The Podcast of the Lotus Eaters - PREVIEW： Brokenomics ｜ Market Update October 2025

00:00:00.000 Hello and welcome to Brokonomics.

00:00:29.680 Now in this episode I thought I'd better give a bit of an update of where we are with the market stuff because of course, well as you know in the first episode of Brokonomics I laid out the whole thesis and then I kind of did the whole tools to understand the thesis and then I sort of laid out what I expect to happen with the cycle and there was also that period probably about two years ago now, remarkable how long I've been here.

00:00:57.420 I suppose time flies doesn't it? Well I was absolutely begging the audience to buy Bitcoin because it was down at sort of 16,000 per coin and it just seemed like the biggest gift that I'd ever seen in investing and sort of wanted to share that.

00:01:16.420 Then we did a few more videos about how I expected the market to play out and then nothing really happened.

00:01:24.840 So I started talking about other things that seemed interesting or relevant or, you know, otherwise worthwhile.

00:01:34.180 And I'm sort of aware that it's been a while since we've done a market update and, well, the last I told you about my sort of expectations on the cycle, it would have been about now that we'd be hitting the market peak and that hasn't happened.

00:01:51.200 It's just been all terribly boring. Nothing particularly exciting has happened. I mean, yes, it's gone up, you know, Bitcoin's gone up from 16,000 to, you know, over 100 today.

00:02:04.140 So, I mean, that's all very nice and everything. And if this was normal investing world, I mean, if this was, you know, me back in the day working in the city, getting a return like that would be, you know, a cause for rampant celebration.

00:02:17.620 It would have been an out, truly, truly outstanding result. However, we're not in the world of sensible anymore.

00:02:26.960 We're in the world of let's just print money and, you know, take on debt and print more money and more. You get the idea.

00:02:34.280 And you kind of expect it to be perhaps a little bit more exciting, a bit more like previous cycles.

00:02:41.020 And given that I said that about now should be the peak in the cycle, what on earth is going on?

00:02:47.260 You know, does this mean that my theory has failed or is it just delayed?

00:02:53.640 And what's actually happened with everything?

00:02:57.000 And, you know, basically the short summary of this is, and to be fair, I probably should have spotted this earlier.

00:03:04.580 It didn't fail. It just got delayed. And what happened, I'm now pretty comfortable with, is that the COVID era just kind of extended everything.

00:03:15.240 Because it, I mean, they printed so much during that period, they kind of glutted themselves and were able to, you remember the theory,

00:03:27.080 they load up on debt when it's cheap. They force liquidity into this system so that they can buy up a whole load of cheap debt.

00:03:35.740 And that sort of gluts them for a while. And then they set the maturity for a while down the road.

00:03:41.140 Then inflation starts to come barreling up behind them like a, you know, out of control train.

00:03:46.600 And it's like, OK, well, now we've overdone it on the money printing.

00:03:50.280 So we're going to have to really tap liquidity down in order to, you know, stamp on that inflation that's coming this way,

00:03:56.880 because otherwise people might get pay rises and we can't possibly allow that.

00:04:00.420 So, you know, that all gets stamped on. And then they kind of, you know, taper that off over a period of a few years.

00:04:07.220 And then, of course, they've got to roll over all this debt. And they do this on a roughly four-year cycle.

00:04:11.700 And then they throw liquidity into the system again, roll over the debt, then stamp on it and so on.

00:04:18.120 You get these four-year cycles.

00:04:20.280 And about now would be the time in that four-year cycle where you would expect everything to be ramping up.

00:04:27.840 And liquidity has been growing, but it's not been, you know, like wildly exciting.

00:04:33.820 It's not the manic excitement that you would normally expect with a massive bull market.

00:04:41.280 And what seems to have happened is COVID, because they had those two years where everything was a bit crazy

00:04:47.860 and they'd managed to basically stop people from doing anything, including working or being productive in any way,

00:04:58.120 apart from a few people. Well, only a few people are productive anyway.

00:05:01.200 But they kind of really managed to stamp on it.

00:05:04.540 And they kind of bought themselves an extra year of being able to load up at the bottom where they could fire liquidity in.

00:05:10.100 And because nobody was doing anything, it didn't have that inflationary effect.

00:05:14.780 I mean, it did have that inflationary effect in a massive way.

00:05:17.140 And we talked about it in the past and previous episodes.

00:05:19.160 But it took longer to manifest, which meant they could keep liquidity high for longer,

00:05:26.280 which meant they could keep debt issuance going and they could extend the maturity of when the next cycle was going to be.

00:05:37.200 And basically, it looks like they bought themselves another year or 18 months.

00:05:41.860 Now, yes, in all fairness, I probably should have spotted this earlier.

00:05:45.040 But look, if this was a proper research service, you'd be paying like minimum of 10 grand a year for it and you're paying five.

00:05:53.020 So no refunds. And I have to do the bloody podcast and lads hour as well.

00:05:57.800 So, you know, you get what you pay for.

00:06:01.280 So, I mean, I think it's still good value, still very, very good value.

00:06:05.160 But yes, didn't didn't spot earlier that basically the cycle was going to be a bit longer this time.

00:06:11.500 So that is what normally happens.

00:06:13.300 COVID kind of just delayed the stimulus phase by, like I say, maybe a year, maybe 18 months, maybe two years.

00:06:25.240 And instead of letting the system reset on schedule, they just kind of printed into that schedule.

00:06:31.940 And then, of course, they did then get the massive wave of inflation.

00:06:35.240 And they did they did then have to stamp on it and, you know, tighten liquidity and all that kind of stuff.

00:06:43.320 So.

00:06:46.500 Let's try and break this down.

00:06:47.800 What does debt maturity actually look like?

00:06:53.600 Well, most of the U.S. governments and British governments, I mean, they're all colluding, these central banks, but most of their short term debt isn't actually due yet.

00:07:03.560 And there is a huge bulge of bonds that are going to be maturing in, you know, the next couple of years.

00:07:12.780 And if you were to look at a graph of debt maturity, you'd see that bulge out ahead of us.

00:07:17.500 I mean, there's already some triggering now and they are easing liquidity to an extent now.

00:07:23.840 But it's just got a bit longer to run.

00:07:28.000 And then if you were to look at the chart of the debt maturities, you'd see that over the next 18 months or so, these were in two years, really.

00:07:34.820 All these bonds maturing, they need to roll over.

00:07:38.300 And then you just see a long, quiet stretch.

00:07:40.860 So it looks very much like that whole liquidity cycle thing is still in play.

00:07:47.260 It just has another year on it.

00:07:48.800 I mean, put it this way, global debt jumped to 30 trillion over the COVID era, which is, you know, it was the fastest increase in debt ever in history.

00:08:08.940 And, you know, we got to a situation now where the U.S. interest expenditure is about a trillion a year.

00:08:16.340 Well, at least it will be by 2026.

00:08:19.480 I mean, it's not far off that at the moment.

00:08:22.220 So there is no doubt, in my mind, that they're going to need to pump a whole load of liquidity in the system in order to roll over that debt.

00:08:32.280 Because, well, I mean, they're not going to do it through tax rises or spending cuts.

00:08:37.780 So it is going to be debt and it is going to be rolled over because, you know, otherwise they undermine their whole entire financial system.

00:08:46.340 And, I mean, those COVID fiscal programs that they did, not the monetary ones, but the fiscal ones, so, you know, the tax and spend ones, I mean, they equaled about a quarter of global GDP fired out over that period.

00:09:02.720 I mean, they kind of basically put a decade's worth of stimulus into a two-year period.

00:09:10.500 So, you know, I mean, obviously they did not fix the system.

00:09:15.560 What they did is they bought themselves time.

00:09:18.520 And, I mean, to my mind, what they did is they kind of engineered tomorrow's debt crisis with yesterday's free money.

00:09:26.740 That's kind of what they did.

00:09:28.160 But it's always what they do.

00:09:29.680 They just kick the can down the road.

00:09:33.280 And COVID just allowed them to kick it a bit harder down the road and making the eventual problem that they will have bigger.

00:09:44.520 But, you know, whatever, that's the future.

00:09:47.680 They live for today, these central banks.

00:09:51.080 So, I think the liquidity model still holds.

00:09:54.340 It's just been, you know, pushed back.

00:09:57.040 And that's why the market feels weirdly flat and unexciting by modern standards, I should say.

00:10:04.920 I mean, bear in mind, you know, if we were to go back 20 years and you were to see returns like we've already seen, like I say, it would be, I mean, you would be lauded as, you know, high genius for the type of returns that you got.

00:10:19.880 If you didn't buy, do you buy Bitcoin back at 16 grand and, you know, we're now, you know, over 100.

00:10:26.760 But today that's all a bit pedestrian, isn't it?

00:10:30.040 We're looking for a bit more excitement.

00:10:33.940 So, you know, liquidity has been delayed.

00:10:41.440 Markets feel like they're half awake.

00:10:44.120 And growth isn't collapsing, but it's not wildly taking off either.

00:10:47.860 And we're kind of in this sort of, I mean, I won't go so far as to say liquidity drought phase, but we're in the awkward middle where the taps are only just starting to, you know, drip.

00:11:04.880 They're a bit stiff, they're being turned, but everything is a bit, yes, it's just not as exciting as perhaps you might have been expecting if you were watching Brokernomics a year ago when we sort of laid out really a lot of this whole liquidity cycle stuff.

00:11:21.300 So stocks keep grinding higher, but nobody trusts it that much.

00:11:26.500 And there's all this talk about, oh, is it a bubble?

00:11:28.560 We'll get into that.

00:11:32.240 Inflation is cool, though.

00:11:33.640 There is that.

00:11:35.160 Borrowing costs are getting expensive, which is a problem if you're a government and you've got a lot of debt to roll over.

00:11:44.280 Jobs look fine.

00:11:48.240 Yet productivity, new business growth, that's kind of soft.

00:11:51.880 So, you know, the whole economic picture is just very, very middling, very, very, you know.

00:12:00.200 And actually, right, if we were back in a normal world, a world that wasn't so completely consumed by debt, where we are now would just be fine.

00:12:11.760 I mean, it would just, this is fine.

00:12:13.460 Yes, it would be nice if business growth was a bit higher, but we're not in that.

00:12:21.300 We're not in that world.

00:12:22.280 We're in a world where they've got trillions of debt to deal with, trillions of debt, and they need to manage the problem.

00:12:30.940 So we're not going to stay in this middling zone for long because they've got trillions of debt and they need to do something with it.

00:12:38.760 So if you were to look at the charts of liquidity versus, you know, the market performance, things like tech.

00:12:53.500 So let's take NASDAQ, the NASDAQ 100.

00:12:55.900 It normally rises and falls in sync with the total liquidity available in the market, which means, you know, central bank balance sheets, bank reserves, money supply.

00:13:11.520 You can get liquidity injected by the private sector as well, although that's not happening at the time.

00:13:16.060 Now, over the past year, this liquidity level has been basically flat, maybe rising a bit, but only a bit.

00:13:26.940 And markets have mirrored it.

00:13:28.540 You know, they're not crashing.

00:13:29.740 They're just stuck in this sort of sideways motion, modest, modest appreciation.

00:13:36.360 I mean, the NASDAQ has done fine.

00:13:37.960 It's all looking good.

00:13:39.740 But I mean, the other thing is, if you imagine the ISM, have I explained that before?

00:13:47.860 So the purchasing managers.

00:13:50.700 So it's an indicator of health of the economy.

00:13:54.720 Apparently, there were these things called the purchasing managers.

00:13:57.260 We've covered this before.

00:13:57.980 And they do a survey of them saying, you know, how much purchasing are you doing?

00:14:05.440 And basically, it's the measure of telling if the business cycle is picking up.

00:14:10.420 And normally, the liquidity lags that by about nine months.

00:14:17.840 And right now, the ISM is maybe I could describe it as weak.

00:14:25.320 I mean, it's not collapsing.

00:14:27.380 It's just kind of slow and, you know, could be stronger.

00:14:33.280 What you would expect is that that would pick up first and then liquidity would start to follow,

00:14:41.580 which suggests to me that we probably got at least nine months before things get really exciting.

00:14:50.620 Now, you know, maybe I'm wrong on that.

00:14:54.820 Maybe it delivers on cue in December.

00:14:58.760 But that now feels like that's probably just a little bit too soon.

00:15:03.920 And actually, this is probably going to run into 2026, although it's a little bit tricky to tell when exactly.

00:15:10.920 So at this time, I wouldn't be that surprised if it was early 2026, mid or, you know, autumn, possibly even later.

00:15:22.580 That would surprise me a bit.

00:15:24.440 But maybe it goes for another full year at this point.

00:15:27.940 Possibly that could happen.

00:15:30.120 If you would like to see the full version of this premium video,

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00:15:40.920 Thank you.

The Podcast of the Lotus Eaters - October 21, 2025

PREVIEW： Brokenomics ｜ Market Update October 2025

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