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A growing wave of lawsuits is challenging the safety warnings accompanying blockbuster weight-loss drugs that have rapidly reshaped American medicine and culture, raising questions about whether patients were adequately informed of the risks tied to medications now used by tens of millions of people.

The plaintiffs’ stories vary widely, but share a common claim: that drugs known as GLP-1 receptor agonists - including Ozempic, Wegovy and Mounjaro - caused severe, life-altering injuries that were not sufficiently disclosed at the time they were prescribed.

A Maryland truck driver says he suffered what doctors described as an "eye stroke," losing vision first in one eye and then the other. A Louisiana woman developed a serious neurological condition after weeks of vomiting and malnutrition. An Oklahoma real-estate agent alleges her colon ruptured without warning while she was driving her granddaughter home from a softball game.

"My colon blew up. Literally blew up," said JoHelen McClain, the Oklahoma plaintiff. "I was trying to slim down and feel healthy."

All three are among more than 4,400 plaintiffs who have filed lawsuits since 2023 against the drugs’ manufacturers, Novo Nordisk and Eli Lilly, according to court filings. The cases are now consolidated into federal and state litigation expected to take years to resolve.

The suits come amid explosive growth in the use of GLP-1 drugs. An estimated 12% of American adults - more than 31 million people - are currently using a GLP-1 medication, according to the nonpartisan health policy group KFF. Prescriptions rose from roughly one million in 2018 to about nine million in 2022, and usage doubled again between 2024 and 2025, Gallup data show.

Originally developed to treat diabetes, the drugs mimic a hormone that slows digestion, stimulates insulin release and increases feelings of fullness. Their success has helped reduce U.S. obesity rates for the first time in more than a decade and spurred research into additional benefits, including reduced risks of kidney disease, addiction and dementia.

Yet plaintiffs allege that the same mechanism slowing digestion can, in some patients, lead to serious gastrointestinal and neurological injuries.

In court on Jan. 13, Novo Nordisk attorney Katie Insogna said (via USA Today):

• 75% of the federal lawsuits include an allegation of gastroparesis, also known as “stomach paralysis,” a chronic condition where the stomach slows or stops emptying food into the small intestine;

• 18% of the cases allege the drugs caused ileus, a condition in which bowel muscles fail to push food and waste out of the body;

• 18% of the plaintiffs allege intestinal obstructions;

• 8% say they suffered from gallbladder injuries, with some of these patients requiring surgical removal of gangrenous tissue;

• 8% of the plaintiffs allege other serious gastrointestinal complications, such as extreme vomiting, chronic acid reflux or abdominal pain that required multiple hospitalizations in some cases. Others say their digestion issues have continued even after they stopped taking the drugs.

USA TODAY’s review of the lawsuits also found at least 110 plaintiffs alleging sudden blindness or severe vision changes, and at least one alleging Wernicke’s encephalopathy, a neurological condition linked to vitamin B1 deficiency.

The drugmakers deny the allegations. In a joint filing last year, the companies said "the safety profile of GLP-1 RAs has been well-established in hundreds of clinical trials, large-scale observational studies, and nearly two decades of real-world use."

"Novo Nordisk remains confident in the benefit-risk profile of our GLP-1 medicines, when used consistent with their indications and product labeling," said company spokesperson Flavia Brakling, adding that labels are updated "in cooperation with the FDA and consistent with federal regulations."

An Eli Lilly spokesperson said, "Patient safety is Lilly’s top priority," noting that the labels for Mounjaro, Zepbound and Trulicity have "always warned of potential ‘gastrointestinal adverse reactions, sometimes severe.’"

Legal experts say the cases may hinge on whether plaintiffs can prove causation and whether warnings were legally sufficient at the time.

“Proving the drugs caused certain outcomes will be an issue,” said Ana Santos Rutschman, a health-law professor at Villanova University, along with determining "the extent and timing of warnings."

For Todd Engel, the Maryland truck driver, the outcome has already been devastating. After four months on Ozempic to manage diabetes, he woke in December 2023 with vision loss in one eye. Diagnosed with non-arteritic anterior ischemic optic neuropathy, or NAION, he continued taking the drug after doctors failed to identify a cause. In October 2024, he lost vision in his remaining eye.

"You’re not going to believe this," his wife, Shelley, recalled him saying. "I can’t see at all."

Now legally blind, Engel has lost his job and commercial driver’s license. "This whole thing has been catastrophic to me and my wife," he said.

A 2024 JAMA Ophthalmology study of nearly 17,000 patients found an increased risk of NAION among those prescribed semaglutide compared with other treatments, though it did not establish causation. European regulators later described the condition as “very rare,” prompting label updates abroad. U.S. labels warn of vision changes but do not mention NAION by name.

“What happened to me should have never happened,” Engel said.

McClain’s case unfolded differently. After losing 40 pounds on Wegovy, she suffered a sudden colon rupture in March 2024, followed by emergency surgery, sepsis and months of recovery. She now lives with a permanent stoma.

“I read everything I could find on it before I went on it,” she said. “They did not warn about any of the stuff that happened to me at that time.”

In Louisiana, Mark Smith says his wife Robin developed permanent brain damage after months of vomiting while taking Mounjaro. Doctors later diagnosed her with Wernicke’s encephalopathy.

"I still have my wife, physically, not mentally anymore," he said.

Eli Lilly has said Mounjaro’s label has always warned of severe gastrointestinal reactions. Plaintiffs argue those warnings failed to convey how extreme or irreversible some outcomes could be.

"These drugs are not new," said Ziyad Al-Aly, director of research at the St. Louis Veterans Affairs Health Care System. "What’s new about them is that the companies then realized, ‘Oh my God, they actually work on weight loss.’"

Al-Aly said he sympathizes with the plaintiffs but believes the drugs’ benefits outweigh the risks for most patients. "There is nothing that’s really all benefit and no risk," he said.

The first bellwether trials in the consolidated litigation are not expected until 2027. Legal experts say such cases often take four to five years.

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: The Grinch did not successfully steal Christmas this season, but he did use up $30,493 in taxpayer money.

A viral Grinch-themed house in Dallas drew crowds so large that the city needed extra police personnel hours, vehicles and barricades to control the nightly crowd of visitors, WFAA-TV reported.

Key facts: The 9,000-square-foot mansion in the Preston Hollow neighborhood in North Dallas became famous on TikTok in 2024, thanks in part to a Santa statue with President Donald Trump’s face. The house received coverage from the Today Show and an Instagram post from rapper Snoop Dogg, and the ensuing crowds cost the city of Dallas $25,375 in 2024 - rising to over $30,000 in 2025, according to WFAA.

Neighbors were unhappy, and the home received a citation for violating city codes on noise and light glare. The home was also featured in a city council presentation that warned of safety risks from large events, including residents trapped in their homes and limited access for first responders, according to WFAA.

Homeowner Ryan De Vitis called his neighbors “the real-life Grinch” over the controversy, which may explain his choice of theme for 2025.

But this year, his neighbors were prepared. The Preston Hollow Citizens for a Safer Community bought a special events permit and used their own money to hire off-duty police officers to limit vehicle and foot traffic in the area.

That offset "significant" expenses for taxpayers, the city told WFAA, but the Dallas police still had to devote additional resources towards securing the street.

Critical quote: “While I appreciate homeowners lighting their homes to bring joy to others during the holidays, compromising public safety resources to this extent doesn’t reflect the spirit of the season,” City Councilwoman Gay Donnell Willis told KERA News last year.

Summary: The Grinch’s heart grows three sizes once he discovers the true meaning of Christmas, but the only thing growing in Dallas is the size of its projected budget deficits.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com

Venezuela had already long been an embargoed country, akin to Cuba in many aspects. For example, direct commercial passenger and cargo flights between the US and Venezuela have been impossible, going back to a May 2019 suspension ordered during the first Trump administration.

But after the US military ouster of Maduro, President Trump said Thursday that he ordered the reopening of Venezuela's commercial airspace. This move, and the fact that Washington will now be overseeing the country's monthly budget, demonstrates how decisively the US now claims to be running affairs in the oil-rich South American state.

Trump told a televised cabinet meeting he has already "informed" interim president Delcy Rodríguez that US oil companies would soon be arriving to scout potential projects.

It was once documented that after the US-NATO overthrow of Libya's Muammar Gaddafi, the oil executives made it to Tripoli before the diplomats, as their private jets were faster. This looks to be the case with Venezuela too, given the US Embassy has not even yet reopened. 

"American citizens will very shortly be able to go to Venezuela, and they will be safe there. It’s under very strong control," Trump said at the White House.

Shortly after Trump’s remarks, American Airlines said it would move to resume flights to Venezuela, pending formal approval from the administration and assurances of "secure conditions". Trump confirmed that he had directed the Transportation Department to lift the previous restrictions.

Trump also had some positive words in support of Maduro's former Vice President, current interim leader Rodríguez:

The president said he had instructed the US transportation secretary, Sean Duffy, and Pentagon officials to implement the change before the day’s end. He characterized the security situation in Venezuela as being “under very strong control” after Rodríguez replaced Maduro.

She had days ago declared that she would stop taking orders from Washington, but this was clearly more for domestic consumption, where she has to pretend she's asserting national sovereignty in decision-making.

But Venezuela is clearly a country that is anything but sovereign at this moment. More details on Washington's role have been freshly revealed in the NY Times:

Venezuela’s interim government has agreed to submit a monthly “budget” to the Trump administration, which will release money from an account funded by the country’s oil sales and initially managed by Qatar, Secretary of State Marco Rubio said on Wednesday.

But the plan drew sharp questions from skeptical Democrats, and Mr. Rubio conceded that it was “novel” and hastily designed. The role of Qatar — a Middle Eastern country thousands of miles from Venezuela whose ruler has won President Trump’s favor — drew particular criticism from Democrats, who questioned its legality and transparency.

Mr. Rubio detailed the plan during an appearance before the Senate Foreign Relations Committee. It was Mr. Rubio’s first public testimony to Congress since American forces captured Venezuela’s leader, Nicolás Maduro, on Jan. 3, and an opportunity to clarify U.S. policy toward the country.

WOW.

Sen. Shaheen reveals $500M from Venezuelan oil sales.

$300M went to the Maduro government.

The other $200M?

Marco Rubio admits it’s just “sitting in an account.”

In Qatar.

So who controls it? Who benefits? And why is Congress being kept in the dark? pic.twitter.com/kTpMuLShtk

— Brian Allen (@allenanalysis) January 28, 2026

Qatar's playing middleman is indeed interesting and ironic, given how suspicious conservatives have been of the tiny oil and gas rich Gulf country. Lately enemies of Tucker Carlson have blasted him for being influenced by Qatari funds, and yet here the Trump administration is quite openly and unapologetically embracing it.

The skyrocketing value of rare Pokémon trading cards has turned what was once a childhood pastime into a target for increasingly bold criminals, with armed robberies and burglaries hitting collectors and specialty stores across the U.S. in recent months, The New York Post reports.

In one of the most recent high-profile cases, three masked suspects stormed Poké Court in Manhattan's Meatpacking District on January 15 during a community event attended by more than 40 people. The robbers brandished firearms, smashed display cases with hammers, and fled with more than $100,000 worth of cards and cash, including a first-edition Charizard valued at around $15,000, according to CBS News.

Days earlier, a collector leaving RWT Collective in West Los Angeles was held at gunpoint in an underground parking lot and relieved of approximately $300,000 in rare Pokémon cards, ABC7 reports. That incident was part of a broader wave of strikes in Southern California over that weekend, including a power-tool break-in at Simi Sportscards in Simi Valley that resulted in losses estimated between $10,000 and $50,000, as well as earlier burglaries at stores in Burbank—where four suspects were arrested after a December 2025 theft valued in six figures—Glendale, and other locations, according to NBC Los Angeles.

Additionally, Tag Collects in Carrollton, Georgia, lost nearly $100,000 on Christmas Eve, while multiple metro Atlanta shops saw combined losses exceeding six figures, FOX 5 reports. An armed robbery at a Wilmington, North Carolina, store yielded $20,000 in stolen goods and led to an arrest in January 2026. Scattered incidents have also been reported in states including Massachusetts, Connecticut, Maryland, and Fargo, North Dakota, according to The Post.

“The cards are fungible and unregistered,” collector Charlie Hurlocker told The Post. “You don’t need a black market.”

The Pokémon card craze is so hot that even celebrities are getting in on the action.

YouTuber Logan Paul is currently auctioning his one-of-a-kind PSA 10 Pikachu Illustrator card through Goldin Auctions. Paul originally acquired it for $5.275 million, and bidding—set to close on February 15—has already reached $5.1 million, or $6.324 million including the buyer's premium.

“I just gotta bring a security team to move it with me,” Paul reportedly told auction house head Ken Goldin.

“I’ve got a bunch of armed guards here,” Goldin, who stars in “King of Collectibles: The Golden Touch” on Netflix, said he told Paul. “We can meet you.”

So what's really behind the surge in value? Goldin told The Post that he believes nostalgia is the culprit.

Fellas, it might be time to put down the pictures of cartoon creatures and touch grass.

A global shortage of high-bandwidth memory (HBM) has emerged in recent months, and some of the first casualties of the "great memory crunch" were flagged by Goldman in December, starting with consumer electronics companies such as Nintendo.

The list of victims has continued to expand. Last week, we noted that smartphones, PCs, and other consumer electronics dependent on HBM were set to come under pressure. Goldman then followed with another note, warning that it had slashed global PC shipment forecasts due to soaring memory prices. Now the list of victims is expanding yet again, and we suspect this memory price shock will persist through the year.

Bloomberg Opinion's US technology columnist Dave Lee opined that, "One frustrating characteristic of the AI boom seems to be that everyone must pay for it, regardless of any interest in using it. For some, it will be through rising utility bills as data centers strain the grid."

Lee pointed out, "For even more of us, it will be increasing costs of just about every electronic product you can think of: laptops, smartphones, televisions — perhaps even cars."

The columnist is correct about exploding prices tied to the AI-driven supercycle, as massive data center buildouts are soaking up the world's HBM supply. A look at the Amazon price-tracking site CamelCamelCamel shows a parabolic surge in the price of Crucial Pro DDR5 64GB RAM, which has jumped from $145 to $790 in just six months.

Expanding the list of victims of the great memory crunch of our time is a new report this week from Nikkei Asia, which warns that entry-level consumer electronics devices, such as smart TVs, set-top boxes, home routers, budget tablets, smartphones, and PCs, will be among the hardest-hit segments. Automobiles are also expected to be heavily affected, as they require longer verification cycles. The analysis is based on commentary from numerous industry executives deeply embedded in the memory supply chain.

Those same industry executives warned that the memory shortage will persist through this year and into 2027. So if you are planning to build a gaming PC for a new trading desk or just for gaming, or if you are thinking about upgrading to a new AI-equipped PC, be warned: prices are expected to soar further. That is why Goldman's Allen Chang revised down his global PC shipment forecasts for 2026 to 2028, citing a sharp spike in memory prices as data centers worldwide soak up the supply of HBM.

"Demand from servers and AI is extremely strong, and we expect NAND flash prices to continue rising sharply through 2026," P.S. Pua, CEO of Phison Electronics, a major developer of NAND flash memory controller chips, told Nikkei Asia.

Pua said, "But many consumer electronics makers may not be able to absorb that kind of price increase. TVs will be seriously affected, and products like set-top boxes will be hit very hard as well. The total shipment volume will definitely go down. Many of them simply can't afford those prices."

For those who are wondering whether it's time to upgrade the PC before memory prices soars even more, an executive at one Japanese component supplier summed it up perfectly: "If you want to buy any consumer goods, PCs, or smartphones ... do it now, as it is for sure all the prices will be increased. Take an average PC, for example. The ratio of memory chips in the BoM [bill of materials] cost has increased from some 15% to almost 40%."

The surge in memory prices prompted Synopsys CEO Sassine Ghazi to note that the world's top memory suppliers are now fully absorbed by AI infrastructure demand, crowding out other end markets.

"Now it's a golden time for the memory companies," Ghazi said. Meanwhile, memory suppliers such as SK Hynix, Samsung Electronics, and Micron Technology are imposing stricter customer checks to prevent panic hoarding, even as they see record profit margins.

In an effort to crack down on violent rioters in Minneapolis, MN, federal authorities have arrested 16 people identified as alleged participants who assaulted ICE agents in order to obstruct them from carrying out deportation arrests.  

One of the suspects is Nasra Ahmed, 23, of Minnesota, who rose to national notoriety after remarks she made during a Jan. 21 news conference comparing Somali American identity to a cultural mix she described as “bananas and rice,” a phrase that quickly spread across social media. 

A child of Somali migrants, Ahmed claimed during a press conference that she had been wrongly detained (kidnapped) by ICE agents simply for being Somali in the vicinity of an ICE operation.  She also claimed that she had been held for two days without reason and that agents "brutalized" her and called her "racial slurs" during interrogation.  Democrats and the far-left media seized on the story as evidence that ICE was "out of control" and using random "racial profiling" in Minneapolis.

Critics noted that there was no evidence to back Ahmed's claims of abuse and that she seemed to be very excited to become the center of media attention, suggesting that she was going to "go down in history" for standing up to ICE.  Immigration officials stated that Ahmed was not an innocent bystander and she was, in fact, detained for trying to interfere with an ICE arrest.

Ahmed took to the media stage to wax philosophical about her courageous fight against ICE and what it means to be a Somali in America.  “It’s kind of like bananas and rice,” Ahmed said. “People don’t think you can eat bananas with rice, but that’s what it’s like to be Somali and American.”

Her bizarre "bananas and rice" analogy went viral as another example of the low-end IQ standards associated with Somali migrants, coupled with their now legendary overconfidence.    

Today, the activist's bananas and rice are back in hot water after she was arrested again by DHS for alleged participation in violent riots.  Nasra Ahmed is charged with spitting on agents, throwing eggs at them and resisting arrest.

Rice and Bananas pic.twitter.com/du8oojETE8

— Jack Posobiec (@JackPosobiec) January 28, 2026

Attorney General Pam Bondi was on the ground in Minneapolis this week to oversee the arrests, largely based on video footage of identified activists engaging in attacks on agents.  

“Federal agents have arrested 16 Minnesota rioters for allegedly assaulting federal law enforcement - people who have been resisting and impeding our federal law enforcement rights."

“We expect more arrests to come,” Bondi added. “I’ve said it before, and I’ll say it again: NOTHING will stop President Trump and this Department of Justice from enforcing the law."

The crackdown comes after the death of Anti-ICE activist Alex Pretti, who was also misrepresented as a "peaceful protester" by the media, only to be later exposed in video footage participating in violent attacks on ICE agents in the days leading up to the confrontation that ended in his shooting.

The pattern is becoming rather obvious:  Activists and paid agitators interfere with ICE arrests (often violently).  Activists face consequences.  Journalists and Democrats cry foul and claim they were poor innocent victims.  Then, new information comes to light which ultimately reveals the activists were not innocent at all.  

The political left jumps on the headlines to spread anti-deportation sentiment, then retracts quietly when these headlines prove to be false.  They know that a large percentage of the Democrat base does not independently investigate information and sources and will continue to believe the first media claims they see as if they are a proven fact.   

It's the reason why debating the political left has become a superfluous exercise - They live in an entirely separate and delusional universe based on completely fabricated conclusions. 

Authored by Charles Hugh Smith via OfTwoMinds blog,

This is why a recession will catalyze a collapse of the credit-asset bubble-dependent economy down to its foundations.

Narrative control works by having a pat answer for every skepticism and every doubt. Boiled down, the dominant narrative holds that the Federal Reserve (central banking) and the central government have the tools to quickly reverse any dip in GDP, a.k.a. recession, and return the economy to expansion.

The unstated foundation of this narrative is that recessions are bad, as only permanent expansion is good. That this isn't "free market capitalism" doesn't bother anyone, because the whole point of central banking and government is to eliminate the rough edges of "free market capitalism" with the sandpaper of "state capitalism," which creates or borrows as much money as needed to smooth over any spots of bother, a.k.a. recessions.

That recessions are essential market dynamics is not part of the narrative, which is conveniently binary: recessions bad, expansion good. Markets reflect human emotions, famously fear and greed, which manifest as debt and speculation, a.k.a. animal spirits: when we're confident and feeding off an expansion that appears to have no limit, then we borrow more money (debt expands) and "allocate the capital" (i.e. place it at risk to reap a future gain) to increasingly risky speculative investments.

This allocation of borrowed money into speculative assets pushes the price of those assets higher, increasing the collateral to support further borrowing to fund more speculation. In this manner, debt, asset valuations, collateral and speculation all fuel one another in a seemingly endless expansion that makes every participant richer.

This pyramiding of debt and "wealth" generates two self-liquidating dynamics: interest and risk. All debt comes with interest, the compensation due those who put their money at risk by lending it to the borrower. This debt service rises as debt expands, and also as risk increases: the riskier the speculation and the borrower, the higher the interest rate paid by the borrower.

Central banks can play games to reduce interest rates even as risk and interest payment rise, but since central banks own only a fraction of the total outstanding debt, their ability to "corner the market" is nil.

Their gaming the system to enable further expansion of debt and speculation functions not by actually buying up the majority of the new debt, it functions as a signal: the Federal Reserve has our back, they will bail out / recapitalize any lender losses while suppressing interest rates below what the unfettered market would demand, and so the pyramiding of debt, speculation and "wealth" can continue, apparently indefinitely.

But signaling has intrinsic limits, for it doesn't increase the income needed to service additional debt or guarantee speculations will pay off. These are the Achilles Heels of the central banking perpetual motion machine: for the vast majority of borrowers, both private and public, income doesn't automatically increase as debt increases. Income is influenced by market factors (supply and demand), technologies, state interventions (subsidies, stimulus spending, etc.) and the expansion or contraction of debt, interest rates and speculative investments.

In the total-economy context, what matters are total factor productivity gains and the distribution of those gains to wage earners, enterprises, owners of assets and the state, which collects taxes from all three of the private-sector classes. This distribution changes with social, political and financial tides.

The past 50 years have seen productivity gains flow to capital (corporations and owners of assets) at the expense of wage-earners. This means households and small businesses must service debt from a shrinking share of the economy. As a result, borrowing more becomes increasingly risky for both borrower and lender.

As more of the output goes to corporations and owners of assets, their collateral, income and creditworthiness rise, meaning they can borrow more at lower rates of interest than wage earners and small enterprises. The more they can borrow, the more they can own and the more they can earn.

These are the core engines of extreme wealth and income inequality. The rich get richer because they have the means to borrow more income-generating assets at lower rates than wage earners. And unlike wages, this asset-generated income rises as assets increasing in value support additional borrowing as they serve as collateral.

On the most fundamental level, if economic expansion no longer increases the income of household borrowers enough to service more debt, the entire structure of expanding debt, collateral and speculation is destabilized. Ultimately, assets generate income from either 1) issuing more debt, 2) investing more in risk assets or 3) consumer spending. All three are interconnected, i.e. tightly bound, as any decline in the expansion of debt, investing or spending eventually bleeds through to reduced ability to service more debt and the end of the expansion of debt.

Since debt is inherently risky--borrowers can default, i.e. stop paying interest and principal on the debt--then depending on expanding debt for economic expansion is also increasing risk, especially if household earnings are stagnating while debt and interest payments are increasing.

Since the percentage of output flowing to wages has been declining for 50 years, households have funded spending by borrowing more money. Prior to the 2000s, college students borrowed very little to fund their education. Now student loan debt is measured in the trillion-dollar range. Auto loans and credit card debt has also soared, along with shadow-banking debt that isn't even tracked: pay-in-installments, etc.

Speculative investments are also inherently risky: the investment can fail to pay off. If the speculation was funded by debt, then both the borrower and the lender go broke when the speculation fails.

Stagnating earnings, increasing debt to fund spending and increasingly risky debt-funded speculation generate a credit-asset bubble-dependent economy: economic expansion is now dependent on debt expanding to fund spending and the speculation that pushes asset valuations higher, increasing the collateral for even more borrowing.

Once income is no longer rising fast enough to service higher debt loads, defaults cascade throughout the system, triggering avalanches of declining income for both assets and wage earners as households default on rent, auto loans, student loans, credit cards and mortgages, collapsing consumer spending and laying waste to lenders and employers, who respond by reducing borrowing and laying off employees.

Speculations that looked sound in expansion go broke as lenders pull risky loans, household spending dries up and collateral collapses as risk assets are sold off to reduce risk by raising cash and paying down debt.

Credit-asset bubble-dependent economies are tightly bound systems: any drop in income and valuations, any tightening of credit, any rise in interest rates and any decline in collateral (i.e. the valuations of risk assets) feeds back into every other part of the system, creating a self-reinforcing feedback loop of defaults, layoffs and sagging asset valuations.

In an economy saturated with debt, stimulus doesn't generate expansion, it generates inflation which limits central bank stimulus. Without that signal that "the Fed has our back," speculation and the borrowing that funded it both dry up. Once the inflow of new credit-funded investment falters, asset valuations enter a self-reinforcing free-fall.

In a credit-asset bubble-dependent economy, this inevitable unwinding is viewed as an unexpected catastrophe:

In an economy that allowed recessions to clear bad debt and excessive speculation, credit-asset bubbles popping is viewed as inevitable and normal.

What few seem to understand is 1) the last "real recession" that cleared excesses of debt, leverage and speculation was 1980-82, 45 years ago and 2) the buffers that enabled the eventual recovery back then are gone. Where total debt was low in 1980--about 50% more than GDP--now it's triple GDP. That means "borrowing our way to expansion" isn't possible: borrowers are already unable to service existing debt, never mind more debt.

As for the Fed rescuing the debt bubble by dropping interest rates to zero: recall that the Fed isn't buying more than a sliver of the $106 trillion debt; it's only generating a false signal that risk is low. In the real world, risk is rising inexorably due to excessive debt, interest payments, leverage and speculation.

As for bailing the system out as in 2008, that is no longer possible, either. The system was "saved" by recapitalizing the financial sector--the source of new debt and speculation. But this time around, the economy is saturated with debt, income has stagnated and cannot support more borrowing, and the credit-asset bubbles in housing and financial assets has reached unprecedented heights of risk, i.e. fragility.

This is why a recession that clears the system of excessive debt, leverage and speculation leaves a devastated economy incapable of expansion: the system is now totally dependent on excesses of debt, leverage and speculation for its survival, never mind expansion, and once that collapses (as all bubbles do), the signaling, confidence and wealth that enabled the bubble will no longer exist.

As for saving the system by converting fiat money to precious metals or cryptocurrencies: the debt--and the income needed to service the debt--will also be converted, and that doesn't change the inevitable collapse of credit-asset bubbles and all the economic activity that depended on the permanent expansion of that credit-asset bubble.

This is why a recession will catalyze a collapse of the credit-asset bubble-dependent economy down to its foundations. A re-inflation of a new credit-asset bubble will be viewed as the "solution," but that unstable system will no longer be viable. The real solution will be re-arranging the economy to thrive not on credit-asset bubbles but on productivity gains that are widely distributed to all the productive elements, not just the wealthiest asset owners.

This process will be time-consuming and difficult, as all the "winners" in the current bubble economy will expect both a return to outsized gains and a continuation of their outsized share of the gains. Neither will be possible, as the changes will demand time, sacrifice and massive long-term investment in productive assets.

The systemic risks inherent to a credit-asset bubble-dependent economy cannot be extinguished, they can only be cloaked or transferred to others. These artifices enable the expansion of the bubble at a cost paid by everyone when the system's self-liquidating dynamics pop the bubble.

*  *  *

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