What if Liquidity-trap relapse: rate cuts fail to revive flat demand?
Demand stays moribund despite a return to the zero bound, a liquidity trap where monetary policy loses traction and only fiscal action can move the needle.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 3–10 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. Demand stays moribund despite a return to the zero bound, a liquidity trap where monetary policy loses traction and only fiscal action can move the needle. The trigger decomposes into signed root‑shocks — Global growth ▼ · Inflation expectations ▼ · Real yields ▲ · Recession signal ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.1% hist -1.3–+1.14% · other way +6.92% (n=11) |
| 2 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.9% hist -8.33–+1.69% · other way -5.04% (n=10) |
| 3 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.8% model prior · unmeasured |
| 4 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.7% hist -8.15–+2.32% · other way +2.56% (n=10) |
| 5 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -0.7% hist -0.53–+0.01% · other way -0.54% (n=11) |
| 6 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -3.85–+1.06% · other way +2.51% (n=10) |
| 7 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.6% hist -1.08–+0.97% · other way -1.88% (n=11) |
| 8 | Tech sector XLK 📈 chart | Equity | ▼ -0.5% hist -0.52–+0.28% · other way -0.38% (n=11) |
| 9 | Financials XLF 📈 chart | Equity | ▼ -0.5% hist -0.33–-0.02% · other way +1.22% (n=11) |
| 10 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -0.53–+0.53% · other way +1.94% (n=11) |
| 11 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.4% hist -0.2–-0.05% · other way -0.84% (n=12) |
| 12 | High-yield credit HYG 📈 chart | Rate | ▼ -0.5% hist -0.29–-0.16% · other way +0.13% (n=11) |
| 13 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -1.25–+2.27% · other way +9.02% (n=10) |
| 14 | JPMorgan JPM 📈 chart | Equity | ▼ -0.3% hist -0.36–+0.7% · other way +2.63% (n=11) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| CL CL | SHORT | -4.4% · 5d -1.6% | 80% | 40 | 0.48 | ✓ matches cascade |
| MU MU | SHORT | -4.5% · 5d -2.8% | 76% | 40 | 0.39 | ✓ matches cascade |
| SOL SOL | SHORT | -6.9% · 5d -6.7% | 68% | 37 | 0.27 | ✓ matches cascade |
| SPX SPX | LONG | +0.1% · 5d -0.4% ↺ fades | 63% | 40 | 0.25 | ⚠ differs |
| ETH ETH | SHORT | -7.1% · 5d -5.8% | 62% | 37 | 0.19 | ✓ matches cascade |
| JPM JPM | LONG | +0.8% · 5d +0.1% | 61% | 40 | 0.18 | ⚠ differs |
| AMD AMD | SHORT | -0.5% · 5d -1.6% | 61% | 40 | 0.17 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -3.3% · 5d -3.3% | 60% | 39 | 0.16 | ✓ matches cascade |
| Gold XAU | LONG | +0.7% · 5d -0.4% ↺ fades | 59% | 40 | 0.15 | · |
| MRVL MRVL | LONG | +2.2% · 5d -2.0% ↺ fades | 59% | 40 | 0.14 | ⚠ differs |
| XLF XLF | LONG | +0.2% · 5d -0.1% ↺ fades | 56% | 40 | 0.11 | ⚠ differs |
| COIN COIN | LONG | +2.4% · 5d +1.7% | 54% | 37 | 0.08 | ⚠ differs |
| SMH SMH | LONG | +0.8% · 5d -0.5% ↺ fades | 54% | 40 | 0.07 | ⚠ differs |
| TSM TSM | LONG | +2.2% · 5d +0.5% | 54% | 40 | 0.06 | ⚠ differs |