David Collum, a Cornell chemistry professor and market commentator, argues the market only feels invincible because of a 45-year secular bull run that expanded valuations sevenfold (from a PE of 6 in 1981 to a Shiller PE of 42 today), an expansion fueled by boomer demographics that will reverse as boomers die, potentially erasing 85% of market value. He calls the current environment a “complacency bubble,” contends SpaceX trading at 500x sales and the Mag 7 at well over 10x revenue are absurd, dismisses bullish analysts as either “retards or lying their ass off,” and believes the Fed cannot and will not save the market because intervention would expose them as “feckless charlatans.” He thinks the US has been in a recession for years masked by understated inflation (he pegs real inflation at 6-7%), believes Kevin Warsh was nominated to “rip the band-aid off” like a new Volcker, and is positioned in cash, gold, silver, and slowly accumulating energy.
The sevenfold valuation expansion must unwind: Collum says valuations shouldn’t trend yet compounded 4% a year for 45 years, taking the Shiller PE from 6 in 1981 to 42 today. Removing that sevenfold expansion implies an 85% loss, which he expects markets to “find a way to take back” over the next 40-50 years as the boomer demographic disappears.
SpaceX IPO and index mechanics could trigger the top: SpaceX is set to IPO at a $1.75 trillion valuation trading at 500 times sales, making Elon Musk the first trillionaire, and it has been “rigged” to enter the index immediately. As a forced buyer, indexers will have passive flows cannibalized away from holdings like Philip Morris and Chevron to fund these trillion-dollar IPOs.
AI data centers are sunk costs, not wealth creation: Citing Ed Zitron, Collum argues AI companies face enormous remaining capex, servers with limited life expectancies requiring repeated spending, and facilities like the Indiana data center that will burn the energy of a million homes annually. He compares building data centers to a gas station that pumps no gas, calling it Bastiat’s broken window fallacy since these facilities generate no revenue yet.
The Fed can’t save the market and Warsh is the proof: Collum believes the Fed won’t intervene because a failed rescue would reveal them as “mediocre bureaucratic clowns,” so they’ll stay out of the way. He claims Kevin Warsh was nominated specifically to usher the market down to the bottom like a new Volcker, giving the banking system “the chemotherapy that it needs to heal.”
Hidden recession and the boomer retirement crisis: Collum estimates real inflation at 6-7%, meaning reported numbers are off by a factor of two and GDP isn’t actually growing, putting the US in a years-long recession masked by a K-shaped economy. The median boomer has roughly $300,000 in retirement plus $25,000 in Social Security, and a 4% withdrawal yields about $12,000 a year, which “doesn’t pay for Chinese takeout on Saturdays.”
Triffin’s Dilemma began as a 1959 warning: a currency cannot serve the whole world and stay tied to gold at once. Nixon proved it right in 1971 by closing the gold window. But the dilemma then flipped.
The 1974 oil-for-dollars deal with Saudi Arabia made every nation need dollars to buy energy, and the eurodollar market exploded.
That dependence is now leverage.
The world holds dollar debt it cannot print, and the US can weaponize it through SWIFT, sanctions, clearing access, and frozen reserves. The burden Triffin described became a dagger. And the U.S. knows how to use it…
All this and more on this week’s episode of Milkshakes, Markets, & Madness.
What’s happening in Japan is a preview of where the United States is heading. Jay breaks down how Japan’s crushing debt, collapsing yen, rising borrowing costs, and dependence on imported oil could ripple into American bond markets, the dollar, and the price of hard assets. He explains why Washington already copied Japan’s playbook — zero rates, quantitative easing, yield curve control — and why Tokyo running out of road could signal a much larger financial problem heading for the U.S.
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