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Sunday, February 1, 2026

2026-02-01

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

DB: Exploring the Debasement trade: From the Roman Empire to 2026 (via TheBondBeat)

....... for all the narrative about a future debasement, we can see there’s a contradiction in market pricing, as precious metals are at record highs (in line with the thesis), whilst other assets (like inflation swaps in the US and Europe) aren’t pricing in a debasement scenario at all.

This lack of confirmation from other asset classes is the most compelling evidence against an imminent debasement scenario. If markets truly expected a systemic loss of faith in fiat currencies, we wouldn’t see long-term inflation swaps anchored and sovereign yields around their historical averages. This is in line with the experience of recent decades, which consistently suggests that inflating away debt is more difficult than it looks, having been met with strong political resistance given inflation’s unpopularity.


The debasement trade is far from over because fiscal policy remains on a reckless path

............ On a fundamental level, the nomination of Kevin Warsh changes nothing about any of this. Public debt is high and rising. This pushes up longer-term yields, which makes it inevitable that political pressure on the Fed to cut interest rates and cap longer-term yields will mount. The debasement trade, which is markets searching for safe havens from debt monetization, has a lot further to run no matter who the next Fed Chair is. 

........... The nine percent fall in gold merely takes its price back to January 22, as the orange line in the chart above shows. Friday’s correction thus did modest damage to the debasement trade. It’s my expectation that precious metals prices will take off again relatively quickly, like they did after the correction in October.


Think back to the days of Greenspan's "conundrum" - a weak Dollar means lower yields


...... The chart above shows foreign flows into all US assets from the Fed’s flow of funds. The red bars are foreign flows into Treasuries, where I’ve used red arrows to denote periods of Dollar weakness or strength. The key regularity is that when the Dollar is falling or weak, foreign flows into Treasuries are strong. When the Dollar is rising or strong, foreign flows into Treasuries are weak. Intuitively, this lines up with the idea that foreign central banks are buying Treasuries when the Dollar is weak and selling them when the Dollar is strong. 


I've assembled a few charts to illustrate the range of this Bifurcation between the top tier and the rest


Why doing nothing is often the best thing you can do

......... In our brains: action = good, inaction = bad.

So much so that we’d rather harm ourselves than sit alone with our thoughts. Read that sentence again.

It’s easy to see how we (investors) harm ourselves to compound investment capital over the long term.

Yet, there are countless examples of great investors choosing to do nothing. Their ability to do nothing hangs on three principles:
  1. Set The Highest Bar For New Ideas
  2. Preoccupy Yourself with Other Work
  3. Bet Only On The Highest Asymmetric Ideas
.................. Here are a few famous quotes from these unnaturals:
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett

“I think the record shows the advantage of a peculiar mindset – not seeking action for its own sake, but instead combining extreme patience with extreme decisiveness.” – Charlie Munger

“The single most important skill for being a good investor is to be very content with not doing anything for extended periods, and that’s perfectly fine.” – Mohnish Pabrai

“Any superiority an investment process may have will only emerge with time, so patience is important.” – Nicholas Sleep
................. As Charlie Munger says, “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

The best investors show up to the market, sit down, and don’t shock themselves. They like the boredom because they know it’s the boredom that precedes the next best idea. Do yourself a favor, stay bored.



A.I. Fare:

Plus: Tickle Me Elmo and end user demand; Why do all shortages end in gluts? And who is TSMC's customers' customers' customer?



Tweets and Quotes of the Week:



Charts:
1: 

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(not just) for the ESG crowd:

Stranded Assets

In the early 2000s, two fund managers asked a simple question: what happens to fossil-fuel companies if governments actually enforce their climate commitments? Their answer was that reserves currently treated as assets would have to be written off.

They called these ‘stranded assets’, and their thesis reframed climate change as a problem for investors rather than environmentalists.

The argument proved remarkably successful. The Bank for International Settlements now warns that climate-related financial crises could destabilise the entire system. The BIS considers these ‘Green Swan’ crises certain to occur — the only uncertainty is timing.

That certainty deserves scrutiny. The institutions warning of the coming crisis also control the policy levers that would trigger it. Assets become stranded when regulators enforce carbon budgets. The models forecasting instability are produced by the same network that sets the supervisory parameters determining how banks must respond — and the same models feed into the IPCC and IPBES assessments that define the ‘scientific consensus’ justifying the carbon budgets in the first place.

Central bankers call for anticipatory action to prevent the crisis — while simultaneously engineering the conditions under which it occurs.

The outcome is governance by coefficient. Elected parliaments never voted on which assets should be stranded or which industries should survive. Those decisions are being made through risk weights adjusted in Basel, stress-test scenarios produced by the NGFS, and capital formulas that most voters have never heard of.

This essay documents who built this architecture, how the pieces connect, and why the financial infrastructure preceded the treaties it claims to implement.  .........


The limits of self-organization and optimization

In my previous two essays (Part I and Part II) I laid out the thermodynamic basis of every civilization: the need for high grade resources to grow and the acceleration in the rise of entropy the use of these high grade inputs cause—ultimately leading to the demise of every complex society. It follows from this argument, that there is no such thing as a steady (or equilibrium) state for any civilization: they either grow or begin to stagnate then decline. The only difference is how steep their rise and fall is. Since each and every one of them has tapped into a non- or very slowly renewable reserve of valuable inputs, the question of running low on one or more critical raw material was always a question of when, and not if. This is not to say that all civilizations collapsed due to resource depletion alone: there were many other factors putting an end to their existence much sooner than they could chop down the last tree standing, deplete the last mine, or erode the last inch of fertile topsoil. The rise in inequality, civil strife, elite mismanagement, war, pestilence, sudden shifts in climate etc. were all major contributing factors. ..............

......... Complex societies and other human organizations (such as corporations) are very good at solving problems related to growth and scaling up. (Those which are not, fail early and rarely get remembered.) Hitting limits to growth—be them internal due to a rise of complexity, or external due to the depletion of available resources—presents them with a challenge they are unable to meet: contraction.

............................ Increases in complexity are now beyond diminishing returns, our innovations now steadily produce net negative results to society. Think, for example, AI and the electricity cost, water consumption and emissions increase the deployment of data centers caused around the world… And for what benefit? To get rid of more workers, who in turn no longer consume as much…? .............







Sci Fare:


… social networks exploit young people’s vulnerability and actually help boost certain disorders that they are prone to.

This is the conclusion of a large-scale report by the French Agency for Food, Environmental and Occupational Health & Safety (Anses) which dissects the mechanisms behind digital marketing tools designed to target the specific vulnerabilities and emotional weak spots associated with adolescence.



........ The immune system is sophisticated and smart, with many coordinating pieces. There are four components that Soon-Shiong talks about: MHC-1 molecules, antibodies, T cells, and neutrophils. 



U.S. B.S.:

The idea that large-scale state violence and repression are foreign to US soil is a dangerous fiction.

Americans are once again searching for historical analogies to explain what is unfolding around us.

As authoritarianism accelerates — as government-sanctioned violence becomes more overt in immigration enforcement, in policing, in the open deployment of federal force against civilians, and in the steady erosion of civil rights — people are scrambling for reference points.

But instead of reckoning with the long and violent architecture of U.S. history, much of this searching collapses into racialized tropes and xenophobic reassurance: This isn’t Afghanistan. This isn’t Iran or China. This is America. We have rights. This is a democracy. This isn’t who we are.

These statements are meant to comfort. They are meant to regulate fear, to calm the nervous system with the promise that no matter how bad things get, this country is somehow exempt from the logic of repression. Instead, they reveal how deeply many people still misunderstand both this country and the nature of authoritarian power.

They rest on a dangerous fiction: that large-scale state violence, political terror, and repression belong somewhere else — to “failed states,” to the Global South, to places imagined as perpetually unstable. This is not only historically false; it is how people in the U.S. have been trained not to recognize what is being built in front of them. 

The truth is simpler and more unsettling: The U.S. has always governed through violence. .............


Destroying the US to 'Save' It

The Trump administration continues to double down in its defense of the indefensible with respect to the killings by ICE agents in Minneapolis of two peaceful citizens, Renee Good and Alex Pretti. Rather than treating the killings as the avoidable tragedies that they were, Mr. Trump and his administration are twisting the facts in both cases to blame the victims. Should he succeed in doing so, the US will cease to exist as a nation with reconcilable differences. People can work through differences of opinion, but not separate facts.

The multiple videos of each of the killings provide political Rorschach tests, with various factions playing politics with the facts. ...........


....... This is the best summary I’ve read:
an ICE agent physically assaults an annoying woman who is whistling at him to antagonize him, Pretti steps between the officer and the woman to protect her, Pretti is the restrained by 5 officers on his hands and knees, one of the officers notices he is armed and yells “gun,” an ICE officer disarms Pretti and while running away accidentally discharges the weapon, then another ICE agent reacts to the negligent discharge by shooting Pretti in the back multiple times while he is on his hands and knees.
............ Police in the US are almost always bad. The job attracts authoritarians who like the idea of being able to push people around, but even the minimal safeguards were let loose on ICE and the Border Patrol—they took the job because they like being able to hurt people without even the remotest possibility they might be held accountable.



I’ve had several conversations this week about how to be in a time like this when the U.S. government is so overtly corrupted. I’m just the upstairs neighbour in Canada, but we’re high on the list of countries to be overthrown. Even without being in that position, it’s hard to be aware of the world today and not be in a constant state of rage. I mean even more than before. I want to fast forward to the end when all the bad guys go to prison, but that will only happen with ongoing action from as many people as possible. .......................

Martin Luther King Jr. expressed the sentiment in Stride Toward Freedom: “He who accepts evil without protesting against it is really cooperating with it.” ............

If we follow Peter Singer‘s argument for action: “If it is in our power to prevent something bad from happening, without thereby sacrificing anything of comparable moral importance, we ought, morally, to do it,” it allows us some wiggle room. It’s not just about the courage to be on the front-line, but about our prediction of our own effectiveness in the situation (if it’s in our power). Will protesting actually work? It also allows for self-preservation ..............

I’ve been to relatively safe environmental protests over the years, but this is different. I’d like to be a person who stands in the way, but I don’t think I am. My sense of self-preservation overrides any impetus to protect others (except for my kids), and that feels decidedly selfish. Except it feels less of a choice than just what is. .............



More Epstein documents have been dumped, and they’re atrocious. It seems like most of the US elite was involved.

There are two reasons for this. One is that people who are super-powerful and super-rich feel like ordinary morality and laws don’t apply to them, and rape and torture and pedophilia are, to them, an ultimate rush, a proof of their power.

The other is similar to some gang initiations where if you want to be a member you have to kill someone. (Making your bones.) Once you’ve done that, you’re in, because they have you by the balls. You can’t betray them because they know who you murdered.

If you want to be in the top echelon of American (or Israeli, and possibly UK) elites they need to know you can be trusted. They need blackmail. You have to make your bones .............



Geopolitical Fare:

Western society has been hostage to the same pathology for over 2,000 years. Today, we are in a better position than ever to end this curse and emancipate humanity.

............... [Soros] said that, “the world is increasingly engaged in a struggle between two systems of governance.” He contrasted the two systems as the open societies vs. closed societies. The same view has been affirmed by other Western officials including the former US Ambassador to NATO, Kurt Volker. He characterized the conflict as one between democracies and autocratic regimes or dictatorships.

However, in praising liberal democracies and demonizing dictatorships, people like Walker and Soros misrepresent the two systems, claiming that it is the autocratic regimes and dictatorships that are a threat to peace and liberty around the world. By contrast, experience shows that it is the crisis-prone Western democracies fomenting perpetual warfare around the world while increasingly embracing repressions and censorship at home. They have done so, not only over the last few decades, but since the birth of democracy, more than 2,500 years ago.

In the Western world, we have been educated to celebrate and cherish democracy. Yet if we compare what our democracies deliver with what we’re told that they ought to deliver, we must acknowledge that they seem to deliver a lot of what the people dislike, like chronic crises and wars, while all too often failing to deliver what people do desire: peace, prosperity and security. That implies that at best, our democracies are ineffective at turning people’s aspirations into policies. At worst, they impede the democratic process by design.

.............  The implication of these studies is that the United States is in fact ruled by an oligarchy concealed behind the façade of democracy. The same is almost certainly true of most other western “democracies.” ........................


My conversation with Setareh Sadeqi about the recent orchestrated unrest in Iran and the potential for all out regional war.

I managed to speak with a dear friend and Assistant Professor at the University of Tehran Setareh Sadeqi. She describes in great detail the recent externally-managed riots in Iran and the horrific brutality that Iranians faced on the streets of many cities. She covers the propaganda war waged against Iran by the Imperialist Axis and their paid-for media and the Zionist alliance. She calls out the criminal hypocrisy of Western regimes intent on yet another destabilisation project in Iran, targeting the entire regional Resistance Axis. We discuss the potential for engineered water shortages, the debilitating effects of sanctions on the entire Iranian population designed to foment unrest and dissatisfaction with the state. Bracing for war, Iranians refuse to abandon their humanity or their integrity. A culture spanning centuries of civilisation and progress faces down a barbaric alliance of the US and ‘Israel’ with the blood of millions not yet dried on their diseased hands. .............



Other Fare:

The timeless quest to go beyond competence and achieve excellence.


Reinhardt: The Big Door Prize

..................... Enough is enough. Just stop. The world does not need, perhaps cannot afford, anymore Nobel Peace Prizes. And if those in charge of the award need inspiration for putting an end to all this, let them recall their own past, specifically the year 1948.

That year, the Norwegian Nobel Committee handed out the Peace Prize to: Nobody! Instead, they sat on their thumbs, insisting that no one was worthy of their vaunted, shiny medal. No one in the entire world, harrumph!

Not even Mahatma Gandhi, in 1948.

What a shame. It turned out that 1948 was his last year of eligibility. How so? Well, you have to be alive to win a Nobel; there are no posthumous Nobels. And Gandhi was assassinated in 1949.

Oh well.

Maybe it’s time the for Norwegian Nobel Committee to reclaim the spirit of 1948 and stop handing out these awards once and for all. I’m actually a big fan of silliness; it makes the world a more livable place. But self-important silliness is insufferable and should exist only to be skewered and deflated, like the highfalutin foil in a Marx Brothers film.

Or maybe that’s the answer. The Nobel folks should just stick to comedy.


Mile-High Status: How Travel Plans Might Be Wrecking the Birth Rate

........................ Most notably, if men and women have very different views or experiences of travel, this could influence how easily men and women pair up. If women see travel as an important form of identity-formation, a high-status activity, and a valuable form of leisure, but men disagree, then women and men might find themselves at odds over what activities they enjoy together, or that they have fundamentally divergent experiences of the world. Men who are unwilling to travel might even inadvertently broadcast to women that they have low social status. As it turns out, voluminous survey data suggest women really do value international travel more than men, and that women make up a disproportionate share of those traveling internationally for leisure. For whatever reason, international leisure travel is a disproportionately feminine activity, and one that women tend to see as part of their identity formation and growth.



Vid Fare:

Pics of the Week:
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