Turn off the printers, Jerome.

Even those with only the most basic knowledge of economics will be somewhat aware that economies, being partly determined by human factors like greed and fear, are subject to boom and bust.

That was until recently.

There is a recurrent meme on Reddit's "Wall Street Bets" subforum featuring Jerome Powell, current [March 2023] Federal Reserve Chairman cranking a printer with dollars flying out of it, whilst he exclaims "Fuck your puts!" (a 'put' being, in simple terms, a bet that a stock will decrease in value over coming days, weeks and months).

Financial markets hang now almost entirely on the interpretation of the 8x per year FOMC (Federal Open Markets Committee) meeting minutes and the 'dovishness' or 'hawkishness' of Powell's speeches that follow their release. They are wildly open to interpretation - but recent rallies in major indices such as the S&P500 and the NASDAQ would indicate that people are still leaning towards being bullish (that means they think assets will increase in price, if you’re not familiar with the term) as opposed to bearish. They care little for business fundamentals. How much profit is a business making? It doesn’t matter. Think about its future potential. Just keep bidding higher and higher; such is the nature of significant segments of both retail and professional trading right now.

Some private markets have also seen a roller coaster ride in asset valuations caused by the fiscal stimulus unleashed in response to pandemic lockdowns. Whereas 2021 was characterised by venture capitalists bragging that seed stage deals could be turned around in a matter of days, wiring millions of dollars to pre product market fit startups, 2022 has been characterised by massive writedowns in valuation, less deals being completed and a number of new funds falling away. Later stage deals and recently IPO'd companies are seeing their valuations fall to the point where the later investors are incurring substantial losses on their investments. Many funds are, as a reflex, not looking at new deals and instead focussing on portfolio management.

It begs the question why anyone would bother doing anything more complex than putting half of their savings in treasury bonds, and the other half in a S&P500 tracker fund - an oft repeated tip from the godfather of investing, Warren Buffet himself. Buffett has also pointed out how much more money has been made in client fees at many funds, than profits from actual trading. Most people just aren't actually that good at the thing they profess to be good at...

If the public markets are too wild, volatile and speculative - but traditional private markets mean your money is locked away for years and you can only have a tiny pool of investors access your asset or deal, isn't it about time there was some kind of halfway house between the two?

At Consilience, we’re building exactly that.

A lot of people are questioning whether many of the cultural and socioeconomic institutions that have arisen since 2008 are a “Zero percent interest rate phenomenon”. Nassim Taleb has been taking swipes at David Sacks on Twitter about it in the wake of Silicon Valley Bank’s collapse, which was also indirectly caused by unusually low interest rates and too much liquidity flowing into the system courtesy of The Fed. A whole cohort of emerging fund managers and tech workers are being exposed as ‘tourists’ to the industry whilst whatever they were working on goes up in flames (along with their investors’ money).

Bitcoin, touted by its wide spectrum of evangelists as humanity’s ultimate reserve currency, has shown price fluctuations which track various tech investment indices remarkably well. To me, this signals that it is still mainly the preserve of speculators and gamblers, rather than any real backup plan in case of hyperinflation.

A gradual return to more ‘normal’ fiscal conditions will not solve Western economies’ problems overnight, but it will go some way towards making things right.

Who will be shown to have been naked this whole time when the lights finally get switched on?