This is such a key Bubble Dynamic. Over time, Bubbles become increasingly vulnerable. Indeed, systemic fragilities stealthily grow exponentially over time – especially during culminating “Terminal Phase Excess”. And the bigger and increasingly vulnerable a Bubble becomes, the more cautious central bankers will be with tightening measures. Worse yet, acute fragility ensures policymakers will act quickly and forcefully to thwart Bubble deflation – ensuring a quick resurgence of speculative impulses.

Preparing for trouble, Beijing is now moving aggressively to control the information flow – about the economy, markets and finance – in the name of national security. It wreaks of growing desperation. Beijing tactics are not confidence inspiring.

Understandably, the stock market now sees bank instability as ensuring oodles of additional Fed and FHLB liquidity. First Republic’s stock sank 75% this week. Buy big tech stocks.

With options expiration this coming Friday, the market has again worked its magic to ensure a lot of hedges expire worthless. I’m with the bond market for the possibility of an accident this year. I just believe the odds are higher.

Importantly, each bailout and reflation ensures only larger Bubbles – greater amounts of debt, financial system leverage, and speculative excess.