ECB critics misread inflation: echoing Henry Thornton, supply shocks (like energy or bad harvests) create temporary imbalances, not monetary excess. Raising rates won’t fix supply and can worsen it by choking credit and slowing adjustment (e.g. renewables). The right response is real-side adjustment, not tightening, especially with cartelized energy prices.
Archives reveal that today’s financial “innovations” like 0DTE options are not new but echoes of past bubbles. From the South Sea Bubble to tulip mania, markets repeatedly combine leverage, low upfront capital, and option-like payoffs. These structures attract broad participation and create fragility. The pattern is clear: different instruments, same dynamics—leverage and optionality driving cycles of speculation.
The credit cycle is turning as capital absorption weakens in riskier, non-bank institutions. Rising funding costs are stressing these lenders, pushing credit spreads higher—especially in CCC debt. Early signs now extend to consumers, with delinquencies rising and securitization declining. As conditions tighten, fragile, debt-dependent structures begin to unwind, marking a transition from expansion to contraction.
Most investors misunderstand credit. Henry Thornton didn’t—and his framework still explains every boom and bust. Credit begins with trust and drives real commerce when used productively between merchants. But consumer debt and monetary expansion create only the illusion of wealth. We built a new way to read these ideas: live video commentary embedded directly in the text. Experience it free: https://www.graphcall.com/execute?task=NavigationPage&g=a6a94914-086f-4092-8c44-22a888bde0a0