The Degenerate Government and The Degenerate Economy – The Ponzi Stage

Howard Lindzon Howie Town

9 hours ago

4 MIN READ

Tickets for Stocktoberfest are here.

Good morning…

I am heading to San Francisco this week and will be doing a presentation at the Money Show (Wednesday) on Investing in The Degenerative Economy. From there it is three months on the road as I head east. I am going to mostly be New York with a few trips to Europe and Israel.

Yesterday, Ellen and I went to see Tony, the A24 movie about Anthony Bourdain. It was excellent. Speaking of A24, our Social Leverage founder and LP event this fall is at the A24 Cherry Lane Theatre in the West Village which I am very excited about.

Before I get started, here are some links relevant to today’s newsletter…

‘What Happens When The AI Boom Runs Out of Money’ – I read Ben Thompson daily so this podcast was a must listen for me.

‘Ways to think about token pricing’ – by Ben Evans

‘The S&P has a leadership problem’ – by Larry Thompson

‘Tech is not an asset class anymore. It is the economy.’ – by Stephen Messer and thanks to my friend JP for the link.

Onward…

It was a big week for ‘the degenerate economy’ trend.

For new readers…a bit of a backstory…

Back in April, I received the ‘trademark’ for The Degenerate Economy, something I started talking about back in 2021 during the Gamestop saga. I started a ‘degenerate economy index’ in 2023 to track the companies and industries that were part of this trend. It hit another all-time high this week and continues to crush technology indexes (no leverage). I have pinpointed the era here on my blog to the GFC in 2008 and the ‘bearish’ triple leveraged financial ETF ( $FAZ ( ▼ 2.73% ) ) that Stocktwits users talked about all day.

In Henry Fudges excellent essay ‘Degeneracy Is A Symptom’, the disease that has caused the symptom is costs (rent and simple math). ‘You cannot save your way to the life your parents had, because the life your parents had is now priced in a currency (asset wealth) that wages do not convert into.’

I loved this riff…

So why was this week such a big one in the era of degeneracy?

The US debt passed $40 trillion.

The good news for many that have money to invest is you can do what has paid when the debt crossed $5, $10, $20 and $30 trillion…buy stocks!

For everyone else, this up and to the right line of our national debt means rates are higher, stuff is more expensive and so the degeneracy trend amongst our ‘yoots’ accelerates (the ‘yoots’ are doing the simple math).

Our leaders snapped into action as the doom and gloom headlines appeared. Scott (‘You Rang’ ) Bessent hit the news channels with his ‘Bessent Put Strategy‘. Trump made things stupider and said the USA can simply use the military to bring down rates. It’s like using ‘bleach to kill Covid’ I guess.

This had no immediate impact on rates, the dollar inched lower, stocks did what they have been doing (went up), but gold and crypto surged. Even with the huge weekly surge in gold and crypto, gold is 20 percent below all-time highs and crypto 40 percent. It will be interesting if their rally continues.