Why is Wall Street’s fear gauge so low?

Investors urged to have ‘eyes wide open about what is coming next’

Naomi Rovnick and Eva Szalay in London 

       © FT montage; Bloomberg

After inflation fears shocked investors in the first few months of 2021, markets have switched into a different mode: a deep slumber.

The Vix, a measure of expected volatility in Wall Street’s S&P 500 equity index, dwindled to a pandemic-era low of 15.7 points on Friday, having surged above 80 during the early stages of the pandemic. 

A measure of volatility on foreign exchange markets produced by Deutsche Bank also dropped to its lowest point since February 2020 last week.

Analysts say the quiet period partly reflects the wait-and-see tactics of the Federal Reserve, which is prepared to sit out a spell of unusually high inflation without removing monetary support, whose withdrawal would probably unsettle markets. 

But some investors are growing nervous that complacency is setting in.

“We feel increasingly alert” about the calm conditions on stock markets, said Gergely Majoros, a member of the investment committee at European fund manager Carmignac. 

“It means you need to have your eyes wide open about what is coming next.”

In a research note, the investment committee of Swiss bank Credit Suisse also warned of “an elevated level of investor complacency” across asset markets, suggesting there was “higher downside risk to the news flow than usual”.

Global stocks have ticked up to record highs as developed nations’ economies recover from the coronavirus emergency, boosting companies’ earnings prospects. 

But the gains have been muted in recent weeks, with some investors saying that the good news has long been baked in. 

The FTSE All World gauge of developed and emerging market stocks has gained just over 1.4 per cent so far this month.

Headline consumer price inflation in the US hit 5 per cent in the 12 months to May, following a 4.2 per cent increase in April as prices tied to the economy reopening and supply chain bottlenecks — such as used cars and commodities — soared.

Central banks have traditionally tightened financial conditions to combat spiralling prices. 

But the Fed, which meets this week, has maintained the burst of inflation is temporary. 

It has succeeded in convincing many investors of that too.

“Markets are agreeing, at least for now, with [Fed chair Jay] Powell that the inflation we are seeing is ephemeral,” said Margaret Vitrano, portfolio manager at ClearBridge Investments.

A Bank of America survey of 207 global fund managers responsible for $645bn of client assets this week showed more than seven in 10 believed post-pandemic inflation would be transitory. 

Many have also already trimmed bond holdings in expectations of lighter Fed support for this market in future, taking the share of bonds in portfolios to a three-year low. 

A negative stance towards bonds was another factor that had convinced asset managers to hold on to equities, investors said.

“Equities should still rise this year but not at the same rate as when activity was accelerating more quickly earlier in the year,” said Caroline Simmons, UK chief investment officer at UBS’s wealth management arm.

Low volatility is not always a signal to sell equities, historic data suggest. 

Figures compiled by Schroders analyst Duncan Lamont showed that, since 1991, buying the S&P 500 on a day when the Vix was between 15 and 16 would have led to a total return of 14.6 per cent in the following 12 months.

But the sense of calm on markets pointed to a complacency that could shatter, analysts said, if inflation ripped ahead of the Fed’s expectations.

“If persistent inflation means higher input costs that companies cannot pass along . . . because households food and energy costs are also higher that really affects profitability,” said ClearBridge’s Vitrano. 

Stock markets were “treading water,” she said, “because it is too soon to make a call on this”.

Currency markets have also been paralysed by prospects of the Fed keeping financial conditions loose for longer than traders initially expected.

The dollar index, which measures the US greenback’s strength against trading partners’ currencies, has moved less than 1 per cent higher this year, after strengthening in the first quarter and then giving up most of its gains since.

“The main narrative for the inertia in [currencies] is pretty straightforward, and emphasises the stand-off between the irresistible force of US reflation and the immovable object of an ultra-patient Fed,” said Paul Meggyesi, head of global FX strategy at JPMorgan.

The Conference Board forecasts that US economic output will increase at an annualised rate of 9 per cent in the second quarter of this year, moderating thereafter. Companies’ earnings are expected to follow a similar trajectory.

Analysts predict that earnings of companies listed on the S&P 500 will rise by an aggregate 35 per cent this year, falling to a 12 per cent gain in 2022, according to FactSet. 

On the Stoxx Europe 600, profits are expected to increase 51 per cent this year and 14 per cent in 2022.

“The only direction the Fed and other central banks could take now is to reduce accommodation, and that could cause correlation shocks,” driven by a rise in bond yields, said Olivier Marciot, cross-asset investment manager at Unigestion. 

“Markets are in a wait-and-see mode, it is not about what will happen next but about when . . . If you move too early in the game you will get beaten up.” 

We can end the Covid pandemic in the next year

This is a global war but bold action on vaccines gives our governments the opportunity to win it

Martin Wolf

    © James Ferguson

We are a strange species. 

We are able to produce marvels, but then fail to ensure they reach everybody who would benefit, even though the costs would be trivial against the gains to all. 

The marvel now is the swift arrival of effective vaccines against Covid-19. 

The failure is to ensure production and distribution at sufficient scale. 

In our folly, we are throwing away a glorious opportunity.

In “A Proposal to End the Covid-19 Pandemic”, Ruchir Agarwal and Gita Gopinath of the IMF have illuminated both the opportunity and the benefits from seizing it. 

Their suggested plan is to vaccinate at least 40 per cent of the population of all countries by the end of 2021 and at least 60 per cent by July 2022, as well as enabling widespread testing and tracing. 

The study estimates the cumulative economic benefits at $9tn ($1,150 per person) against a cost of $50bn — a ratio of 180 to one. 

This must be among the highest-return investments ever.

This pandemic is, above all, a health crisis. 

But it is also an economic disaster. 

The report is right to insist that “pandemic policy is also economic policy as there is no durable end to the economic crisis without an end to the health crisis.” 

A comparison of the IMF’s forecasts of October 2019 with those for April 2021 suggests that Covid-19 lowered global real output by $16tn (at 2019 prices) in 2020 and 2021 alone. 

If the pandemic continues, such losses will cumulate far into the future.

The report also estimates that 40 per cent of the gain from the plan would go to high-income countries, as a global recovery strengthens theirs, too. 

This would also add at least $1tn to their tax revenue. 

Moreover, accelerating vaccination would not just speed up economic reopening. 

It would also lower the likelihood that a future variant would defeat available vaccines, which could throw the entire world back into shutdowns.

The plan is to spend $50bn, of which at least $35bn would be funded by grants and the rest by concessional lending. 

Given the commitments, only a further $13bn in grants is needed. 

But crucially, these must not just be promises, but upfront financing, at-risk investment and vaccine donations now.

Under what the report calls “business as usual”, it estimates a global supply of 6bn doses by the end of 2021, which would be sufficient to vaccinate 3.5bn people (45 per cent of the world’s population). 

That would allow the world’s high-priority population to be covered. 

In practice, however, some countries are vaccinating children, while others are vaccinating nearly nobody. 

Thus, actual coverage in low- and middle-income countries will be far below 45 per cent.

Worse, there are plausible downside risks to this scenario. 

These include shortages of raw materials, export restrictions, safety concerns over the vaccines particularly suitable to developing countries and the likely use of doses to vaccinate children or provide boosters to offset reduced vaccine efficacy. 

Any or all of these developments would further reduce vaccine availability to developing countries, delaying the end of the global pandemic.

So, what is proposed on vaccination?

First, achieve the more ambitious vaccination targets. 

This will require additional upfront cash contributions of $4bn to Covax, the entity intended to ensure global vaccine access. 

That would allow Covax to finalise orders, activate unutilised global capacity and deliver vaccines. 

Moreover, individual countries should also be helped to order more. 

In addition, restrictions on raw materials and finished vaccines must be lifted. 

Finally, surplus vaccines should be donated wherever needs are greatest.

Second, insure against downside risks, by entering into final contracts for an extra 1bn doses in the first half of 2022. 

This would require extra funding of $8bn. 

Also, make extra efforts to encourage voluntary licensing and cross-border transfer of technology. 

In addition, it is essential to create a global system of genomic surveillance and vaccine modification, if needed. 

Another essential component is transparency over all orders and the supply chains expected to deliver them.

Third, manage the period of vaccine scarcity wisely.

So, invest today in delivery capacity and in countering “vaccine hesitancy”. 

In addition, evaluate all potential vaccines, including those from China or Russia. 

It is also vital to ensure that vaccines will, at the least, be free to poor people.

Moreover, so long as vaccines remain scarce, doses should be stretched, as the UK has done, by giving first doses to more people, by fractional dosing, or by giving single doses to people who have already had the disease.

The technical details of the proposed programme may need to be adjusted. 

So, too, may the precise funding. 

But there can be no question of the overall logic. 

We are all in this together. 

It is folly to imagine that the national focus of today’s vaccination programmes will be effective in dealing with a global pandemic. 

It is folly not to expand global vaccine supply and delivery as urgently as is possible. 

It is folly, too, to spend literally trillions of dollars on pandemic support at home, while failing to spend a few tens of billions on ending the pandemic worldwide as swiftly as possible.

If such self-evident truths do not sway the governments of the high-income democracies, let them consider the geopolitics. 

For modest sums, they can transform the plight of billions of people living in vulnerable countries and so prove that they are both caring and competent. 

They can look good by doing good. 

If they fail to show the needed urgency in spending these trivial sums, posterity will want to know what on earth they were thinking. 

This is a global war. 

Governments of rich countries should go forth and win it now.

When No Landlord Will Rent to You, Where Do You Go?

How extended-stay hotels and motels became the last housing option for thousands of low-income Americans.

By Mya Frazier

Suzy Niffenegger in Las Vegas.Credit...Maddie McGarvey for The New York Times

Suzy Niffenegger slept outside in Las Vegas for the first time in late August 2019. 

She put what belongings she still had — including her collection of what she refers to as her “ ’80s big-hair wigs” — into storage and filled a backpack with dog treats, toys and blankets for her 22-pound terrier, Brownie. 

She barely slept, bunking on top of picnic tables, where she folded up her blankets into a cocoon. 

Brownie would lie next to her, but the dog didn’t sleep much either. 

“If I dozed off, and someone walked within say 15 feet of me, she alerted me,” Niffenegger told me recently. 

“That dog was a trooper. I mean, she saved my life so many times.”

The setbacks that led to Niffenegger’s life outside — a word she prefers to “homeless,” which she can’t bring herself to say — started in early 2019, when she lost her job at a call center. 

She tried to forestall financial disaster with credit cards, applying for two that hit her with $89 in fees for every $300 she charged. 

She ran up debts of nearly $1,000 buying groceries, and pretty soon she couldn’t make the payments. 

“My credit just exploded and went down to nothing,” she says. 

The Credit Karma app gave her a score of 440. 

By the algorithmic logic of America’s widely used credit-scoring system, with its scale ranging from 300 to 850, this made her a bad risk.

Shortly after her work at the call center ended, she was evicted from her condo — another stain on her credit. 

No landlord would rent to her. 

“I had no way to escape that eviction,” she says. 

For the next six months or so, she stayed with friends, then squatted in an empty house with a couple and their kids until they were kicked out. 

Finding a bathroom became a daily struggle. 

Niffenegger, who was born with one kidney, suffers from chronic kidney stones, and without access to showers, she repeatedly came down with urinary-tract infections.

At 51, she had little in the way of family resources to draw on. 

Her mother died about a decade earlier, and her relationship with her father was strained. 

“Three hots and a cot,” he told her dismissively, when she called him to ask for help — he was joking that she should get herself arrested in order to stay housed. 

Still, when he came in from California to spend Thanksgiving with her, she says, “He was shocked at the condition I was in.” 

Together, they drove around the city, submitting rental applications at various apartment complexes. 

Many didn’t take dogs, but she couldn’t live without Brownie. 

Others turned her down when they looked up her credit history and saw the eviction on her record. 

Defeated, Niffenegger and her father bought some warm clothes at Goodwill in preparation for a winter outside.

Then her father, a retired pilot, thought of a different idea. 

While in town, he had been staying at a hotel near the Strip called Siegel Select, and he noticed that people were living there. 

A room was available, and Brownie — a registered service dog — would be allowed to stay there. 

He put up the cash for his daughter’s first month himself. 

“They went on my dad’s good graces,” Niffenegger says. 

Her first night there, she relished the private shower. 

By this point, her dyed hair no longer looked blond, she says. 

“I just remember the dirt going down the drain, and I had blond hair again.”

That was November 2019, and Niffenegger has been living ever since in Room 323, less than 300 square feet on the third floor of a three-story building. 

Wedged directly behind the door is a refrigerator, in the margins of the kitchenette area. 

A counter runs flush along the narrow entranceway; this is a place to stack dishes and pots — and to cook, using one of the counter’s built-in coil burners. 

There is no oven, so Niffenegger mostly eats sandwiches, or cereal, kept in a neat row on top of the fridge. 

The room isn’t cheap: Rent when she moved in was just under $310 a week, or $1,240 a month, far above the $728 considered fair market rent for a studio apartment in her Las Vegas ZIP code, according to the Department of Housing and Urban Development, and much more than the $700 a month she once paid for her last home, a one-bedroom condo. 

But for someone with her credit rating, it has been the only way to avoid living outside.

Suzy Niffenegger’s room at a Siegel Select in Las Vegas, where she has lived since 2019. Credit...Maddie McGarvey for The New York Times

The Siegel Group, which started with a single Las Vegas property in the mid-2000s, now manages 25 Siegel Suites “Flexible-Stay” locations and three “Extended-Stay” locations in the city. 

That the brands emerged in Nevada, and then expanded within the state, before becoming national chains isn’t happenstance. 

Nevada is the worst state in the nation for poor people seeking housing, with only two affordable and available rental units for every 10 extremely low-income households, according to the National Low Income Housing Coalition. 

Child homelessness is a perennial problem in Las Vegas’s school district, which is the nation’s fifth-largest: For the school year that ended in 2020, more than 13,000 out of 324,000 students were classified as homeless, with 2,035 living in hotels or motels.

 (Adults who live in these accommodations are not classified as homeless.) 

“We have families all the time jumping around from hotel motel to motel hotel, trying to find the cheapest rate,” says Kelly-Jo Shebeck, a school administrator who has worked in education in the homeless community for 14 years. 

“They’re saying, Here, I have this rate, I’m going to be here for a week, and then I don’t know where I’ll be next.” 

Many families live at Siegel Suites, whose buildings often display a smiling mascot of a cartoon man wearing a blue tie beside slogans like “Flexible-Stay Living” and “Bad Credit OK.”

One day in late July last year, Niffenegger walked into her rental office to make a payment — she was several weeks behind on the rent — and she overheard some employees discussing eviction plans. 

She quickly left without paying. 

This way, at least she would still have some cash left if she ended up outside again. 

The eviction notice showed up on her door the next day.

A century ago, boardinghouses and single-room-occupancy hotels were a dominant form of low-income housing in many of America’s industrializing cities. 

Disparaged as “poorhouses” and symbols of urban decay, they have largely disappeared from cities. 

Some housing scholars regard their absence as an overlooked cause of today’s acute housing crisis.

No state in the country has enough affordable rentals, especially for low-wage workers, who need to earn at least $23.96 an hour, on average nationwide, to be able to afford a modest two-bedroom rental, according to calculations by the National Low Income Housing Coalition. 

Roughly 7.6 million households with low incomes are currently struggling to find a long-term place to live, a housing gap that has been decades in the making. 

By the mid-1980s, federal and state governments mostly stopped building public housing directly — the thinking was that private investors, lured with tax credits, would build enough affordable housing instead. 

The policy largely failed people with extremely low incomes, and over roughly the same period, the available public-housing units declined to 958,000 at the end of 2020 from 1.4 million in 1990, according to HUD. 

“It’s the portion of the housing stock declining the most,” says Andrew Aurand, the vice president for research at the National Low Income Housing Coalition.

Lack of supply isn’t the only hurdle for low-income renters. 

Private landlords can legally reject would-be tenants based on their income, bad credit or previous evictions, and in many places they can freeze them out by requiring steep deposits and two months of rent up front. 

This makes formal housing, with its yearlong leases, set rates and clear tenancy rights, unavailable to millions. 

“If your position is, ‘Can I find a landlord willing to take me?’ your bargaining position is nothing,” says Philip Garboden, an assistant professor of urban planning at the University of Hawaii. 

“If you can’t get into more mainstream housing at a better price, you are willing to pay more for something inferior.”

Having few other options, those whose incomes are extremely low are more and more finding shelter not in apartments but in roadside motels or aging hotel rooms that have limited, if any, cooking facilities. 

Or they end up in what are known as extended stays, designed for longer — but not permanent — occupancy. 

In some cities, such accommodations, which include small kitchenettes, are referred to as “weeklies,” where rates are guaranteed for only seven days at a time. 

Total costs per month often exceed those of a traditional apartment, and because occupancy taxes are required in many cities for the first 30 days (or more) of a hotel or motel stay, these can add $100 or more per month to someone’s rental costs.

The residents who rely on such rooms are often referred to as the “precariously housed.” 

While no government agency comprehensively tracks their numbers, industry experts say the number of people living permanently in informal housing has been growing quietly for decades and will keep rising. 

There are 5.6 million hotel rooms in the United States, according to STR, a hospitality research firm; roughly half a million of them are classified as extended stay, up from about 200,000 two decades ago. 

Analysts attribute much of that increase to the growth of the gig economy. 

“There are a lot more people who don’t have permanent employment,” says Jan Freitag, national director for hospitality analytics at CoStar Group, which owns STR. 

“It’s a way of life that chose them, especially on the super low end. 

We aren’t talking about the business consultant helping a factory on assignment. 

The people who are using a hotel as housing — it’s because the circumstances dictated it to them.”

As more adults have moved into hotels and motels, so have more schoolchildren — 97,640 lived in these settings during the 2018-19 school year, up from 45,781 in 2004-5, according to the National Center for Homeless Education. 

Children who live in a hotel or motel are considered homeless under the terms of the McKinney-Vento Act, first passed in 1987. 

This law directs tens of millions a year in federal funds to schools so that they can train their staff on child homelessness and provide things like school supplies, tutoring and other services to the nation’s 1.3 million homeless schoolchildren. 

“On some level, I’m very thankful for the weeklies,” says Meg Pike, a McKinney-Vento liaison in Nevada’s Clark County School District. 

“I don’t know where some of those families would go otherwise.” 

She acknowledges the drawbacks, though. 

“I call it the payday loan of housing, because you’re constantly trying to get to the next cycle, right? 

And if you don’t, you’re not able to save that money to get to an apartment, or buy a house, or whatever it is.”

Early in the pandemic, as thousands of midrange and upscale hotels closed their doors, Extended Stay America, a Charlotte-based chain with 652 locations in 44 states, kept all its properties open, proving the strength of its model — and making clear what had been an open secret: People were living permanently in some of its rooms. 

Founded in 1995, the publicly held company has experienced industry-​defying prosperity during the pandemic: $96 million in profits on revenues of $1 billion in 2020. 

In March, the Blackstone Group, the private-equity giant, partnered with Starwood Capital Group and agreed to buy the chain for $6 billion.

‘When you get kicked out of a traditional apartment building it goes on your credit. 

With the other traditional apartments, you go to rent, they check and say, “You’ve been evicted, we can’t take you.” ’

The broader hotel industry endured enormous losses, with occupancy rates plummeting to 44 percent for 2020. 

Extended Stay America’s occupancy rate was around 74 percent. 

“Our business travelers aren’t what the industry thinks of as business travelers,” Bruce Haase, Extended Stay America’s chief executive, said at a virtual industry conference last September. 

“They are folks that need to be physically present to do their job. 

They can’t get on a Zoom meeting.” 

Or people lost a house, Haase added. 

“They’ve been in some sort of life transition that requires them to have temporary housing.” 

Michael Bellisario, a senior hotel research analyst at Baird, described the business to me as “at times like an apartment company and at times like a hotel company. 

In the last year, it has been much more of an apartment business.” 

As Haase explained at the conference: “We leaned in pretty hard early on to some of the more longer-term, lower-rated business to fill up our hotels. 

We call that sort of our residential bucket.”

The company’s resilience suggests the S.R.O. housing model never really disappeared. 

It was reinvented for the suburbs, where, since the mid-2000s, more poor people have been living than in cities, according to research by Elizabeth Kneebone and Alan Berube, the authors of the 2013 book “Confronting Suburban Poverty in America.” 

And it morphed in accord with broader economic trends — captured, above all, by two statistics: One in five adults who “wanted more work” were doing without full-time work in late 2019, according to the Federal Reserve; and 53 million people have low-wage jobs, research from the Brookings Institution shows. 

An expanding industry built on informal and impermanent housing is a reflection of the precariousness that increasingly defines daily life for millions of Americans.

Stephen Siegel is chief executive of the Siegel Group. 

A decade and a half ago, he began rethinking the fundamentals of the traditional apartment model entirely. 

In doing so, he has built a fast-growing national chain catering primarily to people who can’t get into formal housing. 

When I visited him in January 2019, Siegel, then 50, was dressed in all black: Nike Air Max sneakers and a golf shirt stretched tight over his biceps, living up to the description, once made by a Las Vegas newspaper, of his having the “look of a Laguna Beach pretty boy.”

“I call our customers America,” Siegel said. 

“A lot of our people live check to check. 

Some of our people, if they didn’t have certain jobs, they’d be homeless.” 

He characterized these tenants in the form of a list: people on fixed incomes, seniors, veterans, working-class people, bus drivers, teachers, construction workers. 

Before he got into this business, Siegel was running an auto-body shop in North Hollywood when a broker sold him a building across the street with five studio apartments. 

“All my guys were fighting for them,” he recalled. 

He sold off his chain of body shops and, in 2004, bought a rundown 132-unit hotel in Las Vegas. 

“We got rid of all the troublemakers, the riffraff,” he recalled. 

“I cut down all the trees. 

I got rid of the pay phones. 

I lit up the property.” 

Such changes didn’t put an end to the landlord’s problem of late or missed rent. 

“If they didn’t have money, they’d just bounce in the middle of the night,” Siegel said. 

The cliché about people living month to month was wrong. 

People were struggling by the week, he came to understand, so he started letting people pay when they got paid — weekly or every two weeks.

The Siegel Suites brand started taking shape: no annual leases, no extra charge for internet, furniture or TVs, no charge for cable and utilities — a significant perk in the desert heat. 

“The business model is basically: Bring your toothbrush and your clothes and your sheets, and you’re in,” Siegel said. 

His wife, Judith Siegel, is the company’s executive vice president. 

The couple are master sloganeers. 

“Live here, eat free” was a catchphrase in 2008 — people were given free meal coupons if they paid rent on time. 

“We realized that a lot of people we gave the food coupons to weren’t eating if they didn’t have the coupons. 

It was that crazy,” he said. 

“So, we started to realize really who our customers were more and more each year.” 

The Siegels started a loyalty program, Siegel Rewards, offering perks like gift cards to grocery stores and even discounts for on-time rental payments. 

Other giveaways followed: bagels on rent day, turkeys for Thanksgiving, toys at Christmas.

What the chain lacked in status-signaling amenities, it made up for in a different way: It didn’t turn you down because of previous evictions. 

Its slogan “Bad Credit OK” spoke to the moment in 2008, when one in three homes in North Las Vegas went into foreclosure. 

Siegel snapped up more aging hotels around the city. 

“We have a lot of people who lost their houses and had foreclosures or have been kicked out of apartment buildings,” Siegel said. 

“When you get kicked out of a traditional apartment building, it goes on your credit. 

With the other traditional apartments, you go to rent, they check and say, ‘You’ve been evicted, we can’t take you.’”

In the late 19th and early 20th centuries, when S.R.O.s dominated the lowest rung of America’s housing system, credit scores as we now know them did not exist. 

A landlord couldn’t easily find a reliable record of your financial misfortunes. 

The tenant-screening business — today a billion-dollar industry built in part on aggregating eviction data from court proceedings — was nascent and operated locally, and the hundreds of credit bureaus scattered around the country were paper-based operations. 

While cash loans were available almost exclusively to the wealthy, the credit bureaus still tracked everyone, including the poor, but their credit histories didn’t travel with them the way they do today, according to Josh Lauer, the author of “Creditworthy: A History of Consumer Surveillance and Financial Identity in America” and an associate professor of communication at the University of New Hampshire. 

“You could move from one city to another and escape your past,” Lauer says, adding that this started to change in the 1920s, when credit bureaus made it more difficult.

But for decades the poor had the possibility of reinvention, a fresh start on a practical level. 

Perhaps not coincidentally, dynamic geographic mobility lasted until the early 1980s, when Americans stopped moving so much. 

Four decades on, that trend line remains unchanged, and scholars puzzle over why people don’t simply move to where the jobs are. 

But people in poverty move the least.

The role played by the credit bureaus in this stagnation is rarely discussed. 

Credit scores, first introduced in 1989, were quickly mainstreamed as a tool to screen mortgage applicants by the mid-’90s. 

This stratified credit markets. 

If you had a low score, you paid higher interest rates; once the process was automated, decisions that used to take days or weeks were made within hours. 

“We were reduced to numbers and one-dimensional reports with little ability to intervene or plead our case,” Lauer told me.

Without any say in the matter, Americans are now labeled with a new layer of identity: a three-digit judgment of economic worthiness. 

“It’s a number that went from being nonexistent to being a gatekeeper to getting housing,” says Lisa Servon of the University of Pennsylvania, the author of “The Unbanking of America.” 

The $14.4 billion credit-reporting industry in the United States — the consumer-credit subset of that market is dominated by the big three: Experian, TransUnion and Equifax — quietly assumed a new yet profound role in the American class system to the extent it influenced who could live where and who received a second chance after financial disaster.

By 2012, Siegel Suites had 25 locations in Las Vegas. 

The Great Recession had technically ended after 18 months, but for millions, the struggle to find affordable housing continued. 

So, too, did the chain’s struggles with zoning officials — who, Judith Siegel told me, sometimes wanted to classify the chain as a boardinghouse or single-room-occupancy hotel. 

She rejects those terms. 

“They are not seeing the broader picture of what is happening in the world,” she told me. 

“If I rented to you, would you like me to tell you you live in an S.R.O.? 

No, you want to feel that you live in an apartment, right? 

So, I’m going to market myself as an apartment.” 

In preparation for a national expansion, the chain trademarked “Flexible-Stay Living” to promote its alternative vision for affordable housing. 

“People are making $10 an hour, you know, so it’s like, where do you go?” she added. 

“Everybody wants to live in a bubble, and if you’re in your certain bracket, you think everyone lives under it, you assume people live under that bracket. 

It’s not the case. 

They are different brackets.” 

The Siegels actively market their brand and name to the poor. 

When I visited their corporate headquarters, there were stacks of boxes in the lobby filled with red fleece blankets, screen-printed with the Siegel name, ready to be handed out at homeless shelters.

The Siegels see no end to demand and seized on the pandemic as an opportunity to expand beyond Nevada. 

Last July, the Siegel Group announced the purchase of two Budgetel hotels, 15 miles from downtown Birmingham, Ala.; in November, the company said it was buying a HomeTowne Studios with 130 units in Baton Rouge. 

The most recent purchase, announced in early May, is an Amerihome Inn & Suites in Houston,  five miles north of the beltway in the city’s outer suburbs. 

That brought the chain to 60 sites nationwide, which now also include Toledo; Memphis; Jackson, Miss.; and Shreveport, La. 

As Stephen Siegel put it to me, “Our business model is great in a good and a bad economy.”

Daryl Green, who lives at an Extended Stay America in Columbus, Ohio. “There’s been days where we decide if we are going to pay the room fee or if we eat,” she says. Credit...Maddie McGarvey for The New York Times

On a sunny evening in early April, at the Extended Stay America behind a Tee Jaye’s Country Place restaurant on the edge of the eastern suburbs of Columbus, Ohio, two men sat on a picnic bench outside, drinking from a case of beer in a gated area. 

The outline of what was once a pool, now filled with concrete, was still visible. 

“Police Parking Only” signs marked the parking spots on each side of the lobby entrance. 

Daryl Green, a mother of four, opened the door to Room 308 to show me her 250-square-foot space, where she has been living with the father of her two youngest children since August 2020.

Inside, on the left, was a dresser with six drawers, some so stuffed they couldn’t close. 

Until a week earlier, Green, who is 33, had been making $12 an hour as a dietary aide at a nursing home. 

“I worked all through the corona,” she said. 

Now, having lost that job a week earlier, she needed to cut any extra expense, which meant emptying a storage unit that had been holding most of the family’s belongings and bringing all those things to this room. 

“This is not how we live, but we’re in this tight, tight,” she said.

On top of a blue storage tote, there was a plastic laundry basket full of clothes and a tower of blankets. 

A narrow kitchenette, with sheet pans and pots filling the sink, included a mini-stove and a regular fridge and was separated from the bed by a wall-mounted tabletop. 

For about five months, Green and her partner managed to cover the initial daily room rate of $44.99, which would add up to more than $1,300 a month — almost twice the fair-market rent of $717 for an efficiency apartment in Columbus, as calculated by HUD. 

(Extended Stay America says that its rates cover amenities like periodic housekeeping that are not included with a typical apartment.) 

“There’s been days where we decide if we are going to pay the room fee or if we eat,” Green told me. 

In the absence of a regular lease, prices fluctuated.

Green’s room was in one of eight Extended Stay America locations that serve the Interstate beltway encircling Ohio’s capital city, where the population has risen by more than 100,000 over the last decade, causing rents to soar. 

With a shortfall in affordable housing, hotels and extended stays have become a stopgap. 

In early 2014, the city, after noting the “exponential growth” in the number of hotels functioning as apartments in commercial districts not zoned for residential use, passed an ordinance that subjects them to many of the same regulations as apartments. 

The hotels had “an unfair competitive advantage” over traditional multi-unit apartments, according to the language of the ordinance. 

Columbus City Schools classified 3,431 students as homeless in the school year that ended in 2020, including 204 who lived in hotels or motels; the school system makes 16 bus stops at hotels, motels and extended stays.

Green helped her youngest child, Joi, 2, onto the room’s only bed, a queen. 

“It’s insanity in here,” she said, as she checked Joi’s diaper. 

“This is not enough space, you know. 

And I have a girlfriend that’s here with seven kids.” 

Moments later, after Joi passed her diaper inspection, she slipped out of the room and slammed the door shut behind her. 

Green sprinted into the hallway, returning with Joi on her right hip. 

“She’s fascinated with that door,” Green said, breathless, before carefully closing the metal security guard at the top of the door. 

“That’s another reason we got to get out of here.” 

Her oldest child, 13, was living with her mother, and her other children, 10 and 8, were with other relatives.

Inside the lobby, a sign had been posted not long before: “Attention Franklin County Residents Are not permitted to rent/occupy Any rooms on this property Per order of the City of Columbus.” 

After reports of drug activity and “offenses of violence” at the property, the city threatened not to renew Extended Stay America’s hotel license in December. 

In February, the city reached an agreement with the hotel whereby it was required to keep a do-not-rent list and to prevent from checking in all those with any form of identification that indicated they were county residents. 

The agreement had exceptions, though, including “guests with a temporary lack of permanent housing due to emergency or unforeseen circumstances.”

Green, who was named after the actor Daryl Hannah, has an outgoing and commanding presence; she always chuckled at the sign. 

She has lived in Franklin County since she was 3. A month earlier, management pinned a notice to her door: It said the place could no longer “house” Franklin County residents. 

But if she wasn’t a resident, what was she? 

“It felt ostracizing,” she said.

Green was among 80,220 people in Columbus who had applied for housing vouchers since 2015. 

If she did receive a voucher, that was still no guarantee of a permanent home. 

On the built-in table near the kitchenette, Green pointed to a stack of papers: eviction paperwork, posted on her door by management early that same morning. 

That made her one of 24 people in Franklin County against whom Extended Stay America filed eviction actions in 2020. 

(Extended Stay America says that it “has complied with and will continue to comply with the Centers for Disease Control and Prevention order regarding evictions and all state and municipal orders regarding evictions.”) 

“I just don’t want the eviction on my credit,” she told me. 

“I’m in the process of looking for a home. 

I don’t need that. 

That’s my biggest thing. 

I don’t care about anything else.” 

Green’s credit was low, around 500, she said, because of unpaid phone bills, light bills, cable bills. 

“Little mild things, nothing outrageous,” she said. 

In September 2019, she paid a credit-repair company $300 that would bring her score up, briefly. 

It didn’t help for long, she said. 

With no way to pay the room fees she owed, her credit would sink further.

The eviction fears started in mid-December, when her partner tested positive for the coronavirus and spent six days in the hospital. 

Green said that she quarantined in the room alone for 14 days, without sick pay, and that with only $124 in the bank, she couldn’t pay the daily room rate. 

On Dec. 23, a notice appeared on the door: She had to pay $429.90 for the coming week or move out by Dec. 26. 

“My kids didn’t have a Christmas,” she said. 


We didn’t even have a tree.” 

The day after Christmas, when Green was at the grocery store and her partner was in their room trying to recover, three employees from Extended Stay America banged on her door, demanding that the couple pay or vacate immediately. 

Green told me she called the corporate offices in tears, claiming harassment and threats.

As the new year neared, Green awoke one morning to a bank alert on her phone — $1,800 had landed in her account. 

It was her stimulus payment. 

“I was tripping,” she said. 

She immediately went to a check-cashing store, fearful that management, which had her debit-card information, might extract some money — or take it all, leaving her with no cash for food and no way to pay for a place elsewhere. 

(Extended Stay America says that its guests are required to make payments at the front desk personally and denies that employees banged on Green’s door the day after Christmas.) 

She wasn’t receiving food stamps or public health care. 

She went down to the lobby to pay the manager. 

“She refused my money,” Green said. 

She kept being given key cards. 

And she wasn’t asked for more payments again.

By February, after six years of waiting, she had given up on a voucher for housing in Columbus and applied for one in Lancaster, a predominately white city 30 or so miles away, with a population of about 40,000. 

But she was still waiting. 

“If I’m here, that means I have nowhere else to go,” she said. 

“It’s not like you see us balling in here. 

It’s not like we’re blowing through money.” 

She was due in housing court in a week. 

She planned to fight. 

“My voice has to be heard,” she said.

On April 20, Green found out that her Lancaster voucher had been approved: It would cover monthly housing costs of about $1,300. 

But she needed a birth certificate to complete the process. 

“I have no idea where it is,” she said. 

“It’s tore up and folded up somewhere.” 

She was debating whether to drive to New York, where she was born, for a fresh copy, to avoid waiting 20 weeks, the estimate she had been given for a replacement via mail. 

It was too long to wait. 

She was also waiting to hear if her application for federal rental assistance, which she applied for at housing court, was approved. 

The next day, she hashed out a settlement of sorts for her eviction filing. 

She could stay through the end of June. 

But only if she paid $8,382.08 by May 31.

So Green was taking a gamble of sorts. 

If her application for rental assistance wasn’t approved, she would still owe the back rent, and she would never be able to pay that amount. 

Eric Dunn, director of litigation at the National Housing Law Project, points out that “the foremost barrier people have to getting rental housing these days is debts owed to former landlords.” 

That failure would show up on her credit. 

It would make finding a place in Lancaster even harder. 

By early May, there was no news on her application for rental assistance. 

She was struggling to cover the bills, waiting for unemployment payments. 

“I don’t even have any money to pay my phone bill this month,” she said.

Green and her partner’s 250-square-foot room at the Extended Stay America. The daily rate can add up to over $1,300 per month — nearly double what she might pay for an efficiency apartment in Columbus. Credit...Maddie McGarvey for The New York Times

At the same time as the foreclosure crisis of the late 2000s turned homeownership into a lost dream, as millions traded down to rentals, the credit reporting industry faced its own crisis. 

It was losing influence over a key market segment: homeowners. 

In this new economic climate, as America’s ratio of homeowners to renters declined, the credit reporting industry wooed landlords as aggressively as it once courted mortgage lenders and banks. 

In 2011, Experian introduced RentBureau, a service that offers rent-payment history to landlords so they might “reduce the risk of skips, bad checks, evictions and property damage.” 

There was no escape for renters. (The reports aren’t included in credit reports and must be requested separately by tenants.) 

Soon after, TransUnion debuted SmartMove, accompanied by the claim, “15 percent better eviction prediction than a typical credit score.” 

Equifax also offered screening reports. 

Next came the rent-payment platforms like PayYourRent and RentTrack. 

They made paying the rent more expensive. (RentTrack, for example, charges $9.95 a month.) 

The platforms track who has paid on time and funnels that data back to the credit bureaus, which aggregate it and sell it back to landlords.

Still, after the Great Recession, there were 26 million Americans with no credit records, according to the Consumer Financial Protection Bureau. 

In a research brief prepared by the bureau, which was formed in the aftermath of the foreclosure crisis to protect Americans from predatory financial services, they were described as the “credit invisibles.” 

Another 19 million Americans were considered “unscorable” because their files were too thin. 

The research also exposed vast inequities in the credit system across racial and class lines: Almost 30 percent of consumers in low-income neighborhoods were credit invisible, and Black and Hispanic people were more likely to be credit invisible. 

“This is a huge hindrance to personal opportunity,” Richard Cordray, the C.F.P.B. director at the time, wrote in “Watchdog,” a memoir published last year.

The industry, in consultation with the C.F.P.B., wanted to integrate “alternative data,” such as rent and utility payments, into credit reporting. 

The push aligned with their business interests, especially when it came to products with renter credit scores for landlords. 

Cordray saw the push as good public policy — a form of “financial empowerment.” 

In March 2019, Experian introduced Experian Boost, with a $47 million ad campaign that year and another $69 million campaign the next year, according to Kantar. 

At the time, Experian claimed that more than 100 million Americans couldn’t access credit. 

For the “credit invisibles,” Boost promised an immediate and free “boost” to credit scores. 

By this February, more than six million people had signed up. 

But boosting wasn’t hassle free: Experian required read-only access to a bank account to track whether bills were paid on time. 

Immediately after downloading, the offers start: a $249.99 annual subscription to CreditWorks Premium, $9.99 monthly for Experian IdentityWorks Plus.

Niffenegger tried Boost before she was evicted from her condo; she tried it again after she was living in Room 323. 

With no checking account to link to — her Wells Fargo account had been closed after service fees pushed her into a negative balance — it was futile. 

She used a prepaid phone, had no utility or cable bill, which were included at Siegel Select, and hadn’t had any money to pay rent in months. 

“That didn’t do anything for me,” she says.

For people whose financial lives were improving, their increased visibility to the credit bureaus was pitched as upside. 

But what if you couldn’t make rent or pay the gas bill on time? 

As of the beginning of March, 8.8 million families were behind on rent, and 9 percent of renters were reporting that they were likely to be evicted, according to the Consumer Financial Protection Bureau. 

Early in the pandemic, a bill in the House called for a suspension of negative credit reporting. 

It never got through the Senate, even as consumer complaints about financial companies rose by more than 50 percent in 2020, according to the U.S. Public Interest Research Group. 

In late April 2020,  Senators Elizabeth Warren and Brian Schatz sent letters to the three major credit bureaus. 

“Months of late or missed payments could add up to not just a mountain of debt but a cratering credit score,” the senators wrote. 

“Permanently marred credit scores pose a risk to individuals and to our collective recovery.”

All this financial surveillance of America’s poor has helped lead to the creation of a permanent credit underclass. 

A survey conducted in the fall of 2018 in Norcross, Ga., a city of about 17,000 outside Atlanta, concluded that nine of the city’s 14 hotels, motels and extended stays had become “primarily residential facilities.” 

When the respondents — 70 percent of whom were Black — were asked to name the biggest barrier to more permanent housing, one person after another cited bad credit. 

“They are trapped by the credit bureaus,” says Malik Watkins, an affordable-housing researcher at the Carl Vinson Institute of Government at the University of Georgia, who was an author of the survey. 

In Gwinnett County Public Schools, the largest school system in Georgia, 91 bus stops at hotels, motels or extended stays pick up nearly 600 students.

In the nearby Clayton County School District, Morcease Beasley, the superintendent, began looking closely at the rise of extended stays in the county in 2019, and he now considers their growing prevalence in Atlanta and in Clayton County — where the population of almost 300,000 is 73 percent Black, with a 16 percent poverty rate — a full-blown crisis, and one directly tied to the disproportionate harm of bad credit in Black communities. 

In his district, there are 21 regular school-bus stops at hotels, motels or extended stays. 

It is Georgia’s fifth-largest school district, and among its 55,000 students, about 2,000 are classified as homeless every year. 

“Tenants are penalized for life happening to them, so much so that you can’t recover,” he says. 

“Once their credit is damaged, we don’t give people another chance.”

As rents in downtown Atlanta skyrocketed, rents shot up in Clayton County too, unaccompanied by enough new construction of affordable housing. 

“When you see more extended stays than nice town homes or homes being built, something is wrong,” Beasley told me. 

“It’s not the housing projects where [we] are seeing an increase. 

It’s the extended stays we are seeing.” 

He sees a direct connection between the intensified surveillance of poor people by the credit bureaus and the explosion in construction of new extended stays. 

“They are providing a housing opportunity for people to get off the streets because rental companies won’t rent to them because of stains on their credit reports. 

The way credit and evictions are placed on credit files is creating a de facto form of segregation.”

The first Friday this past February was a good one for Niffenegger. 

The mail brought her $600 stimulus check — the first money she had received since Dec. 31. 

Right away she went to a check-cashing place. 

It levied a fee of $11, but she walked out with a couple of hundred dollars in cash, with the rest put on a prepaid debit card. 

She went to the grocery store and took Brownie to the groomer for the first time in months. 

A few days later, we talked on Zoom. 

It was the most relaxed I had seen her in months. 

She showed off a bottle of retinol cream — a splurge she hoped might smooth over tiny acne scars on her cheeks, and smoked a thin, strawberry-flavored cigar, a Racer, which she bought in packs of 10 for $1.50. 

She spoke of finding a regular therapist to talk to about her life, instead of the psychiatrist she had been seeing, who only prescribed her meds and never asked her about anything.

There was more good news. 

Billions in federal emergency rent assistance were being made available, so her back rent might get paid. 

An office manager caught her outside walking Brownie a few days earlier. 

He told her to come to the office to fill out the paperwork. 

She had yet to add up the total. 

I did a rough calculation: $9,888. 

She threw her head back in relief. “Whoa.” 

It would bring an end to more than a year of struggle. 

“I’ve just been on autopilot. 

I’ve had these spurts of extreme anxiety. 

I would have this twitch, and it would go like this,” she said, jerking her head to the left two times fast. 

“And I’d have it all day long. I’d be on the bus and I’d be doing it, looking like a tweaker or something. 

It’s where I carry my anxiety.”

Even if her back rent were paid, she still needed work. 

She would probably try call centers, the only type of work she has been able to find in recent years. 

But she needed a medical procedure, which would require sick leave, and she had never heard of a call-center job that offered health insurance, let alone paid sick leave. 

Room 323 was hers until at least March 31. 

But then what?

On the morning of Feb. 11, Niffenegger found a notice on her door. 

“Rent is Past Due.” 

It had seven boxes, and the third was checked in black Sharpie: “3 Days Past Due Need to Discuss Payment Arrangement.” 

But with so much money available in federal assistance, the Siegel eviction strategy in her case was shifting. 

Siegel stopped arguing that Niffenegger was a “guest” with a “periodic rental term” — and therefore subject to being evicted, despite the nationwide eviction moratorium put in place by the Centers for Disease Control. 

In a letter that accompanied her application for rental assistance, a regional manager for the Siegel Group Nevada wrote, “Suzy Niffenegger is considered a resident here.” 

The amount owed through March: $12,818.50. 

By late March, the Siegel Group had received more than $1.5 million in federal rental assistance for locations in Clark County identified by The Times, according to county records; the company says it applies all rental-assistance funds to cover tenants who owe money and have been approved for assistance.

Through the end of the winter, Niffenegger was still waiting for approval. 

“Had a rough week but coming out of it!” she emailed me on March 19. 

“Xo Suz n Brownies.” Later that same night, she sent another email: “Is like I have a tube in my chest and someone pumps it full of air and walks away. 

And I am stuck alone with nothing to help me.” 

In early April, her weekly unemployment benefits of $525 started again. 

“Wow, I can go down and buy dog food for Brownie,” she told me. 

When she logged into her Clark County Social Service account for updates on her rental application, she received this message: “Your application is waiting to be assigned to a caseworker.”

On April 30, another notice appeared on her door: The Siegel Group was challenging her covered-person declaration, a reference to Nevada’s eviction moratorium. 

The landlord, her notice stated, “intends to proceed with the eviction process.” 

But she thought she met the criteria for assistance: She earned no more than $99,000 in 2020; she was unable to make rent because of a substantial loss in income as a result of Covid-19; she was likely to end up homeless if evicted.

In early May, a federal judge struck down the nationwide eviction moratorium, in a case brought by the Alabama Association of Realtors. 

The Department of Justice appealed the same day. 

Two days later, Niffenegger says, a crumpled page was shoved under her front door: “ORDERED that the nationwide eviction moratorium issued by the Centers for Disease Control ... is VACATED.” 

Her rental application, she said, still had not been assigned to a caseworker.

No matter how her situation resolves, an observation she made earlier this year is likely to remain apt. 

“It just seems like this whole country is just a big fat mess,” she told me. 

“It’s near impossible to survive in it, but win or lose, Siegel Suites is getting its money.”

Mya Frazier is a writer in Columbus, Ohio, and a 2020-21 Knight-Wallace reporting fellow at the University of Michigan. This is her first article for the magazine.


As technological developments and markets go parabolic, we observe many market “experts”, even intelligent ones, forecasting that we are now in an exponential economic era. 

Thus many believe that this will go on forever. 

This is the typical attitude at market and economic tops and guarantees that THIS WILL NOT END WELL!

It is clearly absolute nonsense to believe that exponential expansion based on deficits, debts and fake money is the beginning of a new era. 

Anyone studying the economy and history of markets knows that exponential moves indicate the end of an era and not the beginning. 

As I have repeatedly said, history is our best teacher and it both rhymes and repeats itself. 

And history now gives us dire warnings.


But for some reason, human beings always extrapolate current trends whether it is population growth or stock market rallies. 

We know from statements at historical tops like 1929, 1987 or 2000 that anyone, from politicians to investors at the time, believe that the trend will go on for ever and that the world has made a paradigm shift.

Many markets and investments are now going up exponentially and very few forecast an end to this euphoric state.


Let’s start with global population. 

For thousands of years we saw a very slow and steady growth as the graph below shows. 

In the mid 1850s world population reached 1 billion.

Since the mid 1800s, we have seen exponential growth in population and we are now almost 8 billion people on earth.

Energy and oil in particular plays a major role in this growth, leading to increases in food production, industrialisation, better health care for people etc.


Moore’s law, first linked to transistors, is a projection of historical trends. 

The fallacy with these projections is that they assume the same trend will go on for ever whether it relates to population or stock markets.

The old fable of the inventor of the chess board tells us how little understood exponential moves are. 

The king promised the inventor a reward for inventing the game of chess. 

The inventor asked for one single grain of rice on the first square of the chessboard, two on the second, four on the third and so on. 

The king thought that this request was easy and inexpensive to fulfil. 

Little did the king understand the exponential law of compounding. 

Because once the 64th square was reached, 18 quintillion grains were needed. 

This amount exceeded the total production of the kingdom. 

So instead of getting his reward the inventor was killed for fooling his king.

The longer a trend has gone on for, the more permanent it seems to be. 

The explosion of population growth does not seem reversible. 

But the Black Death period in the mid 1300s showed us how population can quickly halve. 

This was the case in Europe and probably also in the rest of the world.

So exponential moves always end and so will this one. 

The reasons for the coming “correction” are likely to be a combination of the causes in the graph above.


Just as exponential moves up are spectacular, so are the reversals. 

And although few people understand it, exponential moves always reverse, at least temporarily. 

The problem is that the reversal is always faster, more violent and more hair raising than the advance.

A correction of global population from 8 to 4 billion would be totally natural from a statistical point of view. 

It would obviously be devastating for the world. 

But if the advance from 1 billion population took 170 years, the “correction” might take at least half of that, say 85 years. 

Only future historians will tell the world what actually happened.

As the chart below indicates, economic growth is totally linked to the availability of oil.

The chart shows that World GDP per capita (from 1968) grows in line with consumption and therefore also to the availability of oil. 

As oil production is likely to decrease over the long term so will economic growth. 

This is totally in line with the view I have expressed in many articles and interviews, namely that we are at the end of a major economic cycle of at least 300 years and maybe longer.

Renewable energy is unlikely to replace fossil fuels for a very, very long time even if this is a politically uncomfortable view for the climate control activists. 

What very few realise is that most renewable energy sources are very costly and also all dependent on fossil fuels whether it is electric cars, wind turbines or solar panels.


If we look at some more recent exponential moves in the stock market, they have been spectacular.


The above moves have grossly exaggerated the effect of new technologies. 

Once a new invention has been digested, it grows in line with the market as a whole. 

Take the wheel which was revolutionary at the time. 

It was invented. 

Still, today it certainly is not valued at a premium. 

So the value of new technologies only outperforms the market for a limited period and the above moves will see major corrections of much more than 50%.


If you invested $1,000 in Bitcoin at $0.08 in 2010, you would have had $800 million at the $65,000 peak in April. 

Today it would be $400 million at $32,500 so easy come and quickly gone.

A commodity with such volatility can obviously never replace money. 

And nor would central banks permit it. 

Speculative frenzies can go on for longer than anyone expects.

So Bitcoin could go to $1 million or it could go to ZERO. 

Not the best of odds. And certainly Bitcoin has nothing to do with wealth preservation.


Bitcoin has been a spectacular speculative investment and early investors have made massive fortunes. 

Like all exponential manias it is likely to end in tears. 

But for the savvy investors who have now diversified into physical gold and some silver, they have managed to get the best of both worlds.

I doubt Bitcoin will continue to outperform gold. 

But even if it does, this is a binary investment that theoretically could go to $1 million in a continued speculative mania or it could go to zero, which is more likely in my view.


As shown above, global population together with many markets and financial instruments are now moving exponentially. 

Exponential moves up almost without exception finish with a move down of the same magnitude. 

So this will end badly.

With debts and deficits now going exponential, gold will continue to reflect the destruction of fiat money just as it has for several millennia.

More importantly, gold is the best form of wealth preservation par excellence as history teaches us.