Now we have a new and even bigger sandpile

 Sandpiles can grow quite large and then suddenly collapse with a single added grain of sand. The point at which this happens is unpredictable. That it will happen is highly predictable. 

The stable disequilibrium of that time (2006) did, in fact, go critical a couple of years later. The sandpile collapsed but reconstruction (with ample stimulus) began almost immediately. 

Now we have a new and even bigger sandpile.

As noted, timing the collapse is impossible. Sandpiles, both in reality and in theory, can continue to grow much longer than we think they should.

And Minsky tells us the longer it goes, the greater the subsequent collapse. But the instability is now growing more obvious. And this time, something we all depend on is in the sandpile’s shadow: our pensions. 

That includes individual retirement savings, which is part of how we expect to survive if not hopefully thrive as we get older. This coming Minsky moment threatens it all.

Bonds are having one of their worst years ever as the Fed raises rates from the zero bound. Remember, as interest rates go up, bonds lose value. 

Thankfully this doesn’t happen often, at least while stocks are collapsing as well.

John Mauldin 14 October 2022

https://www.mauldineconomics.com/frontlinethoughts/pension-sandpile

Markets are facing a potential ‘Minsky moment’ collapse, strategist says

https://englundmacro.blogspot.com/2020/09/markets-are-facing-potential-minsky.html