The Minsky garbage clean-up has nothing specific to today or to the US.
This is what happened in 1825 in the UK, when the country—overindebted after the Napoleonic Wars—altered the coupon on its gilt bonds (Mr. Gundlach has hinted this could be in the cards for the US).
The SPAC boom involved companies with little more than a PowerPoint deck, some of which may have had business models similar to those seen during the speculative frenzy of 1825 (e.g., Poyais, the fake country, or schemes like draining the Red Sea to find gold). 🤦♂️
As always, the party ends when credit becomes harder to obtain (this has a more direct liquidity impact on the real economy than central banks monetizing debt).
There is an interesting side effect of cutting the coupon on gilts that we should discuss, as it directly relates to Mr. Gundlach’s recent interview. There are two sequential effects: first, the relative yield impact; second, the disturbance in credit.