A New Gilded Age
May 24, 2020·22 comments
Everyone knows the S&P 500 has stopped measuring actual prosperity. Every trader, every investor, every political observer admits privately that fundamentals don't matter anymore, that central banks can't sustain this forever, that our political system is broken beyond repair. Yet none of this shared knowledge produces any meaningful change. The question isn't whether the narrative is artificial. The question is why people keep accepting it.
• The disconnect between what we know and what we do has become total. Investors openly discuss how equity markets are now political utilities divorced from fundamentals. Political operatives acknowledge polarization as a tool for entrenching power. But this common knowledge doesn't alter a single investment decision or policy choice.
• Top-down narratives built on abstractions can absorb unlimited contradictory facts. When the S&P 500 becomes the symbol of prosperity rather than a measure of it, reality on different dimensions can't touch the abstraction. The lie survives not because people believe it, but because it exists in a separate plane from facts.
• History shows this before. Tuxedo Park in the late 1800s was universally acknowledged as artificial even by its residents. The Tyrolean costumes, the stocked fish, the forced formality, the arbitrary rules. Everyone saw through it. The place was ridiculous. Yet it persisted for decades.
• Individual knowledge isn't enough to break the spell. People can know something is broken and still participate in it because leaving feels like career suicide or because the incentives are aligned to keep you inside. The system survives through coercion and calculation, not belief.
• The only force that actually breaks these narratives is mass departure. When William Waldorf Astor left Tuxedo Park, when Emily Post finally left, when enough people decided the cost of staying outweighed the cost of leaving, the narrative collapsed. What breaks the system isn't argument. It's exit.
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This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.
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Comments
I’m never going to wear a Tuxedo again, except to the Crematorium
The University degree is the symbol that perfectly represents our Gilded Age.
Yes, among the most powerful, I agree.
I recall after vacationing in Dubai for a week having this weird, confusing feeling about everything there. I compared it to Vegas. In Vegas, everything is fake, and everyone knows it’s fake and they don’t care. In Dubai, everything is fake, but everyone pretends it’s real, and there was a sadness to it. But yeah, this article could easily be written about Dubai.
One of the most amazing things about Epsilon Theory is that Rusty is every bit the writer and thinker as Ben. Well done.
I had exactly the same feeling about Dubai.
Fact check: TRUE
Tuxedo Park reminds me of the Goose Creek section of Baytown, Texas where I was raised. There was a very strict dress code, “No shirt, no shoes, no service”.
I see your point. I couldn’t stand the place. The thought that people vacation there is beyond me.
It could easily be written about my home town of Louisville Ky. We have a handful of families that run the city behind the scenes. They have kept professional sports out of our city , they kept a bridge from being built for about 30 years because the didn’t want the “wrong type” of people from Indiana wondering too close to their neighborhood.
Anyway great tie in with current state of markets and politics I always feel that time reading espsilon theory is time well speant?
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