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I find myself frequently sharing this incredible prediction from March 24 (paywall has been removed on the paid article) lately so I thought it would be a good time to revisit the dynamic.

Obviously much has happened since March 24 which allows us to increase the accuracy of our predictions about what happens going forward.

Someone asked me

This is exactly the sort of “stuck in the past” mindset that does not appreciate the irreversible changes the world has already undergone in 2026. It’s worth talking through why it is wrong and whether there are alpha opportunities downstream of the false narrative in terms of market pricing.

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Feel free to give feedback on the content. Paid subs: feel free to request an article topic for the near term.)

You Use the Right Tool for the Job

This is a series on learning from our emotions. My emotions emanate from the me who is not my thoughts, which is much larger and more powerful than the me who is my thoughts. You can think of your emotions as a way that your more powerful self communicates with your less powerful self.

Of course, even though your thinking self is less powerful than your unthinking self, there are things your thinking self can do that your unthinking self cannot. When possible, using your rational self to assess, evaluate, and strategize will give you better results than responding to an emotion on pure instinct.

In the absence of time to think, instinct generally gives you the best result. Your unthinking self is powerful, after all. Similarly, you will often find that rational consideration leads you to what you would have already done instinctually. In such cases, it can be good to rationally consider anyways, because that gives you time to place the emotion and your reaction into a framework for future optimal behavior.

What’s most important to internalize is that you should respect strong emotions and spend time trying to extract the valuable information that your unthinking self is trying to tell you. Brushing it off is a very bad idea. Strong emotions are how you realize that something important is going on, whether it’s a situation going wrong, an opportunity for you to get far ahead, or a lesson you’d benefit from learning. You might call it a signifier of a high-stakes situation.

High-stakes situations exist for you to capitalize. Take your emotions seriously and use them to ascend to greater heights.

You are High Status

Our first emotion, and a highly important one, is anger. With anger, your unthinking self is telling you that something is being taken away from you in a situation where you have the power to retain that thing. This isn’t necessarily straightforward to assess because what is being eroded is frequently status, which is an abstract concept with no physical presence in the real world. See “Being Contemptuous” and “You Are High Status.”

You have a set of abilities and accomplishments, as well as a track record of being trustworthy and engaging in fair dealings. Treating people with an amount of respect that matches those qualities is not just politeness: it’s also a short-cut to help people figure out whom to follow. When someone damages your status for no good reason, they disrupt your relationships with every other person in attendance. Feeling that they are being unjust is not a “stupid” emotion: they are doing serious harm to you, and your primal systems know it.

Anger arises when someone is trying to take advantage of you in a scenario where they think they can get away with it. Anger generally doesn’t arise in a situation where you don’t have power to strike back against the aggressor. It wouldn’t make sense for the unthinking self to urge you to protect your territory unless you had some capacity to mount a defense. Those same abilities that make you worthy of respect can be turned to punish the offender for his transgressions.

When you get angry, it’s in your best interest to spend some time thinking through if there is a way for you to expand your territory. Hopefully, there is an immediate way for you to regain your status, time, or possessions with minimal friction. But if it’s more complicated than that, the best option will often to be to pull back territory that you were previously in the habit of freely offering to the aggressor in the spirit of fair play and good-faith positive-sum dealings.

You Give and Take Effectively

You should have a habit of politeness and offering charity to those you have just met for this very reason. It establishes your credibility as a man who treats others fairly and will be their best ally if they treat you with great respect. It also gives you a bargaining chip that you can retract without notice to loudly signal to someone that he is not dealing with you in a good-faith manner. Perhaps he is oblivious. It’s not likely, but it’s possible. Either way, good manners and courtesy let you improve your communication with other people.

If someone you have treated with politeness and fairness tries to take advantage of you in a capricious manner which makes you angry, with no sweat off your brow, you can temporarily flip from “friend mode” into “enemy mode.” This is one of the meanings of karma: people who treat others as enemies find everyone treating them as an enemy. People who treat others as potential allies find strong allies everywhere.

When you flip into enemy mode, you of course create a risk to yourself, particularly if the other person has some sort of power over you. But if you are a generally good-natured and fair person, it’s quite easy to make their dealings with you much less pleasant for them than they used to be, without being obviously and openly hostile. All you are doing is no longer extending certain courtesies to them.

For example, there might be projects or goals the two of you work on together as a team or “on the same side.” Perhaps you suddenly no longer find those projects and goals as interesting as you used to, and the other person increasingly finds himself handling them alone. This development doesn’t have to be permanent, although sometimes it progresses to that level. Most people are smart enough to realize that previously enjoyed benefits are not there anymore and wonder how they went wrong somewhere.

You Resolve Conflicts Productively

This is simple conflict progression which typically resolves when people (verbally or not) settle on a compromise where the non-negotiables of each person are respected. In other words, everyone gets to keep what he most cares about. If you encounter a person who is not capable of respecting your non-negotiables, you need to treat them as an enemy for life, often by cutting them off entirely. Tough darts. This isn’t that hard of a concept to figure out.

The most important takeaway from this article is that you need to have a habit of extending conflict when someone trespasses on your non-negotiables in a way that makes you furious. Your anger is your unthinking self giving you a serious reminder that you need to stand up. Strong emotions always arise in a scenario where you need to make a key decision, and appreciating the signal properly is how you are going to make the right decision.

Once you have this framework around anger, it’ll be easier for you to use your thinking self, your conscious rational mind, to strategize how you can maintain territory that is essential to your desires and goals without creating undue collateral damage upon yourself. If you’re smart, you’ll find there are often very effective ways to strike back or damage someone where they have absolutely no recourse against you and just have to take the blow. In this regard, remember that hits to status are often much more painful than physical blows.

You Bravely Defend What you Love

Hopefully the reason you need to be able to stand up for yourself in this manner is clear. A man who doesn’t defend what he most values shall not preserve it. To gain what you desire most and to keep what makes your life best, you have to have a spine and act in a way that makes people uncomfortable when appropriate.

Use your brain to great effect. Be cunning, be calculated, be ruthless, act with plausible deniability, act under cover of perfect defenses, give them no possible avenue to escape. Above all, maintain a merciful mindset that is prepared to shake hands with an ally when he realizes he can amend his trespasses upon your territory. Resolving conflict brings people closer.

People want to get along. Be ready to forgive, if the verbal or non-verbal expression of contrition makes it clear how they will respect your non-negotiables in the future or if it offers sufficient reparation to make up for the loss (it must generally be in excess, as status is difficult to measure).

Life’s not all sunshine and roses. If you are going to get what you want, you have to fight for it.

See you on Stage.

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It’s a good question. People generally say what they mean; what they are actually thinking.1

Not All Those who Lie are Dishonest

I went back and forth on how exactly to start this article. For example, we’re going to revisit the common topic of how Trump speaks.

It’s natural to want to start there because Trump doesn’t speak like you or I. Trump does not talk like a normal person.

It’s not quite so simple as noting that he lies. Normal people lie as well. What we imagine when we conceptualize a man lying is how normal people lie, so it creates the wrong impression.

Trump tells factual untruths in a particular way that doesn’t match “normal person lies,” and his mentality clearly doesn’t match that of a normal person lying in any meaningful fashion when he does it.

A good example of this comes from the Iran War when he has said seemingly hundreds of times that “Iran really wants to make a deal” that gives the U.S. everything the U.S. wants.

As someone who understands human psychology and persuasion at a deep level, I immediately recognize this as “speaking one’s desired future into being.”

It’s a persuasion technique. Like an affirmation. My free articles at the top of the table of contents go into great depth regarding how it works and why I think it works. Read those if you want to be entirely up to speed on what’s going on when Trump says “Iran wants to make a deal favorable to us.”

Let’s be clear: it does work, in the sense that by continually repeating the statement many of you think of as a lie, he increases his chances that the event happens.

In this case, the chances increase from something resembling 0% to something resembling 0%. But in other situations, the effect is more meaningful. Trump clearly says things like this all the time as a rote habit, hoping to persuade, not being sure of when it’s more or less likely to help.

He simply does it all the time, whenever possible.

One reason for this is it has the effect of an affirmation on his own internal psychology, guiding his subconscious to seek the outcomes he desires.2

Some of you are familiar with Norman Vincent Peale and “The Power of Positive Thinking”: these are related concepts.

I started using some of these principles myself when I first learned about them just to experiment and they worked out much better than I expected. When I post on social media saying “I am a genius” part of the purpose of those posts is to engage in this sort of affirmational rise-seeking. The more you know.

I’ll go into some more detail about my framework on Trump’s persuasion, misdirection, and action later on in the piece.

You Make Good on Your Commitments

However, in this piece it’s probably better to talk through the general idea of what it means to “inflate the debt” in the first place.

It’ll provide some useful groundwork for later.

The idea of “inflating away the debt” is occasionally accompanied by references to U.S. policy in the 1950s and 1960s. This is rather odd because inflation was quite clearly under control in these two decades.

It’s a peculiar statement to assert that the U.S. “inflated away the debt” in 1950s and 1960s when monetary policy clearly maintained credibility on inflation.

In addition to this, these two decades involved so much austerity that roughly a quarter of those years featured a budget surplus, an unimaginable outcome for “inflate the debt” advocates when looking forward to the next decade.

A very peculiar example of “inflating the debt” indeed.

Our current inflation situation is not under control, and monetary policy credibility has deteriorated substantially. If you look closely at the above image you will see that inflation which strays above 3% for any meaningful amount of time has always coincided with a poorly-performing equity market.

That reflects monetary policy which acted to handle the inflation danger, the opposite of what “inflate away the debt” expectors see as our future going forward.

This speaks to the unfeasibility of “inflating away the debt” and the degree to which those who believe it will happen are expecting things to be “different this time.”

A Feasible Route to Outgrowing the Debt

Let’s consider possibilities to proactively outgrow the debt which may reduce the need for austerity if performed effectively. Naturally, we will constrain ourselves to effective credibility-maintaining monetary policy for the reasons outlined above.

In this regard the duration of the Treasury’s issuance and the capacity to term out debt for an extended period of time at a fixed rate immediately jumps to mind.

In other words, we can allow freely traded rates and the short-term policy rate to maintain a level consistent with inflation fighting credibility on an ongoing basis.

But if rates are rising overall, and we have issued large amounts of fixed-rate debt at lower rates, the higher growth level across the economy will naturally outpace those fixed income interest payments. To do this the sovereign will have to either be very lucky or very skilled at effectively “trading” the national debt around policy-makers’ predictions of interest rates going forward.

While they may be arrogant to do so, it is within the realm of plausibility that Warsh and Bessent are hoping to attempt this, given their history of speculation in capital markets and association with renowned fund manager Stanley Druckenmiller.

Such an approach would likely be married to policy which supports the national real GDP growth rate as well as supplemented by genuine austerity measures: including all three would replicate the efforts of 1950-1970 which reduced a substantial U.S. sovereign debt burden.

Donald Trump seeks to be everything to all people

Having addressed the technical matter of debt financing and management, we can return to the key topic of Trump’s use of language.

I want to give you a good standalone framework for assessing the implications of anything that Trump says.

For this, we need to keep in mind one essential fact. Trump is what we might refer to as a consummate politician. He says many, many things for the benefits he hopes to get out of the statement, not because of a steadfast and sincere belief.

The easiest way to see this is by observing all of the times in history he has flipped on a dime and completely contradicted his prior claims, promises, or assertions.

It’s very important to keep fixed in your mind the confidence that Trump always almost uses language to achieve a purpose (often persuasive) and that can be highly detached from anything he sincerely believes in his heart (such as it is).

I want to make reference to another feature of Trump as a politician in this preamble which is his use of rallies. Trump is well reputed to use his rallies to “test” various ideas.

As a “consummate politician” and “ideology-averse opportunist” Trump is highly inclined to “feel out” what his key audience cares about and shift towards saying what they want to hear. It is common consensus that Trump used these methods with his rallies in the run up to his attainment of electoral office to gain political advantage.

In particular, his aggressive stance on immigration is highly likely to come from his responsiveness to the crowd not his own convictions.3

That’s a useful concept to keep in mind: Trump as a shapeshifter. My impression is he loves to mirror his audience when he speaks.

There are quite a few benefits to doing this. One is that people tend to more readily notice sensory data that conforms to the goals they are seeking to achieve.

If Trump can successfully mirror a target audience’s way of thinking and desires, they form a mental impression of his plans which satisfies them, regardless of whether he directly contradicts that plan in other statements.

This works because you are psychologically predisposed to not even perceive or notice sensory data which does not align with your goal orientation.

If someone’s internal goal orientation seeks justification for why a certain investment plan is good, he will notice some Trump statements and not notice others. Or if his goal orientation seeks good arguments for or against a certain political ideology or narrative concerning the current political or geopolitical environment, he again will highly notice some Trump actions and not others.

It is only people with a goal orientation highly centered around simply gathering in all data to assess the truth, like us, who get a “full picture” of Trump as an individual who makes public proclamations.

What do people like us discover? When you take the full picture of Trump’s statements, as he goes around carefully mirroring different audiences and using words to gain a benefit, combinations of statements are almost always completely incoherent.

In effect, Trump says many combinations such as:

• “the sky is very definitely purple, it is extremely purple”

• “the sky isn’t the least bit purple at all, and not only that, anyone who thinks the sky is purple is a total idiot”

There’s no rhyme or reason to any of it, because he’s using language as a weapon and incredibly intent on mirroring various audiences.

The audiences he seeks to mirror will focus in on the parts of Trump that say what they wanted him to hear, literally not perceive others, keeping them from disrupting him as he very often carries out plans which harm them directly.

That is the manner in which Trump is everything to all people.

Handling Trump’s Incoherence

Here’s my general framework for dealing with this challenge. We will then apply it to “inflating away the debt.”

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This is something I mentioned in March: how the geopolitical progressions would likely bring Trump and Putin back into each other’s arms.

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• My articles are generally concept-focused and finding my overall market views by reading through all my notes is time-prohibitive

• It allows for retrospective on views that have and haven’t worked

• It helps people keep tabs on whether changes in pricing since the view was authored have changed the strength of the signal

I’ll run through the asset classes in sequence.

This initial update will be fairly long as I “clear the air” from the last year or so. Future “monthlies” will link back to the previous and focus on what has changed.

Let’s go.

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