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Bubble Insanity
by Karl Denninger Market-Ticker.org
In a bubble economy, where the government is pressing new credit into the hands of the public, directly and indirectly, every business plan looks good.
When the impact of that action turns back into inflation, and it always does, wherever that inflation shows up ultimately detonates every one of those firms.
The truth is that every firm is only stable on an continuing concern basis if it can sell its goods and services at a profit without said excess credit creation.
If it can’t then the business model is bankrupt and said temporary success only occurred because of a scam, whether the firm was doing the scamming or they were riding a government scam.
One of the latest examples is “Toast”, which is a company that provides POS systems to restaurants and bars. You’ve probably seen it; I have, several times. They were a “darling” in the space and quite-rapidly took over, providing various services including online ordering. During the pandemic this looked really attractive to places that were not part of a national chain in that it “gave” them said online ordering presence that they otherwise wouldn’t have and couldn’t afford to individually develop.