..you can imagine all this occurring within the 4 years of Trump 2.0.
..the big problem is debt combined with excessive speculation within a fractured geopolitical environment
..US and Japan's problems become the problems for the world and a world in which trust has eroded.
(1/2) What’s Coming Is Not Inflation. It’s Deflation First Then Disorder.
Why the System Is Already Failing, and What Comes Next Is Not a Cycle It’s a Collapse
⸻ The dominant macro narrative today is dangerously wrong. Many believe we’re at the start of a new inflationary regime that what we saw in 2021–2022 was just the beginning, paused temporarily by Fed tightening. But that framing assumes the system is cyclical and resilient. It’s not. This isn’t the 1970s. This isn’t post-WW2. What we’re facing now is the terminal phase of a debt-based economic order. And unless you understand how this system is structured what it feeds on, what it suppresses, and what it cannot survive you’ll be caught completely offside.
⸻ 1. Debt-Based Systems Don’t Reflate | They Decay
In a healthy economy, inflation is endogenous. It comes from organic growth: rising wages, booming credit creation, expanding populations, and productive investment. But we’ve exhausted those levers. Instead of growth, we have debt accumulation.
And in a debt-based system:
•Every dollar of new debt adds less to GDP (diminishing returns),
•Interest burdens compound while productivity stagnates,
•The private sector stops borrowing and starts deleveraging.
That’s where we are now. Inflation isn’t “coming back” after a deflationary bust because inflation never structurally arrived. The 2021–22 spike was fiscal distortion, not sustainable reflation. It took $6 trillion in emergency stimulus just to get 9% inflation for a few quarters. That wasn’t inflation. That was monetary life support.
⸻ 2. The U.S. Economy Requires 7–9% of GDP in Deficits Just to Stay Afloat @TOzgokmen
is right in that it currently takes 7%-9% of GDP in U.S. government deficits just to keep inflation around 2%. Think about how broken that is. If you remove or reduce those deficits, inflation collapses and we slide straight into deflation. The system isn’t generating demand it’s simulating it through credit issuance and Treasury auctions. That’s why the bond market is breaking.
That’s why the Fed can’t actually normalize rates. Because the moment they do, real yields rise and crush the entire framework.
This is a zombie system. It looks alive because it’s overdosing on liquidity.
But the second you take the morphine away, it flatlines.
3. The Most Probable Path Forward
The likely sequence from here is not reflation. It’s collapse management.
Phase 1: Structural Deflation
•Credit contracts.
•Asset values fall particularly real estate, private equity, and long-duration risk.
•Treasury auctions begin to struggle. Yields rise, not from strength, but from a breakdown in demand.
•Inflation falls but so does everything else.
Phase 2: Sovereign Instability
•Interest on U.S. debt spirals north of $1.5 trillion annually.
•Confidence in U.S. solvency begins to waver.
•Foreign creditors retreat from the long end of the curve.
•Currency volatility spikes as safe-haven logic falters.
Phase 3: Policy Panic
•The Fed intervenes not to stimulate, but to preserve Treasury market functioning.
•Yield Curve Control is implemented under a new pretext: “national stability.”
•Fiscal and monetary policy fuse. Budgets are funded directly through central bank balance sheets.
Phase 4: Coerced Inflation
•Inflation returns but not from growth. It’s engineered through trade barriers, resource hoarding, and political conflict. •Commodity prices surge not because of demand, but because of supply disruption and geopolitical stress.
•This isn’t a boom.
It’s a stagflationary fracture where food, fuel, and sovereignty become policy tools.
Phase 5: Global Monetary Reset
•Confidence in fiat regimes falters.
•Gold, energy, and decentralized monetary assets gain traction as alternative stores of value.
•Capital controls, dual FX regimes, and sovereign default risk emerge in parallel.
•The world breaks into competing financial blocs. The old system dies not with reform, but with rupture.
⸻ 4. This Is Not 1947. And It’s Not 1974.
We cannot repeat the post-WW2 growth miracle. That era had two things we do not:
1.A young, rapidly growing population ready to enter the labor force and consume,
2.A total sovereign debt reset via wartime destruction, controlled currency regimes, and a clean fiscal slate.
Today, we face the opposite:
•Aging demographics,
•Immense debt overhang,
•Stagnant productivity,
•Politically fractured societies,
•And a fully financialized system where even minor shocks transmit system-wide.
The idea that inflation will just “come back” because we hit a secular low is fantasy. You can’t build an expansion on top of rot.
⸻ 5. What to Expect and What to Watch
•Deflation first. Not just disinflation true systemic contraction.
•Policy panic second. Interventions will escalate rapidly and globally.
•Engineered stagflation third. Via force, not fundamentals.
•Sovereign credibility collapse last.
The bond market doesn’t believe in fairytales forever. This is not a cycle. It’s an endgame. A shift from market pricing to administrative control. From economic coordination to political coercion.
From globalization to resource nationalism. The illusion of soft landings will die when deflation exposes the structural damage that years of liquidity masked.
⸻ Final Takeaway:
This is not a drill. This is not a dip. This is not just another tightening cycle. We are witnessing the slow-motion implosion of a system that relied too long on debt, demographics, and delusion.
