One sentence dominated last week, and the man who said it earned the right to be heard.
Governments defending prices against fundamentals always lose.
That was Stanley Druckenmiller, in an opinion piece in the Wall Street Journal aimed squarely at his old protégé, Treasury Secretary Scott Bessent.
This was the week we watched two men try to prove him wrong. One at the Treasury, defending the price of the bond market with a four-billion-dollar buyback and a near-trillion-dollar drawdown of the government’s cash. One at the Fed, defending his own silence in front of a market begging him to break it. And a gold price, a Bitcoin price and a long-bond yield that marked the scorecard.
For your capital markets training needs, visit my friends at Finance Talking.
In 1992, Bessent helped Soros and Druckenmiller break the Bank of England, betting a government couldn’t hold a price the fundamentals said was wrong. Thirty-four years on, he is the government defending the price. And all week the pattern held: talk maximalist, act minimalist. An “economic D-Day” on Iran that, on delivery, was all hat and no cattle.
Meanwhile the new Fed chair, a money-supply man, arrived at Jackson Hole to find M2 running at its fastest since 2022 with his Treasury boss pouring liquidity on the fire.
Nvidia’s blowout lifted the AI trade. But demand was never the doubt; the doubt is the return, and margins are compressing even as a hot PCE print fully prices a December hike and half the world’s central banks tighten.
Demand is real, resilience is real, and the bulls may be right that this is just “normal for longer.”
But the price of time keeps rising, and the man who broke the Bank of England has told us how this kind of story tends to end.
The full episode walks through last week, the IMF’s “tug of war” between AI and the Middle East, and the US move to take a hundred-year lease on Venezuela’s oilfields.
You can’t print oil, so why not sequester some cheap barrels?
When governments insist on defending prices against fundamentals, position for the fundamentals. Be sure to own the unprintable.
Everything is proceeding normally.
Good luck out there and enjoy the weekend.
If you found this useful and know others who might too, please hit the ❤️ and:
It takes no time and makes a world of difference.
Please Note:
The Buy Me a Coffee button has been retired as Hypernormal Times prepares for a new era with an added paid subscription tier.
The main body of Hypernormal Times will remain free. Its conclusions, takeaways and insights will be for paid subscribers only.
If you have enjoyed these posts and pods and maybe even found them useful, then you might be interested in becoming a Founding member of Hypernormal Times. For a strictly limited time, a number of Founding Tier memberships are available at a giveaway price.
While everything is proceeding normally, understanding true hypernormality will soon come at a cost.
I’ll update the tiering plans and their features shortly.
But foundational tier members can expect a white-glove service and merch with bragging rights. Not to be missed:
Thanks
Jeremy
