Leverage unwinds are dangerous

Leverage unwinds are dangerous:

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Leverage unwinds are dangerous.

They’re violent.

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Don’t happen that often.

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Maybe a few times in someone’s lifetime.

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But man, when they do…

They can be disastrous.

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The system is overleveraged.

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Massively overleveraged.

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The US is 38 trillion in debt.

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They pay a trillion plus in interest.

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Their economy is not earning enough money to pay this interest or all the other budget items like Medicare and Defense.

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Both of which also cost a trillion plus a year.

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And are growing.

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They are on an unsustainable path.

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The financial economy is totally propped up by the AI companies.

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But, they’re not making enough money to compensate for all the money they’ve spent on building data centres.

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The problem is these data centres need energy and water.

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Lots of it.

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Where are they going to get it from?

The US grid is failing.

Their infrastructure is failing.

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While they spent trillions fighting useless wars, other countries invested in their economies.

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Invested in their people. 

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Invested in their infrastructure.

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Ala China or India.

If you haven’t been to those places, I’d highly recommend it.

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In one generation, everything changed.

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They went from horse-drawn buggies to buying Mercedes, electric cars, travelling on ultra-high-speed rail and having an affordable life in one generation.

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Meanwhile, what happened to the American generation?

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It crumbled.

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The jobs were outsourced to the rest of the world.

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The American worker lost exponentially.

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Capital won.

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Labour lost.

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Just like it’s happened before in history.

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The last time was the 1930s.

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Lots of smart people are saying we’re in a similar time.

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And I agree.

But we’re not there yet till the great unwind.

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Our 1929 stock market crash.

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I bet it’s coming soon.

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Very soon.

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Sooner than you think.

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And the world won’t be prepared.

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People don’t understand.

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The leverage in the system is disastrous.

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Beyond disastrous.

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Trillions of dollars of value will disappear.

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Or just get reallocated.

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The current people in power can’t let this system die.

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They haven’t.

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They chose not to.

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Look at 2008.

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So they must keep printing this bubble to the top.

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The problem is, like all other times in history, every bubble pops.

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And the biggest bubbles do the most damage.

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Look at Japan post 1989.

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They’re not stock market didn’t get back to the same valuation for 30 years.

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That’s an entire generation.

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We’re there.

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Or not far off that moment.

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Especially with AI.

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What are people going to do for work?

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What purpose will they have if their job can be replaced by a computer robot that works 24/7 at a level better than they’ll ever get to?

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Society will need to be restructured.

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Massively.

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And we will get there.

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Humanity always prevails.

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But boy, do we have to suffer to get there.

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For years.

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Sometimes decades.

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I think we’re in one of those times now.

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It’s great today.

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But I am so scared for tomorrow.

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Terrified.

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There are too many alarm bells ringing.

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Gold and silver keep running.

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CME Futures markets are crashing randomly.

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Japanese bonds are hitting all-time prices.

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Crypto is cratering.

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People don’t realize most of crypto is just overleveraged fake money.

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Mostly controlled by the hedge funds and people up top.

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Where do you think financial billionaires have been parking their money the last 5 years, especially with no rules or regulations?

In crypto.

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Offering more and more leverage.

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Once that leverage unwinds, as we’re starting to see now, watch out.

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Markets can turn quickly.

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They will.

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Sooner than we think.

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I really do pray for us all.

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We’re entering a bad time.

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Dark time in history.

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You could argue that since Covid we’re already in it.

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Leverage has been pumped into the system like no tomorrow.

Especially since Covid.

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More and more credit.

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More and more leverage given out by the banks.

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And when things turn, as they are already showing, watch out.

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Leverage unwinds are dangerous.

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