July 2024 Newsletter: Rates Insensitivity in the Downcycle
Looking ahead, the wealth divide will likely accelerate and today’s social tensions must inevitably rise. But, much like in 1920s Germany when hyper-inflation savaged the post-WW1 economy, there was also a widening split between young (stock speculators) and old (bond investors). In today’s monetary inflation World, many young (crypto investors) ar... See more
Michael Howell • The Debt-Liquidity Spiral
"dominating the present with insights."
Kyle Harrison • Markets, Markets, and Markets
For example, if public debt is compounding higher at a 7-8% annual clip, then liquidity needs to keep pace to avoid financial crises. Think of it as the ‘cost’ of stability. This rate of monetary inflation represents a return hurdle for other assets because it measures the rate of debasement of paper money. Hence, investors need to figure which ass... See more
Michael Howell • The Debt-Liquidity Spiral
Everybody gets levered up the wazoo. If you can’t save because money does not retain value, then you have to be fully invested. If capital has all been misallocated such that price signals are unreliable and losses are artificially sustained, then any minor advantage has to be levered to achieve a satisfactory return. And if interest rates are arti
... See moreSacha Meyers • Bitcoin Is Venice: Essays on the Past and Future of Capitalism
Potential Winners and Losers: In an inflationary environment: o Losers: Long-duration bonds, high-growth tech companies reliant on cheap capital, and heavily indebted entities vulnerable to rising interest rates.
o Winners: Real assets like commodities, infrastructure, and companies with pricing power or exposure to supply chain restructuring.