What Happens to the Economy as America Becomes a Dictatorship

Hi! How’s everyone? Welcome back old friends, welcome new ones, and here’s a tiny Snowy hug to brighten your day.

Today we’re going to discuss finance, politics, and economics. What…what America’s becoming means for you. Practically, in hard terms, financially, economically, by way of sociopolitically. What’s going to happen, next, why, and why everyone from the press to Wall St’s in such deep denial about it.

It’s been a joy and a pleasure to meet so many of you in sessions, by the way. I’m deeply humbled and amazed to have you guys as my readers! (Don’t tell anyone, but there’s a Bonus Snowy Pic at the end of this little essay.)

When you see stock markets rallying in times like these, worry. Don’t panic. Just understand the reality. Which is obvious. They shouldn’t be.

And what that means is also clear. Larger crashes are on the way, because what markets are doing right now is seriously and gravely mispricing risk.

I’ll come to that, but first let’s talk about markets rallying during a time of near constant bad news. Serious bad news. Not trivial. The economy contracted, suddenly, as it was always going to do given sky-high tariffs. Meanwhile, company after company began to warn of the effect of said tariffs, suddenly depressing their earnings. And at the same time, foreign investors began to walk away from America.

So why are stock markets rallying? And why does it matter?

It matters for a very simple reason. All around you now what you see are broken institutions. So far, that’s been a little abstract. But now another broken institution, which is Wall St, is in charge of everyone’s life savings. And there it is, pretending everything’s not just fine, but going to be fine, and that all this is OK.

All this. What is “all this”? People being disappeared. Crackpots and lunatics in power. America fast becoming something like a dictatorship, and I’ll come to that shortly, too. The world reacting in revulsion and shock, moving fast to isolate America, so much so that Canada, of course, just reversed course and elected Mark Carney, instead of its own mini-Trump, and very shortly, there’s going to be a Canada-Europe axis of social democracy.

All that, and that’s just a beginning.

Doesn’t matter? Don’t kid yourself. Wall St is delusional at the moment.

Remember a few years ago? That was when too many people pretended everything was fine. It can’t happen here. La-la-la. None of this is really happening. In that era, liberals, and notably the Democrats themselves, were afraid to use the words fascism, authoritarianism, and dictatorship.

They’re begun using those words, but of course it’s far too little far too late now. I’m drawing an analogy for you. This time, it’s Wall St pretending All Of This is OK.

It’s badly wrong, and it’s going to lose a lot of people a lot of money, very shortly, after it already has been.

Let me give you a principle by which to orient yourself in times like these. You already know it, but now you must really grasp it, feel it, use it.

The NOTOK Principle.

None Of This is OK. NOTOK. Let’s call that the NOTOK Principle.

Now, that might sound trivial, but we’re going to use it.

Wherever you see an institution telling you All This is OK, it is failing. It is failing you, it’s failing society, it’s failing the future, and it’s failing itself.

Let’s do a few examples, and then we’ll come back to money.

Universities have buckled, by and large. To overt levels of authoritarian control. American universities have always had too high an opinion of themselves—apologies to be blunt, but I want you to understand what’s really happening here, which is that American thinking ignores the rest of the world, and is a little arrogant. And now it doesn’t know what to do, because it’s never encountered a situation like this.

But if universities buckle now, what’s going to be left? Research? Tenure? Intellect? Already, journals are shutting down. That is a bad, bad—Soviet-level—omen.

They’re not employing the NOTOK Principle. And they’re failing as a result. We all know it, and we can all see it, but I want you, like I said, to get it. What it means. What it means is that a few years from now, America’s universities will be a joke, in sort of the same way as if you said today to someone that you had a PhD from Russia. These are the stakes, and the brightest minds are already on their way out.

Let’s talk about the press. Remember what a decent newspaper the Washington Post used to be? And take a look at it today. You’d barely know that America was a society sliding fast towards dictatorship. Mostly, perusing its pages, Things Seem OK. That, of course, is because Bezos eviscerated it, hoping to curry favor with Trump, and get an exemption from the tariffs, because his company is basically a Giant Storefront for China. But it didn’t work, because of course Trump revels in the art not of the “deal,” but of the double-cross.

So now Amazon’s tanking, and it’s going to continue tanking, because good luck selling that much cheap junk as tariffs bite, and bite hard. Yet there the stock market is, rallying. See what I mean a little yet? I’m going to explain it all to you, but first let me set the stage a little more.

What’s going to be left of the press? In a few years? Do you know what people around the world say to me about the Times and the Post and whatnot these days? They express a sense of shock and disbelief at how fast the American press has been dismantled, how quickly it surrendered, and how little is left. In a few years? The world will have forgotten America even once had a free press. Because of course, it won’t.

And in that way, the press is failing everyone, even itself. See my point a little?

Who else isn’t employing the NOTOK Principle? Wall St, obviously. Now that I’ve set the stage, let me explain how millions of Americans are going to lose a great, great deal of money pretty soon.

Micro and Macro Risk

What we’re talking about above is Macro Risk. I’ve discussed it with you before. It’s now one of the most crucial ideas in the world. I helped pioneer the field, you can remember when I used to discuss various of Civilizational and Existential Risk, and we’ll do more of that soon too, from climate to inequality to underinvestment to well-being itself.

The point for now is this.

Wall St is ignoring Macro Risk. Just pretending like it doesn’t exist.

It is telling you that the following things are totally OK, just fine, normal, cool, acceptable. That a society won’t have…

—A rule of law

—A separation of powers

—Constraints on power like checks and balances

—A free press and a healthy, confident public sphere

—A vibrant intellectual and academic sphere

—Basic democratic functions

—Norms of peace, justice, and truth

—Policies made by people who aren’t crackpots and lunatics

—A friendly relationship with the world

—Alliances and partnerships

—Respect, trust, and credibility in the eyes of the world

And so on.

All of that’s Macro Risk. Macro Risk has to do, in other words, with institutions. And you know this already, because your gut’s been shouting at you: hey, these things matter. They matter a lot more than money, because how can a modern economy function let alone grow without them? How does an economy if the only “research” we’re doing anymore is how being “woke” is what really causes cancer? If the only innovation in a society is about using AI to identify who’s a “commie libtard?” If the only politics left in a society is about expansionism, violence, and hostility?

It can’t. Economies can’t grow, let alone function very well, in contexts like that.

That’s why America’s economy is already contracting. You can see that plain as day, as in, it’s a literal statistic, that Wall St’s just ignoring, as if a shrinking economy is somehow going to be consonant with a rising stock market. They’re kidding themselves, but more to the point, they’re about to lose people a hell of a lot of money, because none of this is theoretical.

Do you see the world investing heavily in nations like America’s becoming? Go ahead, pick one, and it doesn’t matter which one. Iran, Russia, North Korea, maybe even beleaguered Venezuela. The list of genuinely hostile countries left on the planet is pretty small. Nations which provoke and intimidate and try to bully their way to power. There aren’t too many of them left, and here’s the rub, they don’t tend to do very well.

That is because the Macro Risk is too high.

This is what’s happening in America. Your gut knows it, but now you must know—must know—that your gut is correct. Anyone who ignores all this is a fool. Let us be blunt.

Who’s Going to Get Blown Up As America Becomes a Dictatorship

Anyone who says that all this is OK is going to get blown up.

And they are going to get everyone they take along for the ride with them blown up, too.

That means in a lot of ways. Those who stay at all these failing institutions will get blown up career-wise, sadly, even if they are trying to do the right thing. Good luck trying to do serious research in America ever again, or at least for the next decade or so, which in academic years is an eternity. That means those institutions who buckle and cave now are blowing themselves up, whether they know it or not, in the most basic terms of credibility, legitimacy, and authority.

But in Wall St’s case the stakes are far more visceral and direct. They’re not about ideas, creativity, innovation, intellect. They’re about money, right here and now.

Pretending that all of this is OK. What’s it called? What’s the word? You already know it. It’s called denial.

The Denial Curve, and Where We Are On It

And what we have here is a denial problem on an capital-H Historic scale. The American press has been in deep, deep denial that this was ever fascism, mercy me, why, you’re making me faint like a blushing Victorian bride when you use that word—denial so deep, that it’s spent a decade at this point telling us all never to say the F-word, and that’s how America got here.

American universities haven’t taught their students or themselves how fascism happens. They’ve been in la-la-land for the last decade, pretending that the point of all that research and intellect isn’t somehow to keep society vital and healthy, too, and that the entirety of modern history isn’t to be studied, reflected on, and learned from. Hence, you will never at an American university gain nearly the solid understanding of fascism and authoritarianism you will even in a European grade school, which is startling and amazing both.

Think of how scholars who tried to warn of all this had to fight their own universities to do it.

Denial, denial, denial.

And now we are at an even more advanced point on the Denial Curve. It’s no longer just the press and academia that’s in denial. Now it’s finance, too. The press was in denial that This Was Ever Fascism, academia was in denial that it could Ever Happen Here, and now finance is in denial about What Happens to Failing States.

But the answer is obvious, and anyone who’s ever read a history book or three at this point knows it. Their economies tend to follow the downwards trajectory of their polities.

Has there ever been a failing state in history that somehow got rich? Please take a moment and ask yourself that question seriously, so you have confidence in your own answer. Then ask yourself: why is basically all of American finance pretending the answer to that question is: never mind, Everything’s Going to Be OK?

The Denial Curve in Practice, or Why Finance Doesn’t Understand Macro Risk

Now I want to teach you why finance doesn’t understand Macro Risk.

What Wall St is doing with all of this whoo-hoo-the-stock-market’s-rallying stuff is this. What it knows how to do. And that is about Micro Risk. Micro Risk is about, for example, whether or not some company reports better earnings than expected. And that’s about it.

And even on that score, the Micro Risk one, Wall St’s doing pretty badly. After all, companies themselves are now warning that they’re going to be hit hard by tariffs. And meanwhile, Wall St’s sort of giggling, reclining, and being fed grapes like the final days of Rome are somehow to be enjoyed in decadent splendor.

They are not doing their job. And it’s pretty vital that you grasp this, because in America, you’re a Prisoner of Wall St.

In the rest of the world, you’re not. Europeans and Canadians don’t have to worry so much about their stock portfolios, and most people don’t have them. They don’t need to, because in Europe, for example, retirement’s taken care of. But in America, everyone’s a Prisoner of Wall St—they control your life savings.

Whether you want them to or not. Most Americans are Prisoners of bizarre institutions like 401Ks, but even those who don’t have them have to then “invest” what they can save, because there’s no other real way to retire at all, unlike in most of the rest of the world, and all of the rich world.

So when Wall St’s not doing it’s job, when it’s doing its job this shockingly badly, it matters a very great deal, because Americans are its capital-P prisoners. They have no choice, none whatsoever, than to be captives of Wall St—the other option, I suppose, is to die.

Put those two things together, and you will immediately see that we are headed for a dire scenario. Wall St continues not to do its job, which is pretty simple, just don’t lose people lots of money, because in America, it’s your money or your life—and as it fails, like the rest of America’s institutions, the fallout is catastrophic.

But this it’s not like it was before. Before, when the press failed, America began to lose its senses and its collective sense of reality. When political parties like the Democrats failed, it began to lose its democracy. When academia failed, America began to lose its ability to even make sense of what was happening to, insight, understanding, knowledge.

This time, as Wall St, what Americans are going to lose is their money. And you can live without a lot of things in America. You can make do, even when it comes to information, knowledge, relationships, and so on. But without money? It’s game over. America has no safety nets. And so the fallout this time is going to even more severe than what America’s already lost.

Using the NOTOK Principle to Orient Yourself

I don’t say all this to panic you. That is emphatically not the point. I say it so that you think clearly.

Your gut is shouting the NOTOK Principle at you. None of this is OK. But you must now learn that it is as true for money as it is for anything else. No, you can’t have a democracy if there’s a tyrant there instead. No, you can’t have a functioning society if a significant percentage of people make foolish, self-destructive choices. No, you can’t have an intelligent society if it’s led by crackpots and lunatics. And also: no, a failing state also can’t have a modern economy.

I’m not saying all that will happen overnight. Not at all. But I am saying that the turmoil of the last month is just a prelude. That the real crashes haven’t even begun to happen yet. That this interlude, where Wall St is telling you Everything’s Going to Be OK, is a lot like the interregnum where the Democrats did. Everything didn’t end up OK that time, and it won’t this time, either.

But this time you have a choice. You can learn from people like me, who are still here teaching you how all this ends. You can listen to your gut, because all we are really saying is what every historian and history book has ever said, from Cicero to Keynes.

You have a choice this time. And this is probably the last time you will have a choice. Because this time, you’re not going to lose abstract things like ideals and values. Those who don’t choose wisely are going to lose the one thing you can’t live without in a society as Darwinian, cruel, and individualistic as America: money.

I don’t want that to happen to you, so please take a moment. Orient yourself. With all the principles I’ve given you. Especially the NOTOK Principle. It says: this isn’t abstract and theoretical. There is a price to be paid for denial, for pretending all this is OK. That price is survival. For institutions, who will lose legitimacy and credibility and authority. And also for people, who will lose assets, savings, money.

You must now genuinely begin to learn what I have been trying to teach you. Not as theory, but as practice. If you were the kind of person who like to quibble with me before, swallow your pride, and learn from the fact that I predicted all this in eerie detail, which isn’t because I’m an ancient Greek oracle, but just because I spent a lifetime learning about it, and the timeless ethos of wisdom, justice, and truth says that I must give that gift to you. But you must accept it, too.

This is the calm before the storm, to resort to a cliche. What is on the way will be devastating to millions upon millions of people, in ways they don’t comprehend yet. Imagine shortages of crucial medicines, compounded by deliberately savaged government institutions, multiplied by inflationary impoverishment as prices spike. And that’s just one relatively small example.

By then, it will be too late. You must now learn what I have been trying to teach you for many years, and many of you have been resisting, driven by the shadow impulses governing every human heart. Now is the time to learn at last, and to teach those around you too. Use the principles I give you every day, because that is what they are there for. Don’t get burned and don’t Sink With the Ship. Before, all this might have seemed abstract. Now? Isn’t it all too real?

As always, reach out if you need advice or just to chat things over. In practical terms, I’m going to launch the model portfolio soon, everyone will be able to subscribe, it’ll be affordable, and it’ll help clarify and teach you and your finance guys and your families, kids, parents, etcetera. I’m a little slow since I got too much light as the seasons changed, but I’m getting better. Urgent session requests, as always, just email me and I always try to make room (apologies, I’m still catching up from this week’s!)

Lots of love,

Umair (and Snowy!!)

PS BONUS SNOWY PIC!!!!!!!!!!!!!!!!