2020 was an unprecedented year in financial engineering. Unprecedented and yet… totally predictable if you pay attention to the right metrics.
Market trajectories which have been set in motion, and remain in motion until acted on by an outside force, are being brought to bear on the world stage. No matter how many pundits regurgitate the notion that “nobody could’ve possibly seen this coming,” the truth is that the underpinnings of societal structure have been beset by a very predictable and destructive curse.
As markets become unstable following a period of monetary expansion and contraction, investors will demand either a premium on longer-term lending rates or will drive down yield (due to increased demand) on shorter-term lending rates. Historically, this yield curve inversion is a clear indicator of upcoming recessions because it signals uncertainty regarding the future. Couple this with historically-low unemployment rates (another signal that the market is oversaturated) and you’re left with a clear picture of the downturns to come. In fact, the only truly surprising thing about the market malaise of 2020 is how it leaves supposed experts scratching their heads in befuddlement.
The Rise Of The Vampire
The story certainly isn’t new (aggry beads are a sobering example of the economic and societal impacts of monetary debasement); in fact, American economist Murray Rothbard chronicled over a century’s worth of financial engineering and capital market manipulation in his book “A History of Money And Banking In The United States: The Colonial Era To World War II.” An endless boom and bust cycle exacerbated by fiat currencies and Keynesian economic theory have put us on a trajectory of ever-accelerating debasement.
The history is nuanced and complex, but the mechanics are quite simple. Sovereigns expand the money and credit supply to retain a disproportionate level of expenditure relative to tax…