I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell.
There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries.
[0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.
I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
> The US economy depends on the country's position of world hegemon
Unfortunately, the data doesn't back this up. The US economy is actually one of the least trade-dependent nations in the world.
27% of GDP is trade-oriented (The value of imports and exports as a function of GDP), while the global average is 63%. The US is so developed, that even if the country was completely cut off from the world and operated as an internal economy it would still remain the world's largest.
>> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
For those who want to return the US to the haydays of manufacturing, the days of cheap steel and people working in mills, a rock-bottom dollar is a necessary first step. To sell widgets, the US dollar needs to be low. And to get workers into low-wage mill jobs the population needs to be hungry.
I remember reading this a lot in 2000-2001 and 2007-2008
That said, overall I sort of agree with your assessment except for having any optimism that the US changes course.
The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct.
Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
> if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be
You’ve set no time bound so what you say here is essentially irrefutable. It boils down to “on this path we will eventually have a big bust.” You’re right if it happens in 1 year or 30.
You’ve also not defined the bounds of the path. Paths can weave. So essentially that part of it becomes meaningless because anyone can draw a line that starts with today.
Tech has a long history of boom bust cycles. Some busts are much more mild than others. Some upend the whole economy for protracted periods. In reality no one knows when AI will bust and how bad it will be. Those are the key questions, not whether there will eventually be a tech (or broad) bust. Of course there will be if you’re looking out to infinity days from today.
Most economic commentary is like this including the linked article: so poorly defined as to be low worth as even speculation.
I wanted to add that since the last threat of Trump in Davos where he didn't even know the difference between Iceland and Greenland and accidentally threatened another sovereign country, almost all social insurances of EU countries have started to liquidate/sell their US bonds and assets.
If that is not a red sign to BlackRock, then I don't know...
Economic crashes are hard to predict. In the end stock markets are a bit irrational. They don't crash just because there are good rational reasons. And then some irrational thing triggers a mass panic when you least expected and the whole thing crashes.
The circumstances and timing (it's been a while) suggest we are probably closer to a crash happening.
From a loan/interest point of view, the dollar de-valuating a bit is actually not a bad thing for the US. It stimulates exports and inflation. And at the same time that reduces the value of the debt (and that is paid in dollars). The downside is that inflation going up usually also means interest going up. And Trump resisting that because he wants to accelerate the economy might not be a good thing.
The big picture here is oil. The world is slowly moving away from oil as the key driver for economies and paying for it in dollars. China is well on its way electrifying large parts of its economy. To the point where it is starting to import less diesel. And they border on Russia with whom they trade in Yen, not dollars. A world that is going to trade less and less oil is going to be less dependent on dollars.
I'm not an economist though. But planning for some kind of crash/correction seems prudent.
If the US debt gets to the point that interest on debt can't be paid, the US will just print enormous sums of money. Debt is in $, not in valued or devalued currency.
Sure, the end result will be a deprecation of the dollar. But the interest will be paid.
So the real downside to debt is not-overly apparent. Look at how much money was printed for COVID payments, and the like? And at other economic downturns? I do wonder, when will the merry-go-round stop?
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world.
The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India?
Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward..
AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
> The US economy depends on the country's position of world hegemon
Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy.
This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support.
A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors.
Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too.
[1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
Not shown on the chart (and which couldn't have been predicted at the time of writing) is today's crash of almost 30% in that price.
Speculative bubbles happen. The narrative of people losing faith in currency made no sense, because that should pump the prices of durable commodities as well, if not instead of precious metals.
> It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered
Yes, in a five year span we've had three 20% drawdowns in the stock market that have all recovered which is unprecedented. IMO, anyone who thinks we're going to crash and have a lost decade is not looking at the bigger picture. The Federal Reserve exists to allow the government to spend as much as possible by:
- Making sure that as many people are employed as possible for as long as possible (tax base)
- Making sure that prices keep going up and that the government can borrow below the rate of inflation (so they can spend even more and manage the debt)
What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation. The government also takes a cut from that via capital gains tax. Regardless, there is simply too much "free money" going around for the outlook to be bearish, IMO. I'm investing across my 401(k), Roth IRA, and brokerage accounts as usual with a little more focus on exposure to international funds this year in my retirement accounts.
You should always take bearish outlooks with a grain of salt especially if they don't put their money where their mouth is and show their positions. Bears don't tend to make a lot of money over the long term: https://www.schwab.com/learn/story/does-market-timing-work
> What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation.
Poorer people and younger people need to work. People with assets and benefactors can rest easy.
You're missing one important feedback loop in this system: That debt is subsidized by foreign institutions, which have been slowly pulling out as they recognize that the US has been consistently consuming beyond their means. Also almost every continent has been working on circumventing the USD as the primary exchange currency in some way or another.
This is reflected in the USD losing value at a higher pace, which means the debt cycle becomes unsustainable.
Hopefully it will gradually managed, but that requires a large amount of political will, tax hikes and budget cuts. Very hard to do fairly and different people have extremely conflicting views on who should get poorer, because that's exactly what cuts and hikes mean.
The current admin is trying to brute force a change, where they keep their cake and eat it too, but they are eroding international trust which just accelerates the issue.
What is different about this time is how much a crash is expected, which is reflected in the run up in the gold price, for one. It’s also reflected in the public discourse about the high probability of a crash - as with this post and many others over the past couple years. 2008 was sudden and unexpected by most. The dot com crash was sudden and unexpected by most. If we crashed today it would have been expected by most and many would make money off the crash.
I’m not sure what the effects of a highly anticipated crash are, but I’d love to discuss what they might be.
It’s priced into gold, which I think reflects negative dollar sentiment. It’s not priced into the VIX, which is implied volatility across the S&P. Suggesting a crash in equities is not priced in.
What if the rise in index funds is a bubble on its own?
It's massive and increasing amounts of money that is not price sensitive and keeps growing. There's an underlying bubble message: "the stock market always bounces back, so keep plowing your money into it even when it's down".
Even more insidious is that this is in part driven by retail who are not paying attention. It's literally the definition of passive, hands off
So at some point, valuations will become increasingly disconnected from fundamentals. Active players will notice and find some way to take advantage. Passive yields will eaten. But at what point will the scales tip and people decide it's a sham and there are better places to park your money? That's when a huge bubble will collapse.
I don't know. Honestly don't know if that will ever happen because I'm not sure what a better investment for average Joe would be than a passive broad stock market index.
I don't think that's exactly true of dot com and '08. In both cases the developing bubbles were identified and widely discussed in the years prior to the burst. The surprise in '08 was not that there was a bubble in real estate, but rather that a massive fraction of the financial system was built on leveraging that sector. To paraphrase Buffett, you don't know who's swimming naked until the tide goes out.
There's also the fact that US equities are now consistently best asset class. Used to be all over the map. But with rise of passive investing and global markets, capital flows to the winner. Success begets success.
If something changes and suddenly foreign equities start consistently beating out US then capital would flow accordingly. But the US still has a massive advantage from passive flows propping it up in perpetuity.
Maybe not a particularly astute observation, but what I've seen in 10 years of investing is that the stock market seems to like to do the opposite of what most people expect. There's probably a game theoretic explanation to this, but as you seem to be suggesting, it basically comes down to: if the stock market was easy to predict and everyone could easily anticipate its movement, then everyone would make money, and this isn't really possible. There are big fish trying to take your money. The people selling you stocks or buying stocks from you do so because they think they are making the better move.
IMO we'll see a correction some time after people get used to the crash not coming. Maybe the narrative will shift back to "money printing means it can't crash" for a while, the market will go "risk on" and then we'll get a surprise correction.
If you anticipate it, it means you start pricing it in, which means the price is not high enough to crash.
I think many people understands there is a huge capital investment going into AI right now that is speculative and could blow up, but nobody actually knows if its going to pay off or not and everyone just defaults to their personality on how they process this risk.
If you think that everyone thinks a crash is imminent, you need to expand your social circle. Someone is buying the other side of these trades.
I don't know how any self-respecting person can write a blog post that starts with them hand drawing curved on an employment chart pretending they're doing analysis.
> 2008 was sudden and unexpected by most. The dot com crash was sudden and unexpected by most.
In both those events there was clearly a bubble, and although no one could predict exact dates, corrections were expected.
Exactly the situation now. The problem is predicting the top. Example;You might estimate now is a good time to pull your assets out of the markets, but then the markets go up another 10%. Then a 20% correction happens and you attempt to time the bottom but miss it. Best case you buy back in at about the same point you left. With transaction fees and capital gains you’ve lost money anyway.
I did this in 2007, bought some rentals and missed a lot of gains post 2008.
Gold fell over 10 percent yesterday and silver almost 20 percent because Trump announced that the economist friendly choice would be nominated for the Fed. A lot of the precious metals market activity was based on fears about US monetary policy not fears of an imminent depression.
The dot com crash was absolutely expected - today's "cmon, get it over with! crash!" tone we see in regards to the AI bubble is hilariously reminiscent of the late 90s dot com bubble. It was the era that spawned the famous Economist leader "Crash Dammit!"
1 Online shopping market in the range of 5 trillions
2 Electricity and energy price raise
3 Impossibility to lower interest rates
4 Tech market also in the range of multi Trillions
5 Global education and power expansion ...
Meaning that a % of all this money flow goes private pockets destroying medium class, which gets poorer.
It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes.
The real question for an economist is how much ram has the system and how much the memory has leaked?
> It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered. Tariff and invasion threats, protests, you name it, they might move the needle but it always seems to move back. So, perhaps we won? Perhaps we built our markets so stable that they are these days impervious
This is a myopic question only considering the values of securities, gold/silver, etc, which are owned in significance by relatively few.
The working class economy has already crashed. People who have to put in hours to get paid are struggling, and consumer spending is dominated by the top 10%.
The media, ever fixated on the economic welfare of the top 1%, spins a story that if the stock market is doing well, the economy is doing well.
Meanwhile there is an quiet bet that authoritarians will protect interests of capital owners over all else (i.e the bailout OpenAI hinted they might need), while suppressing the primary methods the masses have for expressing their discontent: speech, organizing/demonstrating, strikes, and voting.
Is it just me or does this metaphor sound AI generated?
> It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes. The real question for an economist is how much ram has the system and how much the memory has leaked?
This is true - all the global multinationals that essentially make the US stock market earn a good portion of their revenue in foreign currency, so their revenue and profits will increase.
In addition, they are all cheaper when priced in USD, so their stock will go up regardless.
This is just counting short term effect of currency devaluation. Long term there are also effects around trade balance and jobs.
Also, increasing billionaire wealth and burgeoning (but somewhat circular) market capitalizations of companies will seem like a good economy while real income and wealth for the bottom half of Americans keeps falling. The mainstream business media is a gaslight factory completely ignoring the ever-widening K-shaped economic reality that there's a very good economy for the highest income people and a rapidly declining/terrible economy for everyone else.
Timing is obviously always the issue. When Greenspan talked about irrational exuberance '96 in regards to the .com bubble, the Nasdaq proceeded to go up almost another 4x in price and it didn't crash for 3 more years.
I know the question is tongue-in-cheek, but I think it’s a fascinating question, so I’ll take it seriously. If you predict the crash and it happens two years later, i think you basically cannot profit off that guess, so I’d say no. Although i haven’t provided data for the two-year claim, there certainly exists some period N for which the prediction no longer pays off, given a fixed drop. But if you can predict it 6 months in advance, you probably could profit! I think a certain amount of annoying repetition is fine for profitability.
I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come.
Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs)
Real estate prices dropped 30% blowing up most people’s savings. The debt overhang is slowly bankrupting various companies. Growth is an anemic 5% (should be double for a country with China’s per capita income) and means it will never enter middle income status. Unemployment, especially for grads is very high and the lack of babies or immigration means the worker base will shrink while the demand for social services will skyrocket.
No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come. There were a lot of people who predicted the housing crash, not the timing but the crash. There are several signs that this is happening and the one no one is talking about is gold and silver prices. Don’t worry about the timing, you’ll never get the timing right, just worry about the fundamental economics and the flaws and protect yourself.
I happen to agree just because of golden silver prices that it’s going to happen sooner than later, regardless if war breaks out with Iran.
At any given moment there is always someone predicting that the economy will crash. So someone will always have predicted it. The question is do they actually have some insight or were they just lucky.
Keep in mind that not only did people predict the housing crash, some were certain houses would be sold for pennies on the dollar.
I bought a short sale distressed town house in 2009 for 40% lower than its peak price, and many people told me it was a terrible decision because if I just waited long enough, I'd buy it for a fraction of the price.
I think prices went a bit lower in 2010, but then I gained about 400k in equity over the next 10 years and sold it.
Stocks might go down if AI doesn't bring in enough revenue. The real risk seems to be currency depreciation though. The USD is already down 15% this year compared to the Euro. I'm worried about what the next FED chair appointee will do. JPow has stuck to his principles so far.
> The USD is already down 15% this year compared to the Euro.
It's down 12% since a year ago, but that's largely a reaction to the tariffs. It's been fairly stable since July or so and has only seen a small dip (and partial recovery) in the last couple of weeks.
Is it really seen as “the real risk” if it is something the current elected president very explicitly said for decades he wants to do? He does want USD to go down in value. He said it, repeatedly, openly. He made very clear why he went after Powell (that he himself reappointed).
It’s more, exactly what we should expect than a risk no?
falling usd is a disaster in a consumption economy like ours. fuels inflation. makes investing in usd-denominated assets less attractive. it's not going to boost exports due to tarriff walls. there's no silver lining here.
> The USD is already down 15% this year compared to the Euro.
False in every sense possible. For starters, the year is only a month old. Second, it’s been pretty stable for the past 6-7 months, and is only down 12% from a year ago - not 15%.
The argument is essentially a technical chart trade? It may as well be numerology or astrology. We are humans, finding patterns in data after the fact is what we do. Do yourself a favor, don't trade on this mumbo jumbo.
The person declaring "trillions in new investments" is Donald Trump. He doesn't understand how tariffs work, he doesn't understand how trade works, and he doesn't understand how the truth works.
So many of the stats you mention are based on potentially-untruthful statements from the Trump administration. When the facts and figures aren't favorable to Trump, his strategy is to shoot the messenger and install his cronies. Works great, right up until it doesn't.
I don't think this proves/suggests a crash will happen, but its worth considering most of what you've said would have been true right up until both the 2008 financial crash and the dotcom bubble.
They say that prediction is difficult, especially when it is about the future. Unwise economic policies may be punished quickly, slowly or might be revoked before punished severely. The question is how much risk one is willing to take. Another matter is of morality. Being invested into something means supporting its practices and being partly responsible for them.
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point.
I'm not even sure what you're trying to say with the rest of it but this is nonsense. The ECB policy IS German, and has been for 3 decades. All of germany's economy is organized around the existence of the eurozone with Germany controlling a unified monetary policy.
The alternative is recognizing that China offers a level of long term stability that the US is failing to match. That stability is worth a premium. You may not believe it's a high one, but our trade partners facing random tariff changes every month see it differently, even if just for a negotiating tactic at the current stage.
We also need to seriously adjust our line of thinking at what they are capable of. The "copycat" era is ending. Our supply chains have hammered their youth with generations of engineering knowledge. If you are relying on an ideological difference to assume they are not capable of innovation, you are making a strategic mistake.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
For a "little" speech, it is all people seem to talk about; e.g., it was mentioned few times in the comments above. And, yes, one can be on the board of a public company and still make valid and consequential analyses. Hell, one can be a convicted fraudster and at the same time become the president of a superpower. My point, you could belittle Canada, EU, China etc but it is going to solve the US's intractable problems.
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
> When has any deal with China worked at a strategic advantage for the other side?
Australia did well out of the Australian-China free trade agreement and then won the subsequent (Australian-caused) trade war.
Turns out being able to produce iron ore cheaper than anyone else and having plenty of alternate buyers when China bans imports means the iron ore price just goes up, Australian miners make more money and Chinese manufacturers get annoyed at Chinese trade policies.
Wasn't awesome for Australian lobster fishers though.
Software sector basically got cut in half just on Claude Code. You have to wonder what is next. I don’t think loss in economics is 1:1 with replacement so it’s not zero sum. Production doesn’t necessarily go up. In fact, net output is going to go down if you think about all the B2B lost too.
Whoever comes into power next better start thinking about universal income fast. We are gonna get there sooner than expected.
Why do people keep espousing such bullshit. Anthropic has terrible subscriber numbers, they are absolutely no where near profitability, a 100k people buying a product that struggles to sell itself is NOT the win you think it is.
If any of these tools did 10% of what their proponents claim they would become trillion dollar companies overnight and not you know... struggle so hard selling the amazing elixirs and perpetual labor machines.
>Software sector basically got cut in half just on Claude Code.
Source?
What you're claiming is completely untrue. There have been claims like this circulating on the internet recently, and they're all based off this one chart:
There are a few major problems with this. First, all of the data comes from one source: Indeed. Indeed SURGED in popularity in the Covid years and interestingly fell off in popularity at exactly the same time as the FRED chart topped. Hey look - the chart for total jobs posted on Indeed looks similar:
Beyond that, the effect is further exacerbated by the fact that tech hiring went absolutely fucking bonkers during Covid as everyone was convinced we would be stuck inside forever and money was literally free to borrow. The FRED chart only shows us the data during Covid. The inability to see realistic developer hiring numbers before that limits your context and gives a false impression. Here's a chart that goes a few years further back (first one on this page) and shows that hiring has simply normalized:
Finally, look at the first chart again. Claude Code was released in May 2025. The chart has actually been RISING since that point.
But the software sector was cut in half by Claude Code. Right. And the false narrative marches on. It's honestly amazing to me how people just soak up false information with literally zero filter and zero critical thought or willingness to do some research.
Live like you're already poor, reduce all unnecessary spending, adopt an ascetic mindset to support this lifestyle. That way, when a collapse comes you'll be accustomed to living frugally already and you'll have all the money you saved by getting a head start already saved up to get you through rough patches with relative ease.
Now, when I say live like you're poor, I mean do it smart. Don't grocery shop at a gas station, do your necessary purchases in bulk (actually poor people can't or won't, but would be better off if they could.). Don't but the cheapest boots, but rather the best value. But when choosing how many vacations to take, maybe pick camping locally more often than exotic vacations. Eat simple foods, don't order out fancy stuff and get accustomed to such luxuries. Don't automatically buy the latest consumer toy just because it looks fun. Don't move into a nicer apartment just because you got a raise. You get the idea.
Painfully I’ve learnt that you want to work in an industry that is largely recession proof.
Focus on industries that sell things that people need and will try to keep buying right down to their last buck.
Food, utilities, insurance. People don’t like sitting in the dark. People need water. People need to eat. People really don’t like living without insurance cover or to let cover lapse.
They don’t need Netflix, Disney+ or Prime. They don’t need Spotify. They don’t need training or e-learning. They don’t need luxury goods. They don’t need new motor vehicles. They don’t need holidays. They don’t need new iPhones or new computers.
Try and move now to an industry that has some security.
Investment wise diversification is key. Just pray that it doesn’t get so bad that banks start to fail.
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
Skill. Knowledge. At your age, your biggest assert is your future earnings potential. The more employable you are, the better you will make iduring and after a downturn. In fact, the highest skill folks tend to even profit from hiccups in the economy.
Nothing provides complete protection, but diversification can help reduce the impact.
The person saying gold and mining stocks may or may not be correct - it's still a risky position. Precious metals could be in a commodity bubble right now (or not). It's had to predict anything with perfect accuracy, which is why diversification matters.
You probably shouldn't be jumping completely in or out of anything because that requires timing, which is also not easy to do. What you can do is change he weights withing your portfolio. For example, reducing your US equity exposure to increase your bond exposure. Or reducing your US growth exposure to increase your US value and Eurozone dividend exposure. It's best to listen to several financial companies reports to weigh what to do.
Your life should have a plan beyond tomorrow or the next hype cycle so that you progress towards your goals independently of the flow of society. This will allow you to navigate those flows instead.
Maximize income and cash flow, when things start to crash, you want to have fresh new money coming in to start buying undervalued oversold assets.
In the meantime, keep investing to avoid eroding the value of your money as the dollar drops in value. It also prepares you for the possibility the crash doesn’t occur for a very long time, long enough to grow your net worth substantially to be better insulated.
It's difficult to draw many lessons from 2008. The people who suffered most then were over extended home owners. It's still not a good idea to be one of those people but there aren't so many of them now anyway.
There's a common consensus in economics that bubbles are really hard to predict, and even some argument that they don't actually really exist. Great paper came out recently called "Bubbled for Farma"[0] which looks at predictability for bubbles and finds some indicators but no sure fire thing.
That sort of rules out an easy or known way to predict and avoid bubbles. That said, it's worth noting our current historic period marked by being post financialisation (taking out a bunch of investment regulation) of markets in the 80s exhibits a lot more economic crashes (the real reason we should car about bubbles) than most of history (although most of history also does not exhibit any economic growth, so be careful what you wish for).
In particular, the period between around 1930-1975 showed extremely high growth with almost no bubbles or market crashes[1].
So my semi-knowledgeable but definitely not expert view is that:
- Bubbles and crashes are not easy to predict, and therefore avoid
- That said, our existing market rules have effects on the number of crashes/bubbles we see (but there's debate around whether you actually would want an economy with less crashes/bubbles if that meant left growth)
[1] You can find this discussed a bunch of places but Ha-Joon Chang's Economics: The User's Guide talks about this very fluently.
Edit: I think your question might actually have just been about personal protection again bubbles, rather than protecting the economy as a whole. In which case, having margin in your spending so you'd be able to live if things were some portion more expensive against your earnings is probably the only sane suggestion.
Yes, you either marry into extreme wealth or hope that luck doesn't strike you into generational poverty. Anyone saying anything different is lying too you.
It is often argued that the US will grow its economy such that the debt is less significant. There is much confusion between the US debt being cited as a ratio of GDP (common among economists) vs net tangible assets (common among businesses and people). For example, after WWII, the U.S. faced its previous record debt-to-GDP ratio—roughly 106% in 1946. By 1974, that ratio had plummeted to just 23% largely through:
a) massive GDP growth with real consumption rising 22% between 1944 and 1947.
b) fiscal discipline where the U.S. actually ran primary budget surpluses in the late 1940s
c) financial repression with the Federal Reserve capping interest rates at around 2.5% while inflation averaged 6.5%. This meant the government was paying back debt with "cheaper" dollars, effectively "inflating away" the debt at the expense of bondholders.
Fast forward to today, there is an often stated belief that the US will grow the economy again, this time with a dramatic expansion into a space economy including orbiting data centers, solar power plants, asteroid mining, space manufacture - all leveraged with robotics and AI. Let's be generous and assume this actual happens and that it happens soon - what mandate is there that this massive space economy will be denominated in US dollars or even be part of the US economy? SpaceX has already launched numerous satellites for foreign countries. What is to stop them launching a space economy that will be owned under a "Flag of Convenience" from an offshore tax-free zone, perhaps even denominated in crypto? Will we then confront this massive off-planet economy with "space-tariffs" in order to import the value-added component back into the US? The U.S. debt can only be "grown away" if the value-added activities (mining, manufacturing, computing) remain registered in the U.S..
China seems to be the only candidate. But whatever happens it won’t be in the same way as before.
As for whether it is better for everyone, that question became a lot harder in just the last year. Who is «everyone»? And what do we mean by «better»?
With the US wanting to annex territory from its NATO allies, and engaging in extortionate tariffs, it is harder to argue that the US is good for Europe. Which is why Europe has already started to look eastward. Starting with a comprehensive trade deal with India.
What’s happening is good for Russia and China. Not so much for the rest of the world.
The EU just signed large deals with Latin America and India, binding a sizable chunk of the world to its rules. ASEAN is on the docket, Japan, Canada and South Korea have been signed for a while now.
Make of that what you will. Power isn't always tanks and soldiers. Sometimes its bureaucracy and contracts.
The single superpower thing was an anomaly which was mostly a result of one specific country being largely untouched by WW2; we're more likely heading back towards multiple regional powers with varying levels of cooperation, e.g. EU+Mercosur+India agreements that just happened.
The lines are still being drawn, but its doubtful one single power will emerge.
The US is resigning the position intentionally. It's not as if someone is gearing up to replace it.
But as a trade partner? China, markets love reliability and stability. Not every 4 years wondering if there will be another trade war for reasons unknown.
You'd be very surprised the amount of malicious behavior countries will ignore to allow trade. Look at Saudi Arabia.
Seems like the rest of the world is just signing new trade deals and continuing on as normal. I hope America returns to normalcy in the next election and everything settles down. Else it seems like back to the old multipolar world.
There is so much wrong with this blog post that it is difficult to know where to start. Does he even know that China has placed silver on the rare earths list? Considering they export 60 % of the worlds refined silver and now exports are limited and controlled. Silver markets have sold 200 contracts to every bar of refined silver. Now they are scrambling to fulfill delivery if someones requests it and are forced to buy on the spot market, which incidentally has driven spot pricing higher than contracts.
People are moving out of Bitcoin and into Gold currently. I see this trend continuing (Bitcoin falling).
The markets today are indestructible at the moment as you have witnessed over the last 3-4 years. This year will be similar to 2025 according to many different and smart people. I tend to agree with them and we are still in a bull market.
-not an expert, not investment advice, your mileage may vary.
I do really hope the AI bubble will collapse soon. The sooner it blows the less damage it will do. And hopefully we can go back to doing real work without all these leadership guys breathing down our necks to see if we are doing enough of this AI all their shareholders want us to be involved in.
It will suck even for us in europe due to shortsighted pension funds having invested in AI as well. But we'll just have to deal with it. I'm sure it will happen sooner rather than later.
PS: I'm not an AI hater as such. It definitely has its usecases where it shines. The problem is like with all hypes; it's not good at everything and it won't be all golden mountains tomorrow like the investors expect. This overhyped investor circlejerk is what screws up technology. It happened to blockchain, it happened to metaverse. All things that have their merits but somehow investors thought it would change the world overnight and make them insta-rich. Obviously didn't happen and it won't happen now.
If every idiot (I'm including myself in this) on HN/Reddit/Youtube/Tiktok/mainstream news/etc. thinks we're in a bubble and is crazy pessimistic and thinks economic collapse is near...it means we're not actually in a bubble.
When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying. Because that will mean the general public must be reaching 1999 levels of euphoria for a hint of optimism to show up here.
The COVID economic depression is not accurately shown in the charts. The economy shut down for more than 2 years. Before RTO, the economy was in a depression. These charts provide indicators to what's happening on the ground. The classic indicators didn't accurately capture the Coronavirus lockdown.
The economy is still growing from the quarantine lockdown. It's why we didn't see a collapse, it would have to be worse than what happened during the lockdown for the economy to be in a recession. That's not the case, and I don't see a collapse or recession for at least 3 years.
For most of us, we work remotely and some people might be out of touch. Don't take this the wrong way, but people are just recently recovering from cottage syndrome. We're still in the transition period with the layoffs and AI doomerism being growing pains.
The debt clock is a proxy for the total amount of plastic we route from shipping containers -> landfills. Plastic is oil, oil is energy. Energy can be exchanged for labor globally therefore energy prices money not the other way around. It’s our civilizational bottleneck. The true cost of oil isn’t priced in to begin with and we have it bound up for 500+ years. This is creating a massive distortion in the global economy which physics will insist on regardless of monetary policy.
Or we burn the oil -> heat into the atmosphere via silicon doing things like routing “wyd” texts around dozens of network devices across the country when the message doesn’t have that value.
The economics of how we allocate energy makes no sense and we debate how to fix this via policy.
This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
If you're going to chart-gaze, you need to have a healthy skepticism about the chart itself - is what it's measuring still meaningful? Every chart is an isolation of variables in an ocean of variables. The shark attack / ice cream sales chart will mysteriously stop working when everyone is on Ozempic and stops craving icecream! Likewise, there's a very real possibility that "inverted yield curve means recession imminent" logic only works during a particular era of USA dominance in the world, which we have thoroughly left behind. Food for thought, I hope.
Expecting the crash of the most important economy in the world based on two graphs, where you do chart astrology, is such an insanely stupid argument it is hard to fathom.
With all these charlatans predicting imminent collapse it is always imperative to consider how strongly they believe in their revealed preferences, based on how much they have invested in their position. That said, how much money does OP have invested e.g. in shorting the S&P 500? Or any equivalent. Let me guess, zero dollars.
The US has several things backing it currency ...oil/gas, gold, oil- processing efficiencies, the value of the world's largest companies ....AND (not to mention) an unrivaled armed force. Lol. BUT, every barrel of oil to emerge from the ground is immediately priced in US dollars. Hence ....a liquid printing press. GDTA.
If you just do very crude pattern matching on the first chart he shows - it is warped by the (intentional?) way he drew orange overlay lines.
The slope in 2024 and 2025 (the data that we already have) is much lower than the orange line drawn.
Following the real visual trend, the next peak would be maybe another 5-10 years in the future. (Not that this is a good way to predict the future, as also stated in the article, "not very scientific").
The us are two economies in a trenchcoat. One a classic naval trade economy, the other a imperial security trade economy. One damages the other regularly and applies local monetary anesthesia to prevent the population from rising up against the whole state of affairs. Now they are divorcing.
I find it crazy that people are so obsessed with the current administration they want the world economy to crash. I can tell you that in a current climate a complete world economy crash is going to play out very very badly politically all over the world. I have a real bad feeling it will be a replay of the 30s.
That spark could end up being the rollout of chinas digital currency to the world and requiring payment using that currency when dealing with foreign businesses. This will kill the position of the US dollar as a reserve currency, slowly, but almost certainly.
> Which is to say that no individual decision make want’s to be the first mover, so the market does not move.
Uh, that's not accurate. Hathaway is sitting all cash because of it and so far they have been the one losing. Even if you assume (and correctly I think) that the market is overvalued, their stock pile of cash is eroding: https://newzsquare.com/warren-buffett-warns-of-fiat-currency...
> A year ago there were a few signs. Right now, it feels like everything is primed to blow. Is that new?
The market is unhealthy. Too unhealthy that I think it can no longer self-heal the usual ways (recession/crash/etc.) and we'll instead move to more advanced stage of hyperinflation, global war, etc.
> People buy precious metals when they might be worried about the value of fiat currencies
It’s not just people. Central banks are buying precious metals due to the dollar and new Basel rules. Gold needs to be allocated if you want it to be considered a tier 1 asset.
I think the government is laser focused on reducing regulations, reducing energy costs, reducing interest rates, a weaker dollar that makes exports better, minimizing taxes. Technological innovation is increasing overall productivity. There are definite headwinds like upward pressure on labor by reducing the worker population, stagnating population growth, undertainty, tarriffs, a weaker dollar increasing inflation.
There’s the looming threat of geopolitical world war that has been overhanging the world since the combination of the pandemic isolating different countries and Russia’s invasion of Ukraine.
It’s really a mixed bag, but it’s not clear to me that we are headed into a total economic crash as the government is definitely focused on doing a lot of good things for the economy, but also is creating lots of different headwinds.
I know HN always has its fair share of doomers, and generally the HN communities track record anecdotally regarding finance and the market is frankly terrible. Tesla (stock price wrong), Bitcoin (wrong), AI a huge dot com like bubble (wrong in my opinion - TBD though).
I’m optimistic on the US. We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year. As far as Gold and Silver I just see it being propped up by speculators. Silver spot is down 15% this mornings and gold down 8%.
I predict double digit gains in the S&P by end of year and strong financial conditions with mag 7 continuing their lead. Tesla also will be a big winner.
3 more years, then the macroeconomic headwinds from aging millennials will be past peak earnings and rather than funding cap weighted index, they will be draining cap weighted index.
1929 silent generation decade or depression after.
1967 post war Baby boom from The Greatest Generation, followed by decade plus of stagflation and recessions.
1999, after a two decade run of the stock market going from 1000 on the Dow Jones in 1980 to 10,000 on the Dow Jones in 2000, the baby boomers born to the greatest generation, peak, earning ears, leading to the lost decade afterwards.
Two decades of stock market returns from 6000 on the Dow to 60,000 on the Dow, followed by post peak millennial earnings…
the burst will be bigger than anything we've ever seen. so everyone pretends its not there (which only makes it bigger but alas), and money only material exists as people's faith in it so that's enough to punt the problem down a bit further.
This isn't a crash, it is something else comming, perhaps the "jackpot", where society/civilisation unravells, climate disaster kicks in with real persistant challenges everywhere, and some third, fourth, fifth effects that break our millenial run to the top of our planets ecosystem as the ultimate apex species.
It has been a good run, but useing the same tacticts as our stone age ancestors, is, I think, about to bite, hard.
And it is literaly this, our strategy is to keep useing the same tacticts.Jackpot.
The Typical language of believers is to say no that wont happen and how? I learned and studied enough history and the usual narrative is to not accept something that is possibly so catastrophic that it will change their way of life.
The tech bubble is another story and to be study on it's own, but it was summarized well that is < its a cycle of delusional capital invested over and over. Along with the numerous indicators of "what ifs">
The housing market is simply stupid, im sorry i don't have another word for it that better describes the current take on this matter. Home prices are outrageous because of market driven assumptions. A house is technically worth $150 is now on the market for $350 and why is that. from 2 years ago. People truly think that home prices are expected to keep rising and to what extent and why? They couldn't tell you<< " my zip code is the place to live at the moment, the person living in the next zip code is saying the same thing about hiss home,
Homes in silicon valley were above and beyond the national average and it was the only thing on the headlines during 2021 - 2022 but for good reasons that cant be argued too much/ Today it is the rest of US in the same mindset.
All of the US economy seems to be in protection mode right now. As to say it's the mother that doesn't want you to go out again after falling of your bike and scuffing your knee on the pavement.
tariffs were used the wrong way this time around, inevitably the very purpose of them was not so effective, it backfired, Damage is done and reputation is broken in a lot of ways. Britain is renegotiation relationships with china, Canada is renegotiation relationship with China, EU is renegotiation relationships with India and China. All with successful results.
There is a lot of stake here the US has a lot to offer to the world and to use that as weapon is tends to not have a good outcome. The market is large, yes it is resilient to some factors but not all/ When collapse takes place there will be tremendous momentum and its going to be hard to stop.
Median house price / median income is at an all-time high for the US.[1]
But what that means is that the rest of the country has caught up to California's overpriced housing. Hence the call for a 50-year mortgage. Still, looks a lot like the 2008 housing bubble.
> This is the 11th time that tariffs have happened, and it just isn’t surprising anymore.
There are tariffs everywhere, all the time. Canada just dramatically cut its 90% (or something) tariff on Chinese cars. Tariffs haven't just started happening because someone you don't like did them.
I feel like one of the following is true (and I don't know yet which is the case):
- I'm genuinely a lot more pessimistic than is accurate around what is and isn't a bubble
- Bubbles are just slower to burst than I expect
Possibly some combination of both. But even ignoring AI which is relatively new, it seems "obvious" to me, that whatever value Bitcoin has, investment in the asset is detached completely from that value. I'd have expected to see Bitcoin crash a long, long time ago, and have been thinking it's "just around the corner" for years and year.
And yet, the bitcoin price as a whole, although it's dipped recently, and is clearly volatile, still remains something like 10x what it's value was 5 years ago[0].
There's quite a few factors here that delayed what should have logically already happened.
1. All the tarriff reactions cause US companies to import a huge amount of stuff for 2025. From what I understand, we're about to exhaust all of those imports.
2. The unemployment reports (especially the U3 numbers) hide quite a bit of turmoil going on under the hood of the job market.
- If you lost your job and switched to Uber/Doordash, you're not unemployed.
- If you are riding on severance pay instead of filikg for unemployment, you're not unemployed.
- If you got tired of throwing out hundreds of apps only to get automated rejections and take a break a month, you're not unemployed.
- If you just graduated into this hellscape and can't qualify for any unemployment, you're not unemployed (you're technically not part of the workforce yet).
There's a lot of these small shifts in how jobs work that make U3 less reliable in reflecting reality. And I only touched the surface of these issues.
3. Continuing on the U3 with a point worthy of its own bullet: the unemployment appears flat, but the makeup of what's happening per industry really lays down the reality. The only industries growing are hospitality (aka food service and similar sorts of duties) and health care. And to top it off these "growing" industries shift more and more to fractional work. Pretty much every other industry is down. So people are getting laid off/fired and moving to part time work to get by. "Stable" by unemployment numbers, but very unstable on the day-to-day. Add in the recent congressional bills for healthcare subsidies and we're throwing more gas on rhe fire.
4. I'm sure it's been said so much by now, but AI in the US is the only thing holding up the GDP. Without that massive investment, the GDP would be at best, dead flat. The US isn't growing in a way that reflects actual yields to anyone outside of a select few shareholders. We're not building more houses, mining more materials (on the contrary, we've resumed ransacking others'), manufacturing more machinery, nor even producing more service value for customers and businesses. We're putting all hedges on one thing with an uncertain outcome. If that industry declines, so does the rest of the US.
5. The K shaped economy. I have to check these numbers again, but I believe that spending is indeed up, but the makeup of spending per income band is more stark than ever. The too 10% income households makes up half of US's spending. But there are signs that even many high income houses add also starting to hunker down on spending.
----
That was a lot and it still only scratches the surface. But the TLDR version is that there's a lot of statistics massaging over the real struggles of life and many industries reaching a breaking point they did a good job putting off. But by this point it will only take a needle to break this camel.
Trump is lowering interest rates, fueling the bubbles.
We can’t know when it’s going to happen, but there is a good chance that one is going to be super bad.
We basically borrowed our way out of the 2008 crash and through covid, but we havent repaid the debt. It is so high I doubt we can do the same next time.
I like how the last image based on "C'mon, Do something" with all the AI symbols, has hard to recognize body part shape, with Claude being right in the middle of it. Hank Green talked about it last year - https://www.youtube.com/watch?v=fIbQTIL1oCo
I asked NOMOS (a system) I built for financial intelligence. These are it's key findings:
Key Answer
As of early 2026, there is no consensus forecast for an imminent crash of the U.S. economy. The prevailing view among major institutions is a period of moderated growth or a "soft landing," not a severe contraction. However, this outlook is balanced against significant and rising risks, including labor market fragility, unsustainable fiscal debt, and persistent inflationary pressures that could trigger a more pronounced downturn.
Key Findings
Consensus Points to Slowdown, Not a Crash. Major institutional bodies like the International Monetary Fund (IMF), Congressional Budget Office (CBO), and large investment banks project modest U.S. real GDP growth for 2026, generally in the 1.8% to 2.5% range. This baseline scenario is supported by expectations of resilient consumer spending, continued investment in technology like AI, and an anticipated easing of monetary policy by the Federal Reserve as inflation moderates. Optimistic forecasts from firms like RSM US and ARK Invest even anticipate a growth rebound to 2.2%, viewing the economy as a "coiled spring" fueled by technology spending.
Labor Market Fragility is the Primary Downside Risk. Despite a low headline unemployment rate, the labor market shows significant signs of weakness. Analysts describe the current environment as a "low-hire, low-fire" equilibrium, characterized by slowing job growth and concerns over employment quality. A critical warning sign is the growing divergence between strong reported GDP figures and weakening labor market data. Historically, such contradictions are often resolved by downward revisions to economic growth, suggesting the economy may be weaker than headline numbers indicate. Capital Economics highlights that a cooling labor market, if not offset by productivity gains, could initiate a self-reinforcing cycle of lower employment and reduced consumer spending.
Unsustainable Fiscal Debt Poses a Systemic Threat. The U.S. federal debt has surpassed $38 trillion, exceeding 100% of GDP. Net interest costs are projected to consume nearly 14% of all federal spending in 2026. The Brookings Institution projects this trajectory is unsustainable, with debt potentially reaching $170 trillion over three decades and interest payments consuming over a quarter of tax revenues within a decade. This creates near-term risks, as FTI Consulting warns that "bond vigilantes" could push back against perceived fiscal profligacy, driving up government bond yields and, consequently, borrowing costs for the entire private sector, independent of Federal Reserve actions.
Stagflationary Pressures Complicate Monetary Policy. The economic environment is characterized by a difficult mix of slowing growth and persistent, albeit moderating, inflation. This presents a stagflationary challenge for the Federal Reserve. Policy measures such as new tariffs are expected to add to inflationary pressures while simultaneously acting as a drag on consumption and investment. This dynamic severely constrains the Fed's ability to stimulate the economy; cutting interest rates aggressively to support growth could risk re-igniting inflation, while keeping rates high to fight inflation could accelerate a downturn.
Negative Public Sentiment Contrasts with Macro Resilience. While macroeconomic indicators like GDP have shown resilience, public sentiment remains overwhelmingly negative. Polls from Pew Research and YouGov show that a majority of Americans rate the economy poorly, driven by persistent affordability challenges related to housing, food, and healthcare. This sentiment is exacerbated by 2026 policy changes, such as cuts to social programs, which directly impact household budgets. This disconnect between headline data and public experience is a vulnerability, as deteriorating consumer confidence can lead to pullbacks in spending that are not yet reflected in aggregate data.
> So, perhaps we won? Perhaps we built our markets so stable that they are these days impervious? That sounds silly on its face, and the two reasons I’d actually give are:
> 1. Markets are just slower moving than ever before, big players just like to sit on their big piles of money
> 2. There are one or more bubbles in the stock market. Almost everyone agrees that AI is a bubble. It funds itself in a circular fashion, and capex cannot be recovered with profits any time soon, even with optimistic outlooks.
It’s a bit of both. The impact of political instability in the US (read: Trump pissing off as many people as possible) may not be felt in the markets quickly, if even within his term. He has severely dented confidence in the US as a trading partner and as an arbiter of the global rules-based order. That will have decades-long implications, the result being a pivot away from dollar-denominated commodities trading, and export markets for US goods being increasingly unfriendly. The value of the dollar will probably decline, and in fact that is a goal of many in his administration. That could actually be good for US equities if it’s in moderation.
The biggest risk I see is flight of capital away from US treasuries, which would drive up interest rates, leading to a sovereign debt crisis in the US. The likely solution to that would be money printing and resultant inflation. The high treasuries rate would drag capital away from equities.
Some sort of an AI crash / bubble bursting is expected to be honest - now if that will take the rest of the US economy as well.... debatable. Any strong opinions on this?
I can't time the market worth shit - I got my first investments out before the 2008 collapse in earnest, and got into the job market at its peak. I waited through the 2010s to accumulate money to invest, only to start doing so amidst rampant speculation in crypto, then NFTs, then meme stocks, then AI.
So yeah. I am not getting a job at a financial firm anytime soon.
That said, the societal gestalt seems primed for something to go horribly wrong. AI boosters are positing their models as solving all of society's ills, which first requires acknowledgement that these are in fact problems facing society requiring solutions. Everyone is broadly on the same side - wealth inequality is a problem, climate change is a problem, energy dependence is a problem, job security is a problem, housing is a problem, etc - but we're all varied on the approach to solving these problems based on personal biases and perspectives. YouTube is infested with AI slop, social media is filled with doomers and preppers, and subcultures are simultaneously splitting off from larger groups (like those leaving Twitter/X for BlueSky or Mastodon) while also forming newer alliances and communities around shared goals or ideologies. Even those in positions of power acknowledge the polycrisis before us, while exacerbating it further by firing swaths of workers to fund their own bunkers, yachts, and contingency plans via share price bumps.
It's in the air, this horrid pit in the stomach that doom lingers just around the corner. It's been there for a decade, long before COVID, festering beneath the surface. Hell, for many of us pre-9/11 Americans, it's been a gradual decline since the heydays of the maximum-employment 1990s. So many of us feel it that it just cannot be ignored, and thus it becomes a sort of self-fulfilling prophecy: enough of us believe something bad is coming, therefore something bad must happen to quell those feelings.
There's two things that give me (and my OCD) solace of a sort:
* We'll all find out together, regardless of status or strata
* Most of us - statistically, generally, based on prior events and barring any explosive escalation - will likely be relatively fine
Yeah, the shifting of geopolitics is likely to result in more violent conflicts with the potential to kill billions if things go NBC. If we don't address climate change, millions will die from wholly preventable causes and tens of trillions of dollars of property will be destroyed over the next century. Misuse of AI could result in doomsday scenarios that Sci-Fi has warned us about for decades. Wealth inequality appears poised to create a modern version of the Coal Wars, if current events are any indication.
Technology alone won't save our asses. Neither will some mythical billionaire genius, or AGI deity. It'll have to be us, regular humans, rejecting the present and choosing to build a better future together.
If Russia's economy is kept afloat after 4 years of full-scale war... Why would one year of Trump 2.0 do us in? Don't get me wrong, a whole lot of problematic actions have been taken in that time-frame but that pales in comparison to 1.25 million casualties and about the same number having left the country (and our population is almost triple theirs) on top of infrastructure destruction.
A have a bad feeling for the US economy. A decline comes soon, then prepare for impact with a financial crisis and in the end of the tunnel the IMF. I know it's super crazy but that was also for my country 16 years ago.
I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell.
There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries.
[0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.
De-dollarisation is happening, but slowly. China has decreased its US treasury holdings by about 7% a year over the last five years [1].
It won't happen quickly because no-one would want to tank the market while they're selling.
[1] https://tradingeconomics.com/united-states/foreign-treasury-...
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing.
I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
> The US economy depends on the country's position of world hegemon
Unfortunately, the data doesn't back this up. The US economy is actually one of the least trade-dependent nations in the world.
27% of GDP is trade-oriented (The value of imports and exports as a function of GDP), while the global average is 63%. The US is so developed, that even if the country was completely cut off from the world and operated as an internal economy it would still remain the world's largest.
>> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
For those who want to return the US to the haydays of manufacturing, the days of cheap steel and people working in mills, a rock-bottom dollar is a necessary first step. To sell widgets, the US dollar needs to be low. And to get workers into low-wage mill jobs the population needs to be hungry.
> 'this time it's different'
I remember reading this a lot in 2000-2001 and 2007-2008
That said, overall I sort of agree with your assessment except for having any optimism that the US changes course.
The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct.
Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
> if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be
You’ve set no time bound so what you say here is essentially irrefutable. It boils down to “on this path we will eventually have a big bust.” You’re right if it happens in 1 year or 30.
You’ve also not defined the bounds of the path. Paths can weave. So essentially that part of it becomes meaningless because anyone can draw a line that starts with today.
Tech has a long history of boom bust cycles. Some busts are much more mild than others. Some upend the whole economy for protracted periods. In reality no one knows when AI will bust and how bad it will be. Those are the key questions, not whether there will eventually be a tech (or broad) bust. Of course there will be if you’re looking out to infinity days from today.
Most economic commentary is like this including the linked article: so poorly defined as to be low worth as even speculation.
> The US economy depends on the country's position of world hegemon
Your premise depends on that being true, and you stated that like it's a fact. It's an unsupported opinion.
The US economy was the world's largest before 1890, without anything remotely resembling the global reserve currency or superpower military.
I wanted to add that since the last threat of Trump in Davos where he didn't even know the difference between Iceland and Greenland and accidentally threatened another sovereign country, almost all social insurances of EU countries have started to liquidate/sell their US bonds and assets.
If that is not a red sign to BlackRock, then I don't know...
Economic crashes are hard to predict. In the end stock markets are a bit irrational. They don't crash just because there are good rational reasons. And then some irrational thing triggers a mass panic when you least expected and the whole thing crashes.
The circumstances and timing (it's been a while) suggest we are probably closer to a crash happening.
From a loan/interest point of view, the dollar de-valuating a bit is actually not a bad thing for the US. It stimulates exports and inflation. And at the same time that reduces the value of the debt (and that is paid in dollars). The downside is that inflation going up usually also means interest going up. And Trump resisting that because he wants to accelerate the economy might not be a good thing.
The big picture here is oil. The world is slowly moving away from oil as the key driver for economies and paying for it in dollars. China is well on its way electrifying large parts of its economy. To the point where it is starting to import less diesel. And they border on Russia with whom they trade in Yen, not dollars. A world that is going to trade less and less oil is going to be less dependent on dollars.
I'm not an economist though. But planning for some kind of crash/correction seems prudent.
This is one thing I've heard repeated - that USD needs to be spent in America - seems like other countries could just transact with it directly.
Can US debt be seen as equity? We mint equity from times to times, do buy backs, allow people to tokenize it to pay with it and so on...
This time is already different. It's way past the point where the US is unfriendly towards the western world
You need US dollars because you have with US. Tarrifs hurt the need for dollars.
If the US debt gets to the point that interest on debt can't be paid, the US will just print enormous sums of money. Debt is in $, not in valued or devalued currency.
Sure, the end result will be a deprecation of the dollar. But the interest will be paid.
So the real downside to debt is not-overly apparent. Look at how much money was printed for COVID payments, and the like? And at other economic downturns? I do wonder, when will the merry-go-round stop?
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world.
The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India?
Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
Trump famously bankrupted 3 casinos. The US economy will be the 4th.
> I dont think AI even factors in to this.
I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward..
AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
> The US economy depends on the country's position of world hegemon
Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
Its standard Republican playbook.
Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy.
This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
[dead]
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support.
A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors.
Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too.
[1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
>The US economy depends on the country's position of world hegemon
no it doesn't.
it's much closer to "you need the best economy to be a hegemon"
> Here’s the current price of silver.
Not shown on the chart (and which couldn't have been predicted at the time of writing) is today's crash of almost 30% in that price.
Speculative bubbles happen. The narrative of people losing faith in currency made no sense, because that should pump the prices of durable commodities as well, if not instead of precious metals.
By crash do you mean a return to the prices of early January 2026?
Gold the same.
$15 Trillion gone yesterday
I don't see 30%. Maybe 12% from the very recent top, back to wherever it was just a few weeks ago.
Once the supreme court decision about Trump went out, I took all of my investments and put into a savings account.
When a dip happens, I simply take 10% of the money, buy the dip, then sell when the price hits pre dip.
So far Ive netted significantly more than any of my peers that actually do investing.
> It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered
Yes, in a five year span we've had three 20% drawdowns in the stock market that have all recovered which is unprecedented. IMO, anyone who thinks we're going to crash and have a lost decade is not looking at the bigger picture. The Federal Reserve exists to allow the government to spend as much as possible by:
- Making sure that as many people are employed as possible for as long as possible (tax base)
- Making sure that prices keep going up and that the government can borrow below the rate of inflation (so they can spend even more and manage the debt)
What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation. The government also takes a cut from that via capital gains tax. Regardless, there is simply too much "free money" going around for the outlook to be bearish, IMO. I'm investing across my 401(k), Roth IRA, and brokerage accounts as usual with a little more focus on exposure to international funds this year in my retirement accounts.
You should always take bearish outlooks with a grain of salt especially if they don't put their money where their mouth is and show their positions. Bears don't tend to make a lot of money over the long term: https://www.schwab.com/learn/story/does-market-timing-work
> What this means is that people need to work to keep up, and that asset prices will continue to go up as people try to protect their wealth from inflation.
Poorer people and younger people need to work. People with assets and benefactors can rest easy.
You're missing one important feedback loop in this system: That debt is subsidized by foreign institutions, which have been slowly pulling out as they recognize that the US has been consistently consuming beyond their means. Also almost every continent has been working on circumventing the USD as the primary exchange currency in some way or another.
This is reflected in the USD losing value at a higher pace, which means the debt cycle becomes unsustainable.
Hopefully it will gradually managed, but that requires a large amount of political will, tax hikes and budget cuts. Very hard to do fairly and different people have extremely conflicting views on who should get poorer, because that's exactly what cuts and hikes mean.
The current admin is trying to brute force a change, where they keep their cake and eat it too, but they are eroding international trust which just accelerates the issue.
Quoting someone else:
"Bears sound smart, Bulls make money"
What is different about this time is how much a crash is expected, which is reflected in the run up in the gold price, for one. It’s also reflected in the public discourse about the high probability of a crash - as with this post and many others over the past couple years. 2008 was sudden and unexpected by most. The dot com crash was sudden and unexpected by most. If we crashed today it would have been expected by most and many would make money off the crash.
I’m not sure what the effects of a highly anticipated crash are, but I’d love to discuss what they might be.
It’s priced into gold, which I think reflects negative dollar sentiment. It’s not priced into the VIX, which is implied volatility across the S&P. Suggesting a crash in equities is not priced in.
What if the rise in index funds is a bubble on its own?
It's massive and increasing amounts of money that is not price sensitive and keeps growing. There's an underlying bubble message: "the stock market always bounces back, so keep plowing your money into it even when it's down".
Apparently passive funds are 60% of mutual funds / ETFs now https://www.avantisinvestors.com/avantis-insights/has-passiv...
Even more insidious is that this is in part driven by retail who are not paying attention. It's literally the definition of passive, hands off
So at some point, valuations will become increasingly disconnected from fundamentals. Active players will notice and find some way to take advantage. Passive yields will eaten. But at what point will the scales tip and people decide it's a sham and there are better places to park your money? That's when a huge bubble will collapse.
I don't know. Honestly don't know if that will ever happen because I'm not sure what a better investment for average Joe would be than a passive broad stock market index.
I don't think that's exactly true of dot com and '08. In both cases the developing bubbles were identified and widely discussed in the years prior to the burst. The surprise in '08 was not that there was a bubble in real estate, but rather that a massive fraction of the financial system was built on leveraging that sector. To paraphrase Buffett, you don't know who's swimming naked until the tide goes out.
There's also the fact that US equities are now consistently best asset class. Used to be all over the map. But with rise of passive investing and global markets, capital flows to the winner. Success begets success.
If something changes and suddenly foreign equities start consistently beating out US then capital would flow accordingly. But the US still has a massive advantage from passive flows propping it up in perpetuity.
Maybe not a particularly astute observation, but what I've seen in 10 years of investing is that the stock market seems to like to do the opposite of what most people expect. There's probably a game theoretic explanation to this, but as you seem to be suggesting, it basically comes down to: if the stock market was easy to predict and everyone could easily anticipate its movement, then everyone would make money, and this isn't really possible. There are big fish trying to take your money. The people selling you stocks or buying stocks from you do so because they think they are making the better move.
IMO we'll see a correction some time after people get used to the crash not coming. Maybe the narrative will shift back to "money printing means it can't crash" for a while, the market will go "risk on" and then we'll get a surprise correction.
Can an anticipated crash even happen?
If you anticipate it, it means you start pricing it in, which means the price is not high enough to crash.
I think many people understands there is a huge capital investment going into AI right now that is speculative and could blow up, but nobody actually knows if its going to pay off or not and everyone just defaults to their personality on how they process this risk.
If you think that everyone thinks a crash is imminent, you need to expand your social circle. Someone is buying the other side of these trades.
I don't know how any self-respecting person can write a blog post that starts with them hand drawing curved on an employment chart pretending they're doing analysis.
> 2008 was sudden and unexpected by most. The dot com crash was sudden and unexpected by most.
In both those events there was clearly a bubble, and although no one could predict exact dates, corrections were expected.
Exactly the situation now. The problem is predicting the top. Example;You might estimate now is a good time to pull your assets out of the markets, but then the markets go up another 10%. Then a 20% correction happens and you attempt to time the bottom but miss it. Best case you buy back in at about the same point you left. With transaction fees and capital gains you’ve lost money anyway.
I did this in 2007, bought some rentals and missed a lot of gains post 2008.
Gold has crashed with previous economic crashes. In 2008 it fell 30%, silver fell by 50%.
Gold fell over 10 percent yesterday and silver almost 20 percent because Trump announced that the economist friendly choice would be nominated for the Fed. A lot of the precious metals market activity was based on fears about US monetary policy not fears of an imminent depression.
" different about this time is how much a crash is expected, which is reflected in the run up in the gold price"
Isn't this an indicator of a coming crash, not a counter point.
Doesn't Gold go up, specifically as people buy it as a hedge against a crash.
The only thing that crashed yesterday was silver and gold
The dot com crash was absolutely expected - today's "cmon, get it over with! crash!" tone we see in regards to the AI bubble is hilariously reminiscent of the late 90s dot com bubble. It was the era that spawned the famous Economist leader "Crash Dammit!"
What is different this time? Maybe:
1 Online shopping market in the range of 5 trillions 2 Electricity and energy price raise 3 Impossibility to lower interest rates 4 Tech market also in the range of multi Trillions 5 Global education and power expansion ...
Meaning that a % of all this money flow goes private pockets destroying medium class, which gets poorer.
It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes. The real question for an economist is how much ram has the system and how much the memory has leaked?
This Legendary site is interesting: https://usdebtclock.org/index.html Especially when combined it´s data with AI.
you can couch it in tech metaphors but there is a clear path forward and it involves eating a certain class of people
> It feels as though all we need is a spark. And yet, many sparks seem to have come and gone. Big market moves, in stocks or yields, that have recovered. Tariff and invasion threats, protests, you name it, they might move the needle but it always seems to move back. So, perhaps we won? Perhaps we built our markets so stable that they are these days impervious
This is a myopic question only considering the values of securities, gold/silver, etc, which are owned in significance by relatively few.
The working class economy has already crashed. People who have to put in hours to get paid are struggling, and consumer spending is dominated by the top 10%.
The media, ever fixated on the economic welfare of the top 1%, spins a story that if the stock market is doing well, the economy is doing well.
Meanwhile there is an quiet bet that authoritarians will protect interests of capital owners over all else (i.e the bailout OpenAI hinted they might need), while suppressing the primary methods the masses have for expressing their discontent: speech, organizing/demonstrating, strikes, and voting.
Is it just me or does this metaphor sound AI generated?
> It is like a memory leak that keeps sucking resources while growing exponentially until the system crashes. The real question for an economist is how much ram has the system and how much the memory has leaked?
A declining dollar will look like a good economy for those who think the economy is the stock market.
From an EUR perspective the s&p500 has flatlined over the past year while the msci Europe is up by almost 30% in eur terms.
Needless to say, as an outsider from the inflation bubble, American stocks are not a good investment.
There is a good reason to believe that us stocks will not outperform in inflation adjusted terms over the next 10 years.
This is true - all the global multinationals that essentially make the US stock market earn a good portion of their revenue in foreign currency, so their revenue and profits will increase.
In addition, they are all cheaper when priced in USD, so their stock will go up regardless.
This is just counting short term effect of currency devaluation. Long term there are also effects around trade balance and jobs.
Private equity and retirees with everything in a 401k.
Also, increasing billionaire wealth and burgeoning (but somewhat circular) market capitalizations of companies will seem like a good economy while real income and wealth for the bottom half of Americans keeps falling. The mainstream business media is a gaslight factory completely ignoring the ever-widening K-shaped economic reality that there's a very good economy for the highest income people and a rapidly declining/terrible economy for everyone else.
If you predict a crash every month and it happens after 2 years... can we call you a visionary?
Timing is obviously always the issue. When Greenspan talked about irrational exuberance '96 in regards to the .com bubble, the Nasdaq proceeded to go up almost another 4x in price and it didn't crash for 3 more years.
I know the question is tongue-in-cheek, but I think it’s a fascinating question, so I’ll take it seriously. If you predict the crash and it happens two years later, i think you basically cannot profit off that guess, so I’d say no. Although i haven’t provided data for the two-year claim, there certainly exists some period N for which the prediction no longer pays off, given a fixed drop. But if you can predict it 6 months in advance, you probably could profit! I think a certain amount of annoying repetition is fine for profitability.
Yes and thank you in advance
There's a real estate YouTube channel that's been calling for a real estate downturn for like 8 years (pre-Pandemic). Eventually they'll be right.
Maybe simultaneous with the crash of the Chinese economy, which was predicted for 40 years now
I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come.
Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs)
Depends on your definition of crash?
Real estate prices dropped 30% blowing up most people’s savings. The debt overhang is slowly bankrupting various companies. Growth is an anemic 5% (should be double for a country with China’s per capita income) and means it will never enter middle income status. Unemployment, especially for grads is very high and the lack of babies or immigration means the worker base will shrink while the demand for social services will skyrocket.
Doesn’t seem great to be honest.
If you predict a stock market crash every year, eventually you will be right one year.
Today's the day!
No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come. There were a lot of people who predicted the housing crash, not the timing but the crash. There are several signs that this is happening and the one no one is talking about is gold and silver prices. Don’t worry about the timing, you’ll never get the timing right, just worry about the fundamental economics and the flaws and protect yourself.
I happen to agree just because of golden silver prices that it’s going to happen sooner than later, regardless if war breaks out with Iran.
At any given moment there is always someone predicting that the economy will crash. So someone will always have predicted it. The question is do they actually have some insight or were they just lucky.
Keep in mind that not only did people predict the housing crash, some were certain houses would be sold for pennies on the dollar.
I bought a short sale distressed town house in 2009 for 40% lower than its peak price, and many people told me it was a terrible decision because if I just waited long enough, I'd buy it for a fraction of the price.
I think prices went a bit lower in 2010, but then I gained about 400k in equity over the next 10 years and sold it.
> No one will ever get the timing right, but if you see the fundamental flaws of the economy, you know a crash is going to come.
If you know it's coming but don't know when then you don't know anything. Certainly not enough to bet on.
Gold and silver are likely to crash. I don't think they are big enough to cause a crash of the overall economy, though.
The issue is that you don't know magnitudes.
If the market go up 80% before dropping 20% then you want to have bought in.
The Economist front page illustration of the 90s .com stock market, with the heading "CRASH DAMMIT!"
Everyone knew there was a bubble. People began to get impatient for what obviously was going to happen, as you say.
Stocks might go down if AI doesn't bring in enough revenue. The real risk seems to be currency depreciation though. The USD is already down 15% this year compared to the Euro. I'm worried about what the next FED chair appointee will do. JPow has stuck to his principles so far.
> The USD is already down 15% this year compared to the Euro.
It's down 12% since a year ago, but that's largely a reaction to the tariffs. It's been fairly stable since July or so and has only seen a small dip (and partial recovery) in the last couple of weeks.
https://finance.yahoo.com/quote/USDEUR=X/
>what the next FED chair appointee will do
What do you think he will do, given he's one of 12 votes?
Is it really seen as “the real risk” if it is something the current elected president very explicitly said for decades he wants to do? He does want USD to go down in value. He said it, repeatedly, openly. He made very clear why he went after Powell (that he himself reappointed). It’s more, exactly what we should expect than a risk no?
falling usd is a disaster in a consumption economy like ours. fuels inflation. makes investing in usd-denominated assets less attractive. it's not going to boost exports due to tarriff walls. there's no silver lining here.
> The USD is already down 15% this year compared to the Euro.
False in every sense possible. For starters, the year is only a month old. Second, it’s been pretty stable for the past 6-7 months, and is only down 12% from a year ago - not 15%.
The argument is essentially a technical chart trade? It may as well be numerology or astrology. We are humans, finding patterns in data after the fact is what we do. Do yourself a favor, don't trade on this mumbo jumbo.
Last 2 reported quarters have 3.8% and 4.4% gdp growth.
Next report is end of february. So it's minimum 4 months away at earliest.
Stock markets are at 10 year peaks.
Unemployment is a little bit high at 4.5%.
Inflation is a little bit high at 2.7%
US government debt is very high at 125%
PMIs are strong across the board.
Also in context, trillions in declared new investments in the usa. Probably trillions more in undeclared new investment trying to avoid tariffs.
No competitor possible on reserve currency status, Euro in about 2013 was looking like hot stuff but they regulated themselves out of it.
So I consider, the crash probability of the US economy is certainly not going to be happening.
> Stock markets are at 10 year peaks.
Put the value of gold on the X axis instead of the USD.
Is this the case with all bubbles? Might be a naive question
The person declaring "trillions in new investments" is Donald Trump. He doesn't understand how tariffs work, he doesn't understand how trade works, and he doesn't understand how the truth works.
So many of the stats you mention are based on potentially-untruthful statements from the Trump administration. When the facts and figures aren't favorable to Trump, his strategy is to shoot the messenger and install his cronies. Works great, right up until it doesn't.
I don't think this proves/suggests a crash will happen, but its worth considering most of what you've said would have been true right up until both the 2008 financial crash and the dotcom bubble.
They say that prediction is difficult, especially when it is about the future. Unwise economic policies may be punished quickly, slowly or might be revoked before punished severely. The question is how much risk one is willing to take. Another matter is of morality. Being invested into something means supporting its practices and being partly responsible for them.
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
The alternative is recognizing that China offers a level of long term stability that the US is failing to match. That stability is worth a premium. You may not believe it's a high one, but our trade partners facing random tariff changes every month see it differently, even if just for a negotiating tactic at the current stage.
We also need to seriously adjust our line of thinking at what they are capable of. The "copycat" era is ending. Our supply chains have hammered their youth with generations of engineering knowledge. If you are relying on an ideological difference to assume they are not capable of innovation, you are making a strategic mistake.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
For a "little" speech, it is all people seem to talk about; e.g., it was mentioned few times in the comments above. And, yes, one can be on the board of a public company and still make valid and consequential analyses. Hell, one can be a convicted fraudster and at the same time become the president of a superpower. My point, you could belittle Canada, EU, China etc but it is going to solve the US's intractable problems.
What is a mess about the Eurozone and reckless about the ECB?
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
> When has any deal with China worked at a strategic advantage for the other side?
Australia did well out of the Australian-China free trade agreement and then won the subsequent (Australian-caused) trade war.
Turns out being able to produce iron ore cheaper than anyone else and having plenty of alternate buyers when China bans imports means the iron ore price just goes up, Australian miners make more money and Chinese manufacturers get annoyed at Chinese trade policies.
Wasn't awesome for Australian lobster fishers though.
> which will inevitably lead to Germany leaving Eurozone at some point
No chance. Unless that happens after a lots of other countries leave
Free market, but not like that (china).
Software sector basically got cut in half just on Claude Code. You have to wonder what is next. I don’t think loss in economics is 1:1 with replacement so it’s not zero sum. Production doesn’t necessarily go up. In fact, net output is going to go down if you think about all the B2B lost too.
Whoever comes into power next better start thinking about universal income fast. We are gonna get there sooner than expected.
Software productivity doubling would be a huge boon for the economy, not a drag.
Of course it's very disruptive for people that lose their jobs, but many of them will get similar new jobs, and the overall impact is higher output.
Why do people keep espousing such bullshit. Anthropic has terrible subscriber numbers, they are absolutely no where near profitability, a 100k people buying a product that struggles to sell itself is NOT the win you think it is.
If any of these tools did 10% of what their proponents claim they would become trillion dollar companies overnight and not you know... struggle so hard selling the amazing elixirs and perpetual labor machines.
>Software sector basically got cut in half just on Claude Code.
Source?
What you're claiming is completely untrue. There have been claims like this circulating on the internet recently, and they're all based off this one chart:
https://fred.stlouisfed.org/series/IHLIDXUSTPSOFTDEVE
There are a few major problems with this. First, all of the data comes from one source: Indeed. Indeed SURGED in popularity in the Covid years and interestingly fell off in popularity at exactly the same time as the FRED chart topped. Hey look - the chart for total jobs posted on Indeed looks similar:
https://fred.stlouisfed.org/series/IHLIDXNEWUS
Beyond that, the effect is further exacerbated by the fact that tech hiring went absolutely fucking bonkers during Covid as everyone was convinced we would be stuck inside forever and money was literally free to borrow. The FRED chart only shows us the data during Covid. The inability to see realistic developer hiring numbers before that limits your context and gives a false impression. Here's a chart that goes a few years further back (first one on this page) and shows that hiring has simply normalized:
https://www.dallasfed.org/research/swe/2024/swe2406
Finally, look at the first chart again. Claude Code was released in May 2025. The chart has actually been RISING since that point.
But the software sector was cut in half by Claude Code. Right. And the false narrative marches on. It's honestly amazing to me how people just soak up false information with literally zero filter and zero critical thought or willingness to do some research.
Turning and turning in the widening gyre, the falcon cannot hear the falconer.
I keep seeing soon, sliding into, moving towards.
USD Currency futures have already collapsed.
World trade will move to (not a good idea) RMB or (mistakenly) crypto.
Euro is the only real option left and it’s beautifully positioned in the center. Great leadership too.
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As long as people predict a crash, things are good. It's far more dangerous when they stop doing so.
I would be surprised if a day went by without someone, somewhere, predicting a crash.
I'm kinda new into economy crashes, was a kid in 2008, is there a way to protect of it?
Live like you're already poor, reduce all unnecessary spending, adopt an ascetic mindset to support this lifestyle. That way, when a collapse comes you'll be accustomed to living frugally already and you'll have all the money you saved by getting a head start already saved up to get you through rough patches with relative ease.
Now, when I say live like you're poor, I mean do it smart. Don't grocery shop at a gas station, do your necessary purchases in bulk (actually poor people can't or won't, but would be better off if they could.). Don't but the cheapest boots, but rather the best value. But when choosing how many vacations to take, maybe pick camping locally more often than exotic vacations. Eat simple foods, don't order out fancy stuff and get accustomed to such luxuries. Don't automatically buy the latest consumer toy just because it looks fun. Don't move into a nicer apartment just because you got a raise. You get the idea.
I’ve been through several recessions.
Painfully I’ve learnt that you want to work in an industry that is largely recession proof.
Focus on industries that sell things that people need and will try to keep buying right down to their last buck.
Food, utilities, insurance. People don’t like sitting in the dark. People need water. People need to eat. People really don’t like living without insurance cover or to let cover lapse.
They don’t need Netflix, Disney+ or Prime. They don’t need Spotify. They don’t need training or e-learning. They don’t need luxury goods. They don’t need new motor vehicles. They don’t need holidays. They don’t need new iPhones or new computers.
Try and move now to an industry that has some security.
Investment wise diversification is key. Just pray that it doesn’t get so bad that banks start to fail.
I (like I'm sure many others) predicted it in 2007 and hedged against it by getting a 10 year fixed mortgage at then-current rates on the basis that rates would go sky high as they had in earlier recessions in the UK.
They plummeted to next-to-zero, and in addition to the injury I had to endure the insult of the people who hadn't seen it coming gloating about their low standard variable rates.
Ofc I clearly didn't have much real economic understanding but I guess I am saying that beyond normal common financial sense (the lack of which at scale leads to these situations) which you should be using anyway, we don't really know which way the wind is blowing, and what the exact consequences will be.
Skill. Knowledge. At your age, your biggest assert is your future earnings potential. The more employable you are, the better you will make iduring and after a downturn. In fact, the highest skill folks tend to even profit from hiccups in the economy.
Nothing provides complete protection, but diversification can help reduce the impact.
The person saying gold and mining stocks may or may not be correct - it's still a risky position. Precious metals could be in a commodity bubble right now (or not). It's had to predict anything with perfect accuracy, which is why diversification matters.
You probably shouldn't be jumping completely in or out of anything because that requires timing, which is also not easy to do. What you can do is change he weights withing your portfolio. For example, reducing your US equity exposure to increase your bond exposure. Or reducing your US growth exposure to increase your US value and Eurozone dividend exposure. It's best to listen to several financial companies reports to weigh what to do.
Your life should have a plan beyond tomorrow or the next hype cycle so that you progress towards your goals independently of the flow of society. This will allow you to navigate those flows instead.
Maximize income and cash flow, when things start to crash, you want to have fresh new money coming in to start buying undervalued oversold assets.
In the meantime, keep investing to avoid eroding the value of your money as the dollar drops in value. It also prepares you for the possibility the crash doesn’t occur for a very long time, long enough to grow your net worth substantially to be better insulated.
Assets traditionally used for such hedge are already massively inflated (look gold an silver price charts), so I'm not sure it's worth it.
This all depends on what timelines you work on, how many assets you are trying to protect.
Alternatively you protect yourself by lowering your dependence on steady income.
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
It's difficult to draw many lessons from 2008. The people who suffered most then were over extended home owners. It's still not a good idea to be one of those people but there aren't so many of them now anyway.
There's a common consensus in economics that bubbles are really hard to predict, and even some argument that they don't actually really exist. Great paper came out recently called "Bubbled for Farma"[0] which looks at predictability for bubbles and finds some indicators but no sure fire thing.
That sort of rules out an easy or known way to predict and avoid bubbles. That said, it's worth noting our current historic period marked by being post financialisation (taking out a bunch of investment regulation) of markets in the 80s exhibits a lot more economic crashes (the real reason we should car about bubbles) than most of history (although most of history also does not exhibit any economic growth, so be careful what you wish for).
In particular, the period between around 1930-1975 showed extremely high growth with almost no bubbles or market crashes[1].
So my semi-knowledgeable but definitely not expert view is that: - Bubbles and crashes are not easy to predict, and therefore avoid - That said, our existing market rules have effects on the number of crashes/bubbles we see (but there's debate around whether you actually would want an economy with less crashes/bubbles if that meant left growth)
[0] https://www.hbs.edu/ris/Publication%20Files/Bubbles%20for%20...
[1] You can find this discussed a bunch of places but Ha-Joon Chang's Economics: The User's Guide talks about this very fluently.
Edit: I think your question might actually have just been about personal protection again bubbles, rather than protecting the economy as a whole. In which case, having margin in your spending so you'd be able to live if things were some portion more expensive against your earnings is probably the only sane suggestion.
Gold and silver mining stocks. And International ETF funds. It looks like the United States will be going through the depression alone.
Yes, you either marry into extreme wealth or hope that luck doesn't strike you into generational poverty. Anyone saying anything different is lying too you.
It is often argued that the US will grow its economy such that the debt is less significant. There is much confusion between the US debt being cited as a ratio of GDP (common among economists) vs net tangible assets (common among businesses and people). For example, after WWII, the U.S. faced its previous record debt-to-GDP ratio—roughly 106% in 1946. By 1974, that ratio had plummeted to just 23% largely through:
a) massive GDP growth with real consumption rising 22% between 1944 and 1947.
b) fiscal discipline where the U.S. actually ran primary budget surpluses in the late 1940s
c) financial repression with the Federal Reserve capping interest rates at around 2.5% while inflation averaged 6.5%. This meant the government was paying back debt with "cheaper" dollars, effectively "inflating away" the debt at the expense of bondholders.
Fast forward to today, there is an often stated belief that the US will grow the economy again, this time with a dramatic expansion into a space economy including orbiting data centers, solar power plants, asteroid mining, space manufacture - all leveraged with robotics and AI. Let's be generous and assume this actual happens and that it happens soon - what mandate is there that this massive space economy will be denominated in US dollars or even be part of the US economy? SpaceX has already launched numerous satellites for foreign countries. What is to stop them launching a space economy that will be owned under a "Flag of Convenience" from an offshore tax-free zone, perhaps even denominated in crypto? Will we then confront this massive off-planet economy with "space-tariffs" in order to import the value-added component back into the US? The U.S. debt can only be "grown away" if the value-added activities (mining, manufacturing, computing) remain registered in the U.S..
Google: USD CHF … set graph to max … it’s right there but it’s a slooooow rot.
Swiss Franc is generally very stable so a good yard stick for other currencies over the long term
Who do we expect will replace Americas global leadership and will they really be better for everyone?
China seems to be the only candidate. But whatever happens it won’t be in the same way as before.
As for whether it is better for everyone, that question became a lot harder in just the last year. Who is «everyone»? And what do we mean by «better»?
With the US wanting to annex territory from its NATO allies, and engaging in extortionate tariffs, it is harder to argue that the US is good for Europe. Which is why Europe has already started to look eastward. Starting with a comprehensive trade deal with India.
What’s happening is good for Russia and China. Not so much for the rest of the world.
The EU just signed large deals with Latin America and India, binding a sizable chunk of the world to its rules. ASEAN is on the docket, Japan, Canada and South Korea have been signed for a while now.
Make of that what you will. Power isn't always tanks and soldiers. Sometimes its bureaucracy and contracts.
The single superpower thing was an anomaly which was mostly a result of one specific country being largely untouched by WW2; we're more likely heading back towards multiple regional powers with varying levels of cooperation, e.g. EU+Mercosur+India agreements that just happened.
The lines are still being drawn, but its doubtful one single power will emerge.
The US is resigning the position intentionally. It's not as if someone is gearing up to replace it.
But as a trade partner? China, markets love reliability and stability. Not every 4 years wondering if there will be another trade war for reasons unknown.
You'd be very surprised the amount of malicious behavior countries will ignore to allow trade. Look at Saudi Arabia.
Seems like the rest of the world is just signing new trade deals and continuing on as normal. I hope America returns to normalcy in the next election and everything settles down. Else it seems like back to the old multipolar world.
No one, we don't need a leader. We need decentralised governance.
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There is so much wrong with this blog post that it is difficult to know where to start. Does he even know that China has placed silver on the rare earths list? Considering they export 60 % of the worlds refined silver and now exports are limited and controlled. Silver markets have sold 200 contracts to every bar of refined silver. Now they are scrambling to fulfill delivery if someones requests it and are forced to buy on the spot market, which incidentally has driven spot pricing higher than contracts.
People are moving out of Bitcoin and into Gold currently. I see this trend continuing (Bitcoin falling).
The markets today are indestructible at the moment as you have witnessed over the last 3-4 years. This year will be similar to 2025 according to many different and smart people. I tend to agree with them and we are still in a bull market.
-not an expert, not investment advice, your mileage may vary.
I do really hope the AI bubble will collapse soon. The sooner it blows the less damage it will do. And hopefully we can go back to doing real work without all these leadership guys breathing down our necks to see if we are doing enough of this AI all their shareholders want us to be involved in.
It will suck even for us in europe due to shortsighted pension funds having invested in AI as well. But we'll just have to deal with it. I'm sure it will happen sooner rather than later.
PS: I'm not an AI hater as such. It definitely has its usecases where it shines. The problem is like with all hypes; it's not good at everything and it won't be all golden mountains tomorrow like the investors expect. This overhyped investor circlejerk is what screws up technology. It happened to blockchain, it happened to metaverse. All things that have their merits but somehow investors thought it would change the world overnight and make them insta-rich. Obviously didn't happen and it won't happen now.
Some advice for those who are young:
If every idiot (I'm including myself in this) on HN/Reddit/Youtube/Tiktok/mainstream news/etc. thinks we're in a bubble and is crazy pessimistic and thinks economic collapse is near...it means we're not actually in a bubble.
When the bitter, frustrated pessimists on HN shift their tone to being neutral or even mildly optimistic, then I will start worrying. Because that will mean the general public must be reaching 1999 levels of euphoria for a hint of optimism to show up here.
The COVID economic depression is not accurately shown in the charts. The economy shut down for more than 2 years. Before RTO, the economy was in a depression. These charts provide indicators to what's happening on the ground. The classic indicators didn't accurately capture the Coronavirus lockdown.
The economy is still growing from the quarantine lockdown. It's why we didn't see a collapse, it would have to be worse than what happened during the lockdown for the economy to be in a recession. That's not the case, and I don't see a collapse or recession for at least 3 years.
For most of us, we work remotely and some people might be out of touch. Don't take this the wrong way, but people are just recently recovering from cottage syndrome. We're still in the transition period with the layoffs and AI doomerism being growing pains.
The debt clock is a proxy for the total amount of plastic we route from shipping containers -> landfills. Plastic is oil, oil is energy. Energy can be exchanged for labor globally therefore energy prices money not the other way around. It’s our civilizational bottleneck. The true cost of oil isn’t priced in to begin with and we have it bound up for 500+ years. This is creating a massive distortion in the global economy which physics will insist on regardless of monetary policy.
Or we burn the oil -> heat into the atmosphere via silicon doing things like routing “wyd” texts around dozens of network devices across the country when the message doesn’t have that value.
The economics of how we allocate energy makes no sense and we debate how to fix this via policy.
Just look at TSLA and you might temper your expectations of a rational market.
This is really obscured by the K-shaped growth, dual economy now. We've reached a stable pattern of a deep underclass serving the wealthy. We won't have a crash or "correction" because the entrenched top 5% has figured out a way extract value from everyone else indefinitely.
Crash of the stock market != crash of the economy
Of course the market will go down at some point.
This long read by Grant Williams really helped put everything into context. https://www.epsilontheory.com/there-can-be-only-two/
If you're going to chart-gaze, you need to have a healthy skepticism about the chart itself - is what it's measuring still meaningful? Every chart is an isolation of variables in an ocean of variables. The shark attack / ice cream sales chart will mysteriously stop working when everyone is on Ozempic and stops craving icecream! Likewise, there's a very real possibility that "inverted yield curve means recession imminent" logic only works during a particular era of USA dominance in the world, which we have thoroughly left behind. Food for thought, I hope.
Expecting the crash of the most important economy in the world based on two graphs, where you do chart astrology, is such an insanely stupid argument it is hard to fathom.
With all these charlatans predicting imminent collapse it is always imperative to consider how strongly they believe in their revealed preferences, based on how much they have invested in their position. That said, how much money does OP have invested e.g. in shorting the S&P 500? Or any equivalent. Let me guess, zero dollars.
The US has several things backing it currency ...oil/gas, gold, oil- processing efficiencies, the value of the world's largest companies ....AND (not to mention) an unrivaled armed force. Lol. BUT, every barrel of oil to emerge from the ground is immediately priced in US dollars. Hence ....a liquid printing press. GDTA.
If you just do very crude pattern matching on the first chart he shows - it is warped by the (intentional?) way he drew orange overlay lines.
The slope in 2024 and 2025 (the data that we already have) is much lower than the orange line drawn.
Following the real visual trend, the next peak would be maybe another 5-10 years in the future. (Not that this is a good way to predict the future, as also stated in the article, "not very scientific").
The us are two economies in a trenchcoat. One a classic naval trade economy, the other a imperial security trade economy. One damages the other regularly and applies local monetary anesthesia to prevent the population from rising up against the whole state of affairs. Now they are divorcing.
I find it crazy that people are so obsessed with the current administration they want the world economy to crash. I can tell you that in a current climate a complete world economy crash is going to play out very very badly politically all over the world. I have a real bad feeling it will be a replay of the 30s.
That spark could end up being the rollout of chinas digital currency to the world and requiring payment using that currency when dealing with foreign businesses. This will kill the position of the US dollar as a reserve currency, slowly, but almost certainly.
> Which is to say that no individual decision make want’s to be the first mover, so the market does not move.
Uh, that's not accurate. Hathaway is sitting all cash because of it and so far they have been the one losing. Even if you assume (and correctly I think) that the market is overvalued, their stock pile of cash is eroding: https://newzsquare.com/warren-buffett-warns-of-fiat-currency...
> A year ago there were a few signs. Right now, it feels like everything is primed to blow. Is that new?
The market is unhealthy. Too unhealthy that I think it can no longer self-heal the usual ways (recession/crash/etc.) and we'll instead move to more advanced stage of hyperinflation, global war, etc.
> The unemployment rate just follows these smooth curves, covid was an exception, and it was due to jump again. Not very scientific I know.
Why did you feel the need to post this article? It totally lacks substance. The above quote says it all.
> People buy precious metals when they might be worried about the value of fiat currencies
It’s not just people. Central banks are buying precious metals due to the dollar and new Basel rules. Gold needs to be allocated if you want it to be considered a tier 1 asset.
Where it's gonna crash to? Where is going the capital move to when everythings going up? (except crypto apparently)
I think the government is laser focused on reducing regulations, reducing energy costs, reducing interest rates, a weaker dollar that makes exports better, minimizing taxes. Technological innovation is increasing overall productivity. There are definite headwinds like upward pressure on labor by reducing the worker population, stagnating population growth, undertainty, tarriffs, a weaker dollar increasing inflation.
There’s the looming threat of geopolitical world war that has been overhanging the world since the combination of the pandemic isolating different countries and Russia’s invasion of Ukraine.
It’s really a mixed bag, but it’s not clear to me that we are headed into a total economic crash as the government is definitely focused on doing a lot of good things for the economy, but also is creating lots of different headwinds.
If we look at it with a little imagination , this undulating, jagged line, when compared to Arabic handwriting, most closely resembles: “الله” (Allah)
Surely the surge of predictions of an incoming crash will never end though.
I know HN always has its fair share of doomers, and generally the HN communities track record anecdotally regarding finance and the market is frankly terrible. Tesla (stock price wrong), Bitcoin (wrong), AI a huge dot com like bubble (wrong in my opinion - TBD though).
I’m optimistic on the US. We could realistically print a 5 handle GDP, oil at rock bottom prices, lower federal income taxes this year. As far as Gold and Silver I just see it being propped up by speculators. Silver spot is down 15% this mornings and gold down 8%.
I predict double digit gains in the S&P by end of year and strong financial conditions with mag 7 continuing their lead. Tesla also will be a big winner.
3 more years, then the macroeconomic headwinds from aging millennials will be past peak earnings and rather than funding cap weighted index, they will be draining cap weighted index.
1929 silent generation decade or depression after.
1967 post war Baby boom from The Greatest Generation, followed by decade plus of stagflation and recessions.
1999, after a two decade run of the stock market going from 1000 on the Dow Jones in 1980 to 10,000 on the Dow Jones in 2000, the baby boomers born to the greatest generation, peak, earning ears, leading to the lost decade afterwards.
Two decades of stock market returns from 6000 on the Dow to 60,000 on the Dow, followed by post peak millennial earnings…
One does not speak unless One knows.
You know nothing Jon Snow.
the burst will be bigger than anything we've ever seen. so everyone pretends its not there (which only makes it bigger but alas), and money only material exists as people's faith in it so that's enough to punt the problem down a bit further.
This isn't a crash, it is something else comming, perhaps the "jackpot", where society/civilisation unravells, climate disaster kicks in with real persistant challenges everywhere, and some third, fourth, fifth effects that break our millenial run to the top of our planets ecosystem as the ultimate apex species. It has been a good run, but useing the same tacticts as our stone age ancestors, is, I think, about to bite, hard. And it is literaly this, our strategy is to keep useing the same tacticts.Jackpot.
The Typical language of believers is to say no that wont happen and how? I learned and studied enough history and the usual narrative is to not accept something that is possibly so catastrophic that it will change their way of life.
The tech bubble is another story and to be study on it's own, but it was summarized well that is < its a cycle of delusional capital invested over and over. Along with the numerous indicators of "what ifs"> The housing market is simply stupid, im sorry i don't have another word for it that better describes the current take on this matter. Home prices are outrageous because of market driven assumptions. A house is technically worth $150 is now on the market for $350 and why is that. from 2 years ago. People truly think that home prices are expected to keep rising and to what extent and why? They couldn't tell you<< " my zip code is the place to live at the moment, the person living in the next zip code is saying the same thing about hiss home, Homes in silicon valley were above and beyond the national average and it was the only thing on the headlines during 2021 - 2022 but for good reasons that cant be argued too much/ Today it is the rest of US in the same mindset.
All of the US economy seems to be in protection mode right now. As to say it's the mother that doesn't want you to go out again after falling of your bike and scuffing your knee on the pavement.
tariffs were used the wrong way this time around, inevitably the very purpose of them was not so effective, it backfired, Damage is done and reputation is broken in a lot of ways. Britain is renegotiation relationships with china, Canada is renegotiation relationship with China, EU is renegotiation relationships with India and China. All with successful results.
There is a lot of stake here the US has a lot to offer to the world and to use that as weapon is tends to not have a good outcome. The market is large, yes it is resilient to some factors but not all/ When collapse takes place there will be tremendous momentum and its going to be hard to stop.
my bet is: "new" tech, emphasis on "new", will keep US on top or whatever US become after the big reveal.
> To be honest I’m glad we are the ones getting out of that market first.
Who is "we" in that sentence?
Median house price / median income is at an all-time high for the US.[1] But what that means is that the rest of the country has caught up to California's overpriced housing. Hence the call for a 50-year mortgage. Still, looks a lot like the 2008 housing bubble.
[1] https://www.longtermtrends.com/home-price-median-annual-inco...
> This is the 11th time that tariffs have happened, and it just isn’t surprising anymore.
There are tariffs everywhere, all the time. Canada just dramatically cut its 90% (or something) tariff on Chinese cars. Tariffs haven't just started happening because someone you don't like did them.
Any time now:
1. Market crash
2. AI bubble bursting
3. Year of the linux desktop
Have I missed something?
"the" crash? you mean "a" crash.
I feel like one of the following is true (and I don't know yet which is the case):
- I'm genuinely a lot more pessimistic than is accurate around what is and isn't a bubble - Bubbles are just slower to burst than I expect
Possibly some combination of both. But even ignoring AI which is relatively new, it seems "obvious" to me, that whatever value Bitcoin has, investment in the asset is detached completely from that value. I'd have expected to see Bitcoin crash a long, long time ago, and have been thinking it's "just around the corner" for years and year.
And yet, the bitcoin price as a whole, although it's dipped recently, and is clearly volatile, still remains something like 10x what it's value was 5 years ago[0].
[0] https://charts.bitbo.io/price/
Ok, now that silver fell, are you going to write another article with the opposing view?
That’s how the news does it.
Ok
There's quite a few factors here that delayed what should have logically already happened.
1. All the tarriff reactions cause US companies to import a huge amount of stuff for 2025. From what I understand, we're about to exhaust all of those imports.
2. The unemployment reports (especially the U3 numbers) hide quite a bit of turmoil going on under the hood of the job market.
- If you lost your job and switched to Uber/Doordash, you're not unemployed.
- If you are riding on severance pay instead of filikg for unemployment, you're not unemployed.
- If you got tired of throwing out hundreds of apps only to get automated rejections and take a break a month, you're not unemployed.
- If you just graduated into this hellscape and can't qualify for any unemployment, you're not unemployed (you're technically not part of the workforce yet).
There's a lot of these small shifts in how jobs work that make U3 less reliable in reflecting reality. And I only touched the surface of these issues.
3. Continuing on the U3 with a point worthy of its own bullet: the unemployment appears flat, but the makeup of what's happening per industry really lays down the reality. The only industries growing are hospitality (aka food service and similar sorts of duties) and health care. And to top it off these "growing" industries shift more and more to fractional work. Pretty much every other industry is down. So people are getting laid off/fired and moving to part time work to get by. "Stable" by unemployment numbers, but very unstable on the day-to-day. Add in the recent congressional bills for healthcare subsidies and we're throwing more gas on rhe fire.
4. I'm sure it's been said so much by now, but AI in the US is the only thing holding up the GDP. Without that massive investment, the GDP would be at best, dead flat. The US isn't growing in a way that reflects actual yields to anyone outside of a select few shareholders. We're not building more houses, mining more materials (on the contrary, we've resumed ransacking others'), manufacturing more machinery, nor even producing more service value for customers and businesses. We're putting all hedges on one thing with an uncertain outcome. If that industry declines, so does the rest of the US.
5. The K shaped economy. I have to check these numbers again, but I believe that spending is indeed up, but the makeup of spending per income band is more stark than ever. The too 10% income households makes up half of US's spending. But there are signs that even many high income houses add also starting to hunker down on spending.
----
That was a lot and it still only scratches the surface. But the TLDR version is that there's a lot of statistics massaging over the real struggles of life and many industries reaching a breaking point they did a good job putting off. But by this point it will only take a needle to break this camel.
Trump is lowering interest rates, fueling the bubbles.
We can’t know when it’s going to happen, but there is a good chance that one is going to be super bad.
We basically borrowed our way out of the 2008 crash and through covid, but we havent repaid the debt. It is so high I doubt we can do the same next time.
I like how the last image based on "C'mon, Do something" with all the AI symbols, has hard to recognize body part shape, with Claude being right in the middle of it. Hank Green talked about it last year - https://www.youtube.com/watch?v=fIbQTIL1oCo
The US was in decline, a vote for Trump was a vote to accelerate that decline.
I asked NOMOS (a system) I built for financial intelligence. These are it's key findings:
Key Answer
As of early 2026, there is no consensus forecast for an imminent crash of the U.S. economy. The prevailing view among major institutions is a period of moderated growth or a "soft landing," not a severe contraction. However, this outlook is balanced against significant and rising risks, including labor market fragility, unsustainable fiscal debt, and persistent inflationary pressures that could trigger a more pronounced downturn. Key Findings
Biden never got a credit for taking us out of the COVID mess.
As a US citizen, I will vote to bring him back once again just to fix this mess.
> So, perhaps we won? Perhaps we built our markets so stable that they are these days impervious? That sounds silly on its face, and the two reasons I’d actually give are:
> 1. Markets are just slower moving than ever before, big players just like to sit on their big piles of money
> 2. There are one or more bubbles in the stock market. Almost everyone agrees that AI is a bubble. It funds itself in a circular fashion, and capex cannot be recovered with profits any time soon, even with optimistic outlooks.
It’s a bit of both. The impact of political instability in the US (read: Trump pissing off as many people as possible) may not be felt in the markets quickly, if even within his term. He has severely dented confidence in the US as a trading partner and as an arbiter of the global rules-based order. That will have decades-long implications, the result being a pivot away from dollar-denominated commodities trading, and export markets for US goods being increasingly unfriendly. The value of the dollar will probably decline, and in fact that is a goal of many in his administration. That could actually be good for US equities if it’s in moderation.
The biggest risk I see is flight of capital away from US treasuries, which would drive up interest rates, leading to a sovereign debt crisis in the US. The likely solution to that would be money printing and resultant inflation. The high treasuries rate would drag capital away from equities.
Some sort of an AI crash / bubble bursting is expected to be honest - now if that will take the rest of the US economy as well.... debatable. Any strong opinions on this?
It is a giant Ponzi scheme and those tend to collapse at some point.
I can't time the market worth shit - I got my first investments out before the 2008 collapse in earnest, and got into the job market at its peak. I waited through the 2010s to accumulate money to invest, only to start doing so amidst rampant speculation in crypto, then NFTs, then meme stocks, then AI.
So yeah. I am not getting a job at a financial firm anytime soon.
That said, the societal gestalt seems primed for something to go horribly wrong. AI boosters are positing their models as solving all of society's ills, which first requires acknowledgement that these are in fact problems facing society requiring solutions. Everyone is broadly on the same side - wealth inequality is a problem, climate change is a problem, energy dependence is a problem, job security is a problem, housing is a problem, etc - but we're all varied on the approach to solving these problems based on personal biases and perspectives. YouTube is infested with AI slop, social media is filled with doomers and preppers, and subcultures are simultaneously splitting off from larger groups (like those leaving Twitter/X for BlueSky or Mastodon) while also forming newer alliances and communities around shared goals or ideologies. Even those in positions of power acknowledge the polycrisis before us, while exacerbating it further by firing swaths of workers to fund their own bunkers, yachts, and contingency plans via share price bumps.
It's in the air, this horrid pit in the stomach that doom lingers just around the corner. It's been there for a decade, long before COVID, festering beneath the surface. Hell, for many of us pre-9/11 Americans, it's been a gradual decline since the heydays of the maximum-employment 1990s. So many of us feel it that it just cannot be ignored, and thus it becomes a sort of self-fulfilling prophecy: enough of us believe something bad is coming, therefore something bad must happen to quell those feelings.
There's two things that give me (and my OCD) solace of a sort:
* We'll all find out together, regardless of status or strata
* Most of us - statistically, generally, based on prior events and barring any explosive escalation - will likely be relatively fine
Yeah, the shifting of geopolitics is likely to result in more violent conflicts with the potential to kill billions if things go NBC. If we don't address climate change, millions will die from wholly preventable causes and tens of trillions of dollars of property will be destroyed over the next century. Misuse of AI could result in doomsday scenarios that Sci-Fi has warned us about for decades. Wealth inequality appears poised to create a modern version of the Coal Wars, if current events are any indication.
Technology alone won't save our asses. Neither will some mythical billionaire genius, or AGI deity. It'll have to be us, regular humans, rejecting the present and choosing to build a better future together.
And I think we can do that.
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If Russia's economy is kept afloat after 4 years of full-scale war... Why would one year of Trump 2.0 do us in? Don't get me wrong, a whole lot of problematic actions have been taken in that time-frame but that pales in comparison to 1.25 million casualties and about the same number having left the country (and our population is almost triple theirs) on top of infrastructure destruction.
A have a bad feeling for the US economy. A decline comes soon, then prepare for impact with a financial crisis and in the end of the tunnel the IMF. I know it's super crazy but that was also for my country 16 years ago.