You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Why They Need You in Debt... (No, Really, They Do.)The American Dream is no longer about a house and a car. It's an invitation into long-term duration payments with an amortization schedule and a place to park growing liquidity...
Dear Fellow Traveler: I keep getting phone calls and text messages. It’s now three, maybe four a day with the same pitch.
Yeesh… I didn’t ask for $50,000. But my credit score is a beacon, one that’s loud and vibrating... The emails and direct mail from lending specialists are piling up. My phone buzzes with numbers from local area codes, from real people… with Delmarva accents. I’m starting to think the only way to make it stop is to default on a pack of gum and disappear. But last night, dodging another 8 p.m. call from another lender, a different question surfaced. Why is the system so desperate to put me into debt? The answer is simple… It doesn’t need me. It doesn’t want to sell me something or give me capital to deploy on my terms. The system needs duration. It just wants me to take on consumer debt… with payment terms of 7 to 30 years… with a preference for the latter… And that’s when I saw the headline… They Need You In DebtThe average American will pay nearly $1.8 million in lifetime debt, according to a new report from JG Wentworth. That total includes mortgages, cars, student loans, and revolving credit from age 18 to death. Whether the exact number is $1.8 million or $1.2 million doesn’t matter. The curve matters. Most people read that figure and think it’s a spending problem. That misses the point entirely. This isn’t about behavior. It’s about how and where new money enters the system. Cantillon Didn’t Die. He Graduated.The Cantillon Effect is simple. Money gets created, early receivers benefit, and late receivers pay higher prices. But today’s definition is incomplete. In the modern system, the Cantillon Effect doesn’t end with higher prices alone. It really ends with liabilities. Early receivers don’t just get purchasing power. They get balance sheet optionality. Late receivers don’t get inflation... They get duration. Sometimes, 30 years of it. Today, money is debased before it ever reaches you. It gets absorbed by dealers, turned into collateral, wrapped in government guarantees, and only then extended to households as debt. By the time you touch it, it’s not money. It’s a 30-year promise. That’s why CPI can fall while people feel poorer. Economists’ models say inflation is contained. The sentiment surveys, meanwhile, say people are drowning. Both are right. CPI measures purchasing power at the end of the chain. But the extraction happens inside it. Follow the supply chain of capital formation… The Fed creates reserves. The primary dealer takes it as collateral. It is rehypothecated in repo and then wrapped into mortgage-backed securities (MBS). It gets insured, guaranteed, and then extended as mortgage credit to a household. Not in a straight line, not every time, but often enough to define the system. Each layer adds a claim, and each claim extracts a fee. By the time that dollar reaches you, it’s been collateralized, levered, and clipped six times. That’s the debasement. Not in the price of eggs. In the stack of claims that sit on top of every dollar before you’re allowed to touch it. The spillover is everywhere. You see it in insurance premiums rising because insurers need yield, so they’re deep in the collateral chains. Property taxes rise because municipal finance runs through dealers. Every refinance re-enters you into the extraction stack. CPI doesn’t capture this. It was never designed to. Those reserves don’t become wages or savings. They become collateral and duration and government-wrapped payment streams. Debasement occurs before money ever reaches the public. By the time households encounter it, the damage is already done. What arrives isn’t inflation… It’s an obligation. Longer mortgages (soon, 50 years), permanent refinancing cycles, rising insurance premiums. Auto loans that never quite disappear. Currency stability is preserved. Asset markets are stabilized, and volatility is contained. But households absorb the rest. This is Cantillon in a world where debasement never shows up on a receipt. It shows up on a balance sheet. Where the Money Actually GoesWhen central banks create liquidity today, it doesn’t flow into wages. It doesn’t flow into small businesses or into households. It flows into primary dealers' balance sheets, broker-dealer balance sheets, collateral chains, and government-backed asset markets. By the time it reaches households, it’s no longer money. It’s a payment schedule. And nowhere is that more obvious than the “duration sink” that is housing. This is the part that rarely gets said out loud. I pointed out that Bitcoin has evolved into a liquidity pressure valve… But what about the Great American Dream investment? It turns out that housing is the system’s liquidity sponge. Why housing? Because housing absorbs massive duration, is politically untouchable, is government-backed, and can be leveraged at scale. You don’t need housing prices to rise forever. You just need mortgages to roll, refinancing cycles to continue, insurance premiums to compound, property taxes to grow, and transaction fees to clip on every exchange. The system doesn’t extract through price spikes. It extracts through time. And that’s the real bitch of it… Broker-Dealers Became the New Tax FarmersIn ancient Rome, the state outsourced tax collection to private intermediaries called publicani. They prepaid the treasury, then extracted as much as they could from the provinces. The empire stayed stable, the intermediaries got rich, and the population revolted over debt, not ideology. Modern broker-dealers play the same role. They decide where newly created money is allowed to go. They intermediate mortgage-backed securities, municipal finance, insurance capital, repo collateral, and duration risk. They clip fees whether prices rise or fall. They keep volatility out of elections and inside balance sheets. That trade-off is the political bargain. Households hold the risk. And this is why my phone keeps ringing. I’m not being offered an opportunity. I’m being recruited into a payment stream. It’s not personal… and I’m not special. Didn’t you know? Any high-score household would do. The $1.8 Million Isn’t the Cost. It’s the Proof.That lifetime debt number isn’t shocking because it’s large. It’s revealing because it’s predictable. Debt peaks when you buy your first home, then again when you buy your second. And when refinancing resets the clock. Geography determines destiny. Duration replaces opportunity. This isn’t excess… It’s designed. But it’s not the type of “design” that requires a meeting. There wasn’t a memo. No cabal. No cigars. Just a system aligned around incentives. Dealers profit from flow. Insurers benefit from duration. Governments profit from stability. And households absorb what’s left. Conspiracy requires conspirators. Equilibria just require incentives. That’s what makes it all so durable. No one has to coordinate. Everyone just has to follow the math. And the math tells the players… keep Americans in the payment stream. Empires used to extract through tribute, taxes, and forced labor. Those methods caused revolts. Modern extraction is quieter. There are no chains or soldiers. Just… Autopay. Housing never revolts. It amortizes. Bitcoin, Housing, and the SystemThis connects to what I wrote on Monday on Bitcoin... Bitcoin is loud, visible, and volatile. Housing is quiet, stable, invisible. Bitcoin absorbs price volatility without policy consequences. Housing absorbs time volatility with policy protection. Both protect the system from political instability. One screams, and the other whispers. All the while, the American Dream bleeds… It’s not about consumption anymore. It’s about being allowed to participate in the balance sheet… a form of permission. Permission and participation come with a price. Not paid upfront. Paid monthly. For decades. And that’s why the phone keeps ringing. Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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