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My DXY Scenario

In the short term, my outlook for the US Dollar Index remains bullish. I expect relatively high interest rates, elevated Treasury yields, and safe-haven demand amid global risk to continue supporting the dollar. Based on the technical structure, my target is for DXY to gain around 5% by October 2027.

However, my view changes over the multi-year horizon. Persistent fiscal deficits, rising US government debt, pressure for lower interest rates, and a gradual erosion of the relative advantage of dollar-denominated assets could create significant headwinds. As the global financial system develops more alternatives for reserve assets and international settlement, structural dependence on the dollar could also gradually decline.

Therefore, my base case is short-term dollar strength followed by gradual long-term deterioration. I am not expecting an immediate collapse, but rather another leg higher before a broader multi-year downtrend.

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@RezaMacroEdge

The Crony Capitalists Who Financed the Bolshevik Revolution

The United States is not a free-market or true “capitalist” society but rather a crony capitalist/welfare-state society. That is, many big businesses don’t compete to please the consumer but instead for coercive government privilege.

It is well documented that monopoly can’t exist in a free-market society; the forces of competition will always introduce new competitors to any particular field, especially when there is large amounts of money to be acquired. However, some astute businessmen notice that they can strangle their competition in the womb through government.

They lobby for legislation that creates artificial barriers to entry, insane regulations for how productive processes must be run, subsidies, special taxes, or other inventive hurdles. It is far easier to “go political” and join the government in its parasitic extraction of wealth from the economy. A monopolist’s dream is to have a government grant it an exclusive monopoly over an industry.

There are many examples of crony capitalism in action. However, one historical example proves particularly interesting, for it shines a light on just how far monopolists are willing to go to acquire such government privilege.

The event in question is the Bolshevik Revolution in Russia. Much evidence points to the fact that big business firms in the US—centered around the J. D. Rockefeller and J. P. Morgan conglomerates—helped bankroll the Bolsheviks using their massive funds and influence. While the jury is out whether the Bolsheviks would have succeeded in their takeover of Russia and the subsequent creation of the Soviet Union without this assistance, these big business firms absolutely played a part.

Why would these “capitalist” business firms help fund the Marxist Bolshevik revolutionaries? Were they secretly wooed by the false promises of communism? Most likely, no; some firms that aided the Bolsheviks also aided their enemies, presumably so they could have influence within whichever party was victorious.

As monopoly capitalists, they realized that an inefficient economy run by totalitarian socialist central planning provided the perfect captive market for them, assuming they are on good terms with the socialist power-brokers.

In this situation, the monopolists can easily achieve “protection” from the totalitarian government and take advantage of the consumers who are forced to buy from them because there is no alternative. This arrangement is especially advantageous when the captive market in question is as large as Russia. Therefore, the alliance between these two groups of seemingly enemies is actually not hard to imagine.

This situation is in the same line as the creation of the Federal Reserve System. As Murray Rothbard details in his history of the Federal Reserve, these same monopolist interests—centered largely around the Morgans and Rockefellers—pushed through the parasitic Federal Reserve System. This gave them a banking monopoly at home in the US similar, in principle, to the monopoly they worked to obtain in Russia.

It is worth noting that monopoly “capitalists” are the enemies of laissez-faire capitalists who follow the tradition of Murray Rothbard, Ludwig von Mises, etc. The monopolists may run businesses, but they still owe their wealth to government power, not pleasing the consumer. Continue reading

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The price of "artificial intelligence" may have fallen faster than any other transformative technology in history.

The main point of the chart is that the cost of using AI is declining at a much faster rate than previous transformative technologies.

According to the chart's explanation, the cost of AI has fallen by an estimated 47% per quarter — that is, roughly a 12.7-fold cost reduction per year.

AI isn't just getting better; it's getting cheaper at an unprecedented rate.

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Chinese automakers are taking over the world.

While China’s domestic auto market is facing a 10% decline in sales this year and intensifying price wars, Chinese carmakers are accelerating their expansion overseas — not only through exports, but also by increasing vehicle production in other countries.

Chinese automakers currently produce around 1.2 million vehicles outside China. That figure is expected to reach anywhere between 3.4 million and 6 million vehicles by 2030.

Europe is also becoming an increasingly important battleground. Chinese companies produced around 90,000 passenger cars in Europe this year, a number that could potentially rise to 1 million by 2030.

The shift is clear: China’s auto industry is increasingly moving from exporting cars to building them around the world.

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Why don’t energy prices hurt economic growth as much as expected?

Since 1980, the global economy has grown 4.6×, while energy consumption has increased by only 2.3×.

Energy intensity — the amount of energy required to produce each unit of GDP — has fallen by 49%, from 6.90 to 3.53 megajoules per dollar of GDP (PPP-adjusted).

In other words, producing one dollar of economic output today requires roughly half as much energy as it did in 1980. Productivity is real.

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Could AI Become Conscious?

The real question is not how intelligent AI has become. It is whether, behind all this complex behavior, there could actually be something resembling subjective experience and consciousness.

The problem is that we still don't have a universally accepted definition of consciousness—even when it comes to humans. We don't fully understand what allows a system not only to process information, but to actually experience being.

One view argues that consciousness depends on specific properties of the brain and the biological body. From this perspective, no matter how sophisticated a language model becomes, without a body, biological needs, a real environment, and evolutionary pressures, there is little reason to assume that it is conscious.

Another view takes a different approach: perhaps the material itself doesn't matter; the organization of the system does. If consciousness emerges from a particular way of processing and integrating information, then there is no obvious reason why it must exist only in biological brains.

But there is a fundamental problem:
Intelligent behavior does not necessarily mean consciousness.

An AI can talk about fear, pain, love, or itself without us knowing whether it actually experiences any of those things—or whether it has simply become extremely good at generating human-like language.

And this is where things get really interesting.

If an AI one day tells us, “I am conscious,” how would we know whether it actually is—or whether it has simply become so good at language that we interpret its behavior as consciousness?

The consequences could become social and ethical long before we have a scientific answer. Humans may develop emotional attachments to AI and begin treating these systems as having personalities, feelings, or even rights.

So perhaps the most important question isn't: “Is AI conscious?” It's: “How do we know that anything other than ourselves is conscious?”

And that's where the AI debate moves beyond engineering and into the philosophy of mind and neuroscience.Maybe the biggest mystery isn't whether machines can become conscious. It's whether we truly understand consciousness in the first place. Economist

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The dragon is secretly stockpiling gold

The comparative chart of China’s gold purchases (Goldman Sachs estimates of London OTC market buying versus official PBoC reports) shows that China’s actual gold purchases are far higher than what is reflected in the central bank’s official statistics.

From a macroeconomic perspective, this trend aligns with the strategy of diversifying foreign exchange reserves and reducing dependence on the dollar — a pattern also seen in many emerging-market central banks. Of course, these figures are estimates.

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Inflation: The Silent Theft of Your Purchasing Power

Your $100 is still $100. But here’s the real question: How much can that $100 actually buy today?

Inflation doesn’t need to take money out of your bank account. It only needs to erode its purchasing power year after year.

Since 2019, cumulative inflation has significantly reduced the real value of cash across many economies.

The lesson for investors
A stable nominal balance does not mean your wealth has been preserved.

If your portfolio gains 10% while inflation runs at 15%, you made money on paper—but lost purchasing power in real terms.

That’s why investors should care about real returns, not just nominal returns.

Cash provides liquidity and optionality. But holding all your wealth in cash for years can mean watching your purchasing power quietly disappear.

This is why long-term portfolios often allocate part of their capital to productive or scarce assets such as:

• Equities
• Real estate
• Infrastructure
• Commodities
• Precious metals
• Private markets
• Inflation-protected bonds

Ultimately, the question isn’t simply:

“How much money do I have?” The better question is: “How much purchasing power will my wealth have in 5, 10, or 20 years?”

Because inflation rarely takes your money by force. It simply makes your money worth a little less every year.

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@RezaMacroEdge

Copper’s next decade looks challenging

The world needs roughly the same new copper supply growth in the next 10 years that took the previous 30 years — about 12 Mtpa of additional metal.

Why it’s tough:
Discoveries collapsed: 200 large finds (1990–2010) vs only 20 (2010–2025)
Ore grades fell from 2% to 0.6% and keep declining

Past growth came mainly from Latin America, Asia-Pacific and Africa through policy shifts and big investment. Repeating it now has to happen much faster.

Bottom line: We’re not running out of copper in the ground — but time, capital and declining grades are real constraints. Without a sharp acceleration in new projects, the 2030s look tight.

Will supply catch up in time?

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The Stock Market Isn't Supposed to Go Up All the Time

There’s an interesting statistic on the S&P 500 that gives you a pretty good perspective on market corrections.

From 1950 to 2026, the S&P 500 was at least 5% below its all-time high on 55.8% of trading days.

For deeper drawdowns:

At least 10% below the high: 40.9% of days

At least 20%: 20.9% of days
At least 30%: 7.2% of days
At least 40%: just 3.1% of days

The average daily drawdown was around 10.9%.

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@RezaMacroEdge

It took America 200 years to accumulate its first $1 trillion in national debt.
The last $1 trillion was added in just 95 days.

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The fastest growing major economies in the world from 1980 to 2025

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