The problem before us couldn’t be clearer.
As long as we have a debt-dependent, interest-based economy, we have a built-in addiction to growth, pure and simple. Not because interest mathematically requires perpetual expansion, but because the institutions we’ve built around borrowing, lending, taxation, and investment are rewarded when tomorrow’s economy is bigger than today’s.
There are two other economic “reality use cases” that don’t get nearly enough attention.
If you want stability, you need to remove the built-in bias toward either growth or decline. Reward durability, efficiency, and maintaining what already works.
And if you believe the world needs to stabilize—and eventually perhaps voluntarily reduce—its population from somewhere around 9 billion, then you need an economy that can prosper with fewer people and less resource consumption. Not one that requires ever more customers, workers, borrowers, and taxpayers just to keep yesterday’s promises.
OK. Simple enough to be obvious from middle school on. But here’s the problem: No one is teaching it. At least not where the decisions are being made.
Instead, we’re trying to grow our way into balance, finance our way into sustainability, and borrow our way into a future that may require less of almost everything except intelligence.
When growth is the only rewarded outcome, even destruction can become a business opportunity. War destroys infrastructure, which creates reconstruction contracts. Disasters destroy homes, which creates rebuilding demand. Disease creates medical revenue. None of this makes society richer simply because someone gets paid. But the revenue appears on somebody’s books, and that’s enough to keep the machinery interested.
This isn’t really hard to figure out. (I mean, if I can….)
Defining MCP — Monetization Change Point
A Monetization Change Point is the moment when an economy begins rewarding stability, durability, efficiency, and reduced resource consumption as reliably as it now rewards expansion.
We aren’t there.
Earlier, Dow futures were up a bit—50 points or so—while the other indices were also stirring in their graves. Brent was down, which should help markets firm. Hardly worth your attention unless—and only unless—you are actually ready to click a buy or sell order today. Otherwise, take a day. The Market Show will still be running tomorrow.
More interesting are two reader comments that nicely summarize the titanic battle for the territory between your ears.
Reader n___ notices something positive:
New power plant work is surging, but this time for heavy industry, not data centers. I think we will be swamped again with new orders before the end of the year. We are looking at multi-year production backlogs.
I’ve heard much BS about the Federales sponsoring replacement of Chinese sub industrial partners; I’m now seeing the first indications that it is real.
Balancing that, reader d’Lynn is bothered that:
Goldman Sachs has lost nearly all of its year-to-date gains as the bond market rises. 26 other corporations sit on the same door-step.
“Brace for Impact.” We are on the verge of the greatest price drop in history – Oxford Club.
Dimon: AI will cut jobs, that’s the way it is., but cut truckers’ pay to $25,000 a year and you risk civil unrest.
This world is so messed up that even Tom Cruise is starting to make sense.
Bunch of wise old men around here—band of merry thinkers that we are.
And notice something important: Both readers can be right.
One sees factories gearing up, power plants being ordered, and years of industrial work ahead. The other sees financial stress, threatened employment, and the possibility that markets have priced in a future that the underlying economy can’t deliver.
That’s not necessarily a contradiction. It’s what happens when we confuse growth in transactions with improvement in human circumstances.
A factory can have a five-year backlog while the people buying its products are going broke. An AI company can build a billion-dollar data center while eliminating jobs that once supported thousands of households. A country can report rising GDP while its citizens spend more time and money just maintaining the lives they already have.
The numbers go up. Whether life gets better is another question entirely.
Which brings us back to MCP.
Until we figure out how to monetize not needing another replacement, not requiring another loan, not rebuilding something that should never have been destroyed, and not consuming resources simply to keep the growth machine fed, we’re going to keep rewarding activity whether or not it improves the human condition.
Monetization of growth can turn war and misery into revenue engines for particular industries. And we see precious little evidence of a Monetization Change Point.
In fact, some of us are so old that we’ve watched the meaning of “funny papers” evolve from Sunday comics to Confederate money, Weimar money, unredeemable dollars, Federal Reserve notes, collateralized mortgage obligations, purely notional crypto, and those wonderful pseudo-paper NFTs.
Oh, and I’m a Zimbabwe trillionaire, too!
Not all of those financial instruments are equivalent, of course. Some represent useful claims on productive assets. Others represent promises, speculation, or historical souvenirs. But the progression is a reminder of how inventive humans become when there’s money to be made creating another layer between value and its supposed representation.
My, ain’t Progress something to behold?
The real question isn’t whether we can keep growing. Humans are remarkably good at finding new things to monetize.
The question is whether we can learn to make money when the right answer is to stop growing something.
Until then, watch closely as the business of destruction and reconstruction keeps finding new customers. Not because war makes the world wealthier—it doesn’t—but because the profits from destruction and rebuilding can accrue to particular players while the costs are spread across everybody else.
There’s your incentive problem.
And until the incentives change, don’t expect the outcomes to.
News Compressor: ON
First-Aid kit at the ready? PPE on? Let’s roll.
Hurricane landfall: Isaias will make landfall along the northern Gulf Coast within approximately 24 hours. Odds: 95%.
Energy production: A substantial portion of temporarily shut-in Gulf offshore production will remain offline through Saturday while operators evaluate conditions. Odds: 90%.
Refinery disruption: The storm will cause at least some precautionary refinery, pipeline or petroleum-terminal interruptions beyond offshore production shutdowns. Odds: 80%.
Middle East diplomacy: U.S.–Iran discussions will continue without a publicly confirmed comprehensive settlement during the forecast window. Odds: 80%.
Regional military escalation: Additional Houthi missile or drone attacks against Saudi or Red Sea targets will be reported within four days. Odds: 70%.
Horn of Africa: Ethiopia–Eritrea border tensions will produce further military incidents or official warnings during the forecast window. Odds: 75%.
European debt: French government borrowing costs will remain sensitive to budget negotiations and political developments. Odds: 80%.
AI finance: Additional large AI infrastructure financing announcements or investor concerns about capital requirements will emerge within four days. Odds: 70%.
These are judgmental forecasting estimates, not statistically calibrated probabilities. On the other hand? Ignore the odds at your peril, especially if making beer bets. It’s Friday, after all, and the idea is win ’em, not lose ’em.
And So?
The latest internet galvanize-polarize-monetize story would well be this one: Pentagon says execution of Fort Hood shooter will be livestreamed | AP News.
Yes, in our view, Malik has it coming. Televising the firing squad sends an important message to enemies of America: Don’t do it.
But brace yourself for mood-swings over this being on TV.
We’d remind any hand wringers that on any particular night, after rousing car chases and such, hundreds die in televised violence.
In fact, so pernicious was TV violence that in the 60s, at the firehouse, Pappy advised his platoon “Sit back at least 10-feet or the blood will get all over you…” B-shift at Engine 37 counted 32 deaths in one Untouchables episode.
And so…dying on TV is…what, exactly?
Around the Ranch: AI & Witch Mirrors
Hell of a paper on Peoplenomics tomorrow. What is the connection?
Think about it: A glass mirror reflects the body back to intelligence. AI reflects intelligence back to itself. Tomorrow we’ll explore what happens when the observer starts wondering which side of the mirror it’s on.
If you don’t follow already, the AI revolution is starting without you.
Item #2 Happy Birthday
HBD’s to daughter Allison and son G2 – “the twins” (but more like womb-mates). They’re turning 46 today.
Elaine and I figure it’s a sure sign of aging when the kids start getting Social Security. Elaine started younger with the “kid thing” so she’s already got two getting benefits. Or, is it three?
Number of offspring getting benefits has become like birthdays for us. We don’t talk about ’em so much, anymore.
Write when you get rich,
George@ure.net