Crystal Balls, Soothsayers, And AI; Oh My!

Tyler Durden's Photo
by Tyler Durden
Tuesday, May 02, 2023 - 08:20 PM

Authored by Charles Hugh Smith via OfTwoMinds blog,

As long as we mint millions from a Never-Ending Bull Market, we'll always stay one step ahead of the Debt Monster. AI! .

Of the many astounding developments of the current era (AI!), none is more remarkable than the proliferation of soothsayers peering into crystal balls to predict The Most Important Trend In The Universe--a Bull or Bear stock market. The computing power and wealth thrown at conjuring up charts, statistics and forecasts is astounding in and of itself, but the proliferation of crystal balls and soothsayers is even more astounding.

After reviewing hundreds of charts, statistics and forecasts on the most arcane correlations and the deepest data-dives (AI!), I've reached soothsayer satori: the secret to insuring a Never-Ending Bull Market in which monumental wealth will be piled up by all those entities (software and wetware alike--AI!) who buy every tiny dip and continuously roll over their zero-expiration-day-call-options is this:

Say "AI" 300 times with fervent enthusiasm and then click your heels three times. You will then be transported to a magical paradise where stocks only go down for a few moments to enable dip-buyers the immense satisfaction of buying more stocks at a discount.

Did I forget to say AI? I'm on number 199, and I'm trying not to lose count. AI!

Setting aside the thousands, or perhaps millions, of charts, statistics and forecasts, let's just ponder one: TCMDO, Debt Securities and Loans, courtesy of the Federal Reserve System.

AI, 200, AI, 201--AI! The first thing we notice is the total debt has been following a parabolic curve since that spot of bother (recession) in 1981-82, increasing 15.5-fold since Q1 1983, 40 years ago, from $6 trillion to $94 trillion.

Gross Domestic Product (GDP), more or less a measure of the real economy, increased from $3.5 trillion in 1983 to $26.5 trillion in 2023, a 7.5-fold increase, a considerably less stupendous rise than debt.

This chart raises two questions:

1. How long will it take to add the next $40 trillion in debt?

2. Precisely how will AI change the trajectory of debt, or the eventual banquet of consequences of parabolic increases in debt?

One interesting thing that isn't communicated by the chart is that Americans haven't experienced a real recession for 40 years. A real recession lasts a long time and grinds down debt via a rising tide of bankruptcies, defaults and writedowns. Thanks to Federal Reserve hocus-pocus, no recession since 1982 has lasted more than a few brief months or been more than a shallow dip.

Only people 60 years of age and older have any experience as working adults of a real recession. For everyone younger, we might as well be talking about the Panic of 1873 or even that spot of bother in Rome circa 14 AD.

Despite poring over hundreds of charts, statistics and forecasts issued by soothsayers peering into digital crystal balls (AI!), not one reflected the possibility that the US was overdue for a real recession that wiped out $40 trillion in debt rather than another Bull Market run that added another $40 trillion in debt.

Never mind, as long as we mint millions from a Never-Ending Bull Market, we'll always stay one step ahead of the Debt Monster. AI! Crystal Balls, Soothsayers and AI, Oh My...AI, 202, AI, 203...

*  *  *

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century. Read the first chapter for free (PDF)

Become a $1/month patron of my work via