The Grand Idea
1 = ~ 1 (x amount of years in the future)
Every year, and more relevantly over the course of time, people want access to more things. They do not set aside money in order to afford these future wants, but rather expect them. In order to maximize this tendency we do not have a fixed amount of dollars like you would gold.
This function makes each additional dollar worth less than the previous. This is more true as time goes on. We try to minimize this by making more people in the world believe 1 dollar is better than one "currency" - more accurately we scare them into belief. In order to do this we need to make a huge supply available for transactions that are outside our core functions as individuals. We make rules around this system like you must pay bills or buy oil in dollars.
This creates the need to hold something that is not fixed, but still have it available to spend on constant cost. You're holding a home, but don't have any cash. But on the billions, and trillions scale.
So we create debt. The giant scale is that we guarantee payment with the full faith and credit of America that if you give us 100k today we will give you 105k in x amount of time. X becomes a very important variable and this is what the fed decides kinda sorta. More generally it's set by the people that have the money to make the agreement. Think banks, or world governments. Banks have huge deposits, and the need to transact daily.
This in turn allows us to grow the money supply more towards the edge of what's good. If you agree to pay someone back in 30 years you're gonna want to do something with the cash you've gotten for the agreement.
On Leverage and Modern Equity Structures
The system has been hijacked for the sake of image rather than genuine value creation. Modern equity compensation structures have corrupted price discovery mechanisms. Historical governance like Rockefeller-era rules required 20-year post-retirement vesting to align decision-makers with long-term outcomes. Now we create traders instead of owners.
The concentration becomes stark: The S&P 500 increasingly resembles an "S&P 12" in terms of cap-weighted influence. We're not investing in "the market" anymore - we're investing in the continuous narrative success of a handful of players who've learned to manipulate the story better than they create value.
The real productivity gains might be happening in some industrial process improvement or unsexy B2B software, but capital chases the shiny objects that can articulate a vision of the future, whether or not they can deliver it.
Reflections
Follow the chain: people want access to more things over time. They don't save for them - they expect them. So we don't fix the money supply. Each dollar becomes worth less. To minimize this, we scare the world into believing our currency is best. We create rules: pay your bills in dollars, buy oil in dollars.
This creates a need to hold something that's not fixed but must remain available for constant transactions - at the scale of billions and trillions. So we create debt. The government guarantees: give us 100k today, get 105k back later. That variable - when "later" is - controls everything. And who sets it? Those with enough money to make the agreement.
But something shifted. Modern equity compensation structures corrupted the system. Historical governance - Rockefeller-era rules requiring 20-year post-retirement vesting - aligned decision-makers with long-term outcomes. Now we create traders instead of owners. People optimizing for narrative rather than value. The system hijacked for image rather than genuine creation.
Consider what this means: The S&P isn't "the market" anymore. It's a handful of companies that learned to tell better stories than they build products. Real productivity gains happen quietly in unglamorous places. But capital follows the vision-articulators, whether they can deliver or not.
What happens when the entire structure depends on narrative success? When price discovery is corrupted because everyone's incentivized to optimize for quarters instead of decades? When currency debasement enables it all to continue indefinitely because failure gets papered over with new money?
Is this capitalism anymore? Or something that captured capitalism's language while serving entirely different purposes?