.

Henchman21• 6 months ago

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.

baal80spam• 6 months ago

Any time now:

1. Market crash

2. AI bubble bursting

3. Year of the linux desktop

Have I missed something?

mechazawa• 6 months ago

Half life 3

mnky9800n2• 6 months ago

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.

lifetimerubyist• 6 months ago

Beyond Good and Evil 2

pelagicAustral• 6 months ago

GTA VI

Der_Einzige• 6 months ago

Year of linux gaming being good (it isn't)

johnnyanmac10• 6 months ago

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.

csomar• 6 months ago

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.

zerosizedweasle• 6 months ago

It is a giant Ponzi scheme and those tend to collapse at some point.

lvl155• 6 months ago

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.

maxerickson2• 6 months ago

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.

FrancisMoodie2• 6 months ago

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.

acuozzo5• 6 months ago

Of course it's very disruptive for people that lose their jobs,

Why would the Jevons Paradox not apply here?

shimman4• 6 months ago

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.

IAmGraydon2• 6 months ago

Software sector basically got cut in half just on Claude Code.

Source?

What you're claiming is completely untrue. There have been claims like this circulating on the internet recently, and they're all based off this one chart:

https://fred.stlouisfed.org/series/IHLIDXUSTPSOFTDEVE

There are a few major problems with this. First, all of the data comes from one source: Indeed. Indeed SURGED in popularity in the Covid years and interestingly fell off in popularity at exactly the same time as the FRED chart topped. Hey look - the chart for total jobs posted on Indeed looks similar:

https://fred.stlouisfed.org/series/IHLIDXNEWUS

Beyond that, the effect is further exacerbated by the fact that tech hiring went absolutely fucking bonkers during Covid as everyone was convinced we would be stuck inside forever and money was literally free to borrow. The FRED chart only shows us the data during Covid. The inability to see realistic developer hiring numbers before that limits your context and gives a false impression. Here's a chart that goes a few years further back (first one on this page) and shows that hiring has simply normalized:

https://www.dallasfed.org/research/swe/2024/swe2406

Finally, look at the first chart again. Claude Code was released in May 2025. The chart has actually been RISING since that point.

But the software sector was cut in half by Claude Code. Right. And the false narrative marches on. It's honestly amazing to me how people just soak up false information with literally zero filter and zero critical thought or willingness to do some research.

dpkirchner• 6 months ago

I agree that there's no way the market has been cut in half, however I am curious to see if aggregate cash (or at least non-stock) spending on engineers has been affected. Are we seeing a decline in average or median wages?

metalman• 6 months ago

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.

trilogic• 6 months ago

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.

red-iron-pine2• 6 months ago

you can couch it in tech metaphors but there is a clear path forward and it involves eating a certain class of people

Nevermark4• 6 months ago

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.

themafia2• 6 months ago

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.

John7878781• 6 months ago

Is it just me or does this metaphor sound AI generated?

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?

rglynn• 6 months ago

"... how much ram has the system" is a typo or an ESL mistake, so not an LLM.

danans• 6 months ago

It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered. Tariff and invasion threats, protests, you name it, they might move the needle but it always seems to move back. So, perhaps we won? Perhaps we built our markets so stable that they are these days impervious

This is a myopic question only considering the values of securities, gold/silver, etc, which are owned in significance by relatively few.

The working class economy has already crashed. People who have to put in hours to get paid are struggling, and consumer spending is dominated by the top 10%.

The media, ever fixated on the economic welfare of the top 1%, spins a story that if the stock market is doing well, the economy is doing well.

Meanwhile there is an quiet bet that authoritarians will protect interests of capital owners over all else (i.e the bailout OpenAI hinted they might need), while suppressing the primary methods the masses have for expressing their discontent: speech, organizing/demonstrating, strikes, and voting.

singularity2001• 6 months ago

Maybe simultaneous with the crash of the Chinese economy, which was predicted for 40 years now

torginus9• 6 months ago

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)

acuozzo5• 6 months ago

Their biggest problem[…]

is demographic in nature. https://www.populationpyramid.net/china/2024/

ahartmetz2• 6 months ago

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.

tim3332• 6 months ago

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.

Dumblydorr• 6 months ago

Their biggest problem is demographics. They’re living on borrowed time. There won’t be enough young people to do all this work in future with all the old folks to care for.

Tiktaalik• 6 months ago

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.

One absolutely would have been able to say the same thing about Japan in the 1990s when they were top of the world.

So I dunno! Anything's possible!

refurb5• 6 months ago

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.

tock4• 6 months ago

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.

drstewart3• 6 months ago

what the next FED chair appointee will do

What do you think he will do, given he's one of 12 votes?

tock4• 6 months ago

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.

zahlman4• 6 months ago

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/

bootsmann3• 6 months ago

Tariffs cause a currency appreciation (they reduce imports, driving down the supply of the currency outside the country)

happyopossum• 6 months ago

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%.

dgellow5• 6 months ago

Is it really seen as “the real risk” if it is something the current elected president very explicitly said for decades he wants to do? He does want USD to go down in value. He said it, repeatedly, openly. He made very clear why he went after Powell (that he himself reappointed). It’s more, exactly what we should expect than a risk no?

trgn4• 6 months ago

do you have link to article or vids where trump or admin talks about this?

trgn4• 6 months ago

falling usd is a disaster in a consumption economy like ours. fuels inflation. makes investing in usd-denominated assets less attractive. it's not going to boost exports due to tarriff walls. there's no silver lining here.

brador• 6 months ago

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.

nodesocket• 6 months ago

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.

tonyedgecombe4• 6 months ago

At this point I think Tesla could sell zero cars this year and their stock price would still be astronomical.

johnnyanmac10• 6 months ago

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.

Ekaros• 6 months ago

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.

pembrook2• 6 months ago

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.

johnnyanmac10• 6 months ago

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?

drstewart3• 6 months ago

The hourly "AI is a bubble" threads doesn't scream optimistic to me.

pembrook2• 6 months ago

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.

torginus9• 6 months ago

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.

torginus9• 6 months ago

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.

SllX2• 6 months ago

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.

maxglute3• 6 months ago

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.

dyauspitr• 6 months ago

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

panarky7• 6 months ago

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.

jacquesm4• 6 months ago

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.

BobbyJo4• 6 months ago

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.

willtemperley2• 6 months ago

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...

bayarearefugee3• 6 months ago

'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.

JKCalhoun2• 6 months ago

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.

0xDEAFBEAD4• 6 months ago

Trump has no ability to admit mistakes even to himself

Whatever happened to 'TACO'

fjordofnorway• 6 months ago

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.

leptons• 6 months ago

Trump famously bankrupted 3 casinos. The US economy will be the 4th.

ulfw2• 6 months ago

He bankrupted 4 casinos. 2 in one swoop.

phkahler• 6 months ago

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.

laluser• 6 months ago

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.

echelon• 6 months ago

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.

SmirkingRevenge• 6 months ago

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.

jacquesm4• 6 months ago

There is no plan. There is just chaos.

watwut2• 6 months ago

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.

labcomputer• 6 months ago

Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.

This is pure fantasy. A weak dollar makes it more affordable for foreign capital to buy US assets, yes, including housing. The president himself recently admitted on video that he plans to make house prices rise.

rayiner2• 6 months ago

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.

t-3• 6 months ago

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.

benSaiyen• 6 months ago

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.

majormajor2• 6 months ago

"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.

YZF17• 6 months ago

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.

peyton• 6 months ago

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.

nazcan• 6 months ago

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.

thaumasiotes2• 6 months ago

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.

ActorNightly4• 6 months ago

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"

BobbyJo4• 6 months ago

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.

CraigJPerry• 6 months ago

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?

bertjk• 6 months ago

If dollars were being repatriated, but as investment into financial instruments and real estate instead of purchases of goods and services, then that would not affect the trade deficit, right?

locknitpicker• 6 months ago

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.

I think you have it backwards. The US dollar can be handled as a more stable alternative only if it's actually stable. As soon as the US government starts to deteriorate goodwill and outright be hostile towards the world, not only does the US dolar lose its value as a stable alternative but foreign governments start to be motivated to dump their assets, which further tanks its value. In the past couple of weeks we started seeing countries outright dump their investments in US dolar to derisk their portfolio, and they did it at the tune of billions of dollars. You also started to see political pressure for foreign governments to demand their gold reserves are pulled out of the US, which means this pressure goes way beyond US dollars.

willtemperley2• 6 months ago

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-...

fsckboy• 6 months ago

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"

oceanplexian2• 6 months ago

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.

AnthonyMouse5• 6 months ago

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.

mndgs• 6 months ago

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)

HlessClaudesman2• 6 months ago

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?

llm_nerd• 6 months ago

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 a pretty enormous assumption. The US economy tends to crash into a smouldering ruin on the tiniest fluctuation in the inputs. The notion that you could abolish 27% of the real GDP and everything else just continues is not reality based. The US is barrelling towards a natural debt limit and that alone is going to be utter catastrophe for an economy that is fuelled by an insane amount of debt spending. The fact that some of the cons, like Trump and Graham, are trying to extract as much as they can as quickly as they can is telling enough.

The US economy is a tenuous mirage. Like Americans constantly love showing the fun charts demonstrating that various backwater, poor, Methville states with negligible business or industry have a higher GDP / capita than most developed nations. Sure they do.

baby2• 6 months ago

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...

raincole3• 6 months ago

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.

wahern• 6 months ago

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.

xanthor2• 6 months ago

The US has pointed and fired guns at other countries for moving away from US treasuries, but alternative justifications are produced to reassure our domestic population that it’s really because the foreign leader is a very bad guy.

jillesvangurp• 6 months ago

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.

pyrale• 6 months ago

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.

ezconnect3• 6 months ago

The next crash will probably be a race for assets or hard assets for the people who can afford it. It means the stock market will reach all time high, gold all time high and land prices skyrocketing as people try to escape from the dollar currency. The US President will still be proud the economy is still good because the stock market is at all time high and the people are rich because their homes are at all time high valuation but the middle class can barely afford food because there are no available jobs that pays good enough.

dgellow5• 6 months ago

This time is already different. It's way past the point where the US is unfriendly towards the western world

cookiengineer• 6 months ago

I wanted to add that since the last threat of Trump in Davos where he didn't even know the difference between Iceland and Greenland and accidentally threatened another sovereign country, almost all social insurances of EU countries have started to liquidate/sell their US bonds and assets.

If that is not a red sign to BlackRock, then I don't know...

sandworm101• 6 months ago

> 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.

For those who want to return the US to the haydays of manufacturing, the days of cheap steel and people working in mills, a rock-bottom dollar is a necessary first step. To sell widgets, the US dollar needs to be low. And to get workers into low-wage mill jobs the population needs to be hungry.

eduction• 6 months ago

if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be

You’ve set no time bound so what you say here is essentially irrefutable. It boils down to “on this path we will eventually have a big bust.” You’re right if it happens in 1 year or 30.

You’ve also not defined the bounds of the path. Paths can weave. So essentially that part of it becomes meaningless because anyone can draw a line that starts with today.

Tech has a long history of boom bust cycles. Some busts are much more mild than others. Some upend the whole economy for protracted periods. In reality no one knows when AI will bust and how bad it will be. Those are the key questions, not whether there will eventually be a tech (or broad) bust. Of course there will be if you’re looking out to infinity days from today.

Most economic commentary is like this including the linked article: so poorly defined as to be low worth as even speculation.

b112• 6 months ago

If the US debt gets to the point that interest on debt can't be paid, the US will just print enormous sums of money. Debt is in $, not in valued or devalued currency.

Sure, the end result will be a deprecation of the dollar. But the interest will be paid.

So the real downside to debt is not-overly apparent. Look at how much money was printed for COVID payments, and the like? And at other economic downturns? I do wonder, when will the merry-go-round stop?

adventured• 6 months ago

The US economy depends on the country's position of world hegemon

Your premise depends on that being true, and you stated that like it's a fact. It's an unsupported opinion.

The US economy was the world's largest before 1890, without anything remotely resembling the global reserve currency or superpower military.

thuridas• 6 months ago

You need US dollars because you have with US. Tarrifs hurt the need for dollars.

benrutter5• 6 months ago

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/

FrancisMoodie2• 6 months ago

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.

r_lee2• 6 months ago

No... problem is that most investors are flooded with liquidity/money (thanks to QE and the rallies) thus alternative assets like Bitcoin are being flooded with liquidity (see: Blackrock BTC ETF)

We only would see a real valuation if there was a sudden need for liquidations, or a loss in faith in value, which would need some kind of an event, either rapid liquidation or some sudden shift in sentiment

I'm guessing it will be part of a larger sell-off in Tech and BTC will be lumped in⁶

incomingpain• 6 months ago

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.

koe123• 6 months ago

Is this the case with all bubbles? Might be a naive question

CamperBob2• 6 months ago

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.

amenhotep• 6 months ago

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.

benrutter5• 6 months ago

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.

acuozzo5• 6 months ago

Stock markets are at 10 year peaks.

Put the value of gold on the X axis instead of the USD.

acuozzo5• 6 months ago

Correction: I was exhausted when I wrote this. I meant: keep time on the X, express the value of the stock in question in gold on the Y.

daft_pink2• 6 months ago

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.

donmcronald• 6 months ago

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.

pixl97• 6 months ago

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 (???).

bayarearefugee3• 6 months ago

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.

yatopifo• 6 months ago

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.

CoastalCoder• 6 months ago

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.

rurp• 6 months ago

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.

daft_pink2• 6 months ago

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.

leemelone• 6 months ago

Oil prices are VERY reasonable right now.

asacrowflies• 6 months ago

The username daft is appropriate

shmeeed2• 6 months ago

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.

yomismoaqui• 6 months ago

If you predict a crash every month and it happens after 2 years... can we call you a visionary?

mrbombastic• 6 months ago

Yes and thank you in advance

cbdevidal4• 6 months ago

ZeroHedge has correctly predicted two hundred of the last two recessions ;-)

pinkmuffinere• 6 months ago

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.

Breza• 6 months ago

If a company has a fundamentally good business model, I can just buy the stock and forget about it for years. I wish there were something equivalent for companies with bad business models. You can't just short something and come back ten years later to check the price.

diogenescynic2• 6 months ago

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.

trgn4• 6 months ago

real's estate been flat for a number of years now in half the country, down even in some parts. not a crash perse, but certainly a bad investment and starkly different from situation 4-5 years ago.

matwood• 6 months ago

Timing is obviously always the issue. When Greenspan talked about irrational exuberance '96 in regards to the .com bubble, the Nasdaq proceeded to go up almost another 4x in price and it didn't crash for 3 more years.

oxag3n• 6 months ago

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

tsoukase2• 6 months ago

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.

willhslade• 6 months ago

Greece? How did it go after the crisis?

tsoukase2• 6 months ago

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.

robinsoncrusue2• 6 months ago

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.

saguntum• 6 months ago

What is a mess about the Eurozone and reckless about the ECB?

robinsoncrusue2• 6 months ago

https://robinjbrooks.substack.com/p/the-principal-agent-prob...

throwawayqqq112• 6 months ago

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.

benrutter5• 6 months ago

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.

tick_tock_tick• 6 months ago

That's not an answer. Japan and the EU can't handle those flows so again there is no other place to go.

Hikikomori• 6 months ago

Free market, but not like that (china).

ajross• 6 months ago

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.

neilwilson• 6 months ago

But importantly the person buying the stock certificate etc preferred to see that rather than a cash balance.

For every seller there has to be a buyer.

fcantournet• 6 months ago

  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.

izacus• 6 months ago

One thing I can always be sure about, is reading premium gold plated, high quality, absolute dumbest nonsense about EU policies and state of EU on this website.

drgo• 6 months ago

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.

nl• 6 months ago

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.

dgellow5• 6 months ago

which will inevitably lead to Germany leaving Eurozone at some point

No chance. Unless that happens after a lots of other countries leave

jfyi4• 6 months ago

The alternative is recognizing that China offers a level of long term stability that the US is failing to match. That stability is worth a premium. You may not believe it's a high one, but our trade partners facing random tariff changes every month see it differently, even if just for a negotiating tactic at the current stage.

We also need to seriously adjust our line of thinking at what they are capable of. The "copycat" era is ending. Our supply chains have hammered their youth with generations of engineering knowledge. If you are relying on an ideological difference to assume they are not capable of innovation, you are making a strategic mistake.

plaidfuji2• 6 months ago

China innovates orders of magnitude faster than they did even ten years ago. Yes, a lot of it is still copycat, but there is value in being able to copy quickly and well.

The question is whether China offers long-term stability for external investment. Should US retirement portfolios load up on Chinese equities?

mahirsaid2• 6 months ago

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.

bigbadfeline2• 6 months ago

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.

mahirsaid2• 6 months ago

https://fred.stlouisfed.org/series/CSUSHPINSA I was taking this as an example.

ron_woods• 6 months ago

This long read by Grant Williams really helped put everything into context. https://www.epsilontheory.com/there-can-be-only-two/

PeterHolzwarth9• 6 months ago

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.

jaggederest• 6 months ago

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.

yxuc77• 6 months ago

Ok, now that silver fell, are you going to write another article with the opposing view?

That’s how the news does it.

datameta• 6 months ago

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.

m000• 6 months ago

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.

actionfromafar2• 6 months ago

Have we seen any signs of any limits to erratic behaviour?

zahlman4• 6 months ago

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.

hirako20007• 6 months ago

I don't see 30%. Maybe 12% from the very recent top, back to wherever it was just a few weeks ago.

zahlman4• 6 months 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.

nofriend• 6 months ago

it was at 120 and now it's at 85. yes it's back to where it was a few weeks ago

ActorNightly4• 6 months ago

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.

4gotunameagain• 6 months ago

Interesting. Do you buy indexes, or ?

raffraffraff• 6 months ago

So if you had a pension mostly in all world indexed funds, you'd switch them over to "boring" investments like cash.

generic92034• 6 months ago

You have explained well how you are determining the point to sell. But how do you determine that "the dip" is now?

ghtbircshotbe• 6 months ago

Obvious problem - stock market could keep going down. Obvious improvement - stop limit sell orders. Obvious flaw in the story - many common stocks like Google have doubled in the past year.

sph• 6 months ago

By crash do you mean a return to the prices of early January 2026?

testing22321• 6 months ago

Gold the same.

$15 Trillion gone yesterday

raldi• 6 months ago

To be honest I’m glad we are the ones getting out of that market first.

Who is "we" in that sentence?

zeckalpha• 6 months ago

A declining dollar will look like a good economy for those who think the economy is the stock market.

themafia2• 6 months ago

Private equity and retirees with everything in a 401k.

gpt5• 6 months ago

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.

0xDEAFBEAD4• 6 months ago

Declining USD makes US exports more competitive.

burnt-resistor• 6 months ago

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.

tossandthrow2• 6 months ago

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.

bootsmann3• 6 months ago

If you’re an US investor (dollar-based) who bought stoxx 600 on the day trump took office youre eating very well right now.

stego-tech• 6 months ago

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.

phendrenad2• 6 months ago

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.

kittikitti• 6 months ago

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.

oowahahahah• 6 months ago

"the" crash? you mean "a" crash.

Animats• 6 months ago

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...

etyhhgfff• 6 months ago

If you predict a stock market crash every year, eventually you will be right one year.

swordsith• 6 months ago

Today's the day!

raincole3• 6 months ago

Crash of the stock market != crash of the economy

Of course the market will go down at some point.

IAmGraydon2• 6 months ago

It's funny people still say this. The two are very much linked, as many millions of Americans have a large percentage of their net worth tied up in stocks via their 401Ks. Market tanks, net worth tanks, there's far less assets for people to borrow against, psychology changes, people stop spending, companies stop hiring, economy is now following the market.

cjfd3• 6 months ago

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.

HlessClaudesman2• 6 months ago

The US was in decline, a vote for Trump was a vote to accelerate that decline.

seydor• 6 months ago

As long as people predict a crash, things are good. It's far more dangerous when they stop doing so.

incompatible• 6 months ago

I would be surprised if a day went by without someone, somewhere, predicting a crash.

hypeatei• 6 months ago

It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered

Yes, in a five year span we've had three 20% drawdowns in the stock market that have all recovered which is unprecedented. IMO, anyone who thinks we're going to crash and have a lost decade is not looking at the bigger picture. The Federal Reserve exists to allow the government to spend as much as possible by:

- Making sure that as many people are employed as possible for as long as possible (tax base)

- Making sure that prices keep going up and that the government can borrow below the rate of inflation (so they can spend even more and manage the debt)

What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation. The government also takes a cut from that via capital gains tax. Regardless, there is simply too much "free money" going around for the outlook to be bearish, IMO. I'm investing across my 401(k), Roth IRA, and brokerage accounts as usual with a little more focus on exposure to international funds this year in my retirement accounts.

You should always take bearish outlooks with a grain of salt especially if they don't put their money where their mouth is and show their positions. Bears don't tend to make a lot of money over the long term: https://www.schwab.com/learn/story/does-market-timing-work

BLKNSLVR• 6 months ago

Quoting someone else:

"Bears sound smart, Bulls make money"

SecretDreams• 6 months ago

This goes really good with "even a broken clock is right sometimes".

diogenescynic2• 6 months ago

Even if bears are occasionally right, they aren't right often enough to really be a winning strategy IMO. Look at the S&P500 gains for the last 10 years, some years it's down, but most years it's up. 99.99% of people won't be able to sell at the top and buy at the bottom, so you have to just dollar-cost average and invest in the total marke. FI you do that--you're going to be fine because even if the market is down 22% in one year, it's up double digits 3x as often. You have to just invest with a long-term perspective and can't worry about 6/12 month time horizons.

lotsofpulp• 6 months ago

What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation.

Poorer people and younger people need to work. People with assets and benefactors can rest easy.

dgb232• 6 months ago

You're missing one important feedback loop in this system: That debt is subsidized by foreign institutions, which have been slowly pulling out as they recognize that the US has been consistently consuming beyond their means. Also almost every continent has been working on circumventing the USD as the primary exchange currency in some way or another.

This is reflected in the USD losing value at a higher pace, which means the debt cycle becomes unsustainable.

Hopefully it will gradually managed, but that requires a large amount of political will, tax hikes and budget cuts. Very hard to do fairly and different people have extremely conflicting views on who should get poorer, because that's exactly what cuts and hikes mean.

The current admin is trying to brute force a change, where they keep their cake and eat it too, but they are eroding international trust which just accelerates the issue.

pfdietz• 6 months ago

Turning and turning in the widening gyre, the falcon cannot hear the falconer.

user3939382• 6 months ago

The debt clock is a proxy for the total amount of plastic we route from shipping containers -> landfills. Plastic is oil, oil is energy. Energy can be exchanged for labor globally therefore energy prices money not the other way around. It’s our civilizational bottleneck. The true cost of oil isn’t priced in to begin with and we have it bound up for 500+ years. This is creating a massive distortion in the global economy which physics will insist on regardless of monetary policy.

Or we burn the oil -> heat into the atmosphere via silicon doing things like routing “wyd” texts around dozens of network devices across the country when the message doesn’t have that value.

The economics of how we allocate energy makes no sense and we debate how to fix this via policy.

aarontice• 6 months ago

3 more years, then the macroeconomic headwinds from aging millennials will be past peak earnings and rather than funding cap weighted index, they will be draining cap weighted index.

1929 silent generation decade or depression after.

1967 post war Baby boom from The Greatest Generation, followed by decade plus of stagflation and recessions.

1999, after a two decade run of the stock market going from 1000 on the Dow Jones in 1980 to 10,000 on the Dow Jones in 2000, the baby boomers born to the greatest generation, peak, earning ears, leading to the lost decade afterwards.

Two decades of stock market returns from 6000 on the Dow to 60,000 on the Dow, followed by post peak millennial earnings…

One does not speak unless One knows.

You know nothing Jon Snow.

christkv2• 6 months ago

I find it crazy that people are so obsessed with the current administration they want the world economy to crash. I can tell you that in a current climate a complete world economy crash is going to play out very very badly politically all over the world. I have a real bad feeling it will be a replay of the 30s.

bthallplz• 6 months ago

I wasn't aware that there are people who want it to crash. I've just been getting the feeling that no one understands why it isn't crashing or hasn't crashed yet amidst a bunch of really destabilizing policies.

christkv2• 6 months ago

If you are rooting for the us economy to crash you are rooting for the world economy to crash. Cutting off one's nose to spite one's face comes to mind.

billystr• 6 months ago

mmaunder• 6 months ago

What is different about this time is how much a crash is expected, which is reflected in the run up in the gold price, for one. It’s also reflected in the public discourse about the high probability of a crash - as with this post and many others over the past couple years. 2008 was sudden and unexpected by most. The dot com crash was sudden and unexpected by most. If we crashed today it would have been expected by most and many would make money off the crash.

I’m not sure what the effects of a highly anticipated crash are, but I’d love to discuss what they might be.

It’s priced into gold, which I think reflects negative dollar sentiment. It’s not priced into the VIX, which is implied volatility across the S&P. Suggesting a crash in equities is not priced in.

snek_case• 6 months ago

Maybe not a particularly astute observation, but what I've seen in 10 years of investing is that the stock market seems to like to do the opposite of what most people expect. There's probably a game theoretic explanation to this, but as you seem to be suggesting, it basically comes down to: if the stock market was easy to predict and everyone could easily anticipate its movement, then everyone would make money, and this isn't really possible. There are big fish trying to take your money. The people selling you stocks or buying stocks from you do so because they think they are making the better move.

IMO we'll see a correction some time after people get used to the crash not coming. Maybe the narrative will shift back to "money printing means it can't crash" for a while, the market will go "risk on" and then we'll get a surprise correction.

xivzgrev3• 6 months ago

What if the rise in index funds is a bubble on its own?

It's massive and increasing amounts of money that is not price sensitive and keeps growing. There's an underlying bubble message: "the stock market always bounces back, so keep plowing your money into it even when it's down".

Apparently passive funds are 60% of mutual funds / ETFs now https://www.avantisinvestors.com/avantis-insights/has-passiv...

Even more insidious is that this is in part driven by retail who are not paying attention. It's literally the definition of passive, hands off

So at some point, valuations will become increasingly disconnected from fundamentals. Active players will notice and find some way to take advantage. Passive yields will eaten. But at what point will the scales tip and people decide it's a sham and there are better places to park your money? That's when a huge bubble will collapse.

I don't know. Honestly don't know if that will ever happen because I'm not sure what a better investment for average Joe would be than a passive broad stock market index.

xivzgrev3• 6 months ago

Related thought: maybe the rise in passive is a permanent buoy for positive market sentiment

In the past bad news led to jumpiness and people getting out, including retail. Now you have a massive amount of money that keeps going. So if you jump out..you see that so much money continues to plow in, and price starts going back up. So you come back in so you don't miss out. And on we go.

I think it's very possible passive investing is changing the dynamic, where downturns are more muted. It's overall a good thing but again, as I said above, it feels like it's setting up an even bigger ruin down the road

r_lee2• 6 months ago

It absolutely is.

With the rise of ETFs and 401ks people are incentivized (literally) by the US Gov to put their money in the S&P500

And the "instead of picking a needle in the haystack, just buy the whole haystack" only works if there is actual stock picking going on and you get to ride that, but now when there's so much passive investing, it's just everybody buying the haystack, even if there is no needle

Like with the ETFs and 401ks, they will happily buy as much NVDA at its ATHs, it's quite literally massive liquidity feeding orders all the time, coming from retail's monthly paychecks

dasil003• 6 months ago

I've been invested largely in US index funds for a while now, and I've definitely thought about this. My conclusion is S&P 500 is too big too fail, everyone with various forms of power in the US (economic, political, etc) are incentivized to keep the music going. Sure it feels unsustainable, but there is no way going active can help me—I don't have enough access to the right people, and even if I did, it's better as a hedge strategy. Someone who has a billion dollars can easily pace a bunch of $10M bets on long-shot hedges that will mint a fortune when the music stops. Theoretically I could do something similar at smaller scale, but the people smart enough to have credible strategies are not talking to me, and even if they did I don't have the expertise to judge the advice (the super rich don't either, but at least AUM volume is some signal of competence).

tonfa• 6 months ago

I don't even think it's about active vs. passive index funds.

Even if people were to do active bets on equity, what matters is the amount of money flowing in the asset class, so as long as there's an infinite stream of long investments into equity (due to 401k, etc.), the prices will rise.

You'd need people to actively balance their allocation between asset classes rather than stock X vs Y to counter those equity bubbles, but I don't think it's happening (and equity becomes too big to fail given the link with things like pension in the US).

solatic2• 6 months ago

US stock market index funds will crash when the US stock market crashes. That will require very large sums of capital to decide to move away from US capital markets. To give an idea of how much money would need to move - VTSAX alone is about $2.1 trillion, with hundreds of billions of dollars of shares of each Mag7 stock.

You basically need the world to decide that EMEA/JAP markets are collectively stronger than the US stock market, and to collectively move their capital outside the US to be deployed in EMEA/JAP. Moves away from Mag7 to US value stocks will be captured by the US stock market index funds; moves into commodities will be seen as opportunities to buy the dip before a market rebound. You can view attempts by US private equity to purchase real estate as attempts to hedge against overvaluation in US markets, but if the US has another Great Depression, those real estate purchases won't be able to fetch high rents or prices anyway.

In short, just follow the normal advice, which is not to put all your money into US domestic stocks, but to also purchase foreign stock market index funds, which help to hedge against the risk of the entire US stock market crashing. In the long run, US index funds are still a good investment - US courts still are quite powerful to settle contract disputes, the US does not have capital flight controls, and American business culture is still one of the hardest working, greediest forces on the planet - a Great Depression v2 would not change that.

variadix• 6 months ago

This is a fundamental misunderstanding of why index funds are effective. Being over invested into U.S. equities is a risk if you hold outsized U.S. index funds (esp. if you have a large allocation in the S&P500, you do not own the market portfolio), but there are other risks being invested into foreign equities as a U.S. investor.

dgb232• 6 months ago

I think the almost opposite is the case.

Passive, (especially global) index funds doing so well and outperforming the vast majority of actively managed, general funds () is not a given, but they point to a different problem.

It means that most actively managed funds are still overpriced (fees), don't deliver efficient price discovery, and in some cases destabilize the market by making consistently wrong bets.

That's not the fault of index funds. In fact they make it easier for high performing investors who have deeper insights.

There are plenty of funds that don't compete on just on beating the index, but have other goals.

bluecalm• 6 months ago

>That's when a huge bubble will collapse.

Maybe there will be a "huge bubble" in the future but it doesn't look that huge right now. Forward P/E for S&P500 is about 22. That is 4.5% yearly return even if there is no growth beyond 2026. This is also real growth as earnings raise with inflation so nominal expected return is about 7% even if there is 0 growth beyond 2026.

Meanwhile risk-free rate (basically short term government bonds) is around 3.5% per year right now (nominal). That 7% is quite pessimistic as some "net growth" (growth - costs of generating it) is expected beyond 2026 and you can only get 3.5% "risk-free" I am not sure why people call current valuations crazy or what their expectations for "fair valuations" are. Equity risk premium seems to be still above 4%. Maybe that's on the low side but far away from bubble territory, let alone "a huge bubble".

le-mark• 6 months ago

2008 was sudden and unexpected by most. The dot com crash was sudden and unexpected by most.

In both those events there was clearly a bubble, and although no one could predict exact dates, corrections were expected.

Exactly the situation now. The problem is predicting the top. Example;You might estimate now is a good time to pull your assets out of the markets, but then the markets go up another 10%. Then a 20% correction happens and you attempt to time the bottom but miss it. Best case you buy back in at about the same point you left. With transaction fees and capital gains you’ve lost money anyway.

I did this in 2007, bought some rentals and missed a lot of gains post 2008.

xivzgrev3• 6 months ago

There's also the fact that US equities are now consistently best asset class. Used to be all over the map. But with rise of passive investing and global markets, capital flows to the winner. Success begets success.

If something changes and suddenly foreign equities start consistently beating out US then capital would flow accordingly. But the US still has a massive advantage from passive flows propping it up in perpetuity.

sbohacek• 6 months ago

International equities out performed US in 2025, e.g., see the chart near the bottom of the article in https://www.cnn.com/2026/01/04/investing/global-stock-market...

fogzen• 6 months ago

Gold has crashed with previous economic crashes. In 2008 it fell 30%, silver fell by 50%.

m-s-y• 6 months ago

This happened yesterday. Not quite 30/50, more like 20/30

ls612• 6 months ago

Gold fell over 10 percent yesterday and silver almost 20 percent because Trump announced that the economist friendly choice would be nominated for the Fed. A lot of the precious metals market activity was based on fears about US monetary policy not fears of an imminent depression.

werdnapk• 6 months ago

Gold and silver were up the most they'd ever been the previous 1-2 days... followed by them going back down. So don't mention the fall without the literal massive rise that happened hours before.

jb1991• 6 months ago

This is a good example of a comment taken completely out of context to indicate something that’s not true at all. Take a look at a chart of gold. Crash of 10% makes it sound like gold depreciated a lot.

mrbluecoat• 6 months ago

The only thing that crashed yesterday was silver and gold

ccc3• 6 months ago

I don't think that's exactly true of dot com and '08. In both cases the developing bubbles were identified and widely discussed in the years prior to the burst. The surprise in '08 was not that there was a bubble in real estate, but rather that a massive fraction of the financial system was built on leveraging that sector. To paraphrase Buffett, you don't know who's swimming naked until the tide goes out.

PeterHolzwarth9• 6 months ago

The dot com crash was absolutely expected - today's "cmon, get it over with! crash!" tone we see in regards to the AI bubble is hilariously reminiscent of the late 90s dot com bubble. It was the era that spawned the famous Economist leader "Crash Dammit!"

FrustratedMonky• 6 months ago

" different about this time is how much a crash is expected, which is reflected in the run up in the gold price"

Isn't this an indicator of a coming crash, not a counter point.

Doesn't Gold go up, specifically as people buy it as a hedge against a crash.

Eridrus• 6 months ago

Can an anticipated crash even happen?

If you anticipate it, it means you start pricing it in, which means the price is not high enough to crash.

I think many people understands there is a huge capital investment going into AI right now that is speculative and could blow up, but nobody actually knows if its going to pay off or not and everyone just defaults to their personality on how they process this risk.

If you think that everyone thinks a crash is imminent, you need to expand your social circle. Someone is buying the other side of these trades.

I don't know how any self-respecting person can write a blog post that starts with them hand drawing curved on an employment chart pretending they're doing analysis.

tejohnso• 6 months ago

Just look at TSLA and you might temper your expectations of a rational market.

bwfan123• 6 months ago

you might temper your expectations of a rational market

TSLA is like a snowball down a hill. It morphs from EV to autonomous driving to AI to robots to space to tera fab to space datacenters. Rolling in the next big narrative or gov handout as it speeds down the hill.

chaostheory• 6 months ago

People buy precious metals when they might be worried about the value of fiat currencies

It’s not just people. Central banks are buying precious metals due to the dollar and new Basel rules. Gold needs to be allocated if you want it to be considered a tier 1 asset.

kopollo• 6 months ago

If we look at it with a little imagination , this undulating, jagged line, when compared to Arabic handwriting, most closely resembles: “الله” (Allah)

constantcrying• 6 months ago

Expecting the crash of the most important economy in the world based on two graphs, where you do chart astrology, is such an insanely stupid argument it is hard to fathom.

With all these charlatans predicting imminent collapse it is always imperative to consider how strongly they believe in their revealed preferences, based on how much they have invested in their position. That said, how much money does OP have invested e.g. in shorting the S&P 500? Or any equivalent. Let me guess, zero dollars.

harryf• 6 months ago

Google: USD CHF … set graph to max … it’s right there but it’s a slooooow rot.

Swiss Franc is generally very stable so a good yard stick for other currencies over the long term

d--b• 6 months ago

Trump is lowering interest rates, fueling the bubbles.

We can’t know when it’s going to happen, but there is a good chance that one is going to be super bad.

We basically borrowed our way out of the 2008 crash and through covid, but we havent repaid the debt. It is so high I doubt we can do the same next time.

riazrizvi• 6 months ago

The argument is essentially a technical chart trade? It may as well be numerology or astrology. We are humans, finding patterns in data after the fact is what we do. Do yourself a favor, don't trade on this mumbo jumbo.

nothrowaways• 6 months ago

Biden never got a credit for taking us out of the COVID mess.

As a US citizen, I will vote to bring him back once again just to fix this mess.

ks2048• 6 months ago

If you just do very crude pattern matching on the first chart he shows - it is warped by the (intentional?) way he drew orange overlay lines.

The slope in 2024 and 2025 (the data that we already have) is much lower than the orange line drawn.

Following the real visual trend, the next peak would be maybe another 5-10 years in the future. (Not that this is a good way to predict the future, as also stated in the article, "not very scientific").

plaidfuji2• 6 months ago

So, perhaps we won? Perhaps we built our markets so stable that they are these days impervious? That sounds silly on its face, and the two reasons I’d actually give are:
1. Markets are just slower moving than ever before, big players just like to sit on their big piles of money
2. There are one or more bubbles in the stock market. Almost everyone agrees that AI is a bubble. It funds itself in a circular fashion, and capex cannot be recovered with profits any time soon, even with optimistic outlooks.

It’s a bit of both. The impact of political instability in the US (read: Trump pissing off as many people as possible) may not be felt in the markets quickly, if even within his term. He has severely dented confidence in the US as a trading partner and as an arbiter of the global rules-based order. That will have decades-long implications, the result being a pivot away from dollar-denominated commodities trading, and export markets for US goods being increasingly unfriendly. The value of the dollar will probably decline, and in fact that is a goal of many in his administration. That could actually be good for US equities if it’s in moderation.

The biggest risk I see is flight of capital away from US treasuries, which would drive up interest rates, leading to a sovereign debt crisis in the US. The likely solution to that would be money printing and resultant inflation. The high treasuries rate would drag capital away from equities.

sleepyguy• 6 months ago

There is so much wrong with this blog post that it is difficult to know where to start. Does he even know that China has placed silver on the rare earths list? Considering they export 60 % of the worlds refined silver and now exports are limited and controlled. Silver markets have sold 200 contracts to every bar of refined silver. Now they are scrambling to fulfill delivery if someones requests it and are forced to buy on the spot market, which incidentally has driven spot pricing higher than contracts.

People are moving out of Bitcoin and into Gold currently. I see this trend continuing (Bitcoin falling).

The markets today are indestructible at the moment as you have witnessed over the last 3-4 years. This year will be similar to 2025 according to many different and smart people. I tend to agree with them and we are still in a bull market.

-not an expert, not investment advice, your mileage may vary.

roninapps• 6 months ago

I asked NOMOS (a system) I built for financial intelligence. These are it's key findings:

Key Answer

As of early 2026, there is no consensus forecast for an imminent crash of the U.S. economy. The prevailing view among major institutions is a period of moderated growth or a "soft landing," not a severe contraction. However, this outlook is balanced against significant and rising risks, including labor market fragility, unsustainable fiscal debt, and persistent inflationary pressures that could trigger a more pronounced downturn. Key Findings

    Consensus Points to Slowdown, Not a Crash. Major institutional bodies like the International Monetary Fund (IMF), Congressional Budget Office (CBO), and large investment banks project modest U.S. real GDP growth for 2026, generally in the 1.8% to 2.5% range. This baseline scenario is supported by expectations of resilient consumer spending, continued investment in technology like AI, and an anticipated easing of monetary policy by the Federal Reserve as inflation moderates. Optimistic forecasts from firms like RSM US and ARK Invest even anticipate a growth rebound to 2.2%, viewing the economy as a "coiled spring" fueled by technology spending.

    Labor Market Fragility is the Primary Downside Risk. Despite a low headline unemployment rate, the labor market shows significant signs of weakness. Analysts describe the current environment as a "low-hire, low-fire" equilibrium, characterized by slowing job growth and concerns over employment quality. A critical warning sign is the growing divergence between strong reported GDP figures and weakening labor market data. Historically, such contradictions are often resolved by downward revisions to economic growth, suggesting the economy may be weaker than headline numbers indicate. Capital Economics highlights that a cooling labor market, if not offset by productivity gains, could initiate a self-reinforcing cycle of lower employment and reduced consumer spending.

    Unsustainable Fiscal Debt Poses a Systemic Threat. The U.S. federal debt has surpassed $38 trillion, exceeding 100% of GDP. Net interest costs are projected to consume nearly 14% of all federal spending in 2026. The Brookings Institution projects this trajectory is unsustainable, with debt potentially reaching $170 trillion over three decades and interest payments consuming over a quarter of tax revenues within a decade. This creates near-term risks, as FTI Consulting warns that "bond vigilantes" could push back against perceived fiscal profligacy, driving up government bond yields and, consequently, borrowing costs for the entire private sector, independent of Federal Reserve actions.

    Stagflationary Pressures Complicate Monetary Policy. The economic environment is characterized by a difficult mix of slowing growth and persistent, albeit moderating, inflation. This presents a stagflationary challenge for the Federal Reserve. Policy measures such as new tariffs are expected to add to inflationary pressures while simultaneously acting as a drag on consumption and investment. This dynamic severely constrains the Fed's ability to stimulate the economy; cutting interest rates aggressively to support growth could risk re-igniting inflation, while keeping rates high to fight inflation could accelerate a downturn.

    Negative Public Sentiment Contrasts with Macro Resilience. While macroeconomic indicators like GDP have shown resilience, public sentiment remains overwhelmingly negative. Polls from Pew Research and YouGov show that a majority of Americans rate the economy poorly, driven by persistent affordability challenges related to housing, food, and healthcare. This sentiment is exacerbated by 2026 policy changes, such as cuts to social programs, which directly impact household budgets. This disconnect between headline data and public experience is a vulnerability, as deteriorating consumer confidence can lead to pullbacks in spending that are not yet reflected in aggregate data.

stevenjgarner• 6 months ago

It is often argued that the US will grow its economy such that the debt is less significant. There is much confusion between the US debt being cited as a ratio of GDP (common among economists) vs net tangible assets (common among businesses and people). For example, after WWII, the U.S. faced its previous record debt-to-GDP ratio—roughly 106% in 1946. By 1974, that ratio had plummeted to just 23% largely through:

a) massive GDP growth with real consumption rising 22% between 1944 and 1947.

b) fiscal discipline where the U.S. actually ran primary budget surpluses in the late 1940s

c) financial repression with the Federal Reserve capping interest rates at around 2.5% while inflation averaged 6.5%. This meant the government was paying back debt with "cheaper" dollars, effectively "inflating away" the debt at the expense of bondholders.

Fast forward to today, there is an often stated belief that the US will grow the economy again, this time with a dramatic expansion into a space economy including orbiting data centers, solar power plants, asteroid mining, space manufacture - all leveraged with robotics and AI. Let's be generous and assume this actual happens and that it happens soon - what mandate is there that this massive space economy will be denominated in US dollars or even be part of the US economy? SpaceX has already launched numerous satellites for foreign countries. What is to stop them launching a space economy that will be owned under a "Flag of Convenience" from an offshore tax-free zone, perhaps even denominated in crypto? Will we then confront this massive off-planet economy with "space-tariffs" in order to import the value-added component back into the US? The U.S. debt can only be "grown away" if the value-added activities (mining, manufacturing, computing) remain registered in the U.S..

assaddayinh• 6 months ago

The us are two economies in a trenchcoat. One a classic naval trade economy, the other a imperial security trade economy. One damages the other regularly and applies local monetary anesthesia to prevent the population from rising up against the whole state of affairs. Now they are divorcing.

nektro• 6 months ago

the burst will be bigger than anything we've ever seen. so everyone pretends its not there (which only makes it bigger but alas), and money only material exists as people's faith in it so that's enough to punt the problem down a bit further.

ohbleek• 6 months ago

That spark could end up being the rollout of chinas digital currency to the world and requiring payment using that currency when dealing with foreign businesses. This will kill the position of the US dollar as a reserve currency, slowly, but almost certainly.

GOD_Over_Djinn2• 6 months ago

The unemployment rate just follows these smooth curves, covid was an exception, and it was due to jump again. Not very scientific I know.

Why did you feel the need to post this article? It totally lacks substance. The above quote says it all.

Dumas007• 6 months ago

The US has several things backing it currency ...oil/gas, gold, oil- processing efficiencies, the value of the world's largest companies ....AND (not to mention) an unrivaled armed force. Lol. BUT, every barrel of oil to emerge from the ground is immediately priced in US dollars. Hence ....a liquid printing press. GDTA.

Surely the crash of the US economy has to be soon

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