Authored by Mark Jeftovic via BombThrower.com,
Two inexorable realities have come into sharpened focus over the last month or so.
Both are themes we have been exploring and monitoring – one, since practically the very beginning of this service, the other, over the last year or so.
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The first is the unsustainable nature of the global monetary system: we are not unique in calling that out – it’s practically a trope and has been for a long time.
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The other is the existential necessity to win the new arms race – which is less about kinetic weapons now and more about computation, information and 5GW.
In the past, when the Soviet Union put as astronaut into space before NASA, it was a humiliation and a psychological defeat – but the USA arguably still held strategic advantage where it counted at the time, which was here on earth, with more nuclear missiles, tanks and military bases than the USSR.
The US space program kicked into overdrive, and NASA was able to slingshot past the Russians, and over time and across more dimensions, the Soviets never caught back up or retook the lead – in anything.
To this day, Russia’s resurgence onto the world stage – articulated through concepts such as Neo-Eurasionism or “Third Rome” (basically their version of “Manifest Destiny”) – is more than anything, an aspirational framework for “getting up to speed”, while rationalizing their inability to do so in traditionalist, volk-ish trappings.
Their high priest of this quixotic mix, is “Fourth Political Theory” author, university professor and philosopher, Alexander Dugin – whose other titles include “Last War of the World-Island” and – perhaps most tellingly, although least known of his works here in the West – “Katechon and Revolution”.
The word “Katechon” (from the Greek: ὁ κατέχων / τὸ κατέχον which translates loosely as “the Restrainer”) is important in the Russian collective psyche because it contains a massive “tell”.On its surface, it’s supposed to encompass Russia’s “state messianism” and symbolize its opposition to The West – their “Antikeimenos”.
The day of the Russian invasion of Ukraine, Dugin posted on Facebook “Now we are in a war of the spirits. Katechon vs. Antekeimenos”.
Antikeimenos (from the Greek: ὁ ἀντικείμενος) is the term St. Paul uses in Thessalonians 2:4 for the figure of the Antichrist. It appears exactly once in the Greek New Testament, in that single verse. The literal sense is “the one who opposes” or “the one set against”.
And therein lays “the tell” – what the Russian collective psyche is admitting to, and trying to come to grips with, and it is this:
If we reframe the Cold War as the first technological contest between Great Powers, Russia has to confront the fact that they lost – and they’ve never been able to recover from it.
In the contemporary pantheon of international relations and political economy, absolutely nobody today thinks of Russia as a “great power”. When you peel back the ideations of “The Fifth Empire” or “The Soviet Union 2.0”, you get to that underlying underdog mentality – trying to recapture super-power status.
They lost the space race. Then the Cold War, and now they can’t even beat the Ukraine.
That was supposed to be an overwhelming military victory, but the Ukrainians, mainly through wholesale adoption of drone warfare, have managed to give the invaders a rough time of it, even penetrating deep into Russian territory using high-altitude balloons to deliver suicide drones.
Make no mistake, all that financial support from the West aside, the Ukrainians have been able to stave off complete defeat through technological means and because cheap, sophisticated weaponry (drones) completely upended the conventional battlefield.Such are the travails of an erstwhile great power that has lost a technological competition. You can bet today’s incumbents – namely the USA and China – understand these stakes, and neither of them has any intention of losing:
- AI
- Energy
- High Performance Computing (which leads us into)
- The Space Race 2.0
- Quantum Computing
This is why the “catastrophic climate change” narrative has been rather suddenly sunsetted in The West (at least, the non-Euro west): we need more energy, including nuclear – lots, and lots of nuclear.
It’s why White House Asset Management (WHAM) is pumping money into quantum computing companies (including, from our wish list: D-Wave, which we hadn’t yet pulled the trigger on).
It’s also why China has moved further out on the interventionist side of the state capitalism spectrum, with mandated “Capital Reallocation” programs where the government has issued structural directives forcing state-owned pensions, insurance funds, and enterprise pools to funnel trillions of yuan directly into equities, while the state-backed “National Team” continues steady, strategic purchases of domestic ETFs to put a floor under major indices.
The Chinese debt overhang on bad real estate loans is even larger than what we had here in the run up to the GFC, so regulators there are pulling out all the stops to keep the balloon duct-taped together:In early 2026, Beijing quietly abolished enforcement of its strict “three red lines” policy. Developers are no longer required to report monthly data regarding debt-to-equity, cash, and asset metrics, freeing up fresh credit channels.
They’ve backstopped an additional 7 trillion yuan under a new “property project whitelist” mechanism, which extends developer loan maturities by up to five additional years to stave off defaults.
Commercial and state banks are aggressively financed to help local governments buy up unsold, completed housing inventory directly from developers to convert them into subsidized public housing (this is a nominally communist country, so why not).
To top it all off, we’re seeing capital flight restrictions – going so far as to prevent technology transfers to the West via acquisition (we covered last month how Meta’s acquisition of Manus was blocked and reversed by state authorities).
Any rational observer of finance and economics knows that all world economies, including The World Economy, is levitating in mid-air buoyed by stimulus, signal suppression and pure white-knuckled will.
In prior years, when all the financial commentators and contrarians were waiting for this to hit a wall, we all marvelled (at least I did) how the system was kept on the rails at all costs – because too much was riding on it to let rational economics and market restructuring take their course.
That was before AI. Before it became apparent that not being number one in this technological arms race had civilizational consequences, like joining Russia as another “also-ran”.
Once again, the contradictions and distortions that this imperative amplifies are bubbling to the surface.
On one hand – all rational analysis of the market is screaming “overbought”. Practically every financial commentator I came up following is looking at this and making comparisons with the dot-com bubble; the AI high flyers now look a lot like Global Crossing, Nortel, L3, VA Linux before they all imploded.
My X feed is absolutely jam-packed with people posting screenshots of 7-figure trading accounts that were ostensibly amassed in under a year trading HPC, AI, chip makers, memory, and now quantum (again).
ZeroHedge has remarked on the circular nature of the AI economy more than once:
Note that the above-linked article (from which the screenshot came) is a Tyler Durden original, it is not a repost of somebody else’s article.
Tyler has this annoying trait: he’s always early and he’s often right.
Yet it’s possible the man himself buried the lede (from that screen cap):
“The Infinite Money Glitch”
By all rational and financially coherent measures, the equities markets are overvalued, beyond bubble levels and primed for a catastrophic drop on the order of, pick one, 50%, 75%, 90%. Yes. 90%. We’ve been pumping since 2008 folks. Even further if you go back to the beginning of the equities supercycle in 1982.
After the dot-com bust, we were in a bear market for two years. When the GFC finally hit, it was straight down for a good 18 months. When COVID was coming, the banking system was starting to crack up under the hood (the reverse repo situation in late 2019) but when it came unglued in March, it was about two weeks before the monetary bazookas were unleashed and everything reversed hard of the March low.
What happens after that is instructive:
The Regional Banking crisis erupted, and was even larger in nominal terms than the GFC when it came to the amount of assets tied to bank failures. The Fed threw the taper overboard, did a massive liquidity injection and after a failed attempt to pick and choose winners in terms of which banks to save, caved in to public uproar and backstopped everything.
Liberation Day, Japan-ageddon, Israel/Iran/Gaza barely perturb the trajectory.
If you switch out of linear mode for that long-term chart, and go to logarithmic – you should recognize the pattern:
It’s the same as Bitcoin, which is the same as gold during the Weimar Republic and it’s the same signal being broadcast from every one of those charts.
We should acknowledge that the Nasdaq took 15 years to recover from the Dotcom shakeout, which is a long time to be underwater if you bought in at the tippy-top.
But I believe two things have changed since the GFC:
The first is that tech, despite taking the biggest hit, almost by definition when the Dotcom bubble blew, also became the apex asset class from here on out.
If you look at the long-term chart for the Nasdaq, it basically went parabolic for the first half of the equities supercycle, and formed a double-bottom from the Dotcom crash to the GFC
After that it blasted off and has left everything else in its dust:
This makes perfect sense, because tech is the asset class of choice in a world driven by acceleration and tachyosis.
We can’t put Bitcoin in that chart because it’s basically a divide by zero error. But if we take the commonly held, first market price ever for Bitcoin, which was $0.10, it pencils out to an absurd value. Call it 77,719,900% and leave it there.
It’s not uncommon to hear criticisms of Bitcoin that are simply “all it does is follow tech”.
Yeah, no shit. That’s because it is tech.
The other thing I believe about all this, is Raoul Pal’s theory that after the GFC, the world’s central banks got together and made a deal to never let anything like that happen, ever again.
Which means that central bank balance sheets will grow in perpetuity, and stock market will never have a meaningful bear market – for the remainder of the duration of the current monetary system:
That’s from Raoul Pal’s “Everything Code”, it goes on:
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They don’t understand valuations are a function of debasement.
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They don’t understand why technology rises and valuations can keep rising.
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They don’t understand why crypto is being adopted and is the fastest horse in the race.
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They don’t understand why the dollar keeps rising.
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They don’t understand that energy transition is real and is crucial for the world economy.
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They don’t understand why rates won’t remain high.
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They don’t understand why GPT4/AI is the biggest humanity-scale event since the splitting of the atom.
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They don’t understand why this is all so fucking deflationary. They want their sticky inflation. They will not get it.
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They don’t understand why nothing in their world makes sense.
We understand it. Because we know the cheat code, which is:
Put the chart into logarithmic view.
Look at the X axis.
Then own the assets that are outpacing everything else on that scale.
That’s it.
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