The Bubble of the Ages

We are at the peak of a 5000-year bubble in government. Like all bubbles, this one will burst. When it does, our world will become unrecognisable.

How can I say we are at the top of an inter-millenial government bubble? Interest rates.

Throughout history, interest rates have never been as low as they are now. Central banks around the world have kept interest rates at or near 0% since the world economy had a cardiac arrest in 2008. The problem then was bad debt, and they papered over it and socialised the losses. The propaganda has been telling us that the unprecedentedly-low interest rates were to stimulate the world economy and bring about a ‘recovery’. Nonsense. Low interest rates are deflationary. They reflect pessimism. They have been kept low to enable a few more years of fiat debt expansion before the whole thing blows up. That time has almost arrived. In the US, it will manifest first as a pension fund crisis. 0% interest rates have starved them of yield, and debt defaults by cities and states are not far off. The final chapter will be the sovereign default of the United States government and the end of the Imperium Americanum. That’s at the end of a long chain reaction though. This will not be an overnight event, and our rulers will tax you to the marrow on their way down.

The last eight years have been very good to asset owners – those who are already rich. It has been very bad for the asset-poor – particularly the young. Those millenials who have racked up massive student debts to fund their Masters in Comparative Gender Identity Studies are going to be pretty pissed off when the gravy train of socialism grinds to a halt. If they used mum & dad’s nest egg as collateral for an overpriced ‘starter home’ at current interest rates that their busywork job was going to pay for, they’re in big trouble. Then everyone will feel the bern.

Ultra-low interest rates express pessimism about the real (private) economy, yet conversely express optimism about the public economy (government debt). If you are willing to take a Treasury note or a Bund at nearly 0%, you are saying that you trust the ability of governments to tax-farm their peasantry and repay you more than you trust private assets. Your confidence is so great, you’re willing to take a negative yield (after inflation) just for the safety.┬áThis is the bubble that will bring down the world. It’s the one nobody sees, and it is the absolute confidence that people have in government.

Government will feed us, fix us, house us, employ us, entertain us, raise our children and superannuate us. This is the bubble of the ages. When it pops, it will be Biblical.