After a decade of zero rates and QE post-2008, the financial system can no longer function without continuous stimulus. Attempts to tighten policy, as seen with the 2018 repo crisis, immediately cause breakdowns, forcing central banks to reverse course and indicating a permanent state of intervention.

A generation of investors has only known a market where the Federal Reserve intervenes to prevent crises. This creates a deep-seated belief in a 'Fed put' that won't dissipate until the Fed is forced to let a significant event unfold without a bailout, which is unlikely in the near term.

The stock market's resilience in the face of a severe oil crisis is rooted in the recent memory of the COVID-19 pandemic. Investors anticipate that any significant economic fallout will trigger massive government stimulus and money printing, which would ultimately boost equity valuations, creating a disconnect from the real economy.

Unlike the post-GFC era, governments now lack the fiscal and monetary flexibility to cushion every economic shock due to high debt levels. This is forcing global markets to trade on their own fundamentals again, creating volatility and relative value opportunities reminiscent of the pre-2008 era.

Unlike past crises like 2008, the coming debt sustainability crisis will be different because the government's own balance sheet is the source of the instability. This means it will lack the capacity to bail out the market in the same way, fundamentally changing the nature of the crisis.

Global governments are actively pursuing policies (running economies hot, suppressing energy costs, managing rates down) to create a period of artificial prosperity. This is a deliberate strategy to push a massive debt sustainability crisis further into the future, which will feel great until it doesn't.

Governments with massive debt cannot afford to keep interest rates high, as refinancing becomes prohibitively expensive. This forces central banks to lower rates and print money, even when it fuels asset bubbles. The only exits are an unprecedented productivity boom (like from AI) or a devastating economic collapse.

The underlying math of U.S. debt is unsustainable, but the system holds together on pure confidence. The final collapse won't be a slow leak but a sudden 'pop'—an overnight freeze when investors collectively stop believing the government can honor its debts, a point which cannot be timed.

When countries run large, structural government deficits, their policy options become limited. Historically, this state of 'fiscal dominance' leads to the implementation of capital controls and other financial frictions to prevent capital flight and manage the currency, increasing risks for investors.