Most people have never heard of the Cantillon Effect. But once you understand it, you’ll see the world of investing differently. What is it? In the early 1700s, Richard Cantillon noticed a simple pattern: When new money enters an economy, it doesn’t reach everyone at once. And whoever gets it first benefits the most. Here’s how it works today: New liquidity enters through the Fed and through bank lending. Both follow a similar pattern: → Markets and large balance sheets get first access → Large corporations and well-connected borrowers tap cheap credit next, they invest and expand at today’s prices → Asset prices tend to rise as new liquidity chases finite assets → Consumer prices often follow → Wages rise last, usually after purchasing power has already declined Fed data shows how lopsided the playing field is: - The top 10% hold nearly 90% of equities. - The bottom 50% holds about 1%. It’s a simple but powerful monetary transmission. Understanding this won’t change the system. But it might change how you think about where to store your savings. For those of you who don't know, I write all about topics like this every week in The Informationist. Last week, we dove deep on this one. Link in bio if you want to read the full explanation.

All roads lead to debasement.

UPDATE: The 7-year auction slightly tailed anyways (0.7 bps), even with the highest yield in this tenor's history of 5.085%. Foreign demand was weak at 57.2% with dealers taking down 12.5%, and BTC was 2.42. Not horrific, but not great, and certainly not a strong bounce back from yesterday. I'd give it a C or C-.

The US Treasury is caught in a doom loop. This is a problem that both parties in Congress have created by their refusal to control spending. Investors have indicated that 5% is no longer a high enough interest rate for the risk involved. The dollar is being devalued and the US Treasury is selling $2 trillion in new debt each year. $40.1 trillion and climbing.

Good morning. If you are selling hard assets like gold and bitcoin as yields rise and bond auctions become disorderly, you are not paying attention to the underlying problem and inevitable currency debasement coming. Have a great day.

The challenge the US Treasury currently faces is a collapse of investors willing to accept current yields in the face of both structural debasement of the underlying dollar and the expected supply that the Treasury itself will continue to dump on the market. The problem is, the higher yields go, the more bonds the Treasury will need to sell. If they step in to buy the bonds themselves, this creates further debasement, only exacerbating the self-reinforcing loop. Welcome to MMT hell.

The current state of the US government: $40 trillion of public debt + over $100 trillion of unfunded liabilities being serviced by approximately $5 trillion of tax revenue annually while running $2 trillion deficits. This is like a person who has $2.8 million of debt, take home pay of $100K and personal expenses of $140K, adding $40K+ to that debt very year.

"The Four Horsemen of the Diesel Apocalypse are staring Europe in the face." Doomberg and @jameslavish on diesel, bonds, Bitcoin, and the regime change nobody priced in. Watch Now: piped.video/yiFRq1xkK7s

I repeat: Bitcoin is not going to $10,000.

Good evening. Remember, it’s not a debasement “trade”, it’s a debasement regime. Have a great night.

Comparing the current bitcoin cycle to the 2019-21 cycle makes sense to me, as there was just too much noise and confusion surrounding bitcoin in the last bear cycle (2021-2025) due to fraud from FTX, Celsius, etc., causing a longer and deeper drawdown IMO. And so, looking at the current price versus peak to trough drawdown, I would agree that without a major overall market disruption, bitcoin should be bumping up against all-time highs again in the next 60 to 120 days. Thanks to James (@_Checkmatey_ ) for the comparison chart.

🐂

When I see posts like this, it always gives me the impression that the author sold near or at the bottom.

Good morning. Lower rates are good for bitcoin, and higher rates are also good for bitcoin. I hope this helps. Have a great weekend.

Does anyone else miss well-written prose and articles? Ones with life and a tangible human voice behind them?