Copyright ZeroHedge
Anyone with even basic financial literacy—the kind acquired after surviving a single dinner with your private banker—usually knows better than your private banker that Harry Browne’s Permanent Portfolio is the market’s version of comfort food: simple, reliable, and strangely effective everywhere from the U.S. to Europe, Japan, and even China. It delivers steady, inflation-adjusted returns with monk-like serenity, barely blinking during market tantrums. The trick? Four humble ingredients—cash, bonds, equities, and gold—mixed in equal weights to help investors glide through all four seasons of the business cycle. Within the Permanent Portfolio, financial assets fall into two simple camps: contracts—legally binding promises of future payments like bonds and cash—and properties, which represent ownership claims, namely stocks and gold. Some sit on the long-duration end of the spectrum, such as bonds and equities, while others are short-term and highly liquid, like cash and gold. Put together, this “forever portfolio” forms four clean quadrants—properties vs. contracts and long vs. short duration—an elegant, intuitive framework designed to balance risk, reward, and resilience through every season of the economic cycle. Debt, in everyday terms, is theorically money but in reality currency you borrow now with a pinky promise to pay it back later—plus a little “thank-you gift” called interest. It can come from a bank, a credit card, your overly generous friend, or even your government (which borrows like it’s a competitive sport). Think of debt as borrowing from your future self: Present You gets the cash today, and Future You gets the bill. Used wisely, it can help you buy a house, start a business, or upgrade your life. Used badly… well, it becomes the financial equivalent of eating too much dessert—you enjoy it now, but Future You regrets everything. Long before modern regulators wrote thousand-page rulebooks no one reads, King Hammurabi kept things simple with laws carved in stone. His code set some of history’s first debt rules—interest caps, clear collateral requirements, and penalties for predatory lenders that made today’s fines look like gentle reminders. Debts could be suspended after droughts or disasters, and overly “creative” creditors faced consequences they wouldn’t forget. Hammurabi understood what modern policymakers still can’t seem to grasp: unchecked debt can tear a society apart, so it’s wise to keep lenders in line before they invent derivatives and blow up the system. The reality is that debt has been humanity’s favorite bad habit since ancient Mesopotamia, where people borrowed so much grain and silver that kings had to declare regular “debt jubilees”—the original Control-Alt-Delete for society. Greece and Rome turned unpaid debt into servitude, the Middle Ages tried to moralize lending, and rising merchant cities ignored all of it to finance trade and conquest. With nation-states came public debt, the magical tool for waging wars and building empires on tomorrow’s dime. Today, debt is global, industrialized, and turbocharged, created by banks and markets faster than ancient scribes could carve warnings into clay. Even Hammurabi understood the danger: his stone-carved code imposed interest caps, set collateral rules, and punished predatory lenders with unforgettable consequences. Modern policymakers could take a hint—unmanaged debt can tear a society apart long before derivatives finish the job. https://avalon.law.yale.edu/ancient/hamframe.asp Different religions have spent thousands of years trying to keep humanity from turning debt into a full-time self-destruction hobby. Judaism allowed lending but frowned upon charging interest to fellow Jews, and even built in “jubilee years” — history’s earliest financial reset button — because apparently people have been terrible with money since antiquity. Christianity long declared usury a sin, which worked fine until everyone realized commerce doesn’t run on good intentions and church doctrine quietly “evolved.” Islam still holds the strictest line: Sharia law bans interest entirely, forcing Islamic finance to get creative with profit-sharing, asset-backed deals, and contracts that look suspiciously like loans wearing a disguise. Hinduism and Buddhism view debt through karma — borrow recklessly, and the universe will eventually send the bill. Across all traditions, one message repeats: debt isn’t just economic; it’s moral. And every religion, in its own way, has tried to stop humans from inventing financial trouble even faster than they invent new ways to avoid paying their bills. Napoleon’s soldiers stole the Rosetta Stone in 1799, Champollion cracked it in 1822, and the British Museum has been “safeguarding” it ever since. Its trilingual message revealed that ancient pharaohs had a charming habit we’ve conveniently forgotten: wiping out debts before their peasants collapsed or revolted. From Ramses III freeing prisoners to Bocchoris cancelling debts outright, the goal was simple—keep farmers fed and armies full. Even Assyria, Jerusalem, and the writers of Deuteronomy and Leviticus were in on the tradition. In other words, long before modern economists invented austerity, ancient rulers already knew the secret: sometimes the smartest policy is just hitting ‘delete.’ Debt jubilees are basically history’s “Ctrl-Alt-Delete” for finance. When peasants, farmers, or hapless citizens got buried under mountains of debt—and creditors started eyeing their goats and children—kings and rulers would step in and declare, “Enough! Wipe the slate clean!” Suddenly, loans vanished, land was restored, and everyone got a temporary reprieve from the horrors of compound interest. Think of it as a wildly generous reset button: the poor get to breathe, the economy keeps spinning, and the rich… well, they learn that hoarding IOUs isn’t always a winning strategy. In short, debt jubilees were society’s way of saying, “Sure, you can lend, but don’t push it… or the king will ruin your fun.” Corporations borrow money to grow without surrendering ownership, using debt to fund operations, expansions, or new projects. They typically raise capital via bank loans or corporate bonds, committing to pay interest and repay principal at maturity. When managed prudently, debt enables companies to invest ahead of cash flow, fueling growth and boosting profitability. However, excessive borrowing increases financial risk, interest obligations, and vulnerability during downturns. In short, corporate debt is a strategic lever: highly effective when controlled, but perilous if overextended. Governments love debt because it lets them throw extravagant parties today while politely asking future taxpayers to foot the bill. When tax revenues fall short, they issue bonds—fancy IOUs sold to investors, banks, pension funds, or even other countries—promising interest and eventual repayment. This magic trick funds infrastructure, social programs, or emergency bailouts without raising taxes immediately, all while looking responsible. But beware: borrow too much, and interest payments balloon, policy options shrink, and future generations get to enjoy the “fun” of cleaning up the fiscal mess. In short, government debt is the ultimate “buy now, pay later” scheme, with society as the credit card. Global debt has officially become a monster: just over 235% of world GDP as of end of 2024 and growing, with public debt at 93% and private debt at 143%. That’s $251 trillion in total—$99.2 trillion for governments, $151.8 trillion for everyone else. Corporate debt, the rock star of private borrowing, has skyrocketed from $69 billion in 2007 to $86.1 trillion by 2022, dwarfing even government borrowing. The US and China are the headliners: US government debt hit 121% of GDP, while China’s corporate debt exploded to 206%, despite a wobbly property sector. Low rates, tax perks, and strategic bets fueled the binge, but nearly half of all government and corporate debt in advanced and emerging markets is due by 2027—proof that the party may soon come with a very hangover-inducing bill. Read more and discover how to trade it here: https://themacrobutler.substack.com/p/when-debt-trap-turns-into-jubilee Join The Macro Butler on Telegram here : https://t.me/TheMacroButlerSubstack You can contact The Macro Butler at info@themacrobutler.com Disclaimer The content provided in this newsletter is for general information purposes only. 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