Author: Maggie Lake

Translation: TechFlow

TechFlow Digest: When nominal GDP is still at 6-7%, and industries like dining, housing, and automobiles are generally shrinking, Kuppy's explanation is that this is not an accident, but rather the policy is deliberately maintaining an asset bubble. For investors in risk assets, the ongoing influx of liquidity into the asset side and the continued widening of real-world cracks is a macro background that must be faced head-on.

The founder and chief investment officer of Praetorian Capital discusses the multi-speed economy, why he believes current policies maintain a "perpetual asset bubble," and why he no longer holds any real economy assets.

Harris "Kuppy" Kupperman has recently been contemplating feudalism.

As the founder and chief investment officer of Praetorian Capital, he introduced the concept of economic feudalism at the Tony Greer TG Macro conference in February of this year. Since then, he has done more thinking on the subject.

This episode was recorded on August 28, 2026. He elaborates on this theory, its origins, and how he operates through Praetorian based on it.

🏠 This is a special edition of Macro Sessions. Normally, Macro Sessions are behind a paywall, but Talking Markets is on summer break, so we are making this episode available to everyone. Thank you for your support.

Multi-Speed Economy

"I'm not so sure inflation is the enemy," Kuppy said. "If wages go up, that's inflation. If commodity prices go up because demand is strong, that's inflation too. But that’s good demand. That’s a good economy."

Kuppy said the U.S. has a "multi-speed" economy. "Current interest rates are clearly too high for building houses, buying cars, or anything that requires financing," he said. "But then take a look at data centers, most of which are financed in cash. This is driving a lot of economic growth here." He said the Federal Reserve is "struggling" to manage this multi-speed economy.

But in any case, "overall, what this country needs is real GDP growth, and real growth often begins with nominal GDP growth," he said. "Sometimes you can have inflationary growth. As long as the economy grows alongside it, I don't think a bit higher inflation is a big issue. What you don’t want is stagflation; that’s what everyone fears."

Monetary Policy "Choked Off the Recovery in 2022"

Kuppy said the economic recovery in 2022 was actually "the first real recovery in 14 years following the great financial crisis. And monetary policy came in and choked it off."

"Think back to 2022," he said. "All the restaurants were packed, people were traveling, everyone was happy, the economy was booming… Yes, inflation was high, but people felt really good. Now, people feel pain."

"Voters don’t want inflation; in democracies, voters have a say in this, so people want to suppress inflation," he said. "I get that. But at the same time, I believe the average voter’s desire for economic growth exceeds their concern about inflation."

Kuppy's Economic Feudalism Theory

Kuppy proposed this theory to answer a question: Why, with nominal GDP at 6-7%, are various businesses still struggling, especially any consumer-related industries like dining, retail, residential construction, and automobiles?

The "K-shaped economy" can explain this to some extent, but "the K-shaped economy makes it sound coincidental, like 'yeah, some people are doing well, some are not, accept it,'" he said. But Kuppy believes this is actually "very premeditated, and I think this is a long-standing structural problem."

At the government level, Kuppy said, the policy is to maintain a "perpetual asset bubble." "In our version of economic feudalism, we want asset bubbles," he said. "We just want that. So we are constantly injecting liquidity into the system. Then some liquidity leaks into the real world, creating inflation. We try to do this Red Bull and vodka thing: injecting liquidity while trying to slow down any leaked liquidity—one way to do that is to keep the dollar overvalued."

He said injecting liquidity has greatly supported the stock market, "but that will hollow out your economy," he said. "When business owners go buy stocks instead of buying plant and equipment, their view is: There’s no productive investment that can bring back a sufficiently high capital return; it’s better to buy existing plants and equipment and hope someone pays a higher price for it tomorrow."

He said there are different types of economic feudalism elsewhere.

In China, they "hate asset appreciation," he said. "They’ve depressed the stock market for 20 years and just punctured the real estate bubble again. They want to keep everyone poor, but the goal is to become an export powerhouse."

In Europe, "they want to make everyone poorer," he said. "They’re a bit conflicted. They somewhat want asset bubbles, but more in real estate. But at the same time, they also want to invest in U.S. stocks. So they’ve created so many regulations on climate and the economy to slow things down, essentially preventing any economic growth."

In Japan, "they really want growth but don’t know how to do it," he said.

Thus, the four major blocs—the U.S., China, Europe, and Japan—"are all a bit stuck," he said, "and I think the commonality is: If the vast majority of the population has very little disposable income, and that’s by design, then they can’t go out and consume, there’s no multiplier effect, there’s no economic growth; this means you can inject liquidity into assets and create asset bubbles."

Back to 2022, Kuppy said people were spending the money they received in the aftermath of the pandemic, so that money circulated very quickly. "I think that moment completely frightened the global elite," he said. "Because in 2022 tech stocks fell, interest rates rose, and real estate, priced on capitalization rates, also fell; venture capital started to struggle, and private equity was squeezed by rising labor costs… Everyone's margins were compressed. Thus, you saw assets falling while cleaners and gardeners were still demanding raises. So the elites were squeezed and said, 'Never again.'

So what’s the result? Kuppy said he believes "that’s why Jerome Powell raised interest rates like a madman; they pulled the emergency brake on the economy. And not just us, other countries are doing this too. Once I saw that, I realized it was a policy decision, not an accident."

What If It Were the Other Way Around?

"I really believe you can run your economy for any set of goals," Kuppy said. "If you want the largest and most vibrant middle class, like the U.S. has done for the past 200 years, then that's your policy goal. If you are afraid of inflation, you will fight inflation. If you want to be an export powerhouse, fine. If you want an asset bubble, which seems to be what we want to do, then okay, we will have the best asset bubble ever. This is a policy decision made at the government level."

Changing this policy decision—like returning to the policies focused on developing a large and vibrant middle class—would come at a cost to asset owners. "The stock market will fall, and there will be a long adjustment period," Kuppy said. "The wealth effect will reverse. Valuation multiples will drop to historical levels, that is, in the teens with the S&P 500 index at around 3000 points, maybe that’s the level."

However, Kuppy does not believe the government should target the stock market. He said, "I think the simplest way is to tax capital inflows. If you charge foreign buyers 5% to buy our NVIDIA, the problem will resolve itself quickly. They will take the money home, our dollars will depreciate, and most problems will be solved. This is an elegant solution, not the way Trump raises tariffs on penguins and argues with Canada."

But he doesn’t believe this will happen, "because the stock market will fall, the baby boomer generation will feel poorer, and big corporations will also feel poorer. We won’t do this. Instead, we will continue this feudalism."

AI and Feudalism

"Everyone is cheering AI because it accelerates feudalism," Kuppy said. "The ultimate goal of AI is to replace all humans in companies. If no one has a job, I don’t know who will consume products. Everyone is excited about feudalism because if you own assets, great, everyone will make more money."

More importantly, Kuppy asked, "How do you finance trillions of dollars of data centers? You rely on millions of people trading data centers with tiny Robinhood apps, financing $5000 at a time. I guess monkey JPEGs are the entry-level drug, and now they are doing what they really want, which is to get people to fund the data centers that take away their jobs."

What Should Investors Do?

Many who read this article know that Kuppy has long been a proponent of hard assets and the real economy. But according to his economic feudalism theory (by the way, he initially developed this theory to understand why his consumer retail stocks performed poorly despite seemingly good GDP growth), at Praetorian, they no longer really hold real economy assets.

"We don’t hold anything that relies on GDP," he said. "They’ve already told you they want to build a gigantic casino and then call it a stock exchange. So we hold brokers, exchanges, and the backend pipeline systems. We’re betting that 1% of people are doing well while 0.1% are doing even better. We’re making these types of trades that will perform well when feudalism achieves its ultimate goal."

His theory has also influenced his investments in other ways:

"We don’t short anything. I sympathize with anyone who shorts."

"I also won’t leverage heavily to go long. Even in the Weimar period, there were multiple brutal pullbacks."

KUPPY Talks About…

Jackson Hole

Kevin Warsh said the Federal Reserve is committed to reducing inflation to 2%. The 2% target is still alive (!!!) "He said a lot," Kuppy said. "He is the type who can talk for 30 minutes without saying anything. I don’t think he’s there to create chaos; I think he’s there to find excuses for interest rate cuts." Beyond that, Kuppy is skeptical about the 2% target. He said, "We’ve actually never studied why 2% is the correct number."

The Biggest Opposition He Faces to His Feudalism Theory

"People think I’m crazy," he said. "They say: 'They won’t do that. All the politicians say they support middle-class people like me. They stand on my side.' I’m not saying that the Davos crowd gets together to manipulate these things. I’m saying the top tier experienced a moment of panic in 2022, and then they said, 'Never again.'" He said 2008 was another "never again" moment, and "if we had let the stock market and all the banks go down then, we would be in a better place today… it would have been 18 months of terrible days instead of 10 years of terrible days."

Phew. There’s a lot of information here. Please let us know your thoughts in the comments.

For more of Kuppy's articles on feudalism (all free to read):

What is Inflation?

Important Note: This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.