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Ripple Effect

From Two Centuries to 27 Months

Loading ...Addison Wiggin

August 7, 2025 • 2 minute, 34 second read


debtparbolicsoaring debt

From Two Centuries to 27 Months

We’ve honed in on the dangers of soaring debt since well before the founding of the Grey Swan Investment Fraternity last year.

It’s been the focus of our life’s work — and that of many esteemed economists and investors for decades before that.

But we can’t help but feel like things aren’t just getting worse — they are at a faster rate.

Well, we’re right. Debt isn’t just soaring, it’s gone exponential:

Turn Your Images On

We’re gonna need a taller chart soon enough.

In the past 27 months, more debt has been created in the U.S. than during the first 215 years of the Republic.

That kind of exponential move isn’t sustainable. Like tulip prices in 1637 or shares of Cisco in January 2000, it can’t last. The question isn’t whether this will collapse — it’s whether or not we get a massive market run first.

That seems to be in the cards — what Austrian Economist Ludwig von Mises called the “crack up boom.”

And it’ll be fueled by a combination of debt and the collapse of the purchasing power of the dollar. Not a company’s earnings or AI spend. That won’t be a typical bull market — it’ll be a terrifying one.

~ Addison

P.S. For the first time in living memory, a principal economist at the Fed has openly explored the mechanics of gold revaluation.

To be clear, the U.S. government still officially values its 261.5 million troy ounces of gold at $42.22 per ounce, a relic from the early 1970s.

But what if — as Ray Dalio, Elon Musk, and even the Chinese central bank seem to believe — the U.S. is preparing for a new monetary regime?

According to Musk’s new Grok model, revaluing the U.S. gold stash to today’s ~$3,380 spot price would generate an $873 billion paper windfall.

That could be used to expand the Fed’s balance sheet, issue new certificates, or offset the nation’s eye-watering debt load.

Dalio added on X: “The U.S. dollar used to be backed by gold. It’s not farfetched to think we may be headed there again… Once people lose trust in fiat, the pattern repeats: print, inflate, devalue, and return to gold.”

Meanwhile, China is preparing. Their gold deliveries against futures contracts have doubled in the past month.

The signal is clear: when the faith in fiat falters, the old gods of money — gold, silver, hard assets — tend to return.

We know that relative to money supply creation, gold prices are still undervalued — as are many other metals and commodities in general.

We continue to like gold as a long-term store of value, and this quarter’s earnings reports from gold miners are showing signs of life across the resource sector.

While this market rally continues, by all means, take some profits in high-flying trades. But it’s still safe to stay invested in parts of the market that are rising for fundamental reasons.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)


George Gilder: Morgan Stanley’s Memory Problem

October 7, 2025 • Addison Wiggin

Overspending during periods of rising ASPs is self-destructive. For most products, today’s ASP increases result less from natural demand pull and more from supplier-enforced discipline. If memory makers treat them as justification for a capex binge, they will repeat past mistakes and trigger another collapse.

The $50 billion bull case for WFE in 2026 rests on a faulty assumption. Lam and AMAT may benefit from selective investments, but the cycle-defining upturn Morgan Stanley describes is unlikely.

Investors should temper expectations. If history repeats — and memory markets have a way of doing so — the companies that preserve pricing power will outperform, while equipment suppliers may find that the promised order boom never fully materializes.

George Gilder: Morgan Stanley’s Memory Problem
Europe’s Increasing Irrelevancy

October 7, 2025 • Addison Wiggin

Europe’s GDP has flatlined over the past 15 years, against a doubling in GDP for the U.S. and even bigger GDP gains in China.

While the U.S. leads the world in AI spending, and China leads in technology like drones, what does Europe lead the world in? Regulation.

They spend more time penalizing U.S. tech firms for regulatory violations than encouraging their own tech ecosystem.

Europe’s Increasing Irrelevancy
Another Day, Another Circular AI Investment

October 7, 2025 • Addison Wiggin

Liquidity is flowing again, but conviction isn’t. U.S. M2 money supply has been expanding for months, even before the recent interest rate cut.

Currently, it’s up 4.8% year over year. That’s the fastest pace since 2022. That’s just enough to drive stocks higher in the short-term. Even algorithms and systematic funds will respond mechanically and buy stocks when they see liquidity rise. It’s the most fundamental indicator.

The volatility index (VIX)’s rise to 16.6, up over 2% this week, shows that big money is hedging, even as the market indices rise. After all, with signs of a slowing economy – and a government shut down – it’s hardly business as usual.

Another Day, Another Circular AI Investment
The Ghost of Bastiat

October 6, 2025 • Addison Wiggin

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

The Ghost of Bastiat