Where We Are in the Big Cycle of Money, Credit, Debt, and Economic Activity

There's a cycle. Um, there's a short-term money credit debt market economic cycle we call it the business cycle also.

What happens is, you know, you go from a recession, go to slow inflation. Uh, is low central banks, uh, produce a lot of money and credit. The stimulative, it's like creates that, uh, credit turns into debt. Debt is something that has to be paid back. Credit is something that's stimulative; it gives buying power.

So it starts to create a cycle that goes up. It leads to creating bubbles and reaching a point where there's inflation and so on. Through this process, the three main players or three main types of players are those who are alcohol borrowers, debtors.

Is it economic to borrow and be in debt or lender creditors? Is it economic to be a lender creditor? Of course, there needs to be the same amount of those because one man's lending has to be an immense borrowing.

But you could see how those incentives are changed by the system because what they'll put in at one part of the system to get it going and so on. Real low, uh, real interest rates, lots of liquidity, and so on.

During such times, it pays to be a borrower, you know, a debtor. Then in these cycles, then it goes to the opposite; it pays to be a creditor.

So, for example, now, uh, you have a situation where short-term interest rates are relatively high in relationship to other things. They went from giving money away for negative real interest rates to that they change the incentives.

The action of that move from one to the other in changing interest rates changes the value of asset classes because every asset is a lump sum payment for future cash flow.

So the present value of that with the interest rate has an effect. And there are such things so that you can watch those; they've repeated over and over again for the same reasons.

This cycle looks like just another one of those cycles. Essentially, we know where we are in the cycle roughly.

Um, you know, you're at the point where you're approaching the, uh, late in the tightening, but you haven't yet achieved that particular goal. So, you know what they're going to do. Blah blah blah blah blah.

You know, there's a lot of those things for each investment.