The Fascism Risk Premium, or What Happens to the Economy Next

Hi! How's everyone? Gather ‘round, welcome back old friends, welcome new ones, and here’s little Snowy grinning up at you.

Apologies for being away. I was spending a little time with a friend I don’t get to see often (who I miss now that they’re away,) and I was wrapped up in sessions with many of you, which have been amazing and delightful and humbling and wonderful.

Today I’m going to teach you about what’s going to happen next to the economy. And to the financial markets over the next few months, since everyone’s worried about their life savings going up in smoke…billowing into ashes…turning into the black hole at the end of capitalism, or in Donald Trump’s soul, which is the same thing, I suppose.

Let’s begin.

Markets and Zombie Brains, or, The Abyss We’re Dancing Around

See the markets bouncing around? But it feels off. Something’s not right. It’s not like usual. Bouncing around’s one thing, but this…it feels like they’re dancing on the edge of an abyss. A very, very deep one.

They are.

Think of the markets as a giant brain. Only not a very good one. More like a zombie brain. This is why we have crashes and crises. The markets are profoundly “irrational,” in the technical parlance, but in plainer English, they’re just not very smart.

They get it wrong. Sometimes, badly wrong.

Right about now, it feels like they’re dancing on the edge of a very deep abyss because they come close, achingly close, to figuring out something the rest of us already know.

Donald Trump is melting down America’s wealth. It’s prosperity. He’s turning it to ashes. That’s not my opinion, really, it’s just a fact. Good luck producing another few decades of growth without…science. (Or the rule of law. Or a free press. Or, you know, freedom itself.)

You know what’s really bad for economic growth? The Gestapo. Go ahead and chuckle, that’s a bad joke, but only sort of. It’s true, for obvious reasons.

So the markets come achingly close to figuring out what anybody sane already knows, which is that all this folly is going to wreck the economy. It already is, if you’ve tried selling a house or getting a job or running a business lately.

Now. Let me make all that more formal, so that you really get it.

The Fascism Risk Premium

In finance, we have a notion called a “risk premium.” It’s easy to understand. It just means that where there’s additional risk, an additional price is demanded.

Imagine that I, I don’t know, wanted to open a restaurant. Risky business, right? Now imagine that it was my first restaurant. Even if you were my best friend, you’d probably ask for…a little something. It might be something like that if I went broke, you’d get paid back from the sales of the equipment first. You’d be a “secured creditor,” in the lingo. That’s a kind of risk premium.

So are credit scores. Awful things. Peak capitalism. But they serve to make the point. If you have a low credit score, bang, you have to pay higher interest rates.

Who’s credit score just got shredded? America’s did.

Guess who’s going to be paying more for every credit card payment, car payment, and mortgage payment? Every American is. But when will they figure that out? T the poor fools who voted for Trump to “fix the economy?” Not soon enough, because part of the ugly business of capitalism is keeping people alienated from their own money, but I digress. I’m just trying to teach you a few things along the way.

So. What’s happening to the markets is very simple. They are a primitive zombie amoeba brain. Trying to work out a whole new risk premium.

(This is all markets do, by the way. They “price risk.” That’s it. The rest is noise and nonsense, really. Markets just exist to price assets, and they do that by judging risk.)

The difference in this case is that they have to try to compute a risk premium for something they’ve never encountered before.

That something we might call a Moron-Fascist-Industrial Complex.

That means that the crackpots in charge of America really have a plan to melt down the economy. An actual…plan. It’s called the Mar a Lago Accord, it has four steps, I’ve discussed it with plenty of you in sessions already. Alongside that, there’s Project 2025, which is gutting the government, in the name of lower taxes, while exploding the debt, and hence America’s recent credit rating downgrade. So these two titanic pillars of idiocy have real world consequences already.

Now. The markets have no idea what to do with this. They’ve never seen something like America descending into fascism, by way of morons, no less. Nobody has.

So there they are, bouncing around, skating, perilously, dancing, lethally, right on the edge of an abyss that we can all feel right in our bones.

When is the meltdown going to happen?

You ask yourself that every day. So do millions of others. Don’t worry. I’m about to answer the question for you.

The Markets Have a Pro-Trump Bias (and It’s Going to Cost You Money)

I don’t mean that acerbically. I mean it literally. The markets are really stupid.

Why do I say that? Because they have a pro-Trump bias. Even while he’s melting them down.

This is why they’re taking so long, and sweating so hard, and being so slow, to compute the risk premium. They can’t understand, process, believe, what’s happening in front of their eyes. Their guy, their macho man, their savior…Donald Trump…is the one…punching them in the face with his flabby gut, over and over again. Sorry if I made you spit out your coffee, or choke on it. I wanted you to understand the point.

Markets are not very smart to begin with. Markets are just people. Finance bros aren’t usually very intelligent, or very curious, or very likable. That’s not my opinion, it’s why they’ve become a cultural touchstone of toxicity. Patrick Bateman wasn’t exactly Clark Kent, he was American Psycho for a reason.

In this case, though, markets are even dumber than anyone much believed possible. Markets are people, and the people in America’s financial markets are Big Fans of Donald Trump. That’s not unusual, and it shouldn’t be controversial. They might not be quite MAGA, but finance types hew conservatives, and so now, they’re baffled by what’s happening to them. Their conservative darling has turned into a black widow, if you like.

They literally can’t understand any of this very well. They are so behind Donald Trump and have been for many years now that they are bewildered, surprised, and confused. But they shouldn’t be. After all, they’ve been asking the rest of us to believe a pretty foolish proposition for a long time now, by backing Trump: America could be modern history’s first wealthy fascist nation.

There aren’t any of those, for a reason. If they read books, they’d get that reason, which is that fascism is about destroying things, not creating them, and you don’t get real growth or prosperity through destruction, through idiocy, through hate, ugliness, spite, or violence. Sorry. Doesn’t work that way, at least not anymore. To get real growth, you need, let me say it again, science, literature, reason, truth, justice, all the things that fascists hate.

But finance types don’t understand this. Their understanding of economics isn’t even skin deep, it’s barely Botox deep.

And so because they don’t understand this basic principle of economics—growth takes modernity, and fascism destroys both—they are totally bewildered.

And so they don’t quite grasp how to compute what they need to, which is the risk premium of fascism.

The Fascism Risk Premium, Again, or What an Economy’s Worth

Now that I’ve taught you how economics really works, you can understand the fascism risk premium at its simplest and truest.

So. Growth and prosperity don’t come from Gestapos, authoritarian edicts, ugliness, hate, stupidity, spite, vendettas. They come from science, literature, truth, justice, freedom, all the pillars of modernity.

Now. What’s the price of the paragraph above? What happens when we eviscerate the stuff of modernity in a hundred days, all of it, science, literature, truth, justice, freedom—and what’s left is a black hole, in which simmers and boils ugliness, hate, stupidity, spite, and all the flavors of destruction?

That’s what the markets have to compute.

What’s all that worth?

This is the difference, by the way, between finance, which is just mechanics, and economics, which is conceptual. But I digress a little bit. I want you to understand all this well and deeply.

Now. In a normal world, that risk premium would be hard to compute. And nobody’s saying, by the way, that it has to be done precisely. Just as a kind of rough estimate in degrees.

But the problem, as I’ve explained to you, is that the markets are pro-Trump to begin with. Not having read much in the way of history, being incurious, and being generally OK with the principle that money is the point of human existence, markets are now baffled at how to understand the relationship between fascism and risk and growth.

So they are being very, very schizophrenic. They don’t know up from down. one week, they head this way, the next day, bam, they go the other. They appear a little undone and a lot delusional. You can see the struggle in the lines they trace, which are the lines of struggle itself, full of resistance, weary, heavy with confusion.

But you already know the answer they don’t.

What’s an economy worth, without science, literature, truth, discovery, justice, freedom, and so forth?

Not as much as it used to be.

Maybe not very much at all.

Why a Fascist Economy is Worth Less than a Not Fascist Economy

Now. There is only one way out of this mess.

And that way is down.

The markets will struggle to figure all this out, for the reasons above. They are in unfamiliar terrain, and worse, the pied piper who led them there was the very figure they believed in most, and still do. Markets are just people, and most people in America’s financial markets are still die-hard Trump supporters.

Good luck with your money, if they’re all you have on your team, because by the time they figure it out, much of it’s going to be gone.

It’ll take the markets, I’d guess, maybe the next 6 months to a year to really digest the fascism risk premium. And even then, because they love Trump so much, they’ll sort of give him a pass, and the premium still won’t be as high as it should.

I’d better explain that part.

None of the above is theoretical.

When I say that an economy without science, literature, freedom, truth, justice, etcetera, is worth less, probably a lot less, I’m not sort of making some grad-school seminar level point. I am talking about your money. An economy without that stuff in it is going to be valued at a much lower level, and all “markets” are are ways to value an economy.

So the reason that America’s markets are all dropping—stock, bond, currency—is because the world is figuring out, very fast, that an economy without all the stuff of modernity in it is worth a lot less. And as that calculation sets in, Americans are going to lose their life savings to a large degree, because in America, your life savings are made of dollars, stocks, and bonds.

By the time Wall St figures this out, it’ll be way too late for most people.

So none of this is theoretical.

None of This is Theoretical, or, Capital Flight From America

It is already happening before your very eyes.

The world is applying a fascism risk premium, and saying, an economy without modern institutions in it, freedom, truth, science, etcetera, is worth a lot less to us than otherwise. We don’t trust it, we don’t want to invest in it, we don’t even want to hold its currency as much.

America’s markets, on the other hand, are being very, very slow to understand this, because unlike the world, they’re in a doomed love affair with fascism, and don’t appear to understand that it isn’t good for them, either.

They have fallen into the trap conservatives often do, which is to imagine that money and power are the point of life. So when a pied piper comes along like Trump, promising you more of them than ever—The Most in History!!!!!—you are easily seduced.

We liberals, on the other hand, and I use that we broadly to mean anyone more or less who’s not cheering for fascism, tend to want to do better things with our lives. So we create, teach, guide, nurture, nourish, tend. Me? I teach you about these things because you need to know about them, but I’d rather be making music or falling in love.

I say that so you understand how different we are from the people we are dealing with. The whole world is, really. America’s financial markets are really different in this sense: they’re packed with die-hard believers in capitalism, who call anyone who’s not an obsessive-compulsive fanatic about money a “communist.” But in Europe, it’s perfectly cool to be a social democracy and work in finance. See my point a little? I digress again. This whole capitalism-as-a-cult thing, which is how you get to fascism, is just going to make the world run away in horror from America even more, because nobody much wants to deal with people like this anymore.

None of the above is theoretical, and now let me make clear what I mean.

Staying Ahead of the Curve

America’s markets will be achingly slow to figure out the fascism risk premium. It will take them the better part of year, maybe more. Because they’re not just investing your money, way before that, they’re invested in Donald Trump.

Who do you think they’re putting first?

Right now, it’s not you, it’s Trump.

During that time, America’s finance types will continue their uneasy dance around the edge of an abyss. And there will be occasional crashes, as reality sets in.

The world, meanwhile, is already applying the fascism risk premium, and that’s why American assets are dropping steadily.

The world understands how fascism devalues an economy. America does not.

So. In terms of your money, that’s a very great deal of risk. Because by the time American finance types figure it out, wham, it’s going to be too late. That’s the curve to stay ahead of.

Now. You might be wondering: so how high is this “fascism risk premium,” anyways? The answer to that is: we don’t know yet, but it’s a lot higher than this. So far, Trump’s already lost most Americans about 10-15%, maybe 20,% of their wealth, and we’re barely a hundred days in. And that’s just today, not even factoring what all the destruction to say, research, will cost tomorrow.

My answer goes like this. An economy without science, truth, justice, literature, freedom, etcetera—or at least one with much less of those—is going to be worth a lot less. And the rest is sort of noise. “A lot” means what it sounds like. It’s already 10-15%. Does it even matter if it’s 50%? 61%? 73%? Who cares? At that point, the answer’s academic. In the real world, all it means is: a lot of people will have lost a lot of money, and living standards will crater, and…

Society will be poorer, permanently.

That is what fascism does. It impoverishes us, in many ways, socially, morally, spiritually, and also, yes, even though American finance doesn’t get it, and maybe never will, until it’s too late, in monetary terms, too.

That’s my answer. Please think it over carefully. I’ve tried to teach you some fairly cutting-edge stuff, and if I did it well, you will have learned a way to think about the economy that’s elegant, powerful, and useful. I did that because I care about you guys, and I don’t want you to get burned by this coterie of jokers, charlatans, and villains.

If you need help, as always, feel free to reach out.

Lots of love,

Umair (and Snowy!)

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