Why Is This Egg Sandwich Costing Me $17?

We think a lot about what is scarce. Or at least scarce over a long enough time horizon that it makes for an interesting business or investing idea.

Jeff Bezos has talked about how people always ask him what’s going to change but he responds by answering the question of what is not going to change (which for Amazon (paraphrasing) = people will always want goods delivered faster at low prices).

Similarly (and like Charlie Munger, who implored us to “invert, always invert!”) we can ask: what is not scarce? One answer: fiat currencies.

Financial historian Russell Napier has noted (extensively) today’s global imbalances: debt, wealth inequality, and trade (which is also a capital imbalance). He has also noted:

“…governments will increasingly see their role as managing the wealth of the nation to ensure that the imbalances of the non-system are unwound gradually.”1

In other words, policy maker incentives are now entirely aligned with addressing these imbalances over long periods of time. Dealing with them quickly is just too much (e.g., “liberation day” last April). There is a very real political reality to how much you can push back on the factors that have given rise to all the debt, and the trade deficits, and the structural overvaluation of the U.S. dollar, without creating a lot of short-term pain.

That reality is further summarized in the following conversation quoted from Grant’s Current Yield podcast 11/10/2025 (the episode is named “Obscuring the Cycle” which sadly for us, was the last episode of Current Yield3). The guest is Dan Zwirn from Arena Investors, a specialty finance company2.

Jim Grant: “So in the face of what must be reckoned, a very frothy marketplace, the Fed is really going to proceed with great cuts. And in the teeth of the structure of these risks that you described so well last year, so how does one parse the chance of something really, really loud and troubling and costly happening to your portfolio with rationalizing that with the opportunity and such opportunities as you have described now? Why Dan Zwirn, aren't you in Treasury bills and at home in bed with the covers pulled up over your head?”

Dan Zwirn: “Well, I would say I'd look to Charlie Munger who said, show me an incentive and I'll show you an outcome. And nobody in this picture has any other incentive other than to keep this party going or recognizing that there's an issue here, stretch out the amortization of the issue for as long as possible. And that's what you see every day. We are going to, that's why I mentioned over the next 10 or 20 years, right? What happened in late 21 will be stretched out over an enormous period of time, because that's in the interest of policy makers and financial sponsors.

And so in the absence of something really extraordinary in terms of the left tail, right? Perhaps Chinese troops showing up in Los Angeles, it's going to be very difficult for that not to be the case, because it's in too many people's interests. And you'll just basically see continued debasement.”

Jim Grant: “But in whose interest was the 2008 affair? And whose interest was the 1929 break, etc.? Sometimes these happen despite the unanimity of interests. They never should and never will again, right?”

Dan Zwirn: “Well, they do. And I think they always arise from something you didn't expect, right? Residential mortgages in 2007 were crazy, but so were many other things. And that's where it happened to start. And so, is it possible? Sure….I think if you're, if you're positioned correctly without inappropriate leverage, with asset liability matching, when that happens, if it happens, you should be happy, right? Warren Buffett was happy in 2008 because he had been doing things that made sense and was loaded with cash and could play offense.

And so the question to ask yourself is, do you feel happy in an 08 situation? We actually say that to ourselves. What does this thing look like in 08? Are we going to be happy or not?”

Evan Lorenz: “So say if the Fed took rates to zero again this time, would it actually bail out kind of private equity like it did in 2008, 2009?”

Dan Zwirn: “Yes, pretty much, yes. It would be incredibly helpful to not just private equity, but to owners of financial assets, owners of real property assets that bought them pre-late 21 at rates that were close to zero. But the question then is, again, going to the New York Post article, why is this egg sandwich costing me $17?”

Fiat currencies are not scarce and that is unlikely to change any time soon (quite the opposite). Fiat currencies are less valuable when goods cost more. Fiat currencies, as represented by the $17 egg sandwich, are the collateral damage in the fight against the imbalances. We are preparing accordingly.

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1. https://americanaffairsjournal.org/2024/11/america-china-and-the-death-of-the-international-monetary-non-system/

2. https://www.grantspub.com/podcasts.cfm

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