Summary
Phil highlights private equity loading up companies with 7-9x leverage at ultra-low rates in early 2021. This is appropriate behavior given current tax and rate environment, but by 2026 all these debt-based “profits” will be built on sand. He warns that if 2026 brings a currency collapse event that prevents the Fed from lowering rates (unlike 2007 and 1991), the decline could be dramatic.
Key Claims
- Private equity loading companies with 7-9x leverage at near-zero rates in 2021. — confidence: high
- In 2026, all these debt-based profits will be exposed as sand-built when interest rates rise. — confidence: high
- After 2026, a US currency event that prevents the Fed from lowering rates could cause a severe downturn. — confidence: medium
- Every cycle has been the same — just the numbers get bigger. — confidence: high