When Narratives Go Bad

Central banks have engineered a recovery that works brilliantly for asset owners but delivers nothing to wage earners or income seekers. The contradiction between the official story and lived reality is widening, and it's being held together by a single bet: that there's no limit to central bank intervention. We've seen this movie before.

• The economic recovery is completely real for some people and completely absent for others. Corporations are borrowing trillions at cheap rates, but they're not investing in jobs or equipment. Wage growth is nonexistent. The McKinsey charts show success, but only if you own assets.

• Central banks have systematically destroyed income for anyone who isn't a return-seeking speculator. They've crushed interest rates to drive up bond prices. If you wanted income from bonds, you're out of luck. If you want to speculate that prices will keep rising, you're golden.

• The status quo story is breaking because it's failed to deliver on its core promise. It promised that bailing out banks and inflating asset prices would eventually create jobs, growth, and broadly shared prosperity. That didn't happen. The failure skews young on the wage side, older on the income side. Both groups feel betrayed.

• We're now riding a $10 trillion bet that central banks will keep buying bonds at any price. These negative-rate bonds only make sense if you think yields will get even more negative, meaning someone will pay even higher prices. That's not investing. That's pure momentum, pure "greater fool" dynamics.

• The moment central banks signal they're backing away from this strategy, the entire structure collapses. We built an inverted pyramid on a single piece of shared knowledge before. In 2008, it was "home prices can't fall nationwide." In 2016, it's "central banks have no limit." One breaks, everything breaks.