Thread by @JWalters314

The Federal Reserve most recently cut rates on October 29, 2025, lowering the target range to \(3.75\%-4.00\%\). This followed a previous rate cut on September 17, 2025. 

The Fed still models the world as if we live in a credit-starved industrial economy — the 1950s template.

But in 2025 we live in a capital-glutted financial economy. Every rate cut now fuels:

Asset-price distortion

Wealth concentration

Misallocation of credit toward non-productive rent-seeking

It’s the opposite of stimulus — it’s financial over-feeding.

America’s problem isn’t a lack of liquidity — it’s a lack of productive uses for it.

Until capital scarcity replaces capital surplus, the only sane policy is tight money and fiscal targeting, not another cheap-money relapse.

The U.S. private-credit market (direct lending, mezzanine, BDCs, private debt funds) has ballooned from under $500 billion in 2010 to $2.1 trillion+ in 2025.

That capital isn’t chasing new factories or infrastructure — it’s chasing yield substitution in financial engineering, leveraged buyouts, and real-estate speculation.

Lowering rates only floods the same pipes with more liquidity, worsening the “too much money, too few assets” dynamic.

In theory, rate cuts encourage investment.

In practice, when the system is already saturated:

Firms refinance old debt instead of expanding capacity.

PE and family offices arbitrage spread, rolling cheap funding into higher-yield structured loans.

Asset valuations rise while productive output stagnates.

This is how we got post-2010’s bizarre coexistence of asset inflation + productivity stagnation.

Private credit acts as a shadow central bank:

It channels capital to leveraged borrowers the banks won’t touch.

It prices risk off the same benchmarks the Fed manipulates.

It can keep credit conditions loose even if official policy stays “tight.”

When Powell lowers rates into that environment,

he’s effectively outsourcing leverage to unregulated intermediaries — extending the cycle without changing the fundamentals.

What the system needs isn’t more liquidity — it’s discipline:

Higher rates would force capital to reprice risk and differentiate returns.

Marginal projects and zombie borrowers would clear out, reallocating capital toward productive sectors (energy transition, logistics, manufacturing).

The wealth-effect loop — where money printing raises asset prices, which raises collateral, which raises leverage — would finally slow.

In short: draining excess liquidity is creative destruction, not austerity.

The U.S. economy in late 2025 looks superficially “healthy” (high stock indices, tight labor market, booming private credit), but the vitals tell another story: it’s an over-stimulated system mistaking liquidity for strength.

After fifteen years of financial doping — QE, zero rates, and asset purchases — the economy no longer grows through real investment or productivity gains.

It grows through liquidity pulses: every cut or dovish signal triggers a capital surge into equities, credit, and housing.

Cutting again in 2025, when private credit and asset valuations are already at record highs, is like giving morphine to a patient whose vital signs are already elevated.

You feel better, but the system’s dependency deepens.

The tariff regime now acts as a supply shock tax on imported goods and intermediate materials.

Instead of cooling inflation, tariffs raise input costs, forcing the Fed to choose between:

Fighting inflation with higher rates (which it won’t), or

Funding fiscal deficits and asset prices with cheaper credit (which it is).

That combination — protectionism + monetary easing — is inflationary, regressive, and self-defeating.

It props up financial assets while eroding purchasing power for households.

This is a regressive tax disguised as patriotism.

It doesn’t rebuild factories; it just inflates margins for politically protected producers.

The operating system of U.S. economic policy has inverted — what once built a middle class from the bottom up now extracts from it

to stabilize capital markets and political optics at the top.

Tariffs take from consumers.

Money printing pays asset holders.

The middle class becomes the shock absorber.

The form is nationalist populism; the function is financialized extraction.

It’s not the “free market” or “industrial strategy” running the show — it’s a hybrid regime designed to stabilize asset prices at any cost, even if that cost is household purchasing power.

The stock market is not the economy — it’s the thermometer of liquidity.

When the Fed floods the system with cheap capital:

Earnings multiples expand even if real profits stagnate.

Buybacks soar as firms borrow cheaply to boost EPS.

Passive flows inflate indices regardless of fundamentals.

In that sense, a soaring S&P 500 in a structurally imbalanced economy is not a triumph — it’s a vital sign of addiction.

The patient is drinking the IV instead of receiving a steady drip.

Every time policymakers “juice” the patient, the withdrawal becomes harder — forcing ever-larger doses next cycle.

When you own more than you can consume or even conceptualize, the normal feedback loops of satisfaction break down.

You can’t “feel” wealth anymore — it’s abstract, automated, indexed.

So the ultra-rich seek stimulation, not security.

They experience the economy like spectators in a colosseum — where volatility, crisis, and pain among others generate the only sensations left: control, adrenaline, consequence.

It’s not always conscious malice — it’s emotional atrophy.

For the ultra-wealthy:

Volatility is stimulation.

Suffering is confirmation of control.

Policy failure is a source of leverage.

That’s why crises are no longer feared; they’re opportunities.

When markets collapse, assets reprice, and the government rushes to “stabilize” — liquidity redistributes upward again.

To those at the top, the suffering of others becomes the medium through which they feel alive in a system they’ve otherwise conquered.

You could call this existential decadence — a point where the elite class is so removed from consequence that only collapse still evokes sensation.

That’s why “creative destruction” is no longer a Schumpeterian process — it’s an emotional ecosystem for elites: they destroy to feel.

They cut rates to reawaken euphoria, then watch the fallout as spectacle.

The same way an addict builds tolerance, the system’s upper tier builds numbness — and only crisis can pierce it.

Perhaps the economy isn’t addicted to liquidity so much as the The ruling class is addicted to watching the world react to it?

Each policy cycle is another dopamine hit — not because it serves growth, but because it preserves hierarchy.

When nothing else moves them, watching others bleed becomes the last stimulant in the portfolio?

This is not mere greed; it’s a craving for consequence.

When your wealth renders you immune to the normal feedback loops of life,

watching others struggle becomes a form of vicarious sensation.

The market and tax laws are not just a balance sheet — but an emotional playground.

America’s governing class has turned policy into performance art.

Tariffs masquerade as patriotism while functioning as taxes on consumers.

Rate cuts masquerade as growth policy while inflating assets already owned by the wealthy.

The system’s software now runs on an unspoken algorithm: stabilize capital, externalize cost.

Incompetence alone doesn’t explain the problem — cognitive capture does.

People inside elite policy institutions are:

Educated in the same schools,

Circulating through the same think-tank and corporate boards,

Socialized into the same frameworks of “stability = asset preservation.”

So they aren’t dumb — they’re indoctrinated into a worldview where what’s good for capital markets is what’s good for the country.

It’s not conspiracy, it’s epistemic monoculture.

Their models tell them they’re saving the system, when they’re actually narrowing its oxygen supply.

They perform control at the Fed, Treasury, Commerce, State, and SCOTUS because the appearance of mastery is the only form of legitimacy left.

But underneath, the machine runs mostly on legacy code, inertia, and denial.

In a healthy system, failure provokes reform.
In this one, failure provokes bailouts and promotions.
Policymakers who rescue markets get rewarded with influence, not replaced.

“Too big to fail” has become the defining qualification for leadership.

Private-sector alumni rotate back into public power to “fix” crises they helped design.

So incompetence is not punished — it’s institutionalized.

Over time, that produces a class of leaders who know how to survive crises, not prevent them.

The upper strata of American power are not cartoon villains; they’re narcissistic custodians of a machine they no longer understand.

They don’t conspire to destroy; they default to preservation — of their institutions, their legitimacy, and their portfolios.

And in doing so, they confuse inertia for wisdom.

Incompetent enough to believe their models still work.

Cynical enough to protect their own interests first.

Isolated enough to never feel the costs of their errors.

They’re trapped in the same addiction cycle as the system itself: too scared to change, too proud to admit dependence, and too insulated to feel the consequences.