Mark Moss argues cash is a poor defensive strategy because policy rescues after market crashes drive sharp price recoveries. Record leverage makes violent liquidations possible, but AI is making reproducible goods abundant while genuinely scarce assets gain value. Build positions in hard assets before the panic hits.
Record leverage makes a violent liquidation possible. Okay. But the obvious response is to wait in cash for another 2008 style. But that's again fighting the last war, right? Once falling prices even start to threaten the system at all, policy changes, the rescue restores liquidity, and prices just take off to the moon again. Meanwhile, we have this force of AI making reproducible things abundant, which makes genuine scarcity even more valuable. So I'm not telling you to eliminate cash. Cash is dry powder, right? We need it, but it's there to help you survive the panic and buy the liquidation. But it's not the destination. It's not where we're going. The strategy is to own a base position in hard, scarce assets before the panic and maintain enough liquidity, not cash, liquidity to buy more when institutions are forced to sell. Now, the next crisis, it's going to separate the people who predict the crash from the people who missed it. But more importantly, it's going to separate the people who understood what the response to the policy rescue would be, and it's going to force everyone else who were chasing it out.
