By Aleksandar Kocic

They were driven mad by their riches (P. P. Njegoš)

Strange days. Nearly two decades after the Global Financial Crisis and six years after the COVID-19 pandemic, the United States finds itself at an intersection of economic, political, and technological transformation. It is a historically consequential moment in which emerging technologies are challenging established institutions, social hierarchies, and governing norms, with potentially irreversible consequences.

This technological upheaval is unfolding alongside a broader structural realignment of society marked by accelerationist currents, growing concentration of wealth and power, the erosion of institutional constraints, regressive political tendencies, and the increasing influence of oligarchic actors. Wealth is being redistributed upward on a scale rarely seen in modern history, contributing to financial volatility, political instability, and rising social tensions. For many, these developments create the sense of being non-consensual extras in a rapidly unfolding dystopian experiment.

This is the result of a comprehensive recalibration of the political order. The state that emerged through democratic elections is increasingly unrecognizable. The traditional concept of the national interest is being displaced by overlapping oligarchic networks whose priorities often diverge from those of the United States. State policy is increasingly subordinated to the interests of powerful clans and factions. While elite influence over government is not new, its scale, visibility, and normalization are. Never before have oligarchic actors exercised such direct influence over the federal government, enabled by a highly centralized executive power and an unusually pliable presidency.

This didn’t happen overnight. It is a part of a continuous process that was put in motion about two decades ago. This process has entered its accelerated phase in the last two years. To understand the current point in the AI arms race, one should look at the financial system through the lens of political and social dials. The two concepts, the two main ingredients, The State of Exception and The Counter-Elite, play a crucial role for understanding the intrinsic nonlinearity of the current configuration that resides at the intersection of a multidimensional crisis, against the backdrop of a radically new technology with far-reaching consequences for the future.

Thesis 1 — The State of Exception: The Financialization of Monetary Martial Law

 

In times of crisis, which shake up the accepted order of things, the enhanced power to transcend existing rules and laws, in the name of “public good”, are given to a superior entity, the sovereign, until the crisis is over. In the political context, this is referred to as the State of Exception. During the 2008 Global Financial Crisis and the COVID-19 pandemic, central banks assumed the role of sovereigns, overriding market constraints and becoming the ultimate arbiters of economic outcomes. Their power was exercised not through coercion but through the shaping of market conditions. By altering the environment in which markets operated, central banks induced voluntary compliance, embedding sovereign authority within the market itself.

• The Emergency Act: In 2008, the Federal Reserve invoked its own State of exception by launching Quantitative Easing (QE) and zero-interest-rate policies (ZIRP) to prevent total financial collapse. They suspended the traditional laws of free-market price discovery with an intention of saving the economy. The inner contradiction – suspending free-market functioning in order to save the free-markets — is resolved by an understanding that this maneuver is temporary.
• The Transition to Permanent: The trap of a State of exception is that it is incredibly difficult to undo. Introduction of a non-economic player with deep pockets and enormous power, together with forced low rates and volatility control encourages bad behavior. The free-market dynamics and price discovery process erode, and with time, central banks become hostages to their own intervention. As the economy was recovering after the initial shocks in 2008, every time the Fed attempted to withdraw liquidity or raise rates, the market rebelled against it.
• The “Trapped” Sovereign: the problem is that the State of exception lasted about eight years and became the new normal. By suppressing volatility and acting as a permanent backstop for asset prices, the Fed essentially nationalized market risk and acquired massive addiction liability. The financial system became an artificial construct where true economic signals were replaced by a bureaucratic loop.

From central bank mechanics to the sociopolitical consequences of hyper-concentrated wealth: Dark side of liquidity and the rise of the tech billionaires

 

Central banks broke the traditional financial system by keeping it under a permanent emergency loop (State of Exception). This artificial, low-volatility environment super-charged asset inflation and liquidity concentration. Quantitative easing was the Universal Basic Income for the rich and the State of Exception the venture capital fund for the Counter-Elite.

By keeping the global financial system under an extended (semi-permanent) emergency loop characterized by zero interest rates and massive asset purchases, central banks created a structural wealth-transfer machine. This machine accidentally, yet perfectly, financed the rise of a technocratic overclass (The Counter-Elite) with enough parallel power to step into the vacuum left by fracturing nation-states.

Thesis 2 — The Counter-Elite, the Wealth Event Horizon, and state disintermediation

 

Alongside decades of popular immiseration, rising inequality produced an increasingly concentrated distribution of wealth and power in the United States. This environment fostered the emergence of Counter-Elites: Wealthy actors who challenged the existing political order and sought to convert economic capital into political influence. By channeling popular discontent, they became political entrepreneurs and helped drive the rise of populist movements. Political conflict increasingly reflected struggles among competing elite factions over the distribution of wealth, power, and social organization. At this point, the Counter-Elite stands at the center of the political reshaping of the United States.

• The Wealth Event Horizon: There exists a boundary at a certain scale of wealth. A millionaire or standard billionaire uses his wealth for an upgrade of the lifestyle; he buys luxury goods, real estate, hires staff or finances cultural and humanitarian projects. But when an individual’s net worth begins to rival the GDP of a medium-sized developed economy, their desires fundamentally shift. They cross a psychological event horizon where they no longer want to buy things or services. They desire to acquire state-like powers, and this becomes their fundamental oligarchic impulse.
• Disintermediating the Government: This Counter-Elite bypasses traditional democratic institutions entirely. Instead of lobbying the state, they build parallel infrastructures that the state relies on (e.g., private satellite networks governing global wartime communications, private space programs, massive AI infrastructures, and proprietary digital currencies).
• The Sovereign Bypass: The Counter-Elite functions as a technocratic overclass that can execute unilateral global policy without public accountability or oversight. Because their wealth commands a qualitatively different experience of reality, they view the traditional state not as a sovereign authority, but as an inefficient friction point to be engineered around.

How the Counter-Elite thesis impacts global macro risk

 

The emergence of the Counter-Elite on the scene fundamentally reshapes global macro risk by shifting power from highly predictable, regulated nation-states to unpredictable, hyper-concentrated individual actors. When tech billionaires own the infrastructure that nations rely on (satellites, AI grids, and digital payment networks), they strive to become an underground empire sustained by networks of strategically engineered coercive interdependencies, taking over the template of global domination from the United States to the new technological paradigm. In this environment, macro risk stops being just about growth,  inflation and interest rates. It becomes about Sovereign Bypass, geopolitical volatility, and the breakdown of traditional risk insurance.

Here is how these theses translate into explicit, structural macro risks:

1. The death of the Sovereign Put

Historically, global macro strategies rely on the fact that if a systemic crisis occurred, a sovereign state or central bank would step in to bail out the system (e.g. the Fed Put).

• The Shift: The Counter-Elite operates outside this regulatory and public framework.
• The Risk: If a critical utility run by a tech titan fails—such as a proprietary cloud infrastructure or a private defense satellite array—there is no democratic mechanism to force a bailout or ensure continuity. The traditional safety nets do not apply to private sovereign-scale entities.

2. Geopolitical wildcards & foreign policy fragmentation

Traditionally, geopolitical risk is modeled around state actors whose incentives are bound by diplomacy, treaties, and institutional history.

• The Shift: Members of the Counter-Elite hold enough capital and infrastructure control to execute unilateral global policy. They can activate or deactivate satellite communications over a war zone, fund private space programs, or dictate the distribution of advanced AI.
• The Risk: A single individual’s whim, mood, or personal ideology can trigger a massive geopolitical shock. This injects severe, non-linear volatility into global supply chains, commodities, and defense sectors that macro models cannot accurately price. As a result, we now have to deal with a new type of (idiosyncratic) uncertainty that goes beyond traditional.

3. Disintermediation of the state & tax base erosion

The long-term fiscal solvency of sovereign states relies on taxing the economic value created within their borders.

• The Shift: The Counter-Elite does not just accumulate wealth; they build parallel, digital ecosystems that route around state-controlled entry points.
• The Risk: As economic transactions move deeper into private, localized networks and sovereign-scale tech ecosystems, traditional states face structural tax base erosion. This accelerates the degradation of public balance sheets, raising the long-term macro risk of sovereign debt crises and forced currency debasement.

4. Capital concentration and Monopoly Volatility

When wealth crosses the wealth event horizon, it creates massive bottlenecks in global capital flows.

• The Shift: Billions of dollars are no longer allocated by diversified pension funds or institutional asset managers. Instead, systemic quantities of capital are directed by a handful of technocrats funding highly speculative, existential bets (e.g., terraforming, life extension, or hyper-scale AI computation hubs).
• The Risk: This creates extreme capital concentration risk. Sudden shifts in where these few individuals deploy or withdraw their capital can create abrupt liquidity vacuums or massive asset bubbles in specific tech sectors and emerging markets.

The macro investor’s takeaway

 

Under the Counter-Elite thesis, geopolitics is being privatized. For macro asset allocation, this means traditional metrics—like fiscal deficits, central bank dot plots, and country risk premiums—are no longer sufficient. Investors must increasingly price in the risk of technological monopolies acting as rogue, unaccountable nation-states.

From State of Exception to tech bubble: How central bank money printing accidentally financed the rise of the new technocratic oligarchy

 

1. The death of volatility and the search for yield

When central banks entered the State of Exception post-2008, and when that condition appeared as permanent, they aggressively crushed volatility and suppressed interest rates to zero (ZIRP). During that period, traditional cash-flow-generating assets (like government bonds) stopped providing meaningful yields. And since people always face fixed long-term liabilities (medical, pensions, mortgages, college loans…), they demand commensurate yield. Because of that, in the environment of compressed risk premia, institutional capital (pension funds, sovereign wealth funds) was forced to move further out on the risk curve to survive. This massive wall of liquidity looked for any asset class that promised exponential future growth, finding its perfect home in speculative, hyper-scale technology.

2. The mechanics of the long-duration tech bubble

In corporate finance, technology companies are considered long-duration assets. They typically lose money for years while building infrastructure, promising massive cash flows in the distant future.

• The Math: When central banks drop interest rates to zero, the mathematical discount rate used to value future cash flows plummets to near-zero. For example, as a back of the envelope estimate, a promise to receive $100 in twenty years is worth today $37 in a 5% interest-rate environment. The same promise is worth $81 (more than twice) when borrowing rate is 1%.
• The Result: A compression of interest rates (especially if it is backed with a long-term dovish commitment or bias) causes the discounted present value of far-future earnings to skyrocket. Central bank money printing fundamentally altered the time-value of money, making a theoretical dollar earned by a tech monopoly 20 years from now vastly more valuable than a dollar earned by a traditional manufacturing company today.

3. Hyper-scaling on “free” capital

Because the State of Exception flooded the market with cheap capital, early tech platforms were handed a blank check. They didn’t need to turn a profit; they just needed to capture market share. This “free money” environment allowed a handful of founders to build global, unregulated monopolies (cloud computing, social networks, satellite constellations) at a speed never before seen in human history. The zero-rate environment effectively subsidized the capital expenditure required to build the parallel infrastructures that now rival nation-states.

The ultimate irony: The self-sabotage of subsidizing the sovereign bypass

 

The deepest structural insight of this framework is the recursive irony of the system: The sovereign state funded its own obsolescence. This occurred in four stages.

1. The State Intervenes: Terrified of deflation and market collapse after the 2008 GFC, the democratic sovereign state (via the central bank) suspends free-market rules to protect the existing financial order.
2. The Liquidity Pool Concentrates: This artificial safety net inflates asset prices, disproportionately enriching the top 0.01% who own equity in hyper-scaled tech platforms.
3. The Counter-Elite Crosses the Wealth Horizon: The resulting wealth allows these tech founders to cross the wealth event horizon. They use the capital generated by central bank printing presses to buy state-like assets (private space programs, private AI infrastructure, private network security).
4. The State is Disintermediated: The Counter-Elite uses this technology to route around the very state that printed the money to begin with.

In short, the State of Exception concentrated so much capital into so few hands that it allowed a technocratic overclass to build a parallel world—one that no longer requires, or respects, the sovereignty of traditional nation-states.

One last thing

 

While the US zero rates environment lasted a total ten years (eight after the Global Financial Crisis and two during COVID-19 pandemic, separated by two years of very gradual and consensual rate hikes), Japan endured an even longer period of zero rates without producing the same socioeconomic distortions. The same monetary fuel generated radically different outcomes because it flowed through fundamentally different institutions, demographics, and risk cultures.

In the United States, zero-rate liquidity powered a hyper-growth system built on speculation, disruption, and leverage. In Japan, it was used to preserve stability and sustain the existing order. America’s speculative impulse, reinforced by an implicit sovereign backstop, contrasted sharply with Japan’s culture of caution, savings, and risk aversion. Demographics amplified the divergence: America’s population growth versus Japan’s aging and decline.

Ultimately, the United States used the state of exception to finance a new technocratic elite, while Japan used it to subsidize social and economic continuity. The result was social fragmentation and the rise of a powerful Counter-Elite in America, versus a more egalitarian but stagnant equilibrium in Japan.

The socioeconomic system may be understood as a non-Euclidean manifold whose geometry admits multiple distinct parallel developmental trajectories (that pass through a single point). The manifold’s curvature is shaped by social and political conditions together with the underlying institutional architecture within which economic activity is embedded.

Within this framework, the trajectories from a State of exception to social and political consequences are contingent upon the cultural, institutional, and demographic properties of the society in question. Identical policy interventions may therefore generate markedly different outcomes. In the United States, they catalyzed substantial social and political transformation while in Japan, they reinforced existing structures and contributed to the preservation of the established order.

Ultimately, the origins of the present configuration extend beyond the policy response to the crisis itself. The Global Financial Crisis did not create these dynamics so much as expose, amplify, and accelerate forces already embedded within the ideological, cultural, and institutional fabric of American society. Policy supplied the instrument; society supplied the logic: Monetary intervention engineered the mechanism through which these forces operated, but the direction of change was determined by the underlying social architecture. The socioeconomic order that emerged in the aftermath was not merely the product of emergency intervention nor an historical aberration, but the expression of structural tendencies long in the making.

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Aleksandar Kocic was a derivatives analyst at Deutsche Bank AG from 2002-2023. From 1996-2002 he worked at Lehman Brothers. Prior to Wall Street, he studied theoretical physics.

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