Every financial mania in human history ended in financial collapse and this one won't be different in that regard. It will be different because this is bound to be a secular financial collapse, short nominal rates having been driven to zero, rather than just another interim collapse like 2000 and 2008. If history is any guide that means the better part of three decades will pass before valuations recover in inflation adjusted terms. You cannot buy and hold through a secular financial collapse.
For those who act ahead of the masses tangible assets offer refuge, particularly liquid tangibles (i.e. precious metals).
Hi Lau. Thanks for another great article. I really appreciate the way you educate us. Why does un-inversion cause a recession? Or is this the difference between causation and correlation?
It's the old pushing on a string thing. Distortions caused by previous monetary ease result in inevitable collapse even as central banks push rates lower in an attempt to prevent collapse.
I think NBER are sleeping. I remember there were complaints about them being unwilling to claim a recession happened during the 1998 inversion, but they may have been right.
Great chart and insightful data, thank you!
A timely reminder as I had heard this before but forgotten it.
Possibly related: 2025 Q4 GDP was already revised down to 0.5%.
https://apnews.com/article/economy-gdp-jobs-iran-dcb9dbdea745ddf15bea9b8f79ee308c
Thanks, Lau. Hope I'm positioned well enough.
Every financial mania in human history ended in financial collapse and this one won't be different in that regard. It will be different because this is bound to be a secular financial collapse, short nominal rates having been driven to zero, rather than just another interim collapse like 2000 and 2008. If history is any guide that means the better part of three decades will pass before valuations recover in inflation adjusted terms. You cannot buy and hold through a secular financial collapse.
For those who act ahead of the masses tangible assets offer refuge, particularly liquid tangibles (i.e. precious metals).
Great lesson, insights.
Hi Lau. Thanks for another great article. I really appreciate the way you educate us. Why does un-inversion cause a recession? Or is this the difference between causation and correlation?
It's the old pushing on a string thing. Distortions caused by previous monetary ease result in inevitable collapse even as central banks push rates lower in an attempt to prevent collapse.
Thanks for your clarity Lau. It is greatly appreciated.
I think NBER are sleeping. I remember there were complaints about them being unwilling to claim a recession happened during the 1998 inversion, but they may have been right.