Everything is cycles

Most systems move in cycles. Economies, governments, and institutions rise, overextend, recalibrate, and eventually reset. Today, several of those cycles appear to be overlapping.

Despite how it feels, these times aren’t unprecedented. Many things we’re seeing now have happened before, many times.

One cycle is (the end of) a long-term debt cycle. After decades of credit expansion, low interest rates, and financial engineering, the system is hitting structural limits. Debt levels are high, traditional policy tools are stretched, and most ‘new ideas’ will end up increasing the amount of debt and leverage.

Another cycle shift we’re seeing is one from internal order to disorder. Trust in institutions is declining. Social cohesion is weakening. Political instability is increasing. The party in power matters less than the direction of the trend.

These cycles don’t operate in isolation, but they don’t always all move together in the same way. Thinking in terms of cycles is a useful framework for looking ahead. The only prediction I’m willing to make is to prepare for volatility.