The Sorcerer's Apprentice: Introduction

A New Reality Unveiled

As the dust settles in the aftermath of the global pandemic, the veil has been rent, revealing a financial and social landscape so warped—so untethered from reality—that it is barely recognizable and defies conventional understanding. The fever dream of the COVID era has given way to a stark new reality.

Inflation—long dismissed as a relic of a bygone era—stalks the global landscape with a ravenous hunger, eroding purchasing power and threatening societal stability. Supply chains strain, bending under immense pressure and disrupting the flow of goods, further compounding economic uncertainties. Geopolitical tensions simmer, ready to boil over into conflict at a moment’s notice.

Amidst this upheaval, investors find themselves lost in a labyrinth where corrupted price signals flicker and dance on computer screens like ghostly apparitions, where the principles of fundamental investing no longer apply, where incentives are contorted by perverse feedback loops, and where the policy knobs that once promised stability now seem to amplify economic volatility with every twist and turn.

From Warning to Reality

In January 2021—before the inflationary wave started to ripple and ChatGPT catapulted AI into mainstream consciousness—we shared a groundbreaking white paper with a select group of influential investors and financial historians: The Sorcerer's Apprentice & The Man Who Broke The Market. This seminal work laid bare the esoteric underpinnings of our modern economic order and anticipated the seismic shifts that would soon reshape the global landscape.

Our analysis revealed a troubling reality: the institutions and ideologies that scaffolded our pre-COVID world were built atop socioeconomic fault lines, and the tectonic shifts unleashed by policy responses to the pandemic left this already-unstable foundation riven with cracks and fissures.

Furthermore, we concluded that the glitches proliferating across society were not isolated anomalies, but rather interlocking symptoms of a deeper transformation—a great unraveling. We traced the vectors of contagion—monetary, memetic, algorithmic, and otherwise—back to their sources, identified how they transmitted instability, and concluded that the infection would ultimately upend global economies and societies.

Fast forward to the present, and that once-fringe prognosis has become impossible to ignore. The old principles that anchored our understanding—of truth, of self and society, of value—now ring increasingly hollow. The once-solid parameters by which we navigated the world feel ever more flimsy and contingent. Everywhere we look, we see the glitches multiplying, the simulation straining at the seams. 

The dynamics and vulnerabilities we identified three years ago have only grown more pronounced and pervasive. Recent events—such as the explosion of AI and ChatGPT, as well as the return of Roaring Kitty—drove us to make our analysis accessible to a wider audience for the first time. Now—by releasing it as a multi-part series—we will ensure that its message and insights are disseminated in a more digestible and impactful way.

Through The Looking Glass: Unraveling the Mysteries of the Financial Matrix

Prepare to embark on a journey through the looking glass and into the kaleidoscopic world of modern finance and post- post-modern society—as well as our own beliefs and assumptions about the nature of economic reality itself.

Over the course of these eye-opening dispatches, we’ll reveal the hidden forces and esoteric structures that have animated our surreal economic and cultural landscape: a Financial Matrix in which the line between the real and the simulated, the material and the metaphysical, grows ever hazier—where central banks pump trillions into the financial system, memes move markets, and algorithms reign supreme.

We’ll examine the post-COVID investing and social landscape, trace the fault lines of instability that run beneath the surface of the status quo, and sound the alarm about the growing monetary disorder that is propelling our economic system towards an inexorable reckoning.

Down The Rabbit Hole: The Road Ahead

Here's a glimpse of what you'll discover in the weeks ahead:

• Mr. Market’s Schizophrenic Break: how the speculative manias and meme magic of the COVID era marked a major glitch in the Matrix, and why understanding it is so important in 2024

• The Creation of the Financial Matrix: where economics and finance went wrong, how this error became hard coded into the markets, and the far-reaching consequences for investors, entrepreneurs, the global economy, and society itself

• The Sorcerer's Gambit: how central banks’ monetary alchemy and the Fed's Faustian bargain warped the fabric of reality, unleashed the "everything bubble" and sowed the seeds of an inflationary reckoning

• The Passive Singularity: how the index and ETF revolution creates systemic fragility

• Skynet—Rise of the Machines: how algorithmic and AI-powered investing are creating a ticking time bomb at the heart of modern markets and economies, threatening to destabilize markets in ways few anticipate

• The AI Amplifier: why the rise of artificial intelligence and ChatGPT threatens to amplify market and economic shocks, melt-ups, and the disconnect between financial markets and the real economy

• The Inflation Hydra: why a return to the 1970’s stagflation scourge threatens both portfolios and social cohesion alike, how the popular understanding of inflation is wrong, why the inflation now ravaging your purchasing power is poised to mutate into an even more sinister force, and how to adopt an "inflation mindset" to navigate this new reality

• The Bailout Paradox: how "too big to fail" has morphed into "too big to save" in an era of trillion-dollar market rescues, and what it means for the future of the financial system

• The Double Edged Sword of Cryptocurrencies: how they can exacerbate the Financial Matrix and financial instability (and why Bitcoin may offer a partial solution).

• Meme Magic: How the machinery of manufactured consent has reached surreal new levels of sophistication - and vulnerability; How the rise of memetic warfare, algorithmic supremacy, and deep-fake technology are shredding the fabric of consensus reality

• The Great Divide: how misguided central bank and government policies drove the growth of the financial sphere, leading to increased social bifurcation and unrest, exacerbating inequality, and destabilizing the real economy

• Hidden Risks: underappreciated risks facing certain asset classes and economies

• Investing in the Age of Multiflation: why traditional risk models and inflation frameworks are obsolete, and how to understand and adapt to the challenges and opportunities that lie ahead

And this just scratches the surface.

In an age in which reality itself seems to have become untethered from any solid foundation, how do we anchor our understanding of value, risk, and opportunity? When the map becomes the territory and the model becomes the market, how do we navigate the labyrinth of mirrors and illusions?

By the end of this series, your understanding of money, markets, and reality itself will be challenged and transformed forever.

Join Us

The glitches in society’s operating system are not theoretical—they are already shaping the texture of our everyday existence, whether we realize it or not. To ignore them is to be at their mercy; to confront them is to reclaim our power in the face of the unraveling.

The Sorcerer’s Apprentice is a clarion call to action not only for investors but for all those who suspect that that we stand at the precipice of a historic inflection point—that we are hurtling towards a day of reckoning unlike any in living memory.

So if you're ready to take the red pill and see just how deep the rabbit hole goes, join us on this mind-expanding journey into the heart of the Financial Matrix. Only by understanding its true nature can we begin to develop strategies for safeguarding our wealth, our communities, and our very sense of reality itself. Together, we'll map the terrain, decode the glitches, and develop the tools and insights needed to navigate this brave new world—and emerge with a clearer vision of the world that awaits us on the other side.

Welcome to The Sorcerer's Apprentice Series.

In memory of Paul Cantor, whose work inspired the Sorcerer’s Apprentice, and whose gracious feedback on our final manuscript in 2021 meant more to us than he knew.

Also dedicated to J, S, & R for their invaluable insights over the years.