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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.)


The Liquidity Illusion

October 28, 2025 • Addison Wiggin

AMD’s deal with OpenAI is another echo from 1999. OpenAI agreed to buy six gigawatts’ worth of AMD chips — products that don’t yet exist — in exchange for warrants on 160 million AMD shares, about 10% of the company. AMD stock jumped 24% overnight.

And then there’s Oracle’s $300 billion OpenAI contract — five times OpenAI’s annual revenue. Oracle’s stock soared 43% in a day, making Larry Ellison $100 billion richer.

The Liquidity Illusion
Gold’s Relative Strength

October 28, 2025 • Addison Wiggin

Relative strength, or RSI, provides investors with a quick glance as to how much the market likes or hates a given asset. The correction is a welcome event for hard asset investors.

With the metal back under $4,000, our thesis remains untouched.

In fact, the pullback  – while sharp and severe – makes  gold a less expensive insurance policy against geopolitical shocks and other Grey Swan events.

Gold’s Relative Strength
Networked Nationalism Rises

October 27, 2025 • John Robb

On the current trajectory, online and offline tribal warfare, with events that range from assassinations to riots to sabotage, is inevitable. Worse still, with both sides waging moral warfare (good versus evil), there is no middle ground, rendering compromise impossible.

To avoid this, the government could step in to crack down on illegal immigrants, serial criminality, and activist blue cells to slow the ramp in extrajudicial violence from the red tribe. This would reduce the chance we see a rapid escalation in tit for tat violence. However, to do this, it would need to designate many activist groups as terrorist entities and pursue them with the degree of vigor we saw with Islamic radicals after 9/11.

Networked Nationalism Rises
Economic Cockroaches

October 27, 2025 • Addison Wiggin

We’ve been watching private credit all year — the $3 trillion shadow banking machine that promises “nimble lending” but operates in the dark. Think of it as the modern heir to subprime mortgages: a system that works beautifully until it doesn’t.

According to Moody’s, U.S. commercial banks now hold $300 billion in loans to private credit firms, up from just $100 billion a decade ago. That’s more than 10% of total bank lending — and it means the “non-bank” lenders aren’t so non-bank after all.

When banks lend to private funds, which then lend to companies like First Brands, the risk just loops back into the same system regulators thought they’d insulated after 2008.

Economic Cockroaches