Part 7/15:
He emphasizes that in a credit-based system, assets like real estate and stocks tend to "grow" alongside credit expansion, making balance sheets more impressive—and riskier when corrections occur. The interconnectedness of assets and liabilities dictates that, in many cases, long-term growth is realistic, but short-term volatility can cause dislocation and panic.
He warns that asset prices can be inflated by demand-driven factors, sometimes detaching from actual productivity or real value—drawing parallels to the 2008 financial crisis and recent market exuberance exemplified by phenomena like GameStop's dramatic share price increases, which defy traditional valuation logic.