How Housing Bubble #2 Bursts

Corporate / private equity / STVR investors are all fair-weather owners of housing.

Let's indulge in some basic logic:

1. All credit-asset bubbles burst.

2. U.S. housing is a credit-asset bubble.

3. The U.S. housing bubble will burst.

The only variables are how and when Housing Bubble #2 will burst. That's today's topic.

I've been writing about housing since 2005, as Housing Bubble #1 was inflating. I've participated in / observed housing rising sharply in the late 1970s and the late 1980s, followed by deflation / stagnation. Housing Bubble #1--circa 2003-2008--was characterized by all the classic signs of a mania:

1. Participants denied it was a bubble. When greed displaces prudence, this isn't a bubble doomed to pop, it's the New Normal.

2. Fraud, malfeasance, misrepresentation, speculation and leverage were all rampant. In the euphoric ascent to ever higher valuations, why let foolish little things like income, risk management and credit ratings stand in the way of reaping more profits?

Housing Bubble #2 has rolled over into the decline phase, but this is discounted by the consensus which holds that higher mortgage rates dented the market; once they drop a bit, housing will resume its ascent to ever-higher valuations.

I see a different set of dynamics in play:

1. The 40+ year cycle of interest rates / bond yields has turned. Rates will not go back to zero and stay flatlined for years. Risk and inflationary forces have changed and are not returning to The Great Moderation.

2. The Federal Reserve / federal government effectively nationalized the mortgage industry post-2009 Global Financial Meltdown as the means to stop the decline of housing valuations and re-inflate them via super-low mortgage rates. The Fed bought a staggering $1.2 trillion of mortgage-backed securities in 2009-2010, up from zero--a monumental manipulation of the mortgage market that soon exceeded $1.6 trillion.

How the housing/mortgage market managed to survive without Fed nationalization prior to 2009 remains a mystery.

For its part, the federal government effectively nationalized the quasi-governmental mortgage agencies (Fannie Mae, Freddy Mac), using these agencies to guarantee most mortgages in the U.S.

3. The incentive (lower mortgage rates) to commit fraud by claiming to be an owner-occupant rather than an investor has pushed mortgage fraud to levels that Federal Reserve researchers declare "rampant." Owner-Occupancy Fraud and Mortgage Performance (A 46-page PDF report is available on this link.)

The study's authors found that "in most years, fraudulent investors make up roughly one-third of the total pool of investors." Fraud rates in excess of 13% were found in some states states.

The frenzy to buy and convert houses to short-term vacation rentals (STVRs) took off in the post-pandemic "revenge travel" boom. Corporate purchases of houses as rental properties had taken off in the post-2009 era of mass foreclosures, a trend that accelerated as private equity sought new markets to exploit.

Combine corporate / private-equity buyers with small investors flooding into STVRs and the post-pandemic panic-buying frenzy, and it's little wonder that investors--declared and fraudulent, large and small--now own huge swaths of housing in the U.S.:

Investors Bought 26% of the Country's Most Affordable Homes in the Fourth Quarter--the Highest Share on Record

An estimated 26% of Fort Worth's single family homes are owned by companies, city says

(Yes, family trusts and households can own housing as LLCs, but the study linked above paid no attention to the type of ownership; it paid attention to A) if the owners have multiple first liens, and B) whether they moved following the origination of their new purchase mortgage or not.)

4. The risks created by this preponderance of investor ownership are high. The Federal Reserve researchers found that fraudulent investors pose a much higher risk of default than declared investors and real owner-occupants.

As "revenge travel" shrivels up, property taxes and insurance rise and inflation ravages household budgets, STVRs are quickly shifting from income-producing assets to loss-generating liabilities. Investors either sell before they're under-water or the risk of default rises accordingly.

Professionally managed corporate and private-equity owners will start unloading properties as rents sag and vacancies rise. STVR owners who realize the tide has reversed will also rush to sell before the price slide gathers momentum.

Let's look at some charts for context. Here is a chart of total housing units. Confounding the conventional narrative of a "housing shortage," the U.S. added 7.6 million housing units in the five years 2020-2025, a rate far higher than the 8.6 million units added over 10 years 2010-2020.



Here is a chart of owner-occupied housing. Note that the number of owner-occupied homes was flatlined for 12 years--from 2005 to 2016. Then it suddenly leaps up by 10 million in a few years--from 76 million to 86 million. Did 10 million households all win the lottery, or is the bulk of this astounding increase the result of fraudulent investors posing as owner-occupant buyers?



This map shows the extent of investor mortgage -fraud.



This chart of Federal Reserve ownership of mortgage-backed securities (MBS) overlays neatly with each leap higher in valuations. Pump "free money" into the financial system and keep rates at historic lows, and voila, you can inflate a bubble for the ages.



The post-pandemic buying frenzy pushed the cost per square foot of houses listed for sale up 57%.



Unsurprisingly, this bubble pushed housing affordability to record lows.



The Case-Shiller Index offers a long-term view of how far valuations could drop once the bubble bursts. A 40% decline would be the norm, and a 50% drop would be well within the typical range of bubbles bursting.



The Fed's mass manipulation of mortgage rates in 2010 "saved" Bubble #1 from playing out in a free-market manner, but the Fed won't be able to engineer an equivalent "save" this time around, as the mortgage market has already been nationalized and the Fed already owns a stupendous $2.1 trillion of MBS.



Corporate / private equity / STVR investors are all fair-weather owners of housing. Once the profits shrink or reverse into losses, investors push the "sell" button. And since housing is priced on the margins, it only takes a handful of get-me-out sales to push valuations down 10%, then 20%, then 30% and eventually to a bottom between 40% anf 50%.

This vulnerability to the collapse of valuations is the bitter fruit of the Fed's manipulation of rates and mortgages over the past 16 years. We love a "free market" when rapidly expanding credit inflates a bubble, but oh dearie-dearie me, we have to stop the "free market" from operating if it bursts the bubble.

Here's how Housing Bubble #2 bursts: buyers of overvalued, money-losing properties vanish, those who waited too long sink underwater (sales prices are lower than what they paid), marginal investors default, owner-occupants who lose their jobs sell or default, private equity realizes their losses will only increase the longer they hold off selling, and the momentum of sellers far outnumbering buyers cascades.

Greed is replaced by fear, and then by the realization it's too late to exit without losses. This is how bubbles burst.

Of related interest: Paradise Lost (Melody Wright)

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Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Good News! AI Can Do More BS Work

A truly intelligent AI would refuse to do such transparently stupid, needless counter-productive BS Work.

So here's the good news about AI: it can now do more BS work, author David Graeber's term for the meaningless churning of bureaucratic "work" that lost its purpose and functionality long ago but is now considered "essential" to the operation of a system in which complexity and self-interest are the masters rather than tools to radically improve efficiency.

If we ask, what real-world tasks now take 90% less time, energy, effort and money to complete, the list boils down to marginal ephemera: now my online search for cute kittens is faster and better than ever! Now AI can conjure a look-alike commercial of cute kittens, a "product" whose novelty value wore off months ago.

Coding BS work got faster and easier, which means the load of BS work demanded can rise accordingly.

If we ask, what real-world tasks now take more time, energy, effort and money to complete, the list is long. Consider the accounting and filing of taxes, an enormous industry of self-serving bureaucracies: politicians need to tweak the tax code to foster the illusion they're serving a constituency they need to get re-elected and their campaign-contribution donors, a vast army of accountants, tax lawyers, etc. need this churn to justify their essential role in the process, and a vast regulatory system of state, local and federal agencies needs the churn to justify their ever-increasing payrolls to codify, publicize, monitor compliance and enforce the constant tweaks in the tax codes.

Adjusted for inflation and calculated as a percentage of GDP, tax receipts are remarkably stable. Tax revenues noodle around in a fairly narrow band, and so what's the systemic value-added proposition in constantly tweaking the tax code? There is none.

The entire exercise is a self-serving theater of the absurd which ultimately boils down to this: we have so much money sloshing around that we can siphon off staggering sums under the pretense of doing "essential work" that is actually unproductive or counter-productive BS work.

I've discussed the catastrophic collapse of efficiency and productivity in building permits and similar gatekeeping functions where activity slows to a glacial pace because stamps of approval must be obtained from a mafioso-type monopoly--a model that's been pursued with great vigor in healthcare, defense, Big Pharma, Big Tech and indeed, Big Everything, because concentrating power and wealth enables monopolies, gatekeeping, self-enriching churn, predatory pricing, diploma / accreditation mills, and all the rest of the sprawling, self-serving BS Work complex.

Billions of dollars are being "invested" (heh) in collecting data about consumers whose disposable income is set to drop to zero as the Everything Bubble bursts. What's the value of all that data when the cash and credit available for households and businesses to blow on fripperies dries up? Zip, zero, nada.

All available income will be spent paying the ever-increasing costs of BS Work. All this BS Work churn is highly inflationary, as we're collectively getting nothing but friction and costs--in effect, digging holes and then filling them back up, with zero gain in productivity, efficiency or quality of life.

What's remarkable is this highly inflationary churn attracts zero attention. This reflects the overwhelming power of self-interest: touche pas au grisbi: don't touch my skim, scam, stash, loot.

The stupidity of a system that spends hundreds of billions of dollars building data centers to do more BS Work because that's what's incentivized by self-interest is comically at odds with its grandiose, self-glorifying claims of artificial intelligence.

A truly intelligent AI would refuse to do such transparently stupid, needless counter-productive BS Work.



Regarding the vast sums of money available to blow on BS Work, to paraphrase Captain Renault's comment to Rick in the classic film Casablanca: "Someday money may be scarce."

---

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Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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And So It Begins

The hollowness of the status quo's self-correcting mechanisms is being revealed, and it's discomforting.

And so it begins. Call it whatever you want--how about the Great Unraveling for starters--and perhaps it's appropriate to discuss it on Friday the 13th, as old tales and superstitions are part of the mix.

Let's start with two superstitions that are not yet recognized as superstitions.

1. There are very smart people who will work very hard to keep the status quo glued together. It's unwise to bet against them.

2. Technology is Progress and Progress is inevitable.

These seem valid until the tide turns. As the sand castles erode and collapse, these are revealed as belief structures, not facts. We like to think smart people, technology and Progress will solve all difficulties without causing us any pain. When the tide is receding, this seems to be the case. See, problems are getting resolved, technologies are making life better, and Progress is advancing everywhere.

But beneath this veneer of confidence, buffers have thinned and long-smoldering conflicts are catching fire. Nuclear ambitions, nuclear threats--these never went away, and now the buffers containing them have eroded.

The buffers of financialization and globalization have thinned to the point that crisis management has been normalized. Rather than rebalance a corrupted economy and ship of state when the second of two credit-assets bubbles burst in 2008, the very smart people who work very hard shoved the throttle to maximum and ran the speedboat right over the reef.

Rather than accept the limits of a system geared to increase inequality and waste regardless of PR policy tweaks, to maintain the illusion of stability they gunned the engines of financialization and globalization into hyper-financialization and hyper-globalization.

The reef shredded the hull, but momentum and the mighty engines of cheap oil and money creation kept the doomed craft afloat for 16 long years. The PR machinery duped the passengers into believing this unstable hyper-state of spiraling inequality and squandering resources in the name of "growth" was not just permanent, it was inevitable.

The PR has now reached the pathetic stage of self-parody. The soil we all depend on for food has been depleted, but no worries, a robot will wander over the lifeless fields zapping weeds, so problem solved! The faith that simplistic technologies will painlessly solve complex human and ecological problems was always child-like, but grandiose egos and greed were more than enough to push this childish faith to self-parodying absurdity.

So 19 American families have the same net worth ($2. 6 trillion) as 110 million Americans--no problem, there's an app that resolves that.

Conflicts traverse a familiar landscape. Those dissatisfied with the status quo seek change, and those content with the status quo seek to distract, placate or bribe the discontented without relinquishing any of their power and perquisites.

The greater the concentration of wealth and power in a ruling elite, the greater the opportunities for delusion and catastrophic misjudgment. The concentration of power and wealth have reached extremes throughout the world, and so the stage has been set for miscalculations, clashes of ego, delusional confidences and beliefs and desperate gambles by those who can't afford to lose.

Nobody noticed--or admitted--that the buffers protecting all these forces from breaking out have been thinned by decades of destruction, fraud, corruption, waste, inequality and propaganda that everything was going just fine because it was going just fine for those at the wheel of power and wealth.

The hollowness of the status quo's self-correcting mechanisms is being revealed, and it's discomforting. All is not as it seems, and so it begins. Call it whatever you want, but hyper-normalizing it with fine-sounding cover stories won't repair the shredded hull.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Now That the Parasites Have Consumed the Host....

The parasites have been feasting for so many decades that they've lost the ability to discern reality: their survival now depends on feeding on other parasites.

Let's conduct a thought experiment. First, set aside all the usual economic-ideological certainties, mythologies and filters--capitalism and free markets are the fountains of endless wealth, socialism is the answer, etc.--and then look at our culture not as a monetary-economic machine but as an ecosystem of parasites and hosts. From this perspective consider this statement:

Now that the parasites have consumed the host, they only have each other to feed on.

In this scenario, the US consumer is the host and industries, cartels and corporations are the parasites (along with local governments, whose tax revenues are drawn from transactions and bubble wealth valuations), seeking to "maximize shareholder value" (i.e. profits) by any means available without killing the host.

The problem is the "profit motive" knows no limits and lacks the mechanisms to detect the host is about to keel over. In the natural world, parasites are in a feedback loop with the hosts they're feeding on, as the death of the host means the death of the parasites.

In our culture, the parasites assume the host is immortal, due to the Federal Reserve and federal government's ability to create money out of thin air and distribute it to the host. The parasites can suck as much wealth as they want from the host and the host may stumble but will never collapse because the Fed and Treasury will inject another few trillion dollars into the host to keep it slogging along.

But these injections aren't a true measure of the host's health. These financial injections can keep the patient alive but comatose, which suits the parasites just fine, but that doesn't mean the patient is healthy and immortal.

Greed is infinite but the host is not. The host needs to be physically healthy and financially healthy to support a host of voracious parasites, and neither of these conditions apply.

Over 73% of US adults (i.e. the host) are overweight or obese, conditions which greatly increase the risks of a range of chronic illnesses. Only 26% of the adult populace is normal weight. To call this "healthy" is delusional.



Financially, the bottom 60%--some 200 million people--are on fumes. A strong case can be made (based on wages' share of the economy and astronomical wealth inequality) that the bottom 80%--275 million Americans--are on fumes, but some percentage holds fast to the delusion they're still "middle class," i.e. financially secure and reasonably wealthy, due to the bubble valuations of stocks and housing.

Consider these statistics, courtesy of the St. Louis Federal Reserve database (FRED). (Statistics are the latest available in May 2025, and are rounded: $107.7 is $108, etc.)

Of America's total household net worth of $160 trillion, the top 1% of households own $50 trillion, or 31%.

The top 10% own $108 trillion, or 67%.

The bottom 50% own $4 trillion, or 2.5%.

The top 1%--3.4 million people--are worth 12.5 times what the bottom 50%--170 million people--are worth.

Statistics like these are difficult to grasp, as they are abstractions. A real-world analogy helps us understand what the numbers mean.

Consider a vast expanse of desert. Divide this enormous space in half. On one side, there are the 19 wealthiest families in the U.S., who own a net worth of $2.6 trillion. This is larger than the GDP of Italy ($2.4 trillion, with a population of 59 million).

On the other side, there are 110 million Americans, 65% of the bottom 50% of the populace (170 million). These 110 million Americans also have a net worth of $2.6 trillion.

It's difficult to fit 110 million people into the vast parcel, as this is the combined population of California, Texas, Florida and New York--the four most populous states in the U.S.

Nineteen families--shall we say 110 individuals--own as much wealth as 110 million Americans.

To call this sustainable is delusional.



These statistics were drawn from an article in the Wall Street Journal published in April, 2025: $1 Trillion of Wealth Was Created for the 19 Richest U.S. Households Last Year (WSJ.com).

There are many other indicators of the host's poor condition. Credit card debt and defaults are soaring, student loans are crushing countless debt-serfs, etc. Most of the "middle class" wealth is an artifact of unprecedented bubbles in stocks and housing, two enormous bubbles that will burst without a pin.

Limits on Fed and federal largesse are now visible, and so the base assumption of the parasites--that the host is immortal--is now in question. The host could collapse, meaning there won't be enough money left to keep all the parasites fat and happy.

At that point, the parasites will be forced to start feeding on each other. Consider three sectors: Big Fast Food, Big Processed Food, and Big Pharma. All three have been handily growing revenues and profits for decades.

But Big Pharma's latest fountain of profits--GLP-1 weight-loss medications--is sucking off revenues and profits from Big Fast Food and Big Processed Food. Oops: the Big Pharma parasite is now feeding on two other parasites.

The landscape is now littered with parasites seeking other parasites to feed on. The Higher Education parasite, after decades of marvelous expansion feeding on the host's burgeoning student loan debt, finds itself starving as federal funding dries up just as demographics is shrinking the pool of incoming debt-serfs.

Oh dearie dearie me, what to do? There seems to be a dearth of other fat parasites to feed on. It now appears that the host was supporting far more parasites than was sustainable, and so some parasites will expire, others will be sucked dry by more aggressive parasites, and many others will be reduced to a struggle for their own survival.

The belief that the consumer-host is immortal was delusional. The host has been sucked dry and is one thin mint away from collapsing in a heap. The parasites have been feasting for so many decades that they've lost the ability to discern reality: their survival now depends on feeding on other parasites.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Subscribe to my Substack for free

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The Miracles of Moderate Exercise

A daily walk isn't sexy in terms of attracting eyeballs in a hyper-competitive culture, but it works.

Our culture glorifies competition and extremes in every sphere. This plays out in fitness, which has been folded into extreme sports, as if fitness is by its very nature a competition in which the "winner" is more fit than everyone else.

Fitness is just fitness. Yes, we can improve or backslide, but it isn't a competition. Two recent articles in Scientific American (June 2025 issue) add to the already-immense pile of studies revealing the benefits of daily moderate exercise.

Before we consider the studies, we must first run them through a junk science filter.

The proliferation of junk science is problematic, but fortunately it's not that difficult to discern red flags. Junk science presents a superficial envelope of science that's been gamed to reach a conclusion that serves specific financial / career interests. Junk science has a number of shared markers:

1. What entity funded the "research" and for what implicit / hidden purpose is purposefully muddled or hidden. So when Corporate America sets up a front "research organization" to produce junk science in support of its products, the links back to the corporate sponsors are well-cloaked.

2. The credentials and research history of the "scientists" are also purposefully muddled or hidden. When someone with a PhD in paleontology publishes a study on the benefits of processed meats, the PhD is not evidence of expertise and credibility.

3. Small sample sizes. Studies with 21 subjects, vague protocols and limited time durations are suspect. Few studies follow what happened to the patients five years after they stopped taking the medication.

4. Grandiose conclusions derived from small sample-size studies is a classic junk science giveaway. Our study proves that a shot of vodka consumed with a half grapefruit reduce the risks of heart disease by 50%... uh, yeah, sure.

5. Like everything else, science is faddish. Topics that are out of favor won't get funded and researchers foolish enough to pursue them earn a one-way ticket to academic Siberia. Once a topic becomes hot and the grant money is pouring in, "me too" junk science gets a boost (or cover) along with legitimate research.

Fitness and wellness are now big businesses. Big profits generate big junk science claims. So we have to be wary of studies claiming this or that.

I've been reading science journals and Phase II and III trials studies for decades, and so I'm fairly practiced at assessing the validity of various studies. Junk media has amplified junk science, as the mad frenzy to publish click-bait headlines to boost "engagement" and traffic elevates junk science claims to the top of the page.

All of which is to say that these studies, though preliminary, pass the basic sniff test.

The importance of the studies rests on the foundational nature of mitochondria and the microbiome. The advent of mitochondria enabled the rise of multi-cell organisms. We cannot make full use of the nutrients we consume without a healthy microbiome of trillions of micro-organisms working as a complex ecosystem that is profoundly interconnected with our brains, other organs and overall health.

These two systems are the bedrock of our overall health.

Mitochondria Are More Than Powerhouses--They're the Motherboard of the Cell.

Here are several of the article's fitness-diet-health points:

"Just how defective mitochondria lead to illness in the body and mind is a question that has yet to be answered. But there are simple ways to ensure our mitochondria stay healthy. One is exercise. When you move vigorously, your cells consume energy rapidly, powering up the membrane potential of your mitochondria. If your exercise leaves you feeling out of breath, it is a sign that your mitochondria are working hard.

Surprisingly, social connections, too, may promote the health of our brain mitochondria.

If our cells are exposed to too much glucose or fat--or, worse, both together, causing what doctors refer to as glucolipotoxicity--the mitochondria undergo fission and fragment into little bits, accumulate mtDNA defects, and produce signals that end up prematurely aging or killing the cell.

Once we regard mitochondria as dynamic energy and information processors, an entirely new perspective of life emerges. Think of yourself as a waterfall. The waterfall exists only insofar as the water molecules keep flowing down. You learn as much about the waterfall when you scoop up a few inert H2O molecules as you learn about how healthy a person is by sequencing their genome: close to nothing.

Keeping energy flowing through your mitochondrial collective may be the key to good health and a meaningful life."



Here is the second article: Exercise Improves your Gut Microbe Health (no link) Evidence is growing that aerobic exercise can improve the health of the gut microbes, which in turn improves overall physical health.

"One important finding is that aerobic exercise encourages activity in bacteria that produce short-chain fatty acids, which provide essential support for physiological processes. Of these smaller molecules, butyrate has emerged as an especially important link between exercise and the gut."

"The link between exercise and the gut was barely a glimmer in scientists' eyes some 15 years ago."

Here are a few key takeaways of the articles. (You may be able to find a copy of this issue at your local library.)

1. Exercise is not linear or reducible to one causal chain. Exercise has numerous, inter-connected benefits in multiple physiological systems. This is why no pill can duplicate its complex multi-systemic benefits.

2. The science studying these benefits is still evolving. The microbiome was not a popular field of study 20 years ago, and by today's standards, relatively little was known about mitochondria 20 years ago.

3. Most of the health benefits from fitness can be reaped by 30+ minutes of moderate exercise a day. A 30-minute walk--preferably brisk or with a bit of altitude change (uphill)--captures roughly 80% of the gains of exercise. Adding more extended, high-intensity exercise yields diminishing results in terms of these core measures of health. This aligns with the Pareto Distribution, a.k.a. the 80/20 Rule.

While some additional strength-flexibility training is beneficial, one of the articles notes there is no evidence at this point that strength-training alone adds to the benefits described in the articles.

The point here is that in health, fitness and diet, extremes offer diminishing returns in terms of overall metabolic health.

4. Though the articles were focused on exercise, not diet, they do note that excessive glucose and fats induce glucolipotoxicity, with the key word being toxicity. In summary: a diet of doughnuts and french fries is no bueno.

5. A daily walk isn't sexy in terms of attracting eyeballs in a hyper-competitive culture, but it works. What attracts the clicks is the 90-year old marathon runner. But what the click-bait articles never disclose is how many people ruined themselves trying to emulate outliers in the "fitness is a competition" sweepstakes.

The healthy people over 90 in our neighborhood don't lift weights, follow extreme diets or load up on supplements. What they do is take a daily walk, remain active mentally and physically, and maintain a positive attitude to life and social contacts / relationships.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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The Ratchet Effect: Easy to Spend More, Spending Less Triggers Collapse

What's required is not just a revised spreadsheet but an entirely new culture and value system.

I've been referencing The Ratchet Effect since 2010 as it explains why shrinking bloat is so much harder than expanding bloat.

A common example is household income and spending. When the couple were just starting out, they lived like students with barebones expenses. Then as their income rises, so do their expenses, and so by the time they're making $300,000 a year, every dollar is already spent yet they're still deep in debt. LA couple who earn $300K/year told Dave Ramsey they're drowning in $119K of debt.

Institutional bloat is even more difficult to reverse. Way back in 2010, I posted a link documenting how a major public university's administrative staff bloated up from 3.2 full-time administrators per 100 students in 1993 (before student loan debt skyrocketed) to 13.5 administrators per 100 students in 2007. The Ratchet Effect: Fiefdom Bloat and Resistance to Declining Incomes (August 23, 2010).

As staffing increases, a powerful self-interest in maintaining the status quo becomes the norm. This drive to maintain the status quo at all costs becomes the implicit mission of the organization. As budgets expand, there's no end to the ways it can be spent--all in service of "improving" something or other.

Human ego manifests The Ratchet Effect as well. We like to live large and show off our shiny new campus offices, and resist downsizing and sacrifices with every fiber of our being.

In households, we want to maintain the look and feel of our elevated status: our numerous travel extravagances, our new SUV, etc. But the financial The Ratchet Effect is key, for it's easy to add debt and painful to make sacrifices to pay debt off.

Another core dynamic of The Ratchet Effect is the normalization of extremes. As expenses and debt soar, we soon view what would have been seen as extreme in a previous era as not just normal but sustainable.

So student loans go from $0 in early 1993 to $1.8 trillion in Q4 2024, and nobody thinks anything is extreme because it's been going on so long we accept it as normal.

The dynamic that leads to collapse is as invisible as the extremes. Once the organization--household, institution, corporation or nation-state, the dynamic is scale-invariant--has hardened into a brittle state of stasis, it's impossible to shrink the budget without collapsing the entire structure.

I call this the Rising Wedge Model of Breakdown: as expenses, self-interest and debt all expand, it becomes increasingly difficult to slash expenses without triggering the implosion of the organization.



Under the guise of cutting the fat to save the muscle, what actually happens is the muscle is cut to save the fat. This is a complex process, but in summary, the most competent realize the organization is dysfunctional and cannot be salvaged in its current bloated state of denial, and so they immediately jump ship.

The naive who believe they can turn the situation around give it their best effort but the resistance to any meaningful sacrifices is so tenacious that they burn out and quit.

That leaves the delusionally incompetent who reckon they're finally getting the power they long deserved. This leads to the substitution of PR and artifice for actually reducing the organization to a sustainable level, for what's required is not just a revised spreadsheet but an entirely new culture and value system.

This chart I prepared in 2010 summarizes the dynamics of breakdown.



As an example of all these Ratchet Effect dynamics, let's look at student loans. Prior to the start of the student loan machinery in 1993, the U.S. had a mysterious ability to educate millions of university students without burdening the students with trillions of dollars of student loan debt.

Some believe the aliens enabled this fabulous accomplishment, as it's obviously far beyond the reach of mere humans.



The substitution of debt for competence really took off in the aftermath of the Global Financial Meltdown of 2008-09, when the Federal Reserve instituted ZIRP, Zero Interest Rate Policy, making borrowing "affordable" (heh), and our wisdom-infused political leaders declared student loan debt undischargeable in bankruptcy, virtually the only type of consumer loan that cannot be discharged in bankruptcy.

This serves the interests of the wealthy who own the securitized student loan debt as income-producing assets. It would be a crying shame if a student debt-serf could get out of paying interest, depriving poor millionaires of income desperately needed to live large.



As is easily predictable in the context of the Rising Wedge Model of Breakdown / The Ratchet Effect, higher education is now imploding as revenues decline. That the university operated perfectly well 30 years ago with 3 administrators per 100 students is like marveling at the Great Pyramid: how did mere humans manage to do such monumental work? Now the reduction from 14 administrators per 100 students to 12 administrators per 100 students is shattering the foundations of the institution.

The story of the next decade is the playing out of the Rising Wedge Model of Breakdown / The Ratchet Effect throughout the entire status quo: households, institutions, corporations and nation-states will all hasten to cut muscle to save the fat and then wonder why everything is imploding under the weight of delusion and denial.

As noted previously, what's required is not just a revised spreadsheet but an entirely new culture and value system. Without that, we get zip, zero, nada in meaningful adaptation to new realities.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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What AI Can't Do Faster, Better, or Cheaper Than Humans

The real world isn't digital, and it's unforgiving.

Since generative AI is adept at manipulating digital text, voice and images, many assume this automatically infers it will be adept at the entirety of human endeavor and work. But this is false logic. The same false logic leads many to assume that since a humanoid robot can jump over boxes and a specialized robot can lay flooring tiles in a giant warehouse with a perfectly flat concrete floor, robots will soon be able to do every possible kind of work.

This is a layperson's logic based on a limited grasp of what makes tasks accessible to AI / robots. Jumping over boxes and laying flooring tiles are repeatable behaviors in a narrow context. There is little ambiguity or imperfect choices to make, and little need for dexterity in not one task but dozens of different tasks, none of which are repeatable in the long, complex slog to get job done.

Manipulating text, voice and images is easy for one reason: these are digital, not real-world. All three can be broken down to pattern matching and probability based on scraping millions of existing samples. The real world isn't quite so easy.

Here are two small examples from my own work strengthening our 70-year old house to withstand a hurricane. The fawning videos of robots laying floor tile, etc. leave out all the important contexts of the built environment: operating on a perfectly flat floor where the work is repeatable is a narrow set of conditions that only apply to a very limited number of construction projects.

The majority of homes and buildings in the U.S. are old, and so the consequences of time, settling, decay, leaks, etc.--i.e., real life--establish unique conditions with ambiguous solutions, as there are generally several ways to do the task, and each has its costs, tradeoffs and risks.

Here is a photo of a bracket connecting a post to a concrete foundation. It looks straightforward, but that's because all the choices and work have already been done. It actually isn't a simple job at all, as the task was not just connect the post to the foundation, but to connect the roof framing to the foundation, and that required installing a heavy steel strap--hidden behind the 1X4 wood trim--that is twisted at the top of the post and beam to connect with lag bolts to the hip rafter.



Bear with me as I explain all this, as this will strike many as tedious and complicated. But this is the point: most real-world work outside the controlled spaces of warehouses is tedious and complicated.

The first step is to correctly assess the task and the many ways it could be accomplished. The bracket size, depth of the bolts, type of bolts, size and gauge of the steel strapping, lag bolts versus through-bolts in the roof framing, type of screws used to connect the strap to the post, and so on.

Then the worker--robot or human--has to drive to the hardware store and physically select all the parts, pay the cashier, get the supplies in the vehicle and drive to the jobsite. If one part is out of stock, the worker has to figure out if there's an alternative. Or if the worker is truly experienced, then another option is to fabricate a part.

The work is all performed on a sloping sidewalk, so reaching the beam and roof framing ten feet off the ground is problematic. Setting up the ladder to be stable looks easy, but it isn't.

A wide range of dexterity, strength and finesse is demanded at every step. Pushing the drill hard enough to bore into concrete demands strength, but not so much that you snap the bit off. You have to be careful not to damage the bolt, and in this case, I chose to use an epoxy in the boltholes that has to be mixed in the correct proportions and applied carefully so it doesn't make a mess.

How much pressure to apply to drill into each type of material is not easy, as various types of wood have different densities and age. It's easy to drill right through posts and rafters if you're not careful.

The strap has to be bent just the right way with just the right amount of force to fit against the beam and the hip rafter. This looks easy until you try it yourself. It takes a great deal of strength but applied to just the right point.

Then the 1X4 trim to cover the steel strap has to be cut to size, primed with oil paint, let dry and then painted with the finish coat. The nails holding it to the beam have to be positioned to go through the factory-drilled holes in the steel strap which are now hidden. Then the nails must be set, filled and touched up with paint.

Then the worker has to put away all the tools and the ladder, clean up the site and then move to the next task, which is fabricating a large five-foot by nine-foot panel to protect a window in the event of a hurricane. The polycarbonate panel is only four feet by eight feet, so the panel has to be extended to cover the irregular-sized window.

The most important point here is this task has near-zero similarity to the previous task: nothing is repeatable, and a whole other set of skills has to be applied. This is the real world; there are now an entirely new set of conditions and choices to be made.

Due to the configuration of the wood window frame, I decided to fabricate one panel rather than two or three. This was not the only option, and it might not have been the best. There is no one right answer to many real-world problems, and there are ambiguities and unknowns embedded in the entire process.

The panel had to be extended, and some way to connect it to the window frame had to be conjured. I chose to attach plywood strips, and fabricate my own custom clips. There were multiple options in connecting all these parts, and I chose through-bolts (bolts, washers, nuts).

Note the plywood has been painted to seal it against the weather. Note the steel U-trim that's been added to strengthen the polycarb panel against flexing. Recall the task here is to strengthen an old house against 100-mile an hour winds and flying debris. These are non-trivial forces.



So here's the challenge to those engineers who actually work for robotics firms and know exactly what's demanded of the robot and its programming: can you program one of your robots to do the entire task of connecting the roof framing and post to the concrete foundation, painting and sizing the 1X4 wood trim to cover the strap, from the first step of choosing the most effective options on its own in terms of strength and cost, to driving down and obtaining the materials, doing all of the dozens of different tasks required, and then driving itself back to its place of employment--for $500?

Yes, $500 for all the labor, including programming, the capital costs of developing and manufacturing the robot, maintenance, etc. Remember, the human is self-maintaining and is fueled by a few bites of food. The human requires no special programming before moving on to the next task.

And then tackle the next project, which is completely unique, and then the next project, which is also unique, and so on, one unique project after another. How long can the robot work without recharging? How long can it work without expensive maintenance? Who's insuring the work against defects and failures caused by the robot's misjudging the situation or tradecraft errors?

It took me a few hours to do this first project. I'm pretty average in my skills, but any trade person with fifty years of experience accumulates tacit knowledge that cannot be reduced to algorithms or repeatable steps that can then be applied to an endless series of unique and uniquely ambiguous real-world projects where mistakes are easy and often unfixable.

The assumption that AI and robots are infallible is also not real-world. Gee, too bad your expensive robot fell off the ladder and is all busted up. Guess the $500 isn't going to cover the damage, and you still have to get the work done. Oh, and your robot botched the work it did do before it fell, and the repair is at least $1,000. Still happy with the $500 fee?

I recently laid a new kitchen floor in a small galley kitchen that the floor-tile robot couldn't even squeeze into, never mind lay the tongue-and-groove laminate flooring, most of which had to be cut to size. Laying the flooring was the last step in a tedious chain of much more difficult and demanding tasks, such as repairing the flooring behind the stove rotted by a leak around a plumbing vent pipe that went unnoticed for years. That one task required a dozen steps and tricks, one of which was avoiding cutting the 220V electrical cable just beneath the damage.

So here's the challenge to robotics engineers: record a video of your robot doing a similar construction task from start to finish--measuring the as-built, driving down to the hardware store, picking up the supplies, etc., every task done with no human help, and tell me you made a profit on the $500 fee, given the stupendous capital and operating expenses of your robot.

The real world isn't digital, and it's unforgiving. When a robot can do what I can do in a few hours for a few hundred dollars and do so year after at a profit--net of all capital investment, programming, maintenance, etc.--by all mean let me know. But if the robot's development, manufacture, programming and maintenance costs untold thousands of dollars, then how can anyone claim to make a profit off the modest wage paid to a human?

The infrastructure of the real world isn't always a flat concrete floor or a level field or a repeatable task. All tasks are not equal, and those with unknowns and ambiguities that are unique to the specific conditions are the hard parts.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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My Job Is to Say No--with One Exception

As long as there's a way to borrow more money, there's no discipline pushing efficiency.

There seems to be a large number of people with this job description: my job is to say no, with one exception. And what is the exception, the one circumstance where the answer is invariably yes? Borrow more money? Yes, a thousand times yes.

In theory, we're supposed to invest our surplus capital in new technologies that increase productivity and efficiency, but that's not what happens in the real world. What actually happens is we squander surplus capital, energy and labor on inefficiency, until we've consumed the surplus.

We "grow" via inefficiency, not efficiency. One might imagine that all our new technologies would dramatically reduce the time and cost of straightforward tasks such as obtaining a building permit. But the reality is the exact opposite: where I could obtain a building permit for a modest starter home in one day 40 years ago, now the permit process for that same home, with a few changes to meet new codes, takes 100 days: a 100-fold increase in time, along with a big increase in costs above and beyond inflation.

The entire permit process is now digital. Isn't all this digital technology amazing? If what took a day 40 years ago now took two hours, I would say yes. But now that the process takes 100 days, well, that sure looks like Anti-Progress.

Public safety is a legitimate concern. Warehouses converted to living quarters with extension cords and iffy wiring can and do burn down, killing people. So having some basic public-safety regulations makes excellent sense.

There is no cost-benefit analysis built into such regulations, and so the power flows to those who say no. There is a point beyond which more regulations and more layers of people saying no are counter-productive to the public interest, but there are no mechanisms to make this calculation or impose any discipline on those with the power to say no.

When everyone is a "stakeholder," the layers of those who can say no proliferate. Someone can move into town, take an immediate disliking to a proposed housing project, choose among the menu of options to delay or kill the project, and then move away a month later: my work is done, I said no!

Whether saying no was in the broader public interest--who can say, as the adamant no's will shut down the weak yes's.

Give the power to say no to a half-dozen agencies, and the inefficiencies of the process expand to near-infinity. Ours is an advocacy system, otherwise known as "pay to play," and so there's always some entity that will benefit from any project going forward. But there are also people benefiting from collecting fees and saying no, too. "What's in the public interest?" morphs into self-interest, and eventually someone with the power to say no does so.

Since we have plenty of money, efficiency is unnecessary. And if we ever run out of money, then the solution is to say yes to borrowing more.

Once an industry becomes a golden goose, fees, friction and inefficiencies proliferate. Soak up some of that free-flowing money, it's limitless. After all, everyone has to come to NYC or LA, and so we can impose heavy fees and take our time issuing permission, and since the golden goose will have to pay, why bother with efficiency, when inefficiency pays so many salaries?

Until costs become so painful that the golden goose flies away. Then the limitless money dries up, and all those collecting paychecks for saying no rush to "become competitive" by lowering the permit fee from $5,000 to $4,750. That should do it, they'll all come back for sure.

Well, actually, no, they won't. Inefficiency is profitable to those soaking up surplus money, but it's not actually productive, nor does it serve the public interest.

But there's always one solution when surpluses dry up: borrow more money. And this is how we arrive at this chart of total debt: $102 trillion.



As long as there's a way to borrow more money, there's no discipline pushing efficiency. Inefficiencies will rule until the money runs out.

---

My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $18, (Kindle $8.95, Hardcover $24 (215 pages, 2024) Read the Introduction and first chapter for free (PDF)

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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