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The Epstein Files Tell the Institutional Story of Our Time
Institutional exhaustion and late-cycle hubris turn dormant scandals into tools of demolition
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Welcome to the third edition of Drift Signal’s 2026 Season!
In the 1970s, the “Nixon Shock” proved that even the most ‘permanent’ institutions—like the gold standard—can vanish overnight when they no longer serve the stability of the global economy. Today, we find ourselves in a similar maturity phase, where institutions that seem to have been here forever are beginning to crack under the weight of their own imbalances.
The following edition explores why the Epstein scandal has resurfaced in 2026 not merely as a collection of horrific crimes, but as a “tool of demolition” for a public that has lost faith in traditional reform. By drawing parallels to the Watergate era, today I examine how institutional exhaustion and late-cycle hubris turn dormant scandals into the primary levers for systemic reset.
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1/ The Epstein scandal exposes a broken system
The Epstein files now dominate media coverage. Their impact is arguably large. People from finance, business, politics, science, and the arts appear across the material—notably the emails. Yet almost none of them has had to answer in court. Apart from a few cases such as Ghislaine Maxwell in the US and the man formerly known as Prince Andrew in the UK, there has been no real public reckoning. This lack of reckoning partly explains why the scandal has been lingering for years and won’t go away, but it also suggests something deeper than failure. It’s no surprise that everyone concludes as follows: it’s all a cover up and a long effort to shield powerful people.
‘Why no reckoning?’ is a fair question. The facts have been known for years. Epstein was first convicted in 2008 for soliciting sex from a minor. He served a light sentence, returned to public life, and continued—not on his own but as part of a wide network of rich and powerful people. Then he was arrested again and died in custody in 2019. Seven years after his death, the silence over human trafficking and dozens of women, many of them underage, being paraded and raped by Epstein and his clique covered two Trump years and the full Biden term.
My (cynical) view is that the deeper reason for the current force of the scandal lies not in the facts themselves, however horrific, but in the state of institutions. As of 2026, public trust is badly eroded. Courts, media, and elite networks no longer command belief. And when people see evidence of abuse and protection at the highest levels, they no longer accept delay, process, or silence.
As a result, outrage now escapes control. The Epstein case has become proof that the system itself is rotten. It stands for decades of immunity for the powerful and neglect of the weak. The files expose what many already believed, and they do so at a moment when belief in restraint has collapsed.
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2/ Economic cycles drive institutional collapse
My late-cycle investment theory is based on Carlota Perez’s model of techno-economic paradigms. According to Carlota, every 70 years or so, a technological revolution gives rise to a new paradigm. That paradigm drives growth, speculation, and eventually a financial bubble. When the bubble bursts, the state must step in to build social institutions aligned with the new system. Once in place, these support a golden age of growth. Eventually, the paradigm reaches maturity: markets saturate and imbalances accumulate. At that point, institutions once considered permanent begin to crack.
An example is the gold standard, a key institution initially set up in the 19th century. In 1944, as the Second World War was coming to an end, the damaged gold standard was deemed so critical that it was restored at the Bretton Woods Conference. For decades spanning the 19th and the 20th centuries, the logic of pegging currencies to gold went unquestioned; it was the “forever institution”, and dispensing with it was simply unthinkable for both policymakers and business people.
Yet during the maturity phase of the age of oil, automobiles and mass production, global economic pressure pushed the Nixon administration in 1971 to end the dollar’s link to gold. The “Nixon Shock” ended a system that had shaped money for generations and seemed permanent. It had been set up in the 19th century, not during the current age of oil, automobiles and mass production, and had delivered great prosperity. When Nixon decided to pull the plug, the break was sudden and complete—but it ultimately allowed the global economy to thrive in the coming decades! Maturity phases bring exactly this kind of change. Institutions that seem eternal can vanish overnight once they start to undermine stability, and only then do we realise we can do without them.
Now we have again reached a maturity phase—that of the age of semiconductors, computing and networks. Like during the previous maturity phase (the 1970s), imbalances run deep, and society demands radical answers. Scarcity and conflict loosen political limits and fuel a drive to try new approaches. Society searches for ways to fix the failures of a mature and exhausted techno-economic paradigm, with consequences that will shape institutions, markets, and power for decades to come.
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3/ Society turns to radical levers during maturity
In the late cycle, society looks for levers to release pressure. In particular, when pain rises and institutions fail to adapt, voters turn to radical options. The election of Barack Obama in 2008 reflected this demand for a break from the old order after the financial crisis. However, while he delivered some reforms such as the Affordable Care Act, he generally governed with caution. The system remained essentially intact, and the changes fell short of public expectations.
That disappointment led to a search for something more disruptive. Trump’s election in 2016 was a signal: many voters wanted a shock to the system and rejected careful reform as a result. Trump, a complete outsider, was meant to test the limits. However, his presidency failed to meet that hope. He mismanaged key moments, especially during the pandemic, and lost in 2020. Biden followed. His policies were less cautious than Obama’s, but his style was reassuring and familiar. For many, this again felt like too much continuity and too much compromise.
That set the stage for Trump’s return in 2024. This time, expectations were higher. Voters wanted destruction of the old framework. Instead, however, victory produced hubris. Trump treated victory as proof of invincibility. He focused on personal gain, loyalty, and revenge. Rather than breaking the system, he ultimately looks like he benefits from it.
This brought us closer to the breaking point. People who had considered or accepted Trump as a tool for radical change now see him as an obstacle. The question then becomes how to strike at the system that protected him and many others.
And this is where scandal enters. The Epstein files offer exactly what is needed. They point to crimes—human trafficking and pedophilia—that provoke universal anger and implicate elites across sectors. And if radical leaders such as Trump will not tear the system down after all, then such a universally appalling scandal will be used to do it instead.
It’s not the first time this has happened. In fact, the current breakdown follows a historical rhythm that became visible during the last great shift in the American institutional order.
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© 2026 Nicolas Colin
Cadre Noir SARL | France 
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