“The public…demands certainties…But there are no certainties.”
-HL Mencken
December 23, 2025 — 2025 will be remembered as a year that felt loud, expensive, and strangely unresolved.
The stock market delivered fireworks. The S&P 500 climbed to repeated all-time highs. The Nasdaq extended one of its strongest multi-year runs since the late 1990s.
Capital crowded into a small group of AI-linked companies with an enthusiasm last seen when the internet first discovered banner ads. Retail investors returned in force.
Historic margin debt followed as individual investors borrowed against other assets to chase the bull market in stocks.
Gold and silver finished the year sharply higher, an alignment that left even seasoned strategists reaching for fresh metaphors.
By late November, The Wall Street Journal captured the tone with dry understatement: “Markets keep climbing, even as investors quietly brace for volatility.” Bloomberg was blunter, describing the rally as “relentless, narrow, and increasingly dependent on leverage.”
Those two sentences explain the year better than most forecasts.
We know this terrain. Asset prices can rise for a long time while the underlying structures thin out. Excess announces itself as momentum before it becomes dependency. Dependency invites adaptation. Adaptation buys time.
Against that backdrop, the Grey Swan forecasts were never designed to call a single explosion. Though if that were to happen, we felt confident we’d be able to explain why and how with aplomb.
Rather, our forecasts are more like a roadmap, suggesting ahead of time where the year will bend, stretch, and show its seams — in ways readers can recognize from their own daily experiences.
Here is how each of the seven appeared in the real world of 2025.
Grey Swan #7: The End of the Great American Debt Binge (Not Yet!)
The moment arrived quietly, in a spreadsheet.
In April, Federal Reserve data showed U.S. revolving consumer credit pushing decisively past previous records.
By summer, delinquency rates crept higher among younger borrowers and subprime auto loans. Savings rates stayed compressed. The economy continued to move, but with noticeably less slack.
Meanwhile, Americans kept spending.
Throughout the year, financial media circled the same contradiction. Nominal retail sales remained firm. Sentiment surveys deteriorated.
In August, CNBC highlighted polling showing that a majority of households earning over $100,000 reported financial strain — a statistic that ricocheted across social media because it matched lived experience.
Holiday spending closed the year with record dollar totals. Adjusted for inflation, growth flattened.
This sequence tracks directly with our Financial Reckoning Day analysis, households adapt and spend to keep up appearances. Credit fills gaps. The binge matures into a constraint rather than a collapse.
We’ve had this chart pinned to our desktop all year. We’ve expected the gap between spending on credit and savings to narrow. Fat chance. The structural changes in 2010 after the ‘08 Global Financial Crisis pushed consumers into the credit markets at a historic rate. In 2025, the gap widened to an epic level. (Source: St. Louis Fed)
Grey Swan #6: In A Crisis, Banks Go First
Unlike March-May 2023, which saw three of the largest five bank failures in history, the banking story of 2025 unfolded without sirens.
No major U.S. bank failed. That fact became a refrain.
However, underneath the headlines, the consolidation that started with emergency maneuvers by the Fed in 2023 accelerated.
Unrealized losses on long-dated Treasurys remained embedded on balance sheets. Emergency liquidity facilities introduced after earlier banking stress quietly stayed in place.
In June, The Financial Times described the system as “stable by policy design rather than market resolution.”
By October, Bloomberg reported that smaller regional banks were restructuring around the assumption that regulatory flexibility would remain the norm.
Banks in crisis thus far into the 21st century have been absorbed into the financial architecture.
While bank losses have improved in recent years, unrealized losses still represent a source of uneasy fragility for the financial system. (Source: FDIC)
Grey Swan #5: BRICS, the Dollar, and a More Crowded World
The dollar’s year ran on two parallel tracks.
In March, China and Brazil expanded bilateral trade settlement in local currencies. Over the summer, Gulf energy contracts clearing outside traditional dollar rails drew attention. Central bank gold purchases continued at a pace Reuters called “historically persistent.”
Then volatility arrived.
Following the April 2–4 selloff tied to Liberation Day tariff announcements — a swift 12–16% drawdown across major indices — capital flowed straight back into U.S. Treasurys. Yields rose. The dollar firmed. Similar moves followed flare-ups tied to Israel and Ukraine later in the year.
This pattern echoes Demise of the Dollar: dominance narrows before it disappoints altogether. Alternatives grow alongside the incumbent rather than replacing it.
Dollar 2.0 entered here as the preferred adaptation: tokenized Treasurys, regulated stablecoins, and faster settlement rails designed to keep the dollar central in a more fragmented system.
Gold buying by central banks continued in 2025, with data suggesting that several central banks – notably China’s – are purchasing more than officially reported. (Source: Money Metals)
Grey Swan #4: The China Wild Card
China shaped 2025 through accumulation rather than shock. The Middle Kingdom has improved its military influence across the Pacific region and by mainstream accounts is dominating both global trade (still) and the AI arms race.
The Chinese approach to AI is, like their economy, top-down and state-driven. The year 2025 emphasized the Chinese approach in sharp contrast to US and Western AI development, messy, chaotic, network and market driven… just the way we like it.
The domestic economy commanded by Beijing started to reluctantly reveal its shortcomings. Property weakness persisted. Growth targets leaned heavily on stimulus. Capital controls tightened and loosened in rhythm. Semiconductor and AI-related trade restrictions hardened.
And yet, despite the Trump era tariffs, Chinese exports exploded achieving a historic, record-breaking trade surplus exceeding $1 trillion in goods for the first time in late 2025; a landmark economic event demonstrating its massive export power, built over decades by scaling from low-cost goods to high-tech products like EVs and solar panels, dominating supply chains, and pivoting trade to the “Global South.”
In May, The Wall Street Journal reported that multinational firms are accelerating near-shoring into Mexico and Southeast Asia. By September, Bloomberg described global supply chains as “more resilient, more redundant, and more expensive.”
China’s growth remains a wild card as US supply chains attempt near-shore or reshore, and as US domestic growth remains slow. Chinese global infrastructure ex-US expanded to over a $1 trillion despite aggressive attempts by the Trump administration to realign global alliances. (Source: Livewire markets)
China did not deliver a single defining rupture. But its influence continued to dominate cost structures, trade flows, and government borrowing needs everywhere.
Grey Swan #3: The Slow Death of the Middle Class
One clear theme dominated the year in 2025. Even as inflation started to cool, “affordability” in health and child care, tuition, and housing all pinched hard. The resounding theme for the year: “Own assets that appreciate during inflation and a stock market boom, or get left behind completely. Join the underclass.”
By mid-2025, seven AI-linked stocks accounted for more than 40% of the S&P 500’s gains, according to Goldman Sachs research cited widely in the financial press. Nvidia’s chip announcements became market-moving events. Retail options trading surged. Margin debt climbed steadily.
At the same time, housing affordability worsened. Rents stayed elevated. Wage growth trailed asset appreciation. Consumer sentiment dropped to crisis-level lows.
As we argued across three editions of Empire of Debt, inflation redistributes quietly until it doesn’t. In 2025, the redistribution became visible — in polling, politics, and family balance sheets.
Trouble is brewing here. The crack-up boom is coming, which we expect will draw more boomers into the stock market ahead of retirement, demanding a lot from one asset class… just when retirees need it most. If there’s a correction of any meaningful magnitude, panic selling could set in quickly. The implications stretch far beyond finance to demographics and politics by extension.
Grey Swan #2: Mutant AI and the Rewriting of Authority
The development of AI has been erratic at best. Mostly, we witness the innovation of LLMs move from novelty to infrastructure. We anticipate these tools are here to stay, even if we don’t know how to use them to their full capacity. Even if the debt-fueled boom in AI stocks busts…
In June, developer Hussain Sajwani pledged $20 billion toward U.S. data-center construction. Nvidia unveiled Blackwell Ultra chips aimed at advanced reasoning. Corporate bond issuance tied to compute infrastructure surged.
At the same time, Meta announced the removal of third-party fact-checkers from Facebook. And would offer $200 million signing bonuses to AI architects who could help them keep pace with Google, Anthropic and OpenAI in the race for AGI. The Financial Times framed the decision as a recalibration of responsibility between platforms, governments, and users.
AI spending continues to rise, with expectations for further increases into the 2030s – if mainstream assumptions hold true. (Source: Bloomberg)
In other words, in 2025, the leaders in AI threw caution to the wind. They, too, started assuming historic levels of debt.
Capital concentration and narrative control traveled together. The rapid development of technology amplifies institutional tendencies. The year 2025 made that amplification visible to everyone, including individual investors at the margin.
Grey Swan #1: Violence and a Fraying Civic Culture
The year opened with violence. As we recounted on January 1, it only took 26 hours for our #1 forecast to pan out.
On January 1, an ISIS-linked truck attack in New Orleans killed and injured civilians celebrating the holiday. Markets recovered within days. The event stayed in public memory far longer. Two days later, another disaffected service member detonated a Tesla truck in front of a Vegas hotel with ties to the president-elect.
The most dramatic occurrence of political violence happened 9 months later. In September, conservative activist Charlie Kirk was assassinated during a campus event in Utah. The alleged shooter, according to law enforcement reporting, cited political grievance as a motive.
Charlie Kirk believed in the cause of free speech – and encouraged it on college campuses – sparking a significant political shift among today’s youth.
The killing reignited debate over political rhetoric, protest culture, and radicalization. Many Gen Z social media users saw the streamed video of the assassination live before the images were taken down.
It was graphic and awful, even in an age when we are desensitized to mass shootings.
Performative demonstrations across major cities grew more theatrical and less coherent. Universities, city councils, and police departments found themselves managing spectacles that blended performance and threat.
Markets barely responded. In fact, they often rallied during the same news cycle as ‘useful idiots’ took to the streets.
We have remarked on several occasions this year, “When the money goes bad, the center cannot hold.”
The problem with calling it political violence is, it lets the perpetrator off the hook. If we just call it like it is – “violence” – then it’s clearly the result of a failure to discern right from wrong. The decay of civil society. Next year, in 2026, we expect more to come.
What the Year Revealed
Taken together, the seven Grey Swans of 2025 behaved less like isolated events and more like interlocking stories readers already recognize.
The year moved in phases. A sharp April selloff cleared leverage quickly. Policy shifted toward tax relief, lighter regulation, and renewed tolerance for liquidity. Innovations began to slowly dominate the marketplace conversation – from Dollar 2.0 digital assets to AI-powered applications in all manner of commercial enterprises, ranging from airline and hotel bookings to driverless taxis and robots.
In 2025, gold and silver bullion each hit historic price levels – even without catching a mainstream bid. Next year, we expect this trend to continue as a headline feature of the Most Terrifying Bull Market in history. (Source: Shutterstock)
Markets responded with one of the most spectacular bull runs on record — narrow, intense, and heavily concentrated. Dollar 2.0 advanced as reinforcement rather than rebellion.
As 2026 approaches, the lesson is straightforward. This system can continue. The terms and conditions – Rousseau’s infamous “social contract – under which it continues are changing rapidly. And not necessarily by our own consent.
A Bridge To the 2026 Forecasts
Unlike the common perception about macroeconomics, the work ahead is not about forecasting collapse. Rather, we acknowledge, identify and seek to navigate uneven outcomes. Asymmetry in markets is where all the best stories our found.
The forces that shaped 2025 will not conclude on December 31. They will gain momentum, especially in a critical election year. Debt dynamics, political realignment, technological innovation, and institutional fatigue will all intensify in 2026. And proceed at a more rapid pace than we’ve become accustomed to.
We’ll begin with our 2026 Grey Swan forecasts tomorrow.
Each one will draw on our work from this year and will focus on where we expect the adaptation to accelerate… where credibility will get thinner faster… and where opportunity appears precisely because consensus lags reality.
If nothing else, the markets, politics and the economy have all been engaging in 2025. And so… the new year begins. We’ll start laying out our view of what to expect manana.
Regards,
Addison
P.S. To help us place trades in the year to come, we’ve obtained the rights to a patent from the U.S. Patent and Trademark Office. The new technology has some of the strongest predictive power I’ve seen in all my years of finance.
It uses a proprietary algorithm and patented software designed to track unusual trading activity in real time, on some occasions even making it possible to spot what insiders and people with special, high-level information are doing with their money.
This data hosts over 13.4 billion rows of data, analyzing more than 134 million historical trades and counting.
And it scans over 1.3 million items daily, just for starters. That’s over one terabyte of data, the equivalent to 1,300 physical filing cabinets full of paper.
To be honest, it’s so powerful, it almost feels like cheating. But that’s also what makes this acquisition exciting for the new year.
We’re putting that AI-powered patent to work in our Grey Swan Trading Fraternity. We’ll have more details on this patent, how it identifies stocks before they move based on ripples in the options market – and more. Stay tuned for further details after the holiday.
