ZIRP or ZAP? Will the Fed's 'Zero-Interest Rate Policy' Return, and Will It Work?

Only the wealthy will benefit from ZIRP, and the benefits of "the wealth effect" and "trickle down" have not just diminished--they're now negative. Welcome to the era of ZAP.

Correspondent Scott suggested I consider the possibility that the powers that be will respond to a weakening of the economy by pushing interest rates toward zero, reinstating ZIRP--Zero Interest Rate Policy. The purpose of ZIRP is to reduce the costs of borrowing money as the means of goosing borrowing-and-spending and inflating another credit-asset bubble, a.k.a. "the wealth effect," the Federal Reserve's tried-and-true means of goosing the spending of the top 10% by making them wealthier--not by becoming more productive, but by jacking up the market valuation of the assets they own.

Here is my paraphrasing of Scott's summary of this dynamic:

Here's the logic of ZIRP: near zero interest rates 2008-2020 were beloved by the already rich, hedge funds and private equity (all of whom have enormous political influence). So they borrowed tens of billions of dollars to buy up every asset that wasn't nailed down: stocks & bonds (both touching all time highs), houses (few now available for a decent price), businesses (half the NYSE was bought up by competitors), mobile home parks (desperate people pay their rent), apartment buildings, retirement homes, etc.

This generates higher prices/inflation for overbought assets. This doesn't affect the Powers That Be--they're not affected as the expansion of their wealth far outstrips goods-and-services inflation.

It also means those relative few with access to this "free money" will own the vast majority of the assets. Everyone else becomes a minimum-wage worker and renter.

The Lords and Ladies of the estate are back! The new feudalism.

Thank you, Scott. As long-time readers know, I've often documented these very dynamics: the top 10% already own roughly 90% of all stocks and the majority of other income-producing assets (bonds, rental housing, business equity). The top 0.1% collect the majority of unearned income (i.e. income from assets).

I've also described how lumping all households into one bucket makes everything look rosy by masking the widening divide in wealth and income between the top 10% and the bottom 90%. I've often posted charts showing the bottom 50% of US households own such a thin slice of the nation's financial wealth that it's mere signal noise.

In other words, ZIRP works great if we define "great" as increasing wealth-income inequality and increasing consumption by making the already-rich even richer. Spending by the top 10% is about half of all consumption, meaning the wealthy are propping up the economy based on the enormous bubble in the assets they own.

Wealthy Americans Are Spending. People With Less Are Struggling. Data show a resilient economy. But that largely reflects spending by the rich, while others pull back amid high prices and a weakening labor market.

In other words, thanks to the Fed's "stimulus" and ZIRP, globalization and financialization, ours is a fully neofeudal economy and society. I lay this out in my new book Investing In Revolution.

But here's the thing: the Fed may try ZIRP, but end up with ZAP-- Zero Adaptive Policy, a policy that no longer works as it did in the past because conditions have changed. In other words, ZIRP will not longer be a solution, it will be the problem.

What's changed? Many things. We can start with these:

1. China is no longer providing a deflationary impulse in the global economy that offsets the sources of higher prices (inflation). Now systemic inflationary forces have the upper hand.

2. Risk pushes costs higher throughout the economy. Risks are obviously rising systemically, and so the risk premium is increasing. This pushes up the cost of everything.

3. The Fed's "wealth effect" and "trickle-down" policy--the spending of the wealthy will "trickle down" to the bottom 90%--have pushed wealth-income inequality to extremes that trigger social disorder. Doing more of what worked post-2009 will not generate "growth"--it will generate instability.

4. Bubbles are teleological: they get bigger and more systemically corrosive with each iteration. There is no guarantee that Fed stimulus and ZIRP will reinflate the ruins left after the Everything / AI bubble deflates.

Here is the chart of the S&P 500 (SPX) from 1990 to the present: note the three bubbles: the dot-com bubble and the 2007-08 housing/stock bubble look like modest speed bumps compared to the Everything Bubble (#3 bubble).



Here is the 2000 dot-com bubble in close-up: non-trivial losses of about 80% from peak to trough.



There are limits on using debt to fuel consumption. Here is the chart of Total Debt, courtesy of the Federal Reserve:



There are limits on goosing the economy by expanding the money supply: Here is the chart of M2 Money Supply: note the diminishing returns on GDP growth.



The velocity of money has been in a free-fall from the dot-com era peak which was the last spurt of "growth" that actually trickled down to wage earners. Here is the chart of M2 money velocity--a multi-decade decline:



The Fed inflates asset bubbles. It's not clear what else they do, but they have inflated three credit-asset bubbles. The first bubble was easy--the dot-com bubble in tech stocks. To inflate Bubble #2 in housing and stocks was also easy: just unleash mortgage fraud on a mass scale (subprime mortgages and mortgage-backed securities).

But when the 2008 bubble #2 popped, the Fed had to print / backstop trillions of dollars to inflate this final bubble #3. This chart shows the SPX stock index divided by the Fed balance sheet:



As I noted in the previous post, it's natural to assume inflating credit-asset bubbles is a linear process and therefore predictable, as that's what it looks like when looking back at the past 35 years. But the process isn't inherently linear; it's non-linear as the dynamics around money, credit and risk are emergent, meaning that the sum of the parts have qualities of their own that are not predictable.

ZIRP is assumed to be linear, but since it's mal-adapted to current realities, pushing interest rates down will result in non-linear ZAP: Zero Adaptive Policy Pushing wealth-income inequality to even more extreme heights is not a solution, it's the problem.

As for lowering interest rates doing any good for the bottom 80%--you're joking: the high interest rates paid by the bottom 60% on credit cards, auto loans and student loans aren't going to drop even with ZIRP.

Only the wealthy will benefit from ZIRP, and the benefits of "the wealth effect" and "trickle down" have not just diminished--they're now negative. Welcome to the era of ZAP.

My new book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition) through October 31. Introduction (free)

New podcast: Anti-Progress, Reverse Leverage and the Hot-Potato Economy (45 min)


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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

THE REVOLUTION TRILOGY:
Investing In Revolution     Ultra-Processed Life     The Mythology of Progress

Systemic Problems/Solutions

Investing In Revolution (2025) Introduction (free)

The Mythology of Progress (2024) Introduction (free)

Global Crisis, National Renewal (2021) Introduction (free)

Money and Work Unchained (2017) Introduction (free)

A Radically Beneficial World (2015) Introduction (free)

What You Can Do Yourself

Ultra-Processed Life (2025) Introduction (free)

Self-Reliance in the 21st Century (2022) Introduction (free)

When You Can't Go On: Burnout, Reckoning and Renewal (2022) Introduction (free)

Get a Job, Build a Real Career and Defy a Bewildering Economy (2014) Intro (free)

Novels

The Adventures of the Consulting Philosopher Intro (free)

The Secret Life of an Asian Heroine First chapters (free)


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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Could a Rip-Your-Face-Off Rally in the Dollar Trigger a Global Financial Crisis?

Is this scenario guaranteed? No, of course not. But that doesn't mean it's excluded from the realm of possibility.

We all know the end-game when currencies are inflated as an expedient measure to stave off insolvency: devaluation eventually has consequences as the debauched currency is eventually replaced, a process that wipes out everyone holding or using the devalued currency.

It's natural to assume this is a linear process and therefore predictable, as that's what it looks like when looking back at the broad sweep of history. But the process isn't inherently linear; it's non-linear as the dynamics around "money" and "risk" are emergent, meaning that the sum of the parts have qualities of their own that are not predictable.

Which brings us to the question: could the much-maligned, guaranteed-it's-going-to-zero US dollar USD) stage a rip-your-face-off rally that wipes out those shorting the USD by generating a mad rush for scarce--yes, scarce--USD?

The Federal Reserve measures the supply of US dollars via M2: basically cash in various accounts. As you can see on the chart below, M2 Money Supply is about $22 trillion after a $6 trillion rocket-boost in the Covid stimulus phase.

That may sound like a lot, but consider the global bucket of financial assets is worth $480 trillion. Global Asset Monitor: Public (sovereign bonds, etc.) $232.4 trillion, Private (stocks, RE) $246.8 trillion: $479.2 trillion total.

So M2 Money Supply is 4.6% of global financial assets. US dollars in circulation, i.e. Federal Reserve notes/Greenbacks, is around $2.4 trillion.

The US dollars held in time deposit accounts in banks outside the US are called Eurodollars. I am not an expert on the eurodollar market, but it appears to have experienced a decline in volume since 2016. As this article from the Federal Reserve Bank of New York explains, changes in banking regulations led to selected deposits on the books of US banks replacing the majority of eurodollars volume.

Who Is Borrowing and Lending in the Eurodollar and Selected Deposit Markets?
"Selected deposits are unsecured U.S. dollar deposits that also tend to have an overnight maturity, similar to Eurodollars. However, unlike Eurodollars, but like fed funds, selected deposits are booked at bank offices in the U.S."



The conventional view is that eurodollars are advantageous because they are not regulated by US agencies or the Federal Reserve and so much of the activity is opaque, qualifying as "shadow banking." Eurodollar Secrets: The Hidden Engine of Global Finance (tradingview.com)

"The Eurodollar system is one of the greatest financial innovations--and enigmas--of modern capitalism. Born from geopolitical necessity, it evolved into a vast offshore network that creates and circulates U.S. dollars beyond U.S. borders.

Its power lies in its invisibility: it influences global liquidity, shapes monetary policy, and fuels international trade, all without direct oversight.

However, with great power comes great risk. The Eurodollar market's opacity and lack of regulation mean it can amplify crises when liquidity dries up."

As I understand it, a non-US bank holding $100 million in eurodollar deposits can issue loans denominated in USD based on the USD on deposit. In this case, the quantity of USD is increased not only by the Federal Reserve or US banks but by non-banks holding eurodollars.

There were an estimated $13.8 trillion eurodollars in 2016. I haven't found any more recent estimates that aren't paywalled. Back of the envelope, let's say there are around $17-$20 trillion in eurodollars floating around, which would put total USD in the global financial system around 8% ($38 trillion) or 9% ($43 trillion).

Here is the chart of M2 Money Supply, courtesy of the Federal Reserve:



Why would anyone need USD? The usual reason is to service or pay off USD-denominated debt. As credit tightens--which happens when global markets shift from risk-on to risk-off--loans denominated in USD issued by non-US banks (i.e. eurodollar credit) mature and the lender demands payment in full rather than roll the debt into a new loan.

The borrower must then buy dollars to pay off the loan. Just because there are a lot of dollars in existence doesn't mean there are an abundance of dollars available. When a loan denominated in dollars is paid off, those USD that were borrowed into existence go to Money Heaven.

So the total supply of dollars can shrink in a risk-off crisis as loans are called and liquidated. Much of the supply of USD is tied up and not available for borrowing. In risk-off crises, dollars are hoarded, reducing the supply available for lending.

Given the enormous size of the global financial assets bucket--and the unknown but estimated to be gigantic market of USD-linked derivatives such as currency swaps--the demand for dollars could far exceed the amount available to desperate borrowers and those at the end of derivative chains that eventually lead back to some form of USD-denominated collateral.

This is one scenario for a rip-your-face-off rally in the US dollar that wipes out dollar shorts (those betting on a decline in the relative value of the USD against other currencies), bankrupts borrowers who were unable to secure enough dollars, and forces eurodollar lenders into insolvency when the USD-denominated loans they issued are not paid back.

In systems terms, a risk-off global crisis is a self-organizing criticality that can trigger a phase change much like an avalanche--a dynamic I describe in my new book Investing In Revolution:

"These dynamics of complex systems are illustrated in the Sand Pile analogy: as grains of sand drop out of a hopper, they form a pile which grows in size until it reaches a point of instability, and the sand pile collapses in an avalanche. Which grain of sand will trigger the instability cannot be predicted, and neither can the size of the avalanche.

The sand pile is an example of self-organized criticality, a self-organizing system that hovers between instability and stability. At a critical point/tipping point, a phase transition occurs--the avalanche. Avalanches / instabilities follow a power law distribution: for every 100 small avalanches, there will be 10 that are considerably larger, and one gigantic one that takes down the entire system."

And that's how a rip-your-face-off rally in the guaranteed-it's-going-to-zero US dollar triggers an avalanche that topples multiple lines of dominoes stretching throughout the global financial system. All sorts of collateral would be liquidated to raise funds to buy dollars, and that's how the world ends up with a global financial crisis few thought possible.

Is this scenario guaranteed? No, of course not. But that doesn't mean it's excluded from the realm of possibility.

My new book Investing In Revolution is available at a 20% discount ($16 for the paperback, $20 for the hardcover and $7.95 for the ebook edition) through Wednesday October 22, 6 pm EST. Introduction (free)

New podcast: Anti-Progress, Reverse Leverage and the Hot-Potato Economy (45 min)


Check out my updated Books and Films.

Become a $3/month patron of my work via patreon.com

Subscribe to my Substack for free

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

THE REVOLUTION TRILOGY:
Investing In Revolution     Ultra-Processed Life     The Mythology of Progress

Systemic Problems/Solutions

Investing In Revolution (2025) Introduction (free)

The Mythology of Progress (2024) Introduction (free)

Global Crisis, National Renewal (2021) Introduction (free)

Money and Work Unchained (2017) Introduction (free)

A Radically Beneficial World (2015) Introduction (free)

What You Can Do Yourself

Ultra-Processed Life (2025) Introduction (free)

Self-Reliance in the 21st Century (2022) Introduction (free)

When You Can't Go On: Burnout, Reckoning and Renewal (2022) Introduction (free)

Get a Job, Build a Real Career and Defy a Bewildering Economy (2014) Intro (free)

Novels

The Adventures of the Consulting Philosopher Intro (free)

The Secret Life of an Asian Heroine First chapters (free)


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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The Crisis and Revolution Hidden in Plain Sight

While we focus on AI and finance, society is crumbling beneath our feet.

According to both the mainstream media and social media, the forces that will shape the future are:

1) AI (i.e. technology's impact on jobs and growth),

2) geopolitical competition for AI dominance, energy, resources, trade, military and financial power,

3) finance, which includes cryptocurrencies, stablecoins, Modern Monetary Theory (MMT), federal deficits, hyperinflation / currency devaluation and precious metals --all of which boil down to "what can I do to ensure that my wealth will remain intact whatever happens."

The key issues are technology, finance and market forces--the core drivers of the global economy. Society isn't on the menu other than as a quickly dismissed source of dutiful hand-wringing.

While all these will be influential, no one seems to see the domestic crisis hidden in plain sight or the revolution it makes inevitable. In my analysis, these will be the dominant forces shaping the coming decade.

As I have documented in recent posts-- If We Measured the Economy by Quality-of-Life Instead of GDP, We'd Be In a Depression, For Many, This Recession Will Feel Like a Depression and Crunch Time for Cities, Counties and States--the system has reached its limits and is coming apart.

What is the crisis? There are three self-reinforcing dynamics in play.

The first is the imbalance of the economy and society: the economy now dominates society, and historically this leads to disorder. Everyone looking at technology and finance as the solutions has it backwards: technology and finance are the problems, not the solutions, as they are the primary drivers of the imbalance between society and the economy.

As I explain in my new book's Introduction (free), society and the market forces that drive the economy have different timelines, tasks and priorities.

Market forces are focused on expanding new markets, heedless of consequences beyond profit and market share; the future consequences fall on society, which must take the long view and absorb the impacts on the workforce, social stability and the nation's commons, i.e. the environment.

The second is that inequality--of wealth, income, opportunity and power--has reached extremes that can be visualized as a pendulum: pushed to an extreme, the pendulum will swing to the opposite extreme.

It's not just inequality that's reached an extreme--so has exploitation, artifice and moral decay.

The average income of the bottom 60% households is $38,000 annually, while to qualify as a top 10% household requires about $250,000 annually.

As I have documented here, insecurity can't be measured solely by income--the other dynamic is precarity: the income of many households is variable, and unexpected expenses such as auto repairs or health emergencies (both of which have reached insane heights) can throw the household into a financial hole.

Those ignoring society to focus on the economy assume the bottom 60% of Americans--200 million people, 80 million households who own so little of the nation's financial wealth that their share is a rounding error--will just uncomplainingly accept their accelerating impoverishment as prices for essential soar and wages don't keep pace.

The problem with this assumption is this cohort is making too little money (even with increases in minimum wages) to afford the essentials of shelter, food, healthcare, childcare and transport.

Inflation is not dead; it's already changed the landscape permanently. Lower-cost alternatives have dried up: even old cars and apartments in seedy neighborhoods cost a fortune now.

Those between the bottom 60% and the top 10%--the 30% who self-identify as "middle class"-- may feel immune to precarity, but much of their financial stability rests on sands that will collapse in a recession / asset-bubble pop.

Their financial stability is fragile because it now rests on three fragile economic structures:

1) credit-asset bubbles that have increased "wealth" without increasing use-value;

2) the transfer of risk from corporations and the government to households,

3) the "trickledown economy" where the wealthiest 10% now collect virtually all the non-wage income from income-producing assets and account for 50% of all spending--wealth and income that's supposed to "trickle down" to the bottom 90%.

Once the asset bubbles pop and even the top 10% start experiencing job losses and declining income, the layoffs in the bottom 90% will cascade as spending dries up and stock portfolios and home values return to Earth.

Only those 62 and older were in the workforce in a "real recession," i.e. one that can't be reversed by the Federal Reserve lowering short-term interest rates and the federal government borrowing and spending more to "spend our way out of recession." The last real recession was 43 years ago, 1981-82.

There is also a demographic dynamic in play globally: Gen Z is no longer accepting that massive inequality between generations is "the way it has to be."

The second dynamic is the buffers that enabled people to hang on through recessions have all thinned: where debt was a modest percentage of GDP in the 1970s and 1980s recessions, now it's at historic highs. Households have already tapped credit cards and so borrowing more money to get by is not an option.

So when push comes to shove--when hours are cut or a job is lost--the only choice is what not to pay: student loan, car payment, rent, as food and utilities take precedence.

The buffers are already thinned and we haven't even slipped into recession yet.

The third dynamic is the least recognized: the moral decay that has pushed exploitation, profiteering and artifice to extremes, undermining the foundations of the economy and society.

Though it's unseen, the economy and society both rest on moral foundations. As moral decay consumes those foundations, the consequences are social and economic decay.

The authentic market--defined by transparency and competition--has been replaced by monopolies and cartels that generate outsized profits not by increasing value but by reducing the value of products and services.

Profits flow not from improving durability and quality but by reducing them. There are words that describe our economy: exploitation, profiteering, predation, extraction.

Since political influence is now an open auction in which corporations place the winning bids, there is zero political interest or will to address the inequality divide. The current administration's core economic policies are unchanged from 2008-09: cut taxes paid by the 10% (because they pay most of the income taxes), push interest rates down to goose borrowing, and inflate asset bubbles to create "the wealth effect." That these only increase wealth and income inequality--who cares? Not the political class of either party.

We've succumbed to normalization: all this is "the way it is."

But this is artifice: normalizing extremes doesn't make them stable. The system has reached its limits and the social order is crumbling.

My new book Investing In Revolution describes the inevitable result: a social revolution, not a political one that replaces one ruling elite with another. This will be a revolution that changes values and restores social norms. We will all have the opportunity to invest in revolution.

To me, this is all in plain sight, but since nobody else sees it, it's hidden in plain sight. The Introduction (free) summarizes the many dynamics in play.

I tend to think this might be my most important book, as I sincerely doubt the next decade will be a simple extension of the last decade. Just as the Ming Empire crumbled when it reached its limits, our system has reached its limits; while we focus on AI and finance, society is crumbling beneath our feet.

I'm offering the book at a 20% discount ($16 for the paperback, $20 for the hardcover and $7.95 for the Kindle edition) through Wednesday October 22, 6 pm EST.



New podcast: Anti-Progress, Reverse Leverage and the Hot-Potato Economy (45 min)


Check out my updated Books and Films.

Become a $3/month patron of my work via patreon.com

Subscribe to my Substack for free

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

THE REVOLUTION TRILOGY:
Investing In Revolution     Ultra-Processed Life     The Mythology of Progress

Systemic Problems/Solutions

Investing In Revolution (2025) Introduction (free)

The Mythology of Progress (2024) Introduction (free)

Global Crisis, National Renewal (2021) Introduction (free)

Money and Work Unchained (2017) Introduction (free)

A Radically Beneficial World (2015) Introduction (free)

What You Can Do Yourself

Ultra-Processed Life (2025) Introduction (free)

Self-Reliance in the 21st Century (2022) Introduction (free)

When You Can't Go On: Burnout, Reckoning and Renewal (2022) Introduction (free)

Get a Job, Build a Real Career and Defy a Bewildering Economy (2014) Intro (free)

Novels

The Adventures of the Consulting Philosopher Intro (free)

The Secret Life of an Asian Heroine First chapters (free)


Become a $3/month patron of my work via patreon.com.

Subscribe to my Substack for free

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If We Measured the Economy by Quality-of-Life Instead of GDP, We'd Be In a Depression

GDP is like collecting data on passenger satisfaction with the dessert cart on the Titanic and declaring everyone is delighted as the great "unsinkable" ship settles into the icy waters of the Atlantic.

That Gross Domestic Product (GDP) is an outdated and misleading metric of the economy is widely accepted. The problem isn't an abstraction, as we manage what we measure and so policymakers and citizens alike make decisions on what's being measured. If what's being measured is misleading, then we're flying blind.

Economist Joseph Stiglitz has long advocated for an overhaul for what we measure economically, focusing on well-being rather than adding up transactions. A new book The Measure of Progress: Counting What Really Matters, explains the difficulty of the overhaul. A recent article on the topic addressed the urgency of the task (Foreign Affairs, May/June 2025, paywalled):

"For Americans, these are tumultuous times. Inequality in income and wealth is at historically high levels. Artificial intelligence is reshaping society at an unprecedented pace, prompting layoffs and putting entire professions at risk. According to an estimate by the Brookings Institution, up to 85 percent of current workers in the U.S. labor force could see their jobs affected by today's generative AI technology. In the future, that percentage could climb even higher.

At moments of danger and uncertainty, it is usually the task of governments to protect people and help them navigate change--to step in when markets cannot. Yet Americans seem to have little belief in Washington's capabilities. Over the past two decades, public trust in the U.S. government has plummeted by 40 percent. Some Americans believe the federal government has been absent. Others believe it has failed to meet pressing challenges, including the rising cost of living, and the potential disruptions of AI. Either way, Washington has its work cut out for it as the government tries to regain Americans' trust.

So where can it start? The Measure of Progress, meanwhile, takes aim at the economic data that states use. According to Coyle, analysts evaluate the economy using outdated, limited metrics, causing policymakers to misunderstand the challenges citizens face.

Coyle's book is focused on understanding the economy as it exists today. But her argument--that analysts and governments have failed to properly measure peoples' well-being--is equally essential. The metrics that economists use, Coyle insists, are inherently flawed and do not sufficiently represent the reality of economic activity and value. That poses an immense problem for policymakers and analysts, distorting their view of the world and potentially leading them to faulty conclusions and ineffective policies."

The problem is multi-faceted. GDP and other metrics were institutionalized in the industrial age, where agriculture and factory production were easy to measure. As these sectors' share of the economy has slipped, the "hard-to-measure" parts of the economy are now dominant--81.5% by one estimate.

There are many other critical wrinkles in measuring the economy as it is. The book raises the issue of unpaid work, such as families caring for elderly parents and the unpaid "shadow work" that we're required to do now to keep all of our technology functioning. All this activity occurs outside the traditional market.

Since our metrics don't put a price tag on clean air and functional ecosystems, these are left out of the calculations, as if they don't exist. Not only do they exist, they're critical to our well-being. The book discusses natural capital accounting as an alternative, but alternative measures like this are inherently more challenging than toting up transactions.

What if we decided to measure the economy by the quality of life of the citizenry? While there are endless possibilities of what goes into quality of life, we can start with these basics:

1. Our physical and mental health.

2. The health of our social order--our social contract, social trust, communities and trust in our key institutions

3. The security and stability of our livelihoods and financial future.

Defining health isn't that difficult. A healthy person doesn't need any medications because, well, they're healthy, so there's no need for any interventions. A healthy person has an HDL / triglyceride ratio (calculated by dividing your triglyceride level by your HDL cholesterol level) well under 2, can walk a mile without even noticing, can stand on each foot for an extended time, and so on.

As for mental health, numerous studies have found that social connections are critical to our overall health, along with what we might call sufficiency--enough financial resources to secure the basics of life, and enough opportunities to fulfill one's potential.

Let's go through some charts of what we already measure. Here is a chart of our metabolic health. Over 50% of adult Americans are diabetic or prediabetic. This is a serious disease that shortens our lives.



Only a quarter of the adult population is normal (i.e. healthy) weight, reflecting an unhealthy lifestyle of processed foods and inactivity.



As for mental health, consider teen depression rates. Teen suicide rates have also risen. There is no way to interpret this as healthy.



Loneliness--a measure of declining social connections--is also rising sharply.



I prepared this chart of our unhealthy lifestyle and built environment in 2008. Nothing has changed. We can try to sugarcoat all these, but sugarcoating doesn't change reality.



Turning to the social and economic sources of stability, security and opportunity, consider the astounding rise of student loan debt, as attending college / university went from being affordable to requiring lifetime debt serfdom.



Student loan delinquencies reflect precarity and insecurity, not prosperity and security.



As for opportunity in an economy and society that claims to be a "level playing field," the benchmarks of middle-class security are no longer within reach. The number of 30-year olds who are both married and homeowners has plummeted. Yes, we can quibble about statistics like this, but quibbles are apologists' favorite tools: it's not so bad. But this is just more sugarcoating.



This chart of spending by income group reveals an enormous wealth-income divide. The top 10% collect virtually all the unearned income (from investments), collect over 40% of all the earned income and account for half of consumer spending. The bottom 60%--200 million Americans--account for one-quarter of total spending--half of what the top 10% (34 million Americans) spend.



The chart of generational wealth indicates opportunities to build wealth were more accessible pre-2000. Those graduating from high school or university in 2008 or later experienced a much different economy than their parents.



The health of the society is a key element in stability, security and opportunity. Social trust is eroding.



Trust in elites and institutions reflects the wealth-income divide. The top 10% reckon everything's going great because they're doing great. Meanwhile, the bottom 90% live in a completely different world.



Being born into a wealthy household offers numerous advantages that are difficult for those without these advantages to match. Admissions to elite university reflect this divide. This reflects a neofeudal economy and social order.



The wealthy own the vast majority of income-generating assets. The majority depend on wages for their living. The decline of wages' share of the economy over the past 50 years is consequential, reflecting the cumulative transfer of $150 trillion from wage earners to capital over the past five decades.



Wealth and income inequality has reached levels that do not reflect a healthy economy or social order.



The share of income going to the bottom 90% has declined.



The bottom 50% of American households own a tiny slice of the nation's financial wealth. The vast expansion of central bank stimulus and the resulting asset bubbles haven't increased the wealth of the bottom 170 million Americans, which hovers at 2.6%--signal noise compared to the 31% owned by the top 1% and the 68% owned by the top 10%.



How would we rate the US economy in terms of quality of life? It's clear that we'd have to conclude it's in a deep Depression. Can we really sugarcoat all this with claims everything's going great because GDP is rising and AI is making some of us rich?

As for all the cheerleading about how great the economy is doing--GDP is like collecting data on passenger satisfaction with the dessert cart on the Titanic and declaring everyone is delighted as the great "unsinkable" ship settles into the icy waters of the Atlantic.

New podcast: KunstlerCast 430: Finance and The Ultra-Processed Life (1 hr)


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THE REVOLUTION TRILOGY:
Investing In Revolution     Ultra-Processed Life     The Mythology of Progress

Systemic Problems/Solutions

Investing In Revolution (2025) Introduction (free)

The Mythology of Progress (2024) Introduction (free)

Global Crisis, National Renewal (2021) Introduction (free)

Money and Work Unchained (2017) Introduction (free)

A Radically Beneficial World (2015) Introduction (free)

What You Can Do Yourself

Ultra-Processed Life (2025) Introduction (free)

Self-Reliance in the 21st Century (2022) Introduction (free)

When You Can't Go On: Burnout, Reckoning and Renewal (2022) Introduction (free)

Get a Job, Build a Real Career and Defy a Bewildering Economy (2014) Intro (free)

Novels

The Adventures of the Consulting Philosopher Intro (free)

The Secret Life of an Asian Heroine First chapters (free)


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The Year When Everything Happens in No Particular Order

The pool of speculative fervor will be drained, as impossible as that seems in this moment in history.

2025 may go down as The Year When Everything Happened in No Particular Order, tracking William Gibson's famous line that "The future is already here, it's just not very evenly distributed."

Those expecting inflation will find it, those expecting deflation will find it, those expecting a stock rally will get a rally, those expecting a crash will get a crash, and so on.

The forces that drove reliable trends have all weakened or reversed:

1. ever-lower interest rates lowered the cost of credit/capital to near-zero.

2. the deflationary forces of globalization: everything got cheaper and disposable.

3. expanding workforces increased income and consumption.

4. credit/asset bubbles created wealth without productivity improvements or sacrifice.

5. energy supply kept up with rising consumption.

6. the external costs of the "waste is growth" Landfill Economy (pollution, depletion, etc.) were ignored / not priced in.

These titanic forces still have the momentum of recency bias: most people expect the rest of the 2020s to be an extension of the 40+year Bull Market in Everything.

Feedback (doing more of what's failed) and buffers (print more money and everything will be fixed) are working to maintain the status quo sand castles as the tide rises.

Those castles closest to the sea will dissolve first (the periphery I often refer to). Those with resources will be shoveling sand to build walls around their castles.

But the tide is relentless and so we're in a period of flux where those benefiting from the status quo are fighting the erosion of all the forces that enabled the status quo to reach such heights.

As they lose ground, they redouble their policy efforts, pushing policies to new extremes--extremes which further destabilize the system.

The global economy is a complex self-organizing adaptive system, and so blunt-force policies intended to protect the status quo stability end up generating unintended consequences which have their own consequences (the second-order effects I often mention).

Those trying to control the system find their control is imperfect.

Long cycles are now in play. Interest rates fell for 40 years--the longest such run in recent history. Now interest rates will rise for some period of time, likely culminating in a financial crisis with no easy resolution, because printing money--the solution for the past 40 years--will be the problem, not the solution.

Demographics are also in play. Workforces are shrinking, retirees living off the earnings of the workforce are soaring.

The world desires ever greater quantities of energy and consumption, but the cheap, easy to exploit materials have already been exploited. Now everything will become more expensive, regardless of technological improvements.

Physical, chemical and cost limits will matter.

Whatever we seek, we can find--but that may prove ephemeral.

Everyone's on the lookout for Black Swans, but that's not the way Black Swans work.

Speaking of swans, the tremendous speculative fervor that has become the dominant force in global markets is now so taken for granted, perhaps it is a Gray Swan nobody recognizes.

Huge fortunes have been made by betting on speculative bubbles rising higher than prudence suggested was possible.

These gains fire the imaginations of speculators large and small, and so any rally in a speculative asset--which now includes every asset--will be chased with great confidence.

The desire to speculate on something, anything, is still immensely strong. That desire will manifest in one asset after another, inflating new rallies and pulling in punters far and wide.

But the tides are relentless and any such speculative frenzy is unlikely to last as long as the proponents expect.

Machiavelli's wisdom applies here: "The wise man does at once what the fool does finally."

In other words, perhaps there will be no sure things anywhere in the speculative universe.

It may take multiple crashes to whittle away at this speculative fervor. The forces building sand castles will gain the upper hand for a short while, and spectacular gains will be reaped, and then the tides will erode the sand castles and the valuations will fall.

The process of draining the pool of speculative fervor takes time. If there is anything that's a sure thing, it's that the pool of speculative fervor will be drained, as impossible as that seems in this moment in history.



New podcast: KunstlerCast 430: Finance and The Ultra-Processed Life (1 hr)


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My recent books:

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Ultra-Processed Life print $16, (Kindle $7.95, Hardcover $20 (129 pages, 2025) audiobook     Read the Introduction and first chapter for free (PDF)

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $16, (Kindle $6.95, audiobook, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $15, (Kindle $6.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $15 print, $6.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $6.95, print $16, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $6.95, print $15, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $3.95, print $12, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $3.95 Kindle, $12 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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