The Volatility Decade: The World They Built for You
The Volatility Decade – Episode 1.2
Act I of our serialised white paper. This week: how thirty years of engineered calm created the perfect conditions for what comes next.
This Week in Volatility: The Frames Under Pressure
Before we tease Act I, let’s observe the thesis being stress-tested in real time.
When we published Episode 1.1 last week, we used the Venezuela operation as an example of weakening geopolitical containment. Since then, events have accelerated rather dramatically.
Following the capture of President Maduro on 3 January, President Trump has issued explicit warnings to at least five additional countries – Colombia, Mexico, Cuba, Greenland, and Iran – all within 48 hours.
Colombia’s President Petro has deployed troops to the border. Denmark’s Prime Minister called annexation talk “absolutely senseless.” Iran’s officials warned that US forces in the region would become “legitimate targets.” The UN Security Council held an emergency session today.
Meanwhile, oil prices have remained curiously muted – Brent crude around $60 – absorbed by global oversupply.
The calm surface doesn’t mean the energy has dissipated. It means the energy is building.
This is the environment we described in the white paper. This is why understanding how the old frameworks were built – and why they’re breaking – matters.
Act I: The World They Built for You
What This Chapter Reveals:
Why did markets become so calm after 1990? The answer involves a puzzle that took economists years to explain – and a name they gave it that now sounds almost quaint.
The Great Moderation. Two words that shaped investment practice for three decades. Two words that may have created the conditions for their own unravelling.
The white paper examines:
- The Volcker Anchor – How one man’s willingness to inflict short-term pain created long-term credibility. And what happens when that credibility erodes.
- The Disinflationary Machine – How hundreds of millions of workers entering the global economy changed everything. And what happens when that machine reverses.
- The Central Bank Put – The implicit guarantee that shaped a generation of investors. Seven words that became gospel: “The Fed will save you.” The paper shows exactly how this belief was reinforced – 2013, 2015, 2018, 2020 – and why it may no longer hold
- The Minsky Trap – Three words from a long-ignored economist that explain why thirty years of stability may have been building the very fragility now being exposed: “Stability is destabilising.
- The 60/40 Foundation – How a single empirical observation (-0.29 correlation) became the bedrock of trillions in institutional assets. And what the data shows about how often that observation has actually held throughout history. (Spoiler: the answer may surprise you.)
The Question the Chapter Poses:
The Old Regime was not irrational. It was evidence-based. But what if the evidence came from an exceptionally unusual period in financial history?
What if the world investors were trained for no longer exists?
Next Episode: Act II – Why the Frames Are Breaking. Nine dimensions. Quantified evidence. The case for structural change.