Underneath all of this, slower than any war and more permanent than any crisis, is something the financial press doesn’t really mention:
People aren’t having any children.
US fertility hit an all-time low in 2024. The general fertility rate is still falling. IMPLAN puts 1.4 million fewer Americans contributing to housing demand, retail spending, and service consumption in 2025 than trends would have predicted. To put that in numbers: $104 billion in GDP. Not exactly gone, not really disappeared. It just never existed in the first place.
It’s a vicious circle: housing is too expensive, so young people delay children. Fewer children means less future housing demand. Which should eventually reduce prices, except the lag is 20-30 years, and in the meantime housing stays expensive, so the people who couldn’t afford a house still can’t, still don’t have children, and the loop tightens at its own pace regardless of what the Fed does or what happens somewhere in the narrow waterways in exotic places.
Added: the boomers are saying bye sayonara.
The generation that inflated every asset class for 40 years through automatic 401k contributions is, somewhere around now, flipping from net buyers to net sellers. Of course it’s impossible to say like “March, 17: boomers start to cash out their 401ks”… Nope, the tide just turns. The same passive machine that provided an inexorable, automatic bid for equities and bonds and real estate - every payday, every year, for four decades - begins to redeem. Quietly. Continuously. For the next twenty-some years. Every asset they inflated on the way up faces a headwind on the way out. Not a crash. A long, grinding, demographically-inevitable ratchet.
Another angle I want to cover is the petrodollar. I covered this already in “
The Bretton Whoops”. But the short version is: oil was priced in dollars, dollars were recycled into Treasuries, and the US military keeps the Gulf safe. It required two things - a reliable dollar and a credible security guarantee. The dollar’s reliability cracked in 2022 when Washington froze Russia’s reserves. The security guarantee cracked when the US started a war they cannot finish.
The dollar’s share of global FX reserves has since fallen to around 45%, the lowest since the 1990s. Gold’s share has quadrupled in twelve years. Gulf states are reportedly discussing pulling investment commitments from the US.
And now Iran has done something structurally interesting. It didn’t just close the Strait - it converted it into a tollgate. The toll isn’t money -
yet. It’s alignment. Ten countries have been offered safe passage: China, India, Pakistan, Turkey, and others. The US isn’t on the list. This isn’t a military tactic. It’s economical.
Lots of people have the wrong framing. They think “petrodollar is dead, long live the yuandollar”. Right? Wrong frame entirely. China doesn’t want a reserve status. Couldn’t stomach it if it tried. Because a reserve currency means running a permanent trade deficits to pump your currency into the global system - America has been doing this for 50 years and the reward is a rust belt, a $37 trillion debt tab, and a bond market that needs foreigners to keep showing up or the whole thing seizes. China watched that happen and said: 不用了，谢谢. And opening the capital account enough to make yuan genuinely reserve-worthy would mean letting money flow freely across the border - ending the CCP’s ability to direct credit and control the financial system on Beijing’s terms. They’d sooner eat the wallpaper.
What the yuan-for-oil arrangement being implemented actually is, is an industrial policy dressed as currency diplomacy. You sell your oil into the permitted lane. You receive yuan. Now you’re sitting on yuan in a system with capital controls - you can’t just convert it and park it wherever you like. Your options are: buy Chinese goods, buy Chinese infrastructure contracts, invest in Chinese assets. That flow cycles straight back into Chinese factories and Chinese employment. China doesn’t have to stimulate its domestic consumption anymore. It exports the demand problem onto its trading partners and invoices it as a geopolitical arrangement. Three hundred million jobs - and unlike the US - no helicopter money required.
Those dollars that used to flow into Treasuries don’t just suddenly rush home. They just stop showing up at the next auction. Treasury needs to place roughly a trillion dollars every hundred days. Fewer buyers means higher yields. Higher yields mean the Fed is cornered. A cornered Fed means the printer runs. Same mechanism as demographics, same mechanism as the derivatives book, same direction.
My long-running conviction - and I’ve been saying this long enough that it stopped sounding contrarian and started sounding obvious - is that the world ends up back on a gold standard. Not the romanticised version where you rattle coins in your pocket. Though honestly, with modern payment rails, a gold-backed account is functionally identical to a dollar account. You’d never touch the metal. You’d just change the ticker from USD to XAU and carry on. The technology exists right now. The obstacle isn’t infrastructure. It’s that the people running the current system would rather light themselves on fire.
What happens first, before any grand declaration, is narrower: gold becomes the settlement layer between sovereigns who no longer trust each other’s paper. The US is apparently net-settling its trade deficit with China in gold - if that data holds up. In three of the last four months it seems that gold is flowing East. No Bretton Woods conference. No announcement. Just two countries quietly deciding that when the paper gets complicated, the metal clears the table. That’s how monetary systems actually change - not by proclamation but by practice, one bilateral settlement at a time, until enough of them are doing it that someone calls a conference to ratify what’s already happened. The Bretton Woods conference didn’t create the dollar system. It formalised what the war had already decided.
The next conference is coming. It just hasn’t been scheduled yet.
Silver. Because I can’t write a piece about systemic fragility without it, and because this week’s data is worth your attention even if the price chart isn’t.
The paper price looks terrible. Miners are trading like silver is heading back to $40. Silver Santa - one of the accounts I follow on Twitter (yeah, I’m old) - moved 40% to cash, describing “a strong pre-COVID feeling”. The technical picture is ugly.
But the crucial part: the physical reality didn’t get that memo.
The COMEX “run rate to zero” ticked down to 89 days as of Friday, from 93 days on Thursday. Four days burned in one. The SGE briefly stopped publishing silver inventory data mid-week, then quietly resumed. Shanghai is still paying a 13-17% premium over London. The same paper/physical divergence playing out in oil is running in silver at a slower pace with a much longer fuse.
But what does a draining vault have to do with your savings account?
More than most people think. The COMEX sets the global silver price. But if the COMEX increasingly doesn’t have the physical metal - and the run rate suggests it won’t for long - then the price it sets is a fiction. An unallocated silver account at your bank is a claim on that fiction. An ETF share is a claim on that fiction. When the fiction and the physical reality eventually converge, it won’t be because the paper comes up to meet the physical. It’ll be because the paper can no longer pretend.
Same mechanism as Dubai crude. Same mechanism as the derivatives book. Just a slower fuse.
When $68 trillion in US equity markets eventually moves - and it will - and the indiscriminate ETF selling hits everything, and the margin calls cascade through a derivatives book built on assumptions that no longer hold, and zombie companies start defaulting, and the boomer redemptions add their steady mechanical pressure, and 401k hardship withdrawals accelerate - the question of where capital goes becomes very concrete. Bonds? Already struggling to absorb a trillion per quarter. Cash? In which currency? Real estate? In a demographically challenged market with rising yields?
Gold has a structural bid from central banks who drew their conclusions in 2022 and have been buying ever since. Silver has vaults on an 89-day countdown and a paper price that hasn’t caught up yet.
I’m buying the dips. Have been. Will continue.
(A small aside: I’m considering opening a dedicated Substack to document my trades in real time - with a ten-minute lag - for those who want to follow the positions, not just the analysis. The analysis stays here, free.)
None of this is hidden. None of it requires a security clearance or even a Bloomberg terminal. It’s all there, in the vault data, the yield curves, the fertility statistics, the derivatives book, the bunker fuel prices. The information exists. The pattern is legible.
The question was never whether this would happen.
The question was always who would be holding paper when it did.
Tomorrow, Powell walks to the podium. He’ll probably have a new acronym handy. They always do. TALF, TARP, BTFP, BTFD, YOLO, CTRLP. Each crisis gets a fresh name but the same printer.
Maybe a new suggestion: EEAO
Everything's fine. Truly. Nothing to see here.
no01.substack.com
