Contemplating Out Loud | Contemplating

Thoughts on Coming Apart and the Coming Great Reset

Turning and turning in the widening gyre

The falcon cannot hear the falconer

Kit Webster

Themes and Theses

Why I'm Contemplating Out Loud

(Initially formulated in the early 90s, following decades of reading history, philosophy, religion, psychology and a lot of contemplation, particularly on the subject of cycles. In the end, this is a relatively straightforward story about human nature and of history rhyming.)

The US will enter a period of crisis in the early 2000s. In the late 90s, I incorporated Strauss' and Howe's terminology of the Fourth Turning (without incorporating their generations paradigm) and agreed with Howe that the end stage of the crisis began with the Great Financial Crisis and would last into the early 2030s. We are now at the beginning of the end stage of the crisis.

The crisis will be serious and could be existential.

Internal strife will increase, up to and including secession and civil war.

International conflicts will increase as the vacuum created by the weakening of the US is filled by other players.

There will be many threads to the crisis, but the primary thread will be debt, deficits and entitlements. Other factors include, eg, demographics, a loss of meaning and myth and a loss of self-discipline.

Politics will move leftward as citizens look for some refuge from the chaos. The US will become increasingly susceptible to a (man) on a white horse, who can come from either the left or the right.

Inflation, as the most likely way to address debt since austerity is not politically acceptable, will significantly lower standards of living, exacerbating the civil crises.

Eventually, the dollar will be inflated away and lose its reserve status.

Once the old rot is cleared out, and assuming continuity, there will be the basis for the establishment of a new order.

There will be what Strauss and Howe calls a First Turning . It will be constructed out of the physical infrastructure, wealth, energy sources, thoughts and values in the culture at the time. At this point in time, those components are unknowable. We can anticipate that the next five years or so will be increasingly chaotic. We can anticipate that there will be destruction, and then reconstruction from some level. We cannot yet anticipate the form of the reconstruction or the level from which it will begin.

(Added around 2020) The loss of faith by our youth in our founding principles means that the new order will at least partially be based on new principles. As yet, I have no visibility as to what those principles might be.

(Added in the early 00s) While humans are contributing to global warming, policies implemented to address manmade global warming will create a significant energy crisis, probably toward the end of the Fourth Turning.

(Added in 2023) The lowering / elimination of standards in education, the judiciary, law enforcement, the military and other segments of our society will create a population unable to adequately comprehend, do or respond to the challenges of democracy and culture.

We Should Not Be Here - An Analogy

July 11, 2025

Quotes to Contemplate

We are witnessing a rewriting of the social contract itself, not just the introduction of a few new financial instruments. We are witnessing a shift of power from people to processes and from government to Generative AI. Mechanical consciousness is making its way forward. - Pippa Malmgren

We know they are lying,

they know they are lying,

they know we know they are lying,

we know they know we know they are lying,

but they are still lying.

- Aleksandr Solzhenitsyn

Summary of Primary Thoughts To Contemplate In This Issue

The time for financial reckoning is coming, but not quite yet.

The "no Epstein list" is the last straw in the grand scheme of government illusions - Republican and Democrat. Simply deeply corrupted.

Trump is going to stage a UFC fight at the White House. There are no words.

The whole tariff thing is a changing, morphing process. Now it is not about trade, it is about punishing countries who are doing things we do not like. Trump is starting to let all of this go to his head. Tariffs on copper are simply insane. I am really, really trying to discuss both sides of the story, but I am reaching my limits of being able to fathom what the other side is.

The Texas floods coverage is a great example of how at least 90% of media commentary and coverage is simply garbage.

We Should Not Be Here - An Analogy

I summarized this some time back, but I would like to illustrate part of my central thesis with an analogy.

The analogy is not exact, because governments and households are not the same - the primary differences are that governments can print money and they have a monopoly on the use of force. But this will be close enough.

The bottom line is that we should not be here. We have created an artificial world that should not exist and must go away - at least the artificial layer must go away.

I want to start off with an unrealistic world, a world in economic equilibrium. It is unrealistic because human nature will make demands on that world that the world cannot support. It's human nature; it is just what we do.

And, instead of a world, let's look at just one person. Let's completely simplify and overly generalize by talking about one person as a stand-in for the entire nation or world.

Let's call them Sam - either Samuel or Samantha - and let's set their world into motion.

We start with equilibrium. Sam makes $150,000 per year and takes home about $110,000 after income and employment taxes (exact numbers won't matter in these discussions). S/he has no debt. S/he spends exactly what s/he makes, so, for now, all is well. S/he has no savings for emergencies or retirement, but, even though these are important, we will ignore them for now. Sam takes a $3,000 vacation and puts it on a credit card; the credit card carries interest at 15% per year. Sam does not want to give up any part of his/her lifestyle, so s/he makes a minimum, $60 per month payment, but also borrow $60 as a cash advance. Interest accrues at an initial $38 per month, but Sam's cash flow is still in equilibrium, even though s/he is incurring ever-increasing debt.

All of this is working out so well that Sam takes another $3,000 vacation the next year. Sam's debt has increased to $4,403 by financing his minimum payments and interest.

At the end of the second year, s/he owes $10,867. Time for another vacation.

You see how this is going. So long as Sam can get credit, s/he can enjoy the good life.

Now, flex your mind a little bit. Picture an entire nation of Sams - everyone buying stuff left and right on credit.

There are several points I want to make.

The first is that this huge amount of debt has not been productive - it has been used for consumption.

The second is that all of these people creating all of this debt have created an artificial layer on top of the sustainable economy. Gas stations and clothiers and jewelers and restaurants and car manufacturers are all making a lot of money from all the debt the Sams are spending. Let's just look at the corner pizzeria - in a sustainable economy, maybe they employ 10 people and have 10 tables. In the Sam-on-steroids economy, they may employ 15 people and have 20 tables. People are buying second homes and $500 tennis shoes and having a grand old time.

Until the credit runs out.

Now they have to pay back the debt. In essence they have to return to the sustainable economy. Only it is worse. The sustainable economy assumes no debt and in the new economy, the debt has to be paid down - living standards have to go below sustainable. The restaurant, if it stays in business, now has 7 people and 5 tables. The unsustainable layer has to go, as does part of the sustainable layer.

Let's return to real life.

We are following the analogy - an orgy of debt and deficit spending that can go on until it no longer can - $2 trillion annual deficits! We are not at that point, yet, but we are creeping up on it. The decline in the value of the dollar will track our loss of living standards. That decline is just now getting under way, and should pause for a little while now.

The way to bet is not that we lose all of our unsustainable living standards all at once - it will happen over time.

Although, slowly-and-then-suddenly applies. There will be a weekend in your future when all hell breaks loose - just as happened in the 30s when FDR closed the banks, confiscated all the gold and devalued the dollar.

The world is not linear and there will be ups and downs, but we are now in a period of mostly downs. It looks like the serious bit will re-assert itself within the next year.

What to do?

Keep some cash on hand. Consider bitcoin and gold.

Oddly enough, the stock market could rally for a while under these circumstances, and some sectors should prosper.

But mostly, you are a ship on this ocean, so there is nothing to do but to tie a knot and hold on.

Markets

Updated charts

> No change in outlook. Although my record in predicting the stock market has been poor, there is an interpretation of the charts that we are at the beginning of another, nice bull leg up. The brilliant Lyn Alden discusses this on the latest edition of MacroVoices. A very worthwhile interview with Doomberg on Thoughtful Money.

> More than a decade ago, Warren Buffett said the national deficit could be solved in just five minutes. His plan? "You just pass a law that says that any time there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for reelection."

So, You Say You Want A Revolution?

> The Empire strikes back - with litigation as far as the eye can see.

- Supreme Court rules Trump can continue mass firings of federal bureaucrats.

- Trump's birthright citizenship executive order blocked by federal judge (again).

- A federal appeals court in New York upheld a civil jury verdict that found President Donald Trump liable for sexually abusing and defaming the writer E. Jean Carroll. Trump was ordered in that case to Carroll $5 million in damages.

- Former Columbia University student and Palestinian activist Mahmoud Khalil filed a $20-million claim Thursday against the US government for damages incurred during his Immigration and Customs Enforcement (ICE) detention. The lawsuit accuses ICE of false arrest and imprisonment, malicious prosecution, abuse of process, and intentional infliction of emotional distress.

> The memes create themselves - Trump plans to host a UFC fight on the White House grounds next year.

> Trump said that he would allow the farmers who hire migrants to take charge and allow the migrants working in the agricultural industry to remain in the country.

> Hmmm - The U.S. Air Force has abandoned plans to test hypersonic rocket cargo deliveries from a remote Pacific atoll using Elon Musk’s SpaceX, a U.S. military publication has reported.

> Musk - "Today, the America Party is formed to give you back your freedom."

> The enemy of my enemy ... China tells EU it does not want to see Russia lose its war in Ukraine: sources—Wang Yi speaks of concern that US could shift whole focus in China’s direction in talks with top EU diplomat Beijing.

> Treasury Secretary Scott Bessent said Sunday that countries that fail to make a trade deal with the United States by August 1 will face the steep tariff rates announced by President Trump in early April. Bessent downplayed the announcement as a shift away from Trump’s original July 9 deadline for such deals, essentially telling CNN’s Dana Bash that countries should view the month of July as a window to work toward a deal.

> Trump said the U.S. would send “some more weapons” to Ukraine, days after the White House announced a halt on several key deliveries.

> Trump administration moves away from abolishing FEMA.

> I'm calling bullshit on this one. We will never know - Trump was our last, best hope and he caved.

Justice Department and FBI have concluded they have no evidence that convicted sex offender and disgraced financier Jeffrey Epstein blackmailed powerful figures, kept a "client list" or was murdered.

Remember Attorney General Pam Bondi having previously said that the client list was “sitting on my desk right now to review.” Epstein/Maxwell victim: "I have spend the last 17 years in my own prison for what she, Jeffrey and all the coconspirators did to me. I was raped repeatedly, I was raped 3x per day sometimes and I was not the only girl on that island."

Harvard Law School Professor Emeritus Alan Dershowitz on Thursday told Sean Spicer that he had seen the Epstein client list and that the government had suppressed documents to protect powerful individuals.

"Documents are being suppressed to protect individuals. I know the names of the individuals. I know why they're being suppressed. I know who's suppressing them. But I'm bound by confidentiality," Dershowitz said.

"I know the names of people whose files are being suppressed in order to protect them, and that's wrong," he added.

> The man has a point -

News item - COMEX #copper futures jumps to a 40% YTD gain after Trump called for a 50% tariff on imports.

Louis-Vincent Gave - :One of my big themes since JD Vance’s Munich speech has been that the days in which commodity prices are roughly the same across the world are essentially gone. The reason the price of oil was roughly the same in South Africa and South Korea is that the US Navy guaranteed safety across the world’s ocean for free. To the extent that Munich signaled that the US was done providing such a free service, it stood to reason that commodity prices could start diverging massively across the globe (and that everyone should build up more inventories). Still, I did not expect that the US would willingly choose to make commodities more expensive for itself than for its competitors. It will be hard for American manufacturers to “Make America Great Again” under these conditions… Maybe US copper importers such as the auto industry, the electricity grid and others were on the now non-existent Epstein list and needed to be punished? Hard to understand the logic otherwise…"

I would put it another way - profoundly stupid.

> TDS - Whoopi Goldberg claims Trump wants to split interracial couples and deport anyone who isn’t white, "He's going to deport and you put the white guy with someone else! The man is out there!"

> Katanji Jackson - "I think the nice part about being on the court is you have the opportunity, whether you're in the majority or in the dissent, to express your opinions. I just feel that I have a wonderful opportunity to tell people, in my opinions, how I feel about the issues. And that's what I try to do."

> I did not realize that federal employment had grown so much under Biden.

Superman

I see that the new Superman goes back to the original good guy. That's a good thing. (Beth saw it and thought it was great. It has gotten some criticism from the right for supporting immigration - from history's most important immigrant.)

Part of my childhood was George Reeves as Superman on TV every week. I loved that show - "Truth, Justice and the American Way."

One day, my mother sewed me a Superman shirt (sewing was a thing back then and there was not one in the department stores or the Sears catalog to buy), complete with insignia and a cape. It was my prized possession and I was the envy of the neighborhood.

I put my costume on, climbed on top of a neighbor's garage, and flew off.

I was not hurt and my faith in Superman did not dim. I told myself there was probably some kryptonite nearby.

China

The Texas Floods

This is such a great example of the reality distortion field we create around everything ... everything ... with everybody an expert and Democrats trying to pin a flash flood in Texas on Trump and Trump blaming it on ... Biden? Stupidity once again intersects with social media intersects with the 24/7 news cycle.

It actually is pretty simple:

The area is prone to flash floods, with devastating floods every 30-40 years.
We ignore important things until they are put in our face. W tried to get us ready for a pandemic (and to fix Social Security) and everybody yawned. These rare, devastating things are really important after they happen and then have a short half-life. RFK Jr is being successful about vaccinations simply because we have it so good and only a few of us remember the 50s when these diseases mattered. The LA fires are another great example.
So, a warning system is expensive and we have a lot of other things to worry about.
The person responsible for flood warning was on duty. Regardless of what you think about Trump's cuts at NOAA, they had little to do with the lack of warning. You are in a rural area. Warning's hard.
Even if there had been warning, this was the middle of the night and it was rapid and it was huge. People were going to die, but maybe not as many as did die. Essentially everyone missed the news that there was other flooding north of Austin that cost multiple lives, there was a warning system, and a warning was issued.

The first answer is simple - somebody or some group has to put up the money for the system and for running it. This will be done.

Much more complicated is the question of "letting" people camp in areas prone to one-in-40-years devastating flash floods.

Funny, no one is asking the question about LA or San Francisco for when the "big one" hits.

And, now, about Social Security ...

A Clash of Civilizations

Short Takes

> We can't catch a break in the global warming department. A scientific paper has noted that an Antarctic ocean current has reversed. "According to the research team, the consequences of this reversal are already becoming visible. The upwelling of deep, warm, CO₂-rich waters is believed to be driving the accelerated melting of sea ice in the Southern Ocean. In the long term, this process could double current atmospheric CO₂ concentrations by releasing carbon that has been stored in the deep ocean for centuries—potentially with catastrophic consequences for the global climate."

> There's some comfort in knowing some things never change - Antifa militants launched an arson attack on Portland ICE facility.

> The European Union plans to introduce its central bank digital currency—the digital euro—in October of this year.

> Kohran has said he is African American because he was born in Uganda of two Indian parents. This has given rise to a new term - politically black. The Free Press had a great headline - In a Sense, Aren’t We All African American (referring to the fact that our species started out in Africa)?

> If you want to see a graphic illustration of what hit Texas, look here.

> Velvet Sundown: On June 5, the band released its debut album, “Floating on Echoes.” In just over a month, it had over 1 million streams. The big twist (and shout): On Saturday, the group confirmed its music was created using artificial intelligence.

> Where's Bhutan?

> Fact check, true

Miscellany

The Bee