Excess Returns: Fiscal Dominance, Liquidity and the New Market Math | Remi Tetot

Date: October 24, 2025
Host: Matt Zeigler
Guest: Remi Tetot ("The Mad King")

Overview

In this episode, host Matt Zeigler welcomes macro newsletter writer Remi Tetot ("The Mad King") for an in-depth discussion on the evolving landscape of investing, focusing on liquidity, fiscal dominance, desynchronized economic cycles, and why fundamentals have been eclipsed by policy-driven markets. They explore current risks, global macro frameworks, narratives in investing (particularly around crypto and AI), and what investors should do as old models break down.

Key Discussion Points & Insights

1. The Ascendancy of Liquidity Over Fundamentals

• Liquidity Dominance Post-2008:
  Remi opens by explaining how liquidity has fundamentally altered markets over the last 10-12 years, making forecasting based purely on traditional demand and credit cycles obsolete. He emphasizes how, since 2008 (and especially after 2012 and COVID in 2020), liquidity became the principal driver of markets.

  "We're in an environment where all you choose to use fundamentals and you're not going to make money 100% or you choose to ignore what you think is right and follow the trend for now." (Tetot, 01:51)

• No Turning Back From High Debt and Liquidity:
  The massive expansion in public debt—from $8 trillion in 2008 to $37 trillion in 2025—means rolling back liquidity or debt issuance is off the table without risking systemic collapse.

  "You can't roll back on that. Are you gonna diminish that? You can't. You just need to roll over...It doesn't mean the system is going to collapse tomorrow either." (Tetot, 04:36)

2. Desynchronized Global Economic Cycles ("Three Continents, Three Policies, One Fractured World")

(06:13)

• Divergence Between US, Europe, and Asia:
  Central bank interest rates, fiscal stances, and economic momentum now vary widely:

  • US: Still relatively high yields and slow to pivot dovishly.
  • Europe: Lowered rates, economic slowdown.
  • Asia: China cutting rates, Japan unique with demographic-driven policy.

• Fiscal Dominance and Policy-Driven Markets:
  The U.S. fiscal situation ensures the supply of new dollars at a significant rate just to service debt, blurring monetary and fiscal lines.

3. The Power and Limitations of Investment Narratives

• Narrative Over Fundamentals:
  Both macro markets and specific assets (especially crypto and tech) move increasingly on stories, not financial fundamentals.

  "We live in a world where truth drowns in noise and narrative drives price." (Tetot, 36:25)

• Crypto Cycle Maturation:
  Remi maps the evolution of crypto cycles—from decentralization, programmability (ICOs), to full centralization (ETFs, institutional flows)—and why the old "Bitcoin-Ethereum-altcoin" boom pattern no longer applies.

  "Crypto hasn't died. It's grown up." (Tetot, 16:35)

  He also emphasizes that Bitcoin is not digital gold—it's primarily a speculative asset, despite practical utility in international transfer.

  "Bitcoin or any crypto asset right now is nothing else and more than a speculative asset. That's it." (Tetot, 20:30)

4. Housing: Next Cycle Driver, Not Immediate Risk

(12:00–16:14)

• US Housing Resilience:
  Despite frozen activity for years, housing is poised to benefit from upcoming rate cuts. The major risk is not a housing bust; rather, housing will drive the next leg of the business cycle as rates come down and refinancing unleashes liquidity.

  "It's not now that it's going to blow up. We are about to reach the inflection point." (Tetot, 12:17)

5. Age-Based Investing and the Polarization of Risk Views

(23:22–26:31)

• Generational Split:
  Older investors are skeptical of current markets and new assets, while younger investors pile into volatility. This narrative split leads to conflicting justifications and a combative "my asset is best" attitude—especially between Bitcoiners and gold bugs.

• Shift from Cycle Trading to Fiscal Regime Trading:
  "Before you would trade the cycle, now you trade fiscal policy. Basically, that's all you got to do." (Tetot, 25:46)

6. "Running It Hot" and the Limits of Policy

(28:19–29:14)

• No Choice but to Stimulate:
  Companies and governments must borrow to maintain valuations—economic fundamentals don't justify current prices in technology and some sectors, so only perpetual cheap money keeps the plates spinning.

7. AI, Automation, and Human Capital Risks

(29:14–35:00)

• AI's Dual-Edged Sword:

  • Productivity soars for those using AI (e.g., coders expected to be five times as efficient), but risk of cognitive atrophy rises.
  • Macro risk emerges from automation-driven job loss, but retraining and adaptation are the only options.
  • ESG of AI ("protecting human autonomy") is on the horizon, potentially requiring companies to offset societal losses from automation via taxes or other means.

  "If your good employees use AI, become more productive...eventually he's not going to use his brain as much because AI is going to do it for him." (Tetot, 29:39)

8. The Mechanics and Dangers of Market Narratives in Other Asset Classes

(36:25–43:14)

• New Narrative Frontiers:

  • AI, defense, and space have been recent leading stories; quantum computing is emerging despite no commercial readiness for a decade.
  • Markets now price in stories, not just numbers—returns are pulled forward based on narrative excitement.

• Speculation Guidelines:
  Only invest if you recognize it's speculative—Remi structures investing baskets, but always highlights risks and the weak fundamental underpinnings.

9. Behavioral and Emotional Cycles in Modern Markets

(44:29–47:51)

• Rise of Unsophisticated Investors:
  Emotion-driven transactions (via Robinhood, TikTok "research") alter price formation, contributing to a breakdown in the link between sentiment surveys and actual asset prices.

• Missed Trades & Investor Psychology:
  Remi candidly admits to missing the Nvidia run-up due to focusing on fundamentals.

10. Constructing and Interpreting Narratives for Investment

(50:22–55:59)

• Storytelling as a Tool:
  Strong investment theses are built from multi-layered narratives, deeply backed by data (Remi routinely produces 40-chart decks for a single theme). For example, he’s working on a narrative that “markets can’t correct more than 30%” due to demographic imperatives and passive fund rules.

  "If you build the right narrative for investing and it flows like a story, it's easier to understand." (Tetot, 50:42)

Notable Quotes & Memorable Moments

• On fundamentals losing their grip:

  "Fundamentals have lost their grip, liquidity has taken the throne, and the Fed now holds the match over an already heated economy." (Zeigler quoting Tetot, 01:51)

• On the uniqueness of 2025 vs. prior cycles:

  "The world doesn't have an analog to those years...We're going into uncharted territory here." (Tetot, 09:07)

• On Bitcoin and gold narratives:

  "Why do you even bother saying that? Focus on your positioning, focus on why you own it." (Tetot, 23:22)

• On the risk of AI to human capital:

  "People are going to get at the same time more productive but also could become more stupid." (Tetot, 31:42)

• On constructing market narratives:

  "When it becomes that clear and easy I think it's a no-brainer in those cases." (Tetot, 37:53)

• On ESG of AI:

  "The ESG of AI is coming to counterbalance the human losses. You don't have a choice." (Tetot, 34:11)

• On missed investing opportunities:

  "If you miss an investing opportunity, don't look back. There's always going to be the next one." (Tetot, 58:36)

Timestamps for Major Segments

• [01:51] Liquidity overtakes fundamentals post-2008, implications for investors
• [04:36] Public debt explosion and the point of no return
• [06:13] "Three Continents, Three Policies, One Fractured World" explained
• [09:07] No historical analog; uncharted macro territory
• [12:00–16:14] Housing as cycle driver, not risk
• [16:35] Crypto cycles, the end of predictable boom-bust patterns
• [20:20] Is Bitcoin digital gold?
• [23:22] Generational narratives and portfolio positioning
• [28:19] Necessity of running it hot: borrowing and valuations
• [29:14–35:00] AI, human capital, and the coming ESG dimension
• [36:25] Investing in narratives: AI, defense, quantum computing, space
• [44:29] Behavioral/emotional cycles and their impact on market structure
• [50:42] Importance and construction of narrative-driven investment theses
• [55:59] Policy’s primacy in portfolio construction
• [57:57] One lesson for average investors: filter noise, check sources
• [59:24] Contrarian takes on crypto, AI, market extensions despite fundamentals

Conclusion

Remi Tetot frames the 2025 investing environment as one where global cycles are desynchronized, liquidity and government policy rule, and narratives—more than fundamentals—determine price. He warns that traditional models increasingly fail, advocating a flexible, narrative- and policy-aware approach to identify opportunities and manage risk in this "fractured world."

See more of Remi Tetot ("The Mad King") and his research at

• Twitter: @thekingcourt
• themadking.com