The End of Traditional Economic Cycles

Welcome to the Era of Continuous Refinancing

The global economy has undergone a profound transformation in recent decades. Traditional economic cycles, once defined by clear phases of expansion, recession, contraction, and recovery, seem to be a thing of the past. You’ll understand this shift immediately when you look at the following chart.

If we focus on the pink areas, we can see how we’ve moved from longer, more frequent, and more pronounced recessions to a world dominated by blue with only brief flashes of pink.

We’ve entered an era of continuous refinancing, where both businesses and individuals rely on a constant flow of debt to sustain their operations and lifestyles.

Debt = Money.

This is something you must understand clearly. If you want to withdraw your money from the bank, someone else must be paying off their debt.

This dynamic has led to the rich getting richer and the poor getting poorer. That’s why it’s crucial for all of us to understand how money works and how we can replicate the strategies that allow people to join the first group. To do this, we need to act like businesses—and there’s a way for individuals to do just that.

Companies: Infinite Spending and Endless Debt

In today’s corporate environment, refinancing is no longer an exceptional tool used to overcome temporary challenges; it has become a structural practice. Companies don’t just refinance their debts to avoid collapse—they do it to keep growing and generating liquidity. This model perpetuates a system where operating income is rarely enough to cover expenses and financial obligations.

It’s not uncommon to see companies with P/E ratios of 50 or even many tech firms operating at a loss. What does this mean? It means the market believes that at some point in the future, these companies will turn a profit.

Take SpaceX, for example—it burns through cash. Yet, if Elon Musk were to take the company public tomorrow, does anyone here doubt it would be worth billions overnight?

Refinancing allows companies to renegotiate terms, interest rates, and conditions, giving them room to keep operating. However, this approach also creates a dangerous dependency: corporate success is no longer measured solely by operational profitability but by the ability to manage and expand debt. In this context, financial sustainability depends on the continuous availability of cheap credit.

What Can We Learn as Individuals?

I’ve spent a lot of time thinking about this: how can we, as individuals, become "small businesses" and live in this same way?