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Over the last several months, Macro Watch has examined a remarkable series of developments: enormous US budget deficits, record government debt, extraordinary household wealth, a historically expensive stock market, China’s rise, the new defense spending boom, the AI arms race, and the emergence of artificial intelligence as a force capable of transforming the economic system itself.

These developments may appear unrelated.

I believe they are all connected.

In this new video, Deficits, Bubbles, China, Defense, and AI: A Framework for Understanding the World Today, I bring together the major themes Macro Watch has examined so far during 2026 and explain how they fit within one larger framework.

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For many years, Macro Watch has used the concept of Creditism to explain how the modern economic system works.

When the constraints imposed by gold-backed money disappeared between 1968 and 1971, Capitalism began to evolve into Creditism. Credit expanded on an unprecedented scale. US trade deficits exploded. Globalization accelerated. Interest rates fell. Government debt became increasingly important. Quantitative Easing emerged. Asset prices and household wealth soared.

Creditism also helped transform the global balance of power.

The enormous growth of US imports allowed developing countries to industrialize rapidly through export-led growth. China became the greatest beneficiary, eventually emerging as an industrial and geopolitical rival to the United States.

That rivalry is now driving a new defense spending boom and an accelerating AI arms race.

At the same time, Creditism financed the technology revolution that produced artificial intelligence.

The largest technology companies are now investing hundreds of billions of dollars a year in AI infrastructure. Winning the AI arms race will require enormous additional investment in semiconductors, data centers, electricity generation, critical minerals, advanced manufacturing, and skilled labor.

That may push Creditism into another major phase of expansion.

But something even more important may now be beginning.

Every economic system in history has been constrained by limited human labor and limited human intelligence. Artificial intelligence could remove both of those constraints.

AI-powered robots and autonomous systems could make labor superabundant. AI superintelligence would surpass the combined intellectual capacity of humanity and expand at a speed and scale immensely beyond the limits of human cognition.

I have coined the term Cognitism to describe the new economic system that is beginning to emerge.

In Cognitism, the expansion of intelligence—not the expansion of credit—would become the dominant force driving production, innovation, military power, and wealth creation.

The implications could be extraordinary.

Among the subjects covered in this video:

• Why Capitalism evolved into Creditism.
• How Creditism transformed the US and global economy.
• Why government debt and Quantitative Easing became increasingly important after 2008.
• Why asset prices, household wealth, and stock market valuations have risen to historic levels.
• How Creditism helped finance China’s rise.
• Why China’s emergence as a geopolitical rival is driving a new US defense spending boom.
• Why artificial intelligence has become central to the rivalry between the US and China.
• Why winning the AI arms race will require another enormous expansion of investment and credit.
• Why AI may remove the historic constraints of limited labor and limited intelligence.
• Why Creditism may now be beginning to evolve into Cognitism.
• What all of this could mean for the economy, financial markets, and investors.