The Narrative: The Crack-Up Boom

The market is currently screaming a paradox that few are willing to name, but which Aquinas identifies clearly: Financial Repression.

Today, we witness a historic anomaly. In a “normal” free market, with Gold shattering the $5,000 ceiling—signaling profound inflationary pressure and a flight from sovereign currency—the US 10-Year Treasury yield should logically be surging past 6% or 7% to compensate bondholders for the risk. Yet, it sits remarkably tamed at 4.23%.

What is the efficient cause of this disconnect? It is the visible hand of intervention. The data suggests we have entered a regime of Fiscal Dominance. The Federal Reserve, constrained by a sovereign debt load that makes true price discovery impossible, appears to be capping yields (Yield Curve Control) to prevent fiscal insolvency. They have chosen to sacrifice the currency to save the bond market.

The result is what the Austrian economist von Mises termed a “Crack-Up Boom.” The S&P 500 approaching 7,000 is not necessarily a signal of roaring economic health, but a “flight to assets.” Capital is fleeing cash, which is being debased, and hiding in equities and gold. Stocks are rising in nominal terms, but are they rising in real terms against gold? The divergence tells the true story.

The Aquinas View: Substance vs. Accident

In Thomistic philosophy, we distinguish between the substance of a thing (what it truly is) and its accidents (its external properties, like price tags). The “price” of the S&P 500 is an accident of the currency denomination. The “value” is the substance.

We are witnessing a crisis of nominalism. The world is confusing the map (money) with the territory (wealth). Gold at $5,000 is not a speculative bubble; it is the market’s re-assertion of objective reality against the subjectivity of fiat issuance. The prudent investor today does not chase “returns” blindly but seeks the preservation of substance—owning things that are real, tangible, and productive.

While the crowd chases the “FOMO” of the index melt-up, the wise man observes the foundations. A house built on sand may look magnificent as it rises, but the underlying liquidity crisis—masked by intervention—remains the final arbiter.