Stealth Financial Repression
A mental model for trillion-dollar IPOs.
“Much have I traveled in the realms of gold, and many goodly states and kingdoms seen.” – John Keats
A common angst among gold holders is the lengths the US government will go to in order to delay the eventual dollar reckoning. It seems a mathematical certainty that rising deficits and interest rates mandate money printing, that money printing begets debasement, and that debasement necessitates the accumulation of hard assets by those who would prefer sounder money. An accounting of our personal gold holdings would certainly buy us membership in that club.
History teaches that in the final stages of currency collapse, authorities get desperate, and the legal ability to steal in the name of the public treasury becomes difficult to resist. Piles of gold have regularly been seen as tempting targets.
David Rogers Webb’s self-published book, The Great Taking, codifies this concern by pointing out how the modern plumbing of sophisticated financial markets seems almost designed to enable last-second pilfering, making all financial assets susceptible to forced confiscation in the extreme. Included in scope are stocks, money market funds, bank deposits, and yes, exchange-traded funds purportedly backed by gold.
Against this backdrop, it is easy to dismiss the emergence and normalization of trillion-dollar public equities as little more than proof of how late in the game things are. That money-losing, privately held companies are not only permitted onto the public exchanges at seemingly unachievable valuations, but also their ownership is practically forced into unsuspecting retirement accounts through passive indexing, is surely a sign of some kind. But of what?
Having thought through the mechanics of what happened last Friday, we diverge from our normal programming to indulge in a bit of speculative dot-connecting.