Everything You Know About Finance Is Now Broken
Submitted by QTR's Fringe Finance
Honestly, it feels like we've reached a point where the traditional relationships between currency, bond markets, and monetary policy are fracturing.
For years, the yen and the dollar served as reliable funding currencies, with predictable behaviors around yields. But those correlations have broken down. The disconnect between a weaker dollar or stronger yen no longer pushing yields lower suggests major stress within the global monetary framework. The U.S. and Japan's central banks are backed into a corner, forced to choose between defending their currencies or bailing out their bond markets.
Spoiler: they can’t do both, and pretending otherwise is central bank cosplay at this point.
On the fiscal front, the U.S. is already deep into fiscal dominance. Entitlements and interest expenses now consume nearly all government revenue, and yet spending is only increasing—particularly on defense. The idea that anyone in Washington still cares about deficits is empty theater. The real choice ahead is brutal: monetize the debt or let the markets crash hard. Guess which one a generation raised on asset bubbles and moral hazard will pick?
Layered on top of this is the physical reality of constraints we can’t ignore. Rare earths, crucial to defense and green technology, are largely controlled by China. The U.S. electrical grid hasn’t grown meaningfully in two decades, even as our demand—particularly from AI and data infrastructure—explodes. Labor constraints are just as bad. Skilled trades and engineering talent can’t be printed, and immigration isn’t a quick fix. We’re running up against real-world limits that monetary policy can’t solve.
Meanwhile, AI looms as a structural force with deflationary effects on white-collar wages and employment. Much like China's entry into the WTO devastated blue-collar workers, AI is poised to do the same to office jobs. That dynamic will weigh on consumption, housing, and tax receipts. And since AI doesn’t pay taxes, the burden on the system will grow. Eventually, this deflationary pressure will be met with renewed monetary expansion—because we’ll have no choice but to print to cover rising entitlements, debt service, and defense spending.
So what's the likely path forward? I see a brief deflationary dip ahead, followed by a return to aggressive monetary easing. The meta-trade in all of this is clear to me: exit government liabilities. Get out of long-dated government bonds, especially U.S. Treasuries. I want exposure to hard assets—gold, Bitcoin, even commodities and real estate.
My “25 Stocks To Watch For 2025” have had a great year, outperforming both the S&P 500 and last year’s “24 Stocks To Watch For 2024”, which finished up 18.5% on an equal weighed basis, but lagged the S&P 500.
This year’s picks (full chart here) are up 26.85% on an equal weighted basis so far this year (as of yesterday’s close using math I didn’t double check), significantly outperforming the S&P 500’s gain of 5%.
This outperformance has been largely driven by a few names like...(READ THIS FULL REPORT HERE).
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