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Monday, December 15, 2025

2025-12-14

**** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

QE is now done by the Treasury not the Fed

The Federal Reserve cut rates by 25 basis points yesterday, but the rate decision itself was irrelevant. The real message came through Powell’s press conference, where the contradictions in the Fed’s narrative became impossible to ignore. He insisted the economy continues to grow near 2 percent, that inflation is gliding back to target, and that household balance sheets remain strong. Yet at the same time he acknowledged softer labour demand and weakening consumption. What he did not admit is the critical truth: consumption is being held together purely by the wealth effect. Wages have slowed, credit growth has collapsed, and the income engine of the U.S. consumer is losing power. Powell spoke as if the structure of demand had not changed. It has.

Then came the remarkable moment. Powell stated that monetary policy cannot solve a supply problem in the housing market. He is correct. But tariffs are also negative supply shocks. And if the Fed truly believes monetary policy should not respond to supply-side inflation, then rates should already be far lower today. Powell is defending two incompatible positions, and that contradiction revealed more than all the forecasts combined. ..............

But the real event yesterday was hidden in a single line of text. The Fed will resume buying Treasury securities up to three years in maturity “for reserve-management purposes,” and critically, with no specified limit. This is not routine balance-sheet housekeeping. This is the moment the Fed admitted the system cannot function with declining reserves. Treasury bill issuance drains liquidity; the Fed must now inject it back. The central bank has effectively become the structural liquidity provider to the fiscal authority.

This is where one of our most important charts the last few weeks becomes essential. The gap between total T-bill issuance and the system’s cash basin, bank reserves plus RRP, has exploded to roughly 3.5 trillion dollars, the largest in U.S. history. The private sector does not have the liquidity to absorb issuance at this scale. To close even half of that gap, the Fed would need to buy around 2 trillion dollars of T-bills, injecting 2 trillion of fresh reserves. That liquidity flows directly into Treasury financing. Call it “reserve management” if you like. In substance, it is monetary financing of fiscal operations. 

Because the Treasury controls the maturity structure of its debt, this arrangement grants it unprecedented influence over the entire yield curve. If the Treasury prefers to fund itself at 3 percent while the long end sits at 4½ percent, it can issue aggressively in the short end, slash long-term supply, execute buybacks, and rely on the Fed to offset the reserve drain with short-end purchases. The liquidity the Fed injects naturally spills into duration, pulling long-end yields down. This is a form of yield-curve control, not declared but fully operational, driven not by the central bank, but by the fiscal authority. The Fed cannot resist without detonating the repo market.

This is fiscal dominance. The Treasury leads, the Fed follows, and monetary policy becomes an instrument of funding needs. .............. Negative real rates become the equilibrium condition, financial repression by design ....................

This is why we say the printing press has changed hands. It is no longer Powell’s. It is Bessent’s or the White House’s The Treasury now effectively controls the liquidity engine of the United States. ....................

.......... This is now the global regime. Fiscal dominance is not an American quirk. It is the new international monetary order. The printing press has shifted to the Treasuries of the world, and financial repression is the equilibrium that follows.


Why Trump’s policies will power America’s financial supremacy in a multipolar era

Rumours of the U.S. dollar’s decline are as persistent as they are exaggerated. In 2025, one fact stands out: The global U.S. dollar system—“King Dollar”[1]—is not vanishing. The financial, legal, and institutional architecture that makes the dollar the world’s indispensable currency remains at the heart of global finance. It is this systemic centrality, not its day-to-day market price, that ensures “King Dollar” matters most, and it is being strategically reinforced and recalibrated for a multipolar era. After the energetic “weaponization” of the dollar under the Biden administration and U.S. Treasury Secretary Janet Yellen, a prudent diversification of reserves by global central banks was always going to follow. Still, to declare the end of U.S. exceptionalism or the death of King Dollar is not just premature, it is strategically misguided. Yes, the counter trend rally in many currencies is coming to an end. Driven by fundamentals, the King Dollar revival is upon us; investors take note. 

The dollar’s reserve role obliges the U.S. to run trade deficits, exporting dollars to ensure global liquidity—a dynamic known as the Triffin Dilemma[2]. This system provides stability through dollar liquidity, even as it invites concerns about rising U.S. debt and persistent deficits. Yet King Dollar’s endurance is less about direct U.S. strength or manufacturing prowess and more about the dollar’s indispensable status as the world’s settlement, liquidity, and safety anchor. When the U.S. periodically adjusts, illuminated by tariffs or incremental protectionism, it echoes British economist John Maynard Keynes’ logic at Bretton Woods: for balance in a global system both creditors and debtors must bear responsibility. The present-day pivot toward protectionism, particularly under U.S. President Donald Trump, isn’t an abandonment of leadership but a disciplined reset, enforcing the long-term health of the dollar order. The widely claimed “end” of the U.S. dollar system instead signals how early we are in the artificial intelligence (AI)- driven resurgence of American industrial capacity. ....................

................. The current arc of U.S. policy is less about rupture and more about calibrated reinvention. Implicit yield-curve control has quietly stabilized long-dated bond markets. Following the U.S. Federal Reserve’s move toward October rate cuts and ongoing U.S. Treasury purchases, the curve has flattened, with short-term bill issuance absorbing liquidity and moderating volatility. This is a result of persistent, if subtle, coordination between fiscal and monetary authorities—deliberate, quiet, and effective.

America’s advantage, then, is not raw power but institutional stamina and a willingness to accept short-term pain for longer-term renewal. Supply-side creative destruction—a centrepiece of Trumpian and centre-right economic policy—isn’t reckless but methodical, funding industrial resurgence even when headline debt stays high. A moderately softer dollar could, as after the 1985 Plaza Accord, enhance export competitiveness, catalyze infrastructure booms, and lay groundwork for generational prosperity without destabilizing the international system.

The tech-driven transformation of collateral, the rise of AI-intensive infrastructure, and the emergence of integrated fintech solutions all reinforce U.S. leadership. The 2020s look set to usher in a capital expenditures (CapEx) supercycle unparalleled since the postwar era. .....................


The three charts that signaled the recession 18 months early.


This is the Fun Part
“What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of ‘I’m not sure.’”
Annie Duke, Thinking in Bets
........ The goal is to consistently place probabilistically favorable bets when the weight of the evidence lines up.


Run it Hot, Privatizing the Fed's Balance Sheet, Dollar Devaluation and the AI Boom

Key Themes, Forecasts & Risks:
  • Bank deregulation and a steeper yield curve (3-month-10-year) release bank reserves and drive asset growth with significant macroeconomic and asset pricing effects.
  • The FOMC reduces the policy rate to 3-3.25%, the impact on small banks and small businesses is greater than expected, both for the profitability and valuation of spread sensitive regional banks and the labor market.
  • The FOMC also increases the pace of duration tightening by expanding reinvestment of mortgage paydowns into bills to a portion of maturing Treasuries.
  • As a consequence of the Fed regulatory and monetary policy actions there is no need for additional balance sheet expansion, instead the privatization of the Fed’s balance sheet takes hold.
  • Capital spending broadens to include non-AI infrastructure manufacturing.
  • Consumption recovers as the effects of the three adverse aggregate demand shocks, tariffs, slower government spending and reduced immigration, fade and the individual tax provisions of One Triple B spur spending.
  • Labor market demand and dynamism improve as Fed easing reopens the small bank credit channel and eases pressure on small floating rate borrowers. The increase in the U3 unemployment rate stalls at 4.75% in 1Q26 but doesn’t decline much due to structural pressure on employment (technology innovation adoption).
  • Supply pressures return to the belly of the Treasury curve, 10s end the year at 4.5%, 2s at 3.4%, and with the policy rate at 3-3.25% the 3m10y curve crucial to regional banks ends the year above 1%.
  • The privatization of the Fed’s balance sheet, bank deregulation, rate cuts and duration tightening gets into lots of market cracks. The yield curve steepens; cyclical stocks, metals, energy and industrials outperform.
  • The trade weighted dollar has a similar ~8% decline led by Asian currencies as their trade surpluses stall and begin to contract. If the process stalls, a global accord is possible.
  • The S&P 500 has a significant pullback in 1Q26 and ends the higher with about half the ‘25 gain.
  • Credit spreads widen due to AI infrastructure debt. Fixed income supply from the Fed (DT), mortgage and credit markets, along with reduced global demand, cause a couple of real rate risk-off shocks.
..................
Run it Hot
One of the most widely expected themes for ‘26 is ‘they will run it hot’. They, in this case, refer to the Trump Administration and GOP controlled Congress. Setting aside our aversion to the assumption that ‘they’ have control over the economic outcome, as a base case we expect the effects of the three adverse aggregated demand shocks, lower immigration, slower government spending and higher tariffs, to fade. As the policies that were integral to the first second term president being elected with control over Congress since FDR morph into initiatives targeting the midterms, a modest recovery in consumer spending, stronger capex and increased labor market demand and churn are reasonably probable. Additionally, with the Fed on track to reduce the policy rate close to our estimate of neutral (a bit above 3%), the normalization of the upward sloping yield curve will reopen the small bank credit channel, and a recovery in small business employment and housing construction will contribute to stronger, more broadly distributed, growth in ‘26.


Michael Howell, founder of CrossBorder Capital and GL Indexes, warns of a lack of liquidity in financial markets. The global liquidity cycle is about to turn, which should favor commodity investments in 2026.

Liquidity is the oxygen of financial markets. When it is abundant, stock markets thrive. When it becomes scarce, turbulence increases. In recent weeks, there have been increasing signs of scarcity. Liquidity-sensitive investments such as Bitcoin have promptly suffered losses.

Few market observers understand the plumbing system of the global liquidity structure better than Michael Howell. The founder of CrossBorder Capital and GL Indexes in London specializes in analyzing liquidity flows.

These days, Howell is concerned. He says that the Federal Reserve has deliberately allowed liquidity to be withdrawn, partly because the «monetary plumbers» on the Federal Open Market Committee are in a minority. In addition, after three years of upswing, the global liquidity cycle is beginning to turn, he warns.  ..............



The thesis of my two most recent books (available on the Gavekal website; great Christmas gift for your loved ones!) was that the 2018 US semiconductor embargo against China changed the world. The age of cooperation and globalization was over. Instead, the semi-embargo marked the start of the Clash of Empires. In the years that followed, China became “uninvestible” and the US became “exceptional.” This bifurcation in destinies was the most important investment trend of the period from 2018 to 2024. Anyone long the US and short China thrived. This was really the only trade to have on.

However, since early 2024, the short-China leg of this trade has clearly stopped working. Meanwhile, the long-US leg is also no longer outperforming everything in sight. So has the world changed again? I believe it has, and will try to explain the reasons for this belief in a series of upcoming papers. This paper is the first of this series, and is dedicated to US policy choices, how these have affected relative returns, and where they go from here. ......................................................

.......................... 
In short, looking at the prospect of US industrial policy raises more questions than it answers, including:
  1. Does the US have the institutional make-up to follow through on industrial policy? After all, the US does not have a Ministry of Industry and Information Technology, nor a Ministry of Science and Technology.
  2. Can the US afford to de-Sinify its supply chains? Or are US policymakers simply virtue-signaling around the subject?
  3. Is the demonization of China and the need to de-Sinify supply chains just one big excuse for a power and money grab of epic proportions? If it is, how will US policymakers deal with the consequent corruption?
  4. If US policymakers really are serious about de-Sinifying supply chains, will America’s elites accept the redeployment of capital into activities with lower returns on invested capital, and that in consequence the stock market will struggle and the US dollar roll over?
The answer to the last question seems most obvious: no! With US equity market capitalization now more than twice the value of US GDP, it could be argued that maintaining stable equity prices is now essential to keeping US economic growth on track (see Concerning Signals On US Growth). All of which brings us to the other option: mending fences with China. ...............


Major Markets Letter #2: Ask your parents



This week revealed a clear inflection in the macro landscape as the Fed’s latest actions pointed to the emergence of a new monetary-policy regime. The Fed’s justification for lowering the policy rate is consistent with our call that the FOMC will lean into the long-term outlook for productivity growth to implement increasingly — and perhaps unjustifiably — dovish monetary policy. This move toward an expansionary balance-sheet policy raised the possibility that Paradigm C and Paradigm D could operate simultaneously — a mix that is resoundingly bullish for risk assets.

For those new to our Paradigm framework:

Paradigm A: The 2020–21 lurching into fiscal dominance which helped catalyze the geopolitically driven supply-demand imbalance in the US Treasury bond market that is likely to persist – and widen – throughout the duration of this Fourth Turning.

History confirms that when sovereigns get too indebted – specifically when both the stock and flow of sovereign debt supply increasingly exceed available resources to capitalize the leverage – there are only three options to remedy the issue.

...  Paradigm B is the cut phase of the cut → grow → print sequence required to address the geopolitically driven supply-demand imbalance in the US Treasury bond market. Cutting requires a reduction in fiscal expenditures and a reduction in trade deficits; both outcomes increase net national savings.

... Paradigm C is the grow phase of the cut → grow → print sequence required to address the geopolitically driven supply-demand imbalance in the US Treasury bond market. Growing requires the adoption of a growth-friendly policy mix featuring tax cuts, deregulation, and credit easing. The goal of the grow phase is to delever the public sector balance sheet by increasing the denominator (e.g., GDP, GDI, domestic liquidity) faster than the numerator (i.e., sovereign debt).

... Paradigm D is the print phase of the cut → grow → print sequence required to address the geopolitically driven supply-demand imbalance in the US Treasury bond market. Printing requires an erosion of central bank independence that results in the monetary authority monetizing debt – either explicitly via quantitative easing (QE) and/or yield curve control (YCC), or implicitly via reserve management operations (RMOP). The goal of the print phase is to lessen the impact of crowding out by the bloated public sector balance sheet upon the private sector. The Treasury market is atop the global capital structure, so until the US dollar is no longer the dominant reserve currency, it will always attract the capital it needs at the expense of the private sector – particularly low-to-median-income households, small businesses, and interest-rate-sensitive sectors like housing and consumer durable goods.






Apollo: Private Credit. Fact vs Fiction



Bubble Fare:


Yves here. Servaas Storm provides a fantastic broad and properly sobering view on the AI/stock market mania and the far too many reasons why US players can’t possibly deliver on their hype. ...................................................................................................................................

The Insufferable Irrationality of the AI Industry
The AI race is mostly based on the irrational fear of missing out (FOMO), in Silicon Valley and on Wall Street – which induces a herd mentality to follow ‘momentum’, a complete disregard for fundamental values in favour of placing an exaggerated importance to the limited availability of a key resource (here: Nvidia’s GPUs and ‘compute’), and overwhelming confirmation bias (the all-too-human inclination to look for information that confirms our own biased outlook). To bring home the point: the use of ChatGPT has been found to decrease idea diversity in brainstorming, as per an article in Nature.

It is deeply ironic that the industry that is supposed to build ‘super-intelligence’, a deeply flawed concept with rather sinister origins (see Emily M. Bender and Alex Hanna 2025), is itself deeply irrational. But solid anthropological evidence on the local tribes living in Silicon Valley and working on Wall Street shows that this irrationality is hardwired into the perma-adolescent psyches of the inhabitants, who are wont to talk to each other about the coming AIpocalypse, almost religiously believe in AI prophecies, have deep faith in their algorithms, regard AI as a superior ‘sentient being’ in need of legal representation, enthusiastically engage in techno-eschatology, and, above all, are deeply fond of Hobbits and the LOTR. ...............................

The Revenue Delusion
There is no world in which the enormous spending in data centre infrastructure (more than $5 trillion in the next five years) is going to pay off; the AI-revenue projections are pie-in-the-sky because of the following: ..................................................

Conclusion
Because of these four reasons, AI’s ‘scaling’ strategy will fail and the AI data-centre investment bubble will pop. The unavoidable AI-data-centre crash in the U.S. will be painful to the economy, even if some useful technology and infrastructure will survive and be productive in the longer run. However, given the unrestricted greed of the platform and other Big Tech corporations, this will also mean that AI tools that weaken the labour conditions — in activities including the visual arts, education, health care and the media — will survive. Similarly, generative AI is already entrenched in militaries and intelligence agencies and will, for sure, get used for surveillance and corporate control. All the big promises of the AI industry will fade, but many harmful uses of the technology will stick around.

The immediate economic harm done will look rather insignificant compared to the long-term damage of the AI mania. The continuous oversupply of AI slop, LLM fabricated hallucinations, clickbait fake news and propaganda, deliberate deepfake images and endless machine-made junk, all produced under capitalism’s banner of progress and greed, consuming loads of energy and spouting tonnes of carbon emissions will further undermine and self-poison the trust in and the foundations of America’s economic and social order. The massive direct and indirect costs of generic LLMs will outweigh the rather limited benefits, by far.


Part 1: On the coming geopolitics of the compute stack, or Our New Imperial Strategy


On the political economy of the Cloud and AI

As near as one can tell, the business rationale for AI rests on the hope that it will substitute for human judgment and discretion. Given the role of big data in training AI systems, and the enormous concentrations of capital they require to develop, the AI revolution will extend the logic of oligopoly into cognition. What appears to be at stake, ultimately, is ownership of the means of thinking. This will have implications for class structure, for the legitimacy of institutions that claim authority based on expertise, and for the credentialing function of universities.

Consider some recent developments that don’t pertain to AI per se, but show the power that comes with ownership of computational infrastructure.

When Amazon Web Services went dark in October of this year, thousands of institutions were paralyzed for a few hours. Banks went offline; hospitals were unable to access medical records. Platforms that people rely on to communicate, such as Signal, also became nonresponsive. The cloud hosts an increasing share of the services that make a society run, routing them through a small number of firms. Our own government is also dependent on this infrastructure, and therefore dependent on the continued solvency of a handful of business enterprises. The phrase “too big to fail” hardly begins to capture the situation. .............




Big Tech is spending billions on data centres in the US to fuel the development of artificial intelligence. But those grand plans face a problem: access to power.


Trump goes all in on Silicon Valley, leaving US citizens, and even his own party behind.

Moments ago, despite enormous opposition from both parties, President Trump signed an Executive Order that is designed to block states from regulating AI; since the federal government has passed almost no laws regulating AI, this essentially leaves AI unregulated in America. .............



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(not just) for the ESG crowd:

The 2025 state of the climate report: a planet on the brink

We are hurtling toward climate chaos. The planet's vital signs are flashing red. The consequences of human-driven alterations of the climate are no longer future threats but are here now. This unfolding emergency stems from failed foresight, political inaction, unsustainable economic systems, and misinformation. Almost every corner of the biosphere is reeling from intensifying heat, storms, floods, droughts, or fires. The window to prevent the worst outcomes is rapidly closing.  .......................






Sci Fare:


.......... What’s not rare however, is immune system damage from this virus, if you’re willing to believe the studies that are being done.

The strange unusually large waves of respiratory illness we see every year now that keep getting worse every year are caused by SARS2 vaccination and the virus itself. The studies now suggest that SARS2 vaccination itself plays a role in the problem. ..................



U.S. B.S.:

The regime's project is to destroy all alternative visions of the future.



This is unlikely to end well for all parties concerned, including the US.  

It’s been a busy week for the Empire of Lies and Chaos, especially in its direct neighbourhood. The illegal seizure of an Iranian oil tanker carrying Venezuelan oil on Wednesday was a reminder of what the US’ illegal war of aggression is really about: Venezuela’s oil deposits, which represent almost one-fifth of the world’s known reserves.

........ There are, of course, other reasons, including Venezuela’s large deposits of gas, gold, rare earths and freshwater. Venezuela’s close ties with Russia, China and Iran, from where the tanker originally came, and Cuba, to where the tanker was heading, are also a key factor.

There are the Military Industrial Complex’s needs to keep in mind. With the Trump administration drawing down US commitments to project Ukraine, another war must be started in order to keep the Pentagon’s money laundromat working at full speed ..........



Just as the United States hits its first official trillion-dollar annual military budget, the New York Times editorial board has published an article which argues that the US is going to need to increase military funding to prepare for a major war with China.

The article is titled “Overmatched: Why the U.S. Military Must Reinvent Itself,” and to be clear it is an editorial, not an op-ed, meaning it represents the position of the newspaper itself rather than solely that of the authors.

This will come as no surprise to anyone who knows that The New York Times has supported every American war throughout its entire history, because The New York Times is a war propaganda firm disguised as a news outlet. .........

The narrative that the US war machine has “defended the free world” during its period of post-world war global dominance is itself insane empire propaganda. ....................

................. But that’s the New York Times for you. It’s been run by the same family since the late 1800s and it’s been advancing the information interests of rich and powerful imperialists ever since. It’s a militarist smut rag that somehow found its way into unearned respectability, and it deserves to be treated as such. The sooner it ceases to exist, the better.



Geopolitical Fare:

Is the flotilla off Venezuela’s coast bluff or a prelude to invasion? And either way, what is behind it?

Roughly a quarter of the U.S. Navy’s fleet now floats in the Caribbean off the coast of Venezuela, including the U.S.S. Gerald R. Ford, the largest aircraft carrier in American history. Alongside the Ford, numerous destroyers, amphibious vessels, and submarines are also patrolling just outside Venezuela’s territorial waters. In the air, the Pentagon has deployed F–35 jets, heavy bombers, MQ–9 Reaper drones (large, long-range, lethal), and some 15,000 uniformed personnel. This is America’s largest deployment in the Caribbean since the Cuban Missile Crisis in 1962. In mid–October Trump acknowledged that he has authorized the Central Intelligence Agency to conduct covert operations in Venezuela and that he may order ground troops to invade the country.

What is the plan? Let us reason this through. ...........


The Battle for Heavy Crude Supremacy has Begun

The United States forged its post-war alliances in the Middle East on a simple bargain: price your oil in dollars, and we guarantee the regions political regimes’ security. In return, the major producers not only adopted the dollar for their oil exports but also pegged their currencies to it, ensuring that the dollars earned through energy sales were recycled into U.S. financial assets. In practice, this meant these states surrendered their monetary and fiscal independence. By tying their currencies and their security to Washington, they became, whether acknowledged or not, vassal states within the American financial system.

This also explains why, despite being formal leaders of OPEC, these states remain structurally aligned with U.S. geopolitical priorities. Their monetary anchors, security frameworks, and external balances force them into compliance. And history shows that any OPEC member attempting to rewrite the rules of the dollar-oil order eventually pays a heavy price. Iraq in 1991, Libya before the 2011 uprising, and now Venezuela, all sought to deviate from the dollar-centric system, and all were forced back into subordination. The message has always been clear: challenging the monetary architecture of oil pricing is not tolerated. .................



Dollar privilege: everyone using the dollar for trade, and the US controlling the system that moves currency around the world is important. When it goes away, and it will in the next five years, I’d guess, the US will take a huge hit to its ability to command the world’s resources and will lose most of its ability to sanction anyone outside the US vassaldom area. (And the vassals will find it easier to leave if they choose.)

But to see the loss of dollar privilege as primary is a huge mistake. It’s downstream from the only thing that really matters: actual national capacity.

Industrial output, tech, secure resource availability (people, food, energy, rare earths, oil, uranium, etc.)

Fundamentally everything flows from having the most industry and the tech lead, combined with enough resources to make use of that industry and tech lead. Dollar privilege happened because after WWII the US controlled over 50% of the world’s manufacturing ability and was the most powerful non-Soviet state in the world. .............................

To return to our initial point, dollar privilege is a lagging indicator. You get currency domination after you’ve already won, and you lose it after you’ve lost.  .................

This is another “last days of the American Empire” thing, and thank God. Dollar privilege has been used, literally, to kill many millions of people thru the world, and to impoverish hundreds of millions. It will be a great day for every non-American when it ends.



Zeitgeist Fare:

Why the kids have stopped listening

.............................. Before you even get to the cultural battles, we need to start with the basics, young people today are disadvantaged in ways Boomers never were.

Housing? Impossible.

Wages? Can I even get a job?

Debt? Everywhere.

Public services? Collapsing.

We had hope.

We sold their hope to not have recessions.

Let’s call it for what it is, politicians trading lies for votes and paying for it with debt (their future).

What did that do?

It took away the opportunity of owning a home, having kids and retiring. We told them work hard at school, get a degree and the world is yours. They followed the rules and now they’re working for Starbucks saddled with debt.

If you grew up believing everything was getting better, you behave one way.

If you grow up watching everything fall apart, you behave another.

This is the foundations of the nihilism. It’s not “online radicalisation.” It’s not “bad parenting.” It’s just a generation looking at the economy and realising the lift doesn’t go up for them. ................



Other Fare:



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Monday, December 8, 2025

2025-12-08

 **** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

So let me be my own biggest critic for a moment.

As far as my macro outlook goes, I think I’ve been pretty clear: over time, I expect nominal prices of everything to drift—no, march—higher as governments and central banks eventually capitulate to the obvious: their only escape route from the irresponsible, slow-motion debt disaster they engineered is to quietly (or, recently, not so quietly) brutalize the middle and lower classes through inflation.

It’s not elegant, it’s not moral, but it’s historically reliable and gets politicians and bankers off the hook of taking actual responsibility—so of course it’s the easy choice.

That said, for the last year or two I’ve also argued that once the consumer and the broader economy finally run out of steam, we’ll see a sharp deleveraging event. A quick, violent move lower—one that unwinds years of easy money, risk-free speculation, and the hilariously reckless funding of things that, in hindsight, will look indistinguishable from hot air. (Think: Fartcoin, Dogecoin, Ethereum treasury companies, cash burning SPACs or any other asset whose primary utility is generating memes. This blog excluded, of course.) The tidal wave of hubris and euphoria that’s defined the last decade eventually gets taken out back and put down. Frankly, it’s years overdue.

But—because I try not to permanently live inside my own echo chamber no matter how luxurious and genius-shaped it feels—I found myself thinking today about the “what if I’m wrong” bull case. Everyone knows the long-term bull case. I’m talking about the very short-term bull case. .........


DB: Monthly Chartbook: Curveballs for 2026 (via TheBondBeat)

Although the annual outlook season is upon us, what’s been striking in recent years is just how little has played out as the consensus expected. So even as our World Outlook provides the central DB house view, this got us thinking about potential curveballs that could surprise us in 2026. These curveballs (both positive and negative) have played out repeatedly in recent years:
  • In 2020 the pandemic meant any outlooks were redundant by the end of Q1.
  • In 2021 a surge in inflation surprised the vast majority.
  • In 2022 markets were caught off guard by the most aggressive rate-hiking cycle since the 1980s.
  • In 2023 the consensus wrongly expected a US recession.
  • In 2024 barely anyone thought the S&P 500 would rise over +20% for a second year running.
  • In 2025 the Liberation Day turmoil led to the biggest market volatility since Covid and a huge surge in the US effective tariff rate. Then the positive bounceback was one of the fastest recoveries on record.
When it comes to next year, this chartbook considers some positive scenarios of further equity gains, AI-powered growth, tariff relief, and political stability. Then on the negative side, we think about persistent inflation, mounting fiscal concerns and some of the highest US equity valuations ever. .......



Outlooks, in our experience, tend to have the shelf life of yesterday’s fish and chips. So this is not an outlook, rather a reminder of the need for humility. We recall that the consensus of 2025 analyst forecasts had the US 10-year Treasury yield at about 5% by now. Instead, yields have moved sharply lower: after a brief move through 4%, the benchmark is trading almost 100bp beneath these forecasts.

The next Fed chair, whoever that may be, will likely view the neutral policy rate as lower than both current market pricing and the last FOMC dot plot. If markets continue to push expectations for this rate down towards 2.0% for the second half of 2026, the 10-year yield would more naturally gravitate towards 3.0%, not 4.0%. ......

....... Whether this improvement endures is unclear, but the feared surge in term premium has not appeared. Treasury auctions continue to see consistently strong demand.



Roughly speaking there are two types of corporations in China. State owned (SOE) and private. During the policy driven real-estate bust, the countries biggest builder, Evergrande, went under.

But there was an assumption that the government would bail out real-estate SOEs.

Well the largest one, Vanke, is going under, and the central government is going to let it. Moreover, Shenzen’s (China’s Silicon Valley, but on steroids) has repeatedly bailed it out and that means that not only is the central government not bailing out a SOE, they’re letting a municipal government (arguably the most important in the country) take a huge hit. That will send a message to all other municipal and provincial governments.

The biggest mistake of the US financial collapse was the bailout of participants. Every firm which had financialized should have been allowed to go under. The few that were truly necessary should have been put back on their feet AFTER the shareholders and bondholders took their hits, and after being broken up. Collateral damage (those companies not responsible, but simply getting hit by the backwash, such as GM, could receive bailouts in exchange for a government stake.)

Capitalism has issues even when run properly, but it is a simple proposition at heart: people who allocate resources well should be rewarded with more resources to manage, and those who allocate resources badly should lose their ability to allocate resources. Every participant in over-financialization had made bad allocations of resources. For the American economy to operate, they needed to no longer be participants.

The failure to do this meant that decision makers know (or believe) they can make risky bets that cause systemic economic issues, bets that damage the economy as a whole and expect to be bailed out rather than be required to take their lumps. (And, ideally, be investigated for fraud, which most of them were guilty of.)

An economy where economic decision makers are incentivized to take big risks which hold the entire economy hostage (because they might not be bailed out if the risk isn’t systemic) cannot work and doesn’t. The US economy requires a backstop that amounts to the full expectation that the Fed will print trillions on demand to bail out bad actors. (The current main bad actors are the AI cartel.)

China is, oddly, the only major economy in the world that runs markets more or less right. (Though they let their own real estate casino run for too long.)


The former World Bank chief economist also urges Beijing to adopt more proactive monetary and fiscal policies to achieve faster growth

........... In my view, the overall international economic environment China will face during the 15th Five-Year Plan period is likely to be very weak. In fact, developed economies have still not fully recovered from the 2008 global financial crisis.

According to World Bank data, from 1960 to 2008 the United States posted an average annual GDP growth rate of 3.3 per cent, but from 2008 to 2024 this dropped to 2.1 per cent, a decline of about one third. In the eurozone, average annual growth fell from 3.1 per cent in 1960–2008 to 1.1 per cent in 2008–2024, roughly one third of its earlier pace. For OECD countries as a whole, average growth slowed from 3.4 per cent to 1.6 per cent over the same periods, about half the previous rate.

IMF projections put U.S. growth at 2.0 per cent in 2025 and 2.1 per cent in 2026, while growth in the euro area is forecasted at 1.2 per cent in 2025 and 1.1 per cent in 2026.

Taken together, these numbers suggest that, since the 2008 financial crisis, the developed world has effectively been going through two “lost decades.”



Tweets of the Week:
...



Charts:
1: 
2: 
3: 




(not just) for the ESG crowd:


The energy transition is collapsing—not in headlines, but in economics. What began as a hopeful vision for a cleaner future has become an economic bust. While markets and workers sense the failure, activists and policymakers remain caught in a consensus trance.

Bill Gates saw the winds shifting and changed course almost overnight. After years of climate evangelism, he now downplays the urgency. The public is angry about inflation, energy bills, and economic stagnation. They no longer see climate change or renewables as relevant to their daily lives. Gates didn’t reposition because the science changed—the political wind did. .............

The failure is global. COP30 exposed the widening gap between climate rhetoric and political will. ..........

The underlying problem is simple: the economics of wind and solar unravel once you ask them to behave like real power plants.

This may come as a surprise, since we’ve been told for years—by governments, banks, think tanks, and the industry itself—that wind and solar are the cheapest energy sources ever built. But that was always a narrow view, based on project-level metrics like Lazard’s Levelized Cost of Energy (LCOE). LCOE asks: “What does it cost to generate one megawatt-hour at the project site?” It ignores the cost of turning intermittent, weather-dependent output into reliable 24/7 power.  

But LCOE doesn’t ask the right question. It doesn’t include the cost of backup, storage, grid integration, or the challenge of matching supply and demand second-by-second. It’s not wrong—it’s just not the real world.

Lazard also evaluates relatively small projects—150 MW for solar, 300 MW for wind—compared to the 500–1600 MW size range of typical gas, coal, or nuclear plants.

The entire premise of the transition has been built on an accounting illusion. Wind and solar may be cheap at the generator fence, but not at the system level. The gap between those two is where the economic case collapses. ...........

.............. the nuclear and geothermal projects I’ve modeled—despite high upfront costs—eventually break even. Wind and solar don’t, because they never produce firm output. Their intermittency prevents them from recovering the negative present value from capex.

............. Scaling is a recurring theme in complexity science and systems engineering. Whether it’s software, infrastructure, or power systems—what works at 5% penetration often fails at 30%. It’s hard to believe engineers didn’t warn of this. 

............... This isn’t an argument against technology. It’s a recognition of physical, economic, and thermodynamic boundaries.  ..........

This isn’t a failure of technology—it’s a failure of imagination. We believed we could transition to a fully electric, renewable economy without confronting growth, consumption, or planetary limits. The carbon pulse gave us a century of abundance. The challenge now isn’t to recreate it with wind and sun. It’s to grow up as a species—and learn how to live within the boundaries of a planet that no longer tolerates business as usual.


How peak copper arrived and went completely unnoticed

............. Simply put, we are on a collision course between tightening global copper supply and demand fueled by electrification and most recently: AI data centers. Copper is an essential component in everything electric due to it’s high heat and electrical conductivity, surpassed only by silver. Copper wires can be found in everything from power generation, transmission, and distribution systems to electronics circuitry, telecommunications, and numerous types of electrical equipment—consuming half of all mined copper. The red metal and its alloys are also vitally important in water storage and treatment facilities—as well as in plumbing and piping—as it kills fungi, viruses and bacteria upon contact and conducts heat very efficiently. Thanks to its corrosion resistance and biostatic characteristics, copper is also widely used in marine applications and construction, as well as for coinage.

Growth in copper demand thus comes from both ‘traditional’ economic growth—especially in the Global South—and the energy supply addition from “renewables”. ...............

According to this study a full transition to an alternative energy system—powered entirely by a combination of “renewables”, nuclear and hydro—would require us to mine 4575 million tons of copper; some four-and-a-half-times the amount we have located so far. To say that we have embarked on a “mission impossible” seems to be an understatement here. ...................


German scientists warn global warming is accelerating faster than expected, raising the risk of a 3 °C rise by 2050 and forcing Europe to confront unthinkable adaptation plans.






Sci Fare:


................. We’ve seen the most cases of influenza-like illness ever in the 2024-25 season. The next worse season was the previous season. It’s now getting worse every single year. And this current season is shaping up to be even worse.

It doesn’t take a genius or a conspiracy theorist to figure out that this vaccination strategy against COVID is not working, you just need to read the studies that are now coming out. There’s a reason people are now just sick all the time.

Most people still think that the consequences of these vaccines amount to a minor inconvenience. In reality however, we have unleashed a persistent SARS virus on the population through mass vaccination with negative efficacy vaccines. 



Geopolitical Fare:


Donald J. Trump seems to be experiencing a phenomenon that has also captivated many of his predecessors, which is that they become almost monomaniacally consumed with foreign affairs, virtually to the exclusion of all else.

Not that this doesn’t make intuitive sense — it’s the domain where Presidents wield by far the most unchecked unilateral power. They can simply ignore a chronically inert Congress. They can even largely ignore public opinion, which typically doesn’t intrude on presidential decision-making until a critical mass of Americans divine some adverse impact from a far-off military action, which is rare. General lack of knowledge about international issues, coupled with a tendency to partisan-polarize around the personage of the President, makes the subject area especially ripe for shaping public attitudes in accordance with whatever the President wants to do. This can be observed in a recent poll showing that 87% of Republicans now believe Venezuela constitutes “a threat to US security.” .................................

........................ His policy toward Ukraine can be viewed in the same light, with Trump demanding a so-called “minerals deal” that effectively turns Ukraine into a sort of quasi-colonial US outpost, with the US expropriating vast swathes of Ukraine’s natural resources and physical infrastructure, in return for an uninterrupted supply of US weaponry. (The provision of which Trump has cleverly found a way to bypass any Congressional oversight or appropriations for.) Who knows what Kushner, Witkoff, and Rubio will ultimately cook up in terms of a “peace proposal” for Ukraine — if anything — but the early drafts of their negotiating document envision the US “leading” and thereby profiting from prospective “reconstruction” enterprises, including by seizing $100 billion in frozen Russian assets, paired with an indeterminate US “security guarantee” to defend Ukraine’s “sovereignty.”



............ Normally it never would have occurred to the average westerner that a country on the other side of the planet should be invaded and its leader replaced with a puppet regime. That’s not the sort of thing that would have organically entered someone’s mind. It needed to be placed there.

So it was. 

The most common misconception about the free press of the western world is that it exists. All the west’s most influential and far-reaching news media publications are here not to report factual stories about current events, but to manufacture consent for the pre-existing agendas of the US-centralized western empire.

They report many true things, to be sure, and if you acquire some media literacy you can actually learn how to glean a lot of useful information from the imperial press without losing your mind to the spin machine. But reporting true things is not their purpose. Their purpose is to manipulate public psychology at mass scale for the benefit of the empire they serve. ..........

............ A better world is possible. The first step in moving toward it is snapping people out of the propaganda-induced coma which dupes them into settling for this dystopian nightmare instead.



We’re on track to become the first species to go extinct due to politeness. Gonna follow the dinosaurs out the door because it was too uncomfortable and confrontational to tell a few billionaires and empire managers to fuck off.

As Howard Zinn put it:
“As soon as you say the topic is civil disobedience, you are saying our problem is civil disobedience. That is not our problem…. Our problem is civil obedience. Our problem is the numbers of people all over the world who have obeyed the dictates of the leaders of their government and have gone to war, and millions have been killed because of this obedience. And our problem is that scene in All Quiet on the Western Front where the schoolboys march off dutifully in a line to war. Our problem is that people are obedient all over the world, in the face of poverty and starvation and stupidity, and war and cruelty. Our problem is that people are obedient while the jails are full of petty thieves, and all the while the grand thieves are running the country. That’s our problem.”
Or as Utah Phillips put it, “The earth is not dying, it is being killed. And the people who are killing it have names and addresses.” .....................

I like to think about the Fermi paradox sometimes. You know, the apparent contradiction between the fact that we can’t detect any signs of extraterrestrial life in our galaxy and the fact that the Drake equation suggests we should be seeing some due to the sheer number of stars in the Milky Way.

People have come up with all kinds of theories to resolve this paradox. ....................



....................... The entire world is being consumed by an artificially imposed system which holds as its foundational premise that mass-scale human behavior should be driven by the pursuit of profit for its own sake. It’s a mindless, planet-devouring machine of our own making. It is creating unfathomable destruction and suffering for terrestrial organisms of every species.

And it doesn’t have to be this way. There is nothing inscribed upon the fabric of the universe which says that we need to live under a system which causes us to feed our biosphere into the woodchipper so that billionaires can become trillionaires. Nowhere is it written in adamantine that that the many must always toil and suffer for the benefit of the few. Things are the way they are because of systems that were put in place by human beings, and human beings can replace those systems with different ones.

 If we are to continue to survive on this planet, we’re going to have to move from systems which drive us to compete against our fellow humans and our fellow terrestrial organisms to systems that are driven by collaboration toward the good of all beings. Such systems would be entirely unprecedented by their nature, because unprecedented times call for unprecedented measures. It would be unlike anything that’s ever been done before, but it is now a matter of existential importance that it be done. ........


....................... But China is a competitive market, and in competitive markets, profits are low, because the second they start to rise, someone new jumps in. That’s how capitalism, in theory, is supposed to work. The problem is that it only works that way with aggressive government regulation and enforcement. The CPC, being Socialist, doesn’t “believe” in markets. It uses them as a tool, without an ideological commitment. There’s no nonsense about markets being self-correcting, about rich people being good, about trickle down, etc, etc… If a market isn’t working to improve mass welfare, the state intervenes, and it will let, and sometimes force, “too big to fail” companies die.

This is, ironically, “real” capitalism, something the West no longer practices.

So America in specific, and the West in general has spent about 45 years now hollowing out its real economy. In exchange a great deal of money has been created, and if you as an investor want money, then you invested in the West.

This is coming to an end. It is in its last five or so years. It relies in the destruction of the real economy by jacking up prices, loading up debt and liquidating industries, often, ironically, to send to China. ..............

............ this is the endgame. I’ve been writing about this for decades, and now I’m seeing my Cassandric prophecies all coming true. None of this was, in one sense, necessary: up till about 2010, it could have been reversed, in theory, by correct policy. In another sense it was inevitable, because the people who make all the decisions were all in, and benefiting immensely, and were unable or unwilling to understand or care about long term consequences. For many of them that made cold hard sense. They were engaged in a “death bet”, they bet they’d be dead before the game ended. Others are just fine being the richest or most powerful people in a shitty country. They don’t, yet, understand what they’ll lose when China is recognized by everyone as the most important and powerful country in the world, or what the decay of American military ability (entirely a product of a now lost industrial and tech lead) will mean to them.

This the middle of the end. The beginning of the end was when Obama and Bernanke decided to bail everyone rich out during the financial crisis, and pass the cost to ordinary people, including by stealing their houses.

This is also epochal. For the first time in centuries, the West will no longer be the most powerful or the most technologically advanced region.

The consequences, for everyone in the world, will be vast.



Other Fare:

Generation 6-7

.............. Like nineteenth-century bourgeois families anxiously watching themselves for signs of hereditary ‘degeneracy’, the thing to suspect about yourself these days is that you are suffering from smartphone-induced ‘brain rot’.

...................... That doesn’t make troves of genuinely worrying global statistics about teenage mental health disappear. Whether there is cause for optimism really depends on where you look. But at the very least, youth culture is not standing still: it is, in its own way, reflective about what former Google ethicist Tristan Harris called the “race to the bottom of the brainstem”; in diffuse and ambivalent ways, it is responding to it.



Vid Fare:

discusses nuclear fusion


The Australien Government has made an ad about the Social Media Ban for Under-16s, and it’s surprisingly honest and informative.


Posted by at No comments:

Sunday, November 30, 2025

2025-11-30

 **** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

Why wouldn't my opinion?

..................... Now the question becomes: Does this turn into the sustained year-end rally?
The early signs point that way.
Because when the underlying trend is up and the market gets a chance to break and doesn’t, that’s usually your tell.
This week wasn’t about one stat or a specific “thrust threshold.”
It was about the speed and intensity of the reversal.
Fast reversion from fear is one of the most bullish behaviors you can see inside an uptrend.


A systematic approach for analyzing labor data within the full Business Cycle Sequence.

 

....................... Today, the unemployment rate sits at a touch over 4.4% and in the FOMC Summary of Economic Projections, a move above 4.5% is not expected by a vast majority of committee members (highlighted in blue). 
It’s highly likely the unemployment rate exceeds the 4.5% level, given the sequence of deterioration (starting with the cyclical sectors), the throttling of labor intensity in the form of less full-time and more part-time work, and the trending momentum that already exists in the U3 rate.

For an FOMC that has clearly shown a preference or bias for labor over inflation, further adjustments lower in the Fed Funds rate should be expected.



Albert Edwards, the outspoken global strategist at Société Générale—a figure who even refers to himself as a “perma bear”—is certain that the current U.S. equity market, driven largely by high-flying tech and AI, is experiencing a dangerous bubble. (Société Générale, to be clear, does not hold the view that U.S. stocks or AI stocks are in a bubble, noting that Edwards is employed as the in-house alternative view.) While history often repeats itself, Edwards warned recently that the circumstances surrounding this cycle’s inevitable collapse are fundamentally different, potentially leading to a deeper and more painful reckoning for the economy and the average investor.

“I think there’s a bubble but there again I always think there’s a bubble,” Edwards told Bloomberg’s Merryn Somerset Webb in a recent appearance on her podcast Merryn Talks Money, noting that during each cycle there is always a “very plausible narrative, very compelling.” However, he was unwavering in his conclusion: “It will end in tears, that much I’m sure of.”

Edwards told Fortune in an interview that previous theories about a bubble were “very convincing in 1999 and early 2000; they were very convincing in 2006–2007.” Each time, he said, the “surge in the market was so relentless” that he just stopped talking about bubbles, “because clients get pissed off with you repeating the same thing over and over again and being wrong,” only to change their tune after the bubble bursts. “Generally, when you’re gripped by a bubble, people just don’t want to listen because they’re making so much money.” ...................................................

 “You’ve been around the block a few times, you just do become cynical,” he said, before correcting himself: “That’s not the right word. You become extremely skeptical of the full narrative.” ........................

Beyond equity valuations, Edwards has been highlighting two other major underlying risks that point to systemic vulnerability. First, Edwards emphasized the long-term risk of inflation in the West, driven by “fiscal incontinence.” Despite short-term cyclical deflationary pressure emanating from China—which has seen 12 successive quarters of year-on-year declines in its GDP deflator—Edwards said he believes the path of least resistance for highly indebted Western politicians will be “money printing.” At some point, the mathematics for fiscal sustainability “just do not add up,” forcing central banks to intervene through “yield curve control” or quantitative easing to hold down bond yields.

This is where Edwards’ long-held thesis about Japan comes in, what he calls “the Ice Age.” Around 1996, he said, he started thinking that “what’s happening in Japan will come to Europe and the U.S. with a lag.” He explained that the bursting of the Japanese stock bubble led to all kinds of nasty things: real interest rates collapsing, inflation going to zero, bond yields going to zero. Ultimately, it was a period of low growth that Japan still has not been able to break out of. The difference with the U.S., he added, is that Japanification actually started happening in 2000 with the dotcom bubble bursting, but “the relationship broke” between the economy and asset prices as the Fed began “throwing money” at the problem through QE. The U.S. has essentially been in a 25-year bubble since then that is due to burst any day now, he argued—it’s been due any day for a quarter-century. ...........



The data released over the past forty-eight hours in the USA paint a picture that is no longer compatible with the idea of a soft landing.


Parts of the America's economy are already in deep trouble, and the weakness could drag the whole country into a recession.

.............. Major employers in industries like homebuilding and restaurants are looking shaky, and they offer ominous signs about the direction of the overall economy. By getting a sense of what sectors and industries are struggling, you can get a forward-looking sense of the economy's trajectory and a clearer-eyed view of the possibility of recession.

The problem with relying on broad bundles of data is that things typically appear placid on an aggregate level right up until things go wrong. 


Takeaway: Gold is a core asset allocation that lasts through every cycle.

................... Gold consistently performs in Quad 1, Quad 3, and especially Quad 4, where slowing growth and falling inflation create its most powerful setup.



................. The raw numbers of the most liquid markets are breathtaking. The Bank for International Settlements recently published its latest three-yearly survey of trading in foreign exchange and interest rate derivatives — which are vital in keeping financial markets moving. Trade in interest rate derivatives this year is averaging $7.9 trillion per day. ‘Twas not ever thus. In 1998, when the BIS did its first triennial survey, it was $265 billion. 

Trading in currencies is $9.6 trillion per day — roughly double Germany’s gross domestic product, or all that it produces in a year. Despite all the talk of the retreat of globalization and the decline of trade, this is triple the FX volume that the BIS recorded in the spring of 2007, on the eve of the GFC.


How a Broken Benchmark Quietly Broke America


For our economy to provide a nice life for all we will need structural reform. How bad is it? This bad.

................. Trump owns the economy now. Voters just told him they’re still broke and they’re blaming him for it.

But here’s what matters more than any election. From Tennessee to New York, voters are asking the same question. Why can’t I afford to live well?

This is why Trump won twice. Why we elected Barack Hussein Obama promising hope and change, twice. Obama’s efforts were too little too late, and that led us to the Obama/Trump voters. We kept looking for hope and change in increasingly desperate places. Like an addict searching for our next fix, Americans are going to more and more dangerous places out of sheer desperation. 



Japan Fare:

Japan is easily the most interesting macro market (for now anyway)

While I concentrated on the risks in private credit last week, movements in Japanese bonds and currencies made some people worried.

One very widely spread post made some crazy predictions. Be warned, my ranting response is below (nothing too new for long-time Charts & Notes readers). .............

........... These effects are very technical and apart from providing some education on how the yield curve twists and turns with all of these macro happenings, it is mostly designed to show how prices and yields moving aren’t the end of the world.



QOTW:


Rate cut, no rate cut…maybe a rate cut? Everyone watching their portfolios swing wildly while trying to figure out if this is the start of something worse or just noise. And that’s the problem with discretionary trading during times like these. You’re making decisions every single day based on incomplete information, headlines that contradict each other, and your own emotional state



Bubble Fare:


............. This split is normal. Every major innovation cycle creates a divide between skeptics who see overvaluation and optimists who see a new era of growth. The challenge for investors is not to take sides, but to understand what bubbles do, why they’re so hard to identify in real time, and how to benefit from them without being destroyed by them.

Yes, we may be in the second market bubble of this century. Alternatively, the market may be pricing in a shift as fundamental as the transition to either electricity or the internet. Either way, investors must think clearly, act deliberately, and avoid the kind of blind speculation that turned past booms into bloodbaths.

....................... Understanding that a bubble can be beneficial involves recognizing two key points.
  1. You don’t dismiss the boom simply because it is speculative. You acknowledge that capital is being deployed and that it will have future positive implications.
  2. You accept that risk is inherent during such periods. From one angle, the bubble looks reckless. However, from another, it seems like the stage where breakthroughs become possible. By appreciating the positive aspect, you gain clarity about what is happening and why it matters for investors.
You should treat a bubble not as a spectacle to be ignored, but as a phenomenon to be studied. Market bubbles are periods where capital loses discipline, but that loss of discipline funds the future. The value created during inflation often matters more than the value destroyed during the burst.

............. Calling a market bubble too early can be just as costly as calling it too late. As Howard Marks wrote:
“Being too far ahead of your time is indistinguishable from being wrong.”


AI:


Nvidia’s narrative took a major hit this week due to multiple factors including the emergence of a credible rival, OpenAI’s struggles, and a trade war pincer that has them caught between Trump and China.

Is a Government Backstop the Bull Case?

Nvidia’s narrative, which it kicked off with the launch of Ampere architecture and A100 chip in 2020, subsumed any competing story-lines in the post-pandemic American stock markets in 2022, and engulfed the entire American economy under Trump.

Nvidia’s narrative that Large Language Models (LLMs) like OpenAI’s ChatGPT, Anthropic’s Claude, and Google’s Gemini ARE the future of technology and the global economy has made them the world’s largest corporation by market cap.

The Trump administration may be all-in with Nvidia’s narrative and may be signaling its willingness to backstop the industry to prevent the AI bubble popping. ..........

........... 
Marcus and Zitron remain opinion leaders in the space, however.

Marcus is currently dealing with the emergence of a class of rival AI experts who’ve been on the AGI (Artificial General Intelligence) bandwagon and are now getting off.

AGI is the patent nonsense that LLMs are just a few months away from creating super-intelligent, self-replicating machines.

Naturally, belief in AGI has been the conventional wisdom in Silicon Vally for the last couple of years and continues to be a big part of the bulls’ case for the Nvidia narrative.

Marcus has taken lots of heat for calling bullshit on LLMs as the road to AGI from the get go, and is now expressing mixed feelings about the big names who are joining him on the critical side.

Those names include Meta’s Chief AI Scientist Yann LeCun and OpenAI co-founder Ilya Sutskever.

As for Ed Zitron, his latest “The Hater’s Guide To NVIDIA” is well worth the subscription price and the estimated 54 minute reading time. ............

Zitron cites pseudonymous finance poster “Just Dario” as someone who’s provided key insights into the workings of Nvidia and Dario’s latest piece on the company is worth reading in full, but the TL;DR explanation of Dario’s role in the larger Nvidia narrative wars can be grasped from glancing at these tweets about whether or not Enron is a valid comparison point for Nvidia: ............

Yahoo also quoted “Jim Chanos, who is famous for predicting the fall of Enron, (who) thinks the comparison between Nvidia and Lucent bears weight.”

“They’re [Nvidia is] putting money into money-losing companies in order for those companies to order their chips,” Chanos said.

As for “Big Short” Burry, his new Substack is a bit rich for my blood, although serious investors will likely find it a bargain, but his latest contribution to Nvidia’s narrative involves comparing Nvidia to Cisco before the dot.com bust: ............

The Mid-Wits Weigh In

No debate in 2025 would be complete without one of the Abundance bros weighing in.

Naturally Ezra Klein’s “Abundance” co-author Derek Thomas[pson] (co-writing with Understanding AI founder Timothy B. Lee is coming down in the middle with “Six reasons to think there’s an AI bubble — and six reasons not to” and shrewdly saves the bull case for its paying customers. Talk about knowing your audience.

The Real Bulls Include Jim Cramer and AGI Crazytown’s Finest

But I’ll leave the real bull case to the legendary CNBC commentator Jim Cramer ..........

But the far more entertaining bull case for the Nvidia narrative is made by Utopia believers like Tomas Pueyo ..... Admittedly, I have an immediate and utter disdain for anyone pitching imminent Utopia but a couple of gummies and Pueyo’s stuff becomes quite entertaining. ............


There are 12 statistics, factoids, and studies that dominate every discussion about whether artificial intelligence is a bubble. Here's a deep-dive into all 12 arguments



As the AI 'circle jerk' rages on, OpenAI, the company behind ChatGPT, will need to raise at least $207 billion more by 2030 to simply keep the lights on, according a new analysis by HSBC which takes into account recently disclosed megadeals with Microsoft, Amazon and Oracle. 

Even with bullish assumptions that include 3 billion users, rapid subscription growth, and a giant slice of enterprise AI spending, the company's projected revenues are nowhere near its exploding bills for energy and chips, the bank says. ...........

While HSBC provides a sobering view of OpenAI, they're actually very bullish on AI as a concept ....


Or is pouring a pile of government money in just a coincidence?


The machine learning community is finally waking up to the madness, but the detour of the last few years has been costly.

........... Sutskever also said that “The thing which I think is the most fundamental is that these models somehow just generalize dramatically worse than people. And it’s super obvious. That seems like a very fundamental thing.”

Some of this may come as news to a lot of the machine learning community; it might be surprising coming from Sutskever, who is an icon of deep learning, having worked, inter alia, on the critical 2012 paper that showed how much GPUs could improve deep learning, the foundation of LLMs, in practice. He is also a co-founder of OpenAI, considered by many to have been their leading researcher until he departed after a failed effort to oust Sam Altman.

But none of what Sutskever said should actually come as a surprise, especially not to readers of this Substack, or to anyone who followed me over the years. Essentially all of it was in my pre-GPT 2018 article “Deep learning: A Critical Appraisal”, .... and/or in my 2022 “Deep learning is hitting a wall” evaluation of LLMs, which explicitly argued that the Kaplan scaling laws would eventually reach a point of diminishing returns (as Sutskever just did), and that problems with hallucinations, truth, generalization and reasoning would persist even as models scaled, much of which Sutskever just acknowledged. .........................

................ To be fair, nobody knows for sure what the blast radius would be. If LLM-powered AI didn’t meet expectations and became valued less, who would take the hit? Would it just be the “limited partners” like pension funds who entrusted their money with VC firms? Or might the consequences be much broader? Might banks go down with the ship, in 2008-style liquidity crisis,possibly forcing taxpayers to bail them out? In the worst case, the impact of a deflated AI bubble could be immense. ............................

The whole thing looks incredibly fragile.

To put it bluntly, the world has gone “all in” on LLMs, but, as Sutskever’s interview highlights, there are many reasons to doubt that LLMs will ever deliver the rewards that many people expected.


A skeptic’s pre-mortem

Three years ago, on November 30, 2022, ChatGPT was released. It’s been one of the fastest-growing consumer products in history, and gotten more press than God. But I think a fair case can be made that it is not what it has often been cracked up to be, and probably never will be.

Before I dive in, let me make four of my core beliefs, often misrepresented, absolutely clear:

I believe that artificial general intelligence (AGI) is achievable.

I believe that there is at least a chance that artificial general intelligence will be of large net benefit to society.

I just don’t happen to think large language models like ChatGPT will get us there. (I do think they have their uses, but I worry about their costs to society, around bias, cybersecurity, misinformation, nonconsensual deepfake porn, copyright theft, energy and water usage, the gradual enshittification of the internet, the severe hit to college education, and so on.)

I think that the recurring core technical problems that we have seen (as discussed below) with LLMs aren’t going way; instead they inherent to the technology.

In short, I am at least modestly bullish on AGI, but don’t think that large language models like ChatGPT are the droids we are looking for. And I certainly don’t think that ChatGPT has lived up to expectations. Increasingly, it appears that others are recognizing this as well.

Let’s review. ....................................

............... And worse, the economy itself has become so wrapped up in generative AI and its promises, that the economy itself is, by many accounts in serious jeopardy. (Early in the week a prominent person at the White House, David Sacks, warned of a recession, if generative AI were to go south, in a tweet that many people read as laying the groundwork for a potentially costly bailout of generative AI.)

If the economy goes down, ChatGPT will be at the center of the mess.

Nobody should be surprised if things play out that way. .....................



........... He continued, "We also now have all 7 preconditions for a bubble that we are not yet in (historically, the P/E at a bubble peak has been 45x-72x on 12-month trailing earnings for 30-43% of global market cap versus Mag 6 today on 33x)." 

Garthwaite pointed to a previous analysis in the UBS Global Economics and Strategy Outlook that shows today's market performance patterns are similar to those in March 1998. 

........... We think there is more justification for a bubble (which we are not yet in) to form than any of the many others we have seen owing to the uniquely quick adoption rate of Gen AI and the threat of monetisation of government debt .................


Google’s AI infrastructure chief tells staff it needs thousandfold capacity increase in 5 years.

While AI bubble talk fills the air these days, with fears of overinvestment that could pop at any time, something of a contradiction is brewing on the ground: Companies like Google and OpenAI can barely build infrastructure fast enough to fill their AI needs.

................. the aggressive plans for AI data center expansion reflect Google’s calculation that the risk of underinvesting exceeds the risk of overcapacity. But it’s a bet that could prove costly if demand doesn’t continue to increase as expected.


As I find the topic of Google TPUs extremely important, I am publishing a comprehensive deep dive, not just a technical overview, but also strategic and financial coverage of the Google TPU.



.............................. And that, of course, leads us to the famous alignment problem—the idea that to guard against the existential risk of AI taking over, we need to align AI with human values. The concept actually goes back to 1960 and the AI pioneer Norbert Wiener, who described the alignment problem this way: “If we use, to achieve our purposes, a mechanical agency with whose operation we cannot efficiently interfere... we had better be quite sure that the purpose put into the machine is the purpose which we really desire.”

But there’s actually a larger alignment problem that goes much farther back than 1960. To align AI with human values, we ourselves need to be clear about the universal values we ascribe to. What are our inputs? What’s our model spec? What are we training ourselves on to be able to lead meaningful lives? 

These are the questions we need to answer before we decide what inputs we want AI to draw on. Even if we could perfectly align AI with where humanity is right now, the result would be suboptimal. So now is the time to clarify our values before we build a technology meant to incorporate and reflect them. ..............


How AI has encrusted our culture and social sphere in a sedimentary layer of slop.

One of the more perplexing things about the AI bubble is how relatively little we have to show for it. Mostly, it’s chatbots, some coding automation, and slop. A lot of slop.

You can spend hours reading through eye-popping Nividia earnings reports and lengthy columns expounding on the transformative powers of the technology and analysts’ takes on what may be the biggest bubble of our generation. That’s to say nothing of the breathless proclamations of tech executives, of course, or the federal government’s own enthusiastic overtures. But then you flip on Saturday Night Live and the first sketch they run after the monologue reminds you that a lot of the general public’s experience of AI is actually more like the one depicted here: .......



Everyone knows data centers use a lot of water. What’s less known is how they can poison the drinking water that remains. ........................

ICYMI: Our deep dives into AI
If you’d like to learn more about the full environmental footprint of AI and data centers—from climate impact to how communities are fighting back—here are three essential pieces from the HEATED archives.








China Fare:









Charts:
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(not just) for the ESG crowd:


So I need to get this off my chest. As I explained previously, there’s a disagreement among climatologists, who are roughly divided into two camps. The “climate moderates”, who think climate sensitivity is around 3 degree and the “climate radicals”, who think it is higher, with Hansen arriving at 4.5 or 4.8, depending on the method.

The question that’s on my mind is which of these camps is closer to the truth. When humans double CO2 concentrations in the atmosphere, do we face ~3 degree of global warming, or ~4.8 degree? And why can’t the scientists arrive at agreement on which of these numbers is correct? ..............

............... But there’s the thing: Depending on the period you look at, a doubling of CO2 will have been from a different baseline. There’s no inherent reason why going from 180 parts per million to 360 needs to result in the same increase in temperature as going from 400 to 800 parts per million. 

.................... But anyway, to me the mystery is solved now. I expect global warming will continue to unfold much faster than the “climate moderates” anticipate.


The ocean is undergoing unprecedented, deep-reaching compound change

Earth's ocean, the planet's life-support system, is experiencing rapid and widespread transformations that extend far below its surface. A promising international study published in Nature Climate Change reveals that vast regions of the global ocean are experiencing compound state change, with simultaneously warming, becoming saltier or fresher, losing oxygen, and acidifying—clear indicators of climate change pushing marine environments into uncharted territory.


Deforestation and degradation have reversed the continent’s role as a carbon sink, shows study in Scientific Reports



As our economic, social and environmental problems worsen, nuclear energy has resurfaced as the way out of our planetary crisis. Its appeal is strong — high energy density and zero-carbon output. But its reality is far less reassuring.

I’m not opposed to nuclear power. It’s just far too expensive and scales too slowly to matter in any real window of climate or ecological urgency. ..................

The economics simply don’t work at those costs.  ...............

Small modular reactors (SMRs) don’t solve this; they just break the problem into smaller, still-costly pieces. ................

But if cost were not a factor, how fast could nuclear scale? .............

Technology won’t save us from the mess technology created. Nuclear may have a role but not the one its followers imagine.





Sci Fare:

We asked the world's foremost minds to highlight some of the game-changing scientific breakthroughs shaping our world since the year 2000





............ This is typical of our handling of all problems. We just pretend they don’t exist and won’t have serious consequences if we ignore them. 

............ It’s simple. We have the technology, and we aren’t doing it. Insanity.



U.S. B.S.:


The simplest measure of a government’s legitimacy is whether or not it works for the benefit of the people. Democrats also believe the government should be selected by the people.

America does not meet either criterion at this time. Yes, there are elections, but the duopoly means that voters tend to choose from a small slate, pre-selected by others. The most visible occasion of this was when Obama had every Democratic presidential nominee candidate drop out so that Biden could defeat Bernie Sanders. Year in, year out, most of the candidates put up for election are those chosen by party insiders. ........................

So first there’s a huge barrier to electing people who support outsider views, then most of them are co-opted. If there’s a real threat of an outsider taking the top seat, the establishment works hard against them. We saw that with Corbyn ...........

It’s fair to say that most Western countries don’t really have “government by the people.” The mechanisms still, partially, exist. The form is there, but the reality isn’t. They’re political oligarchies. (The EU is worse than the US.) ..................

These days the great opponent is China, and the one party communist state running a hybrid capitalist/socialist economy. And the problem for the West is that China’s government, while not “by the people” is definitely “for the people”. ..............

The problem for the West is simple: China is better governed than almost any (perhaps actually any) Western country. And that governance shows plenty of signs of being in the interests of the vast majority of Chinese, whose lives it has vastly improved. Democracy itself is in danger. If it doesn’t produce better results for ordinary people, and if it’s basically fake anyway, why keep it? ..........

Democracy, if it wants to survive as a major force in the world, needs real reform (all so-called reforms in the West over the past 50 years have been about hurting ordinary people to benefit rich people). If it isn’t re-aligned to work for the majority, its day as a major force in the world faces a bloody sunset.


War Without End in the Age of Permanent Crisis

Introduction to The Anatomy of Empire
We are living through a global conflict of connected crises—in Ukraine, Gaza, the South China Sea, Palestine, Iran, and Venezuela—and within the fraying social fabric of Western nations themselves. These are not isolated eruptions but the convulsions of an Empire consuming itself, driven by internal contradictions it can no longer hide.

Soaring national debt, decaying domestic infrastructure amidst unparalleled military expenditure, dependence on force to secure an economic order that long since lost its legitimacy—this crisis is the inevitable culmination of centuries of capital accumulation fused with the unbridled application of raw military power.

The Anatomy of Empire, tries to shed light on the path led us to this precipice. It is a history not of chance, but of design; not of isolated events, but of a systemic logic pursued with relentless determination. From the global collaboration with fascism to the architectural pillars of the neoliberal order, we trace the myriad secrets and open secrets that have propelled us forward.

In part one of Rise of the MIC we followed the conception, birth and rise to global dominance of the military industrial complex’ economic model of industrial destruction. Now, in the second part we will trace how the system mutated and metastasized; from emergence of neoconservatism as the militant voice of the MIC; to the cultural arsenal of Hollywood and the 24-hour news cycle manufacturing consent; to the outsourcing, privatization and financialization of organized destruction ..............



It’s a full-time job protecting your mental lucidity in this dystopia.

It was hard enough to form a clear perception of reality when all we had to deal with was the propaganda of plutocrat-owned media corporations and the indoctrination of our power-serving education systems. Now on top of those still-persisting obfuscations we’ve got things like Silicon Valley algorithm manipulation, imperial information ops like Wikipedia, and an exponentially growing field of AI perception management to work through.

I remember watching Julian Assange give a talk way back in 2017 where he described a future in which artificial intelligence is able to harvest the data of individual internet users and then manipulate the information they see online in a custom-built perceptual prism designed to manipulate their thinking at a level far too subtle to be noticed. He compared it to the way a computer program can play chess with strategies looking 20 to 30 moves ahead at a level the human brain just can’t keep up with, saying that we’ll one day have artificial intelligence that can manipulate public perception with a similar degree of sophistication.

............ We’re on a trajectory where soon all our information will be stored and analyzed by artificial intelligence controlled by governments and billionaire megacorporations who can then use that information to surveil, manipulate and oppress us. All our medical and financial information. Whole psychological profiles based on what we view and say online. A far more thorough assessment of our personalities than we could ever create on our own.

.......... Our rulers see AI as an opportunity to recapture the degree of social control that was shaken by the arrival of widespread internet access — a loss of information hegemony we’ve seen oligarchs and empire managers openly complaining about with regard to how social media has spread public dissent on issues like Israel and Palestine.

Journalist Whitney Webb has flagged the fact that Google plutocrat Eric Schmidt co-authored a book with war criminal Henry Kissinger which envisions a future where the public becomes increasingly dependent on artificial intelligence to do our thinking and creative expression for us, allowing our consciousness to become further and further intertwined with these oligarch-owned technologies. 

............ These are the kinds of things we’ll have to do to preserve ourselves as we move into this strange new world, on top of the usual business of staying informed and learning to see through the propaganda illusions. Luckily these things are all good for us anyway; the path toward protecting our humanity also just happens to be the path toward becoming a healthier human being and making the world a better place. .......



Geopolitical Fare:


The Trump administration has put forward the first peace proposal made since April 2022 that includes any of Russia’s demands for an end to hostilities in Ukraine. As of this moment, the US has presented the proposal to Ukraine, adjusted the proposal language in response, and the revised version will presumably be forwarded to Moscow. Meanwhile, European leaders have weighed in with a fantasy counter proposal that assumes that Europe has the money and weapons to keep the war going. It doesn’t.

The Western commenting class has been largely negative toward the proposal, claiming that it is an effort to trap Russia, and that the Russians will never accept it. The naysayers point to clumsy language used by the Americans regarding Russian funds that the Europeans have been trying to steal for a few years now. However, what I’m stuck wondering is what the Russians think of the deal? Using RT (Russia Today) as a proxy for the Russian view, RT seems quite appreciative of the initial proposal.

Part of what is strange in the response by Western advocates of an end to the war is that the initial proposal was intended to be a sketch, not a negotiated solution. Sure, it’s amateurish, but with between one and two million Ukrainians dead and nuclear tensions rising, who cares if it is scribbled in dog excrement? Some version of much of what the Russians are demanding is included in the sketch. It seems far more a basis for further negotiations than the tone-deaf twaddle that Donald Trump previously sent across. ...........

Whatever one might think of the Trump administration, as the Democrats are making clear, their return to power will mean permanent war. To state the obvious, the Republican policy to date has been more war. So, this isn’t to defer to the Republicans as the solution. It is to state that the West needs a better way. The current system makes a few Americans rich for slaughtering millions abroad. The phrase ‘perverse incentives’ doesn’t begin to describe the misanthropic horror show that this arrangement has produced.

Behind the peace proposal has been regular dialogue between the Americans and the Russians that has not been reported in the American press. This suggests that the Trump administration is aware that it faces internal opposition from Democrats and national security Republicans, many of whom have their campaigns funded by the MIC. Given Mr. Trump’s capricious nature and monumentally bad cabinet appointments, it would be foolish to claim progress until the needed signatures and enforcement mechanisms are firmly in place. .................

My take is that despite its flaws, the current proposal represents the best starting point for negotiations to end the bloody and pointless American-made slaughter in Ukraine. If I hadn’t been reading the Russian accounts of the negotiations, I might be closer to the position of the naysayers. But the Russians have been relatively upbeat about prospects for peace. And given that the Russians tend to be straightforward in a way that Americans aren’t, the hope might be sincere. ..............


Frontline events and peace narratives. Suicide bombers and suicide country. Methed-up press gangs and civil war.

Within a few months, the Russo-Ukrainian war will have lasted three years. Trump will have been trying to put an end to it for a year. And the longer things last, the more tiring is the repetition.

With Russia winning on the battlefield, the US presents Ukraine with a peace deal which represents Russian interests. The western media, in its infinite wisdom, is currently hard at work trying to demonstrate that Trump’s peace deal was ‘written originally in Russian and translated’. But were that were true, it wouldn’t matter.

Even if Trump’s envoys handed Ukraine a peace deal Putin wrote by hand and signed in Russian, it wouldn’t change the essence — that Ukraine, constantly retreating on the battlefield, isn’t going to get an appealing deal.

Anyway, faced with a bad deal, Kyiv decides not to accept it. With plenty of cheering from its wonderful western partners, of course. Zelensky and his men get to work presenting their ‘edited version’ of the deal they were given, a version that Russia will no doubt reject (assuming it even approved of the initial American deal).

Cue another few months or years of Ukrainian retreats, at which point they will be presented with a worse deal. I’ve seen this before…






............ Drugs come into the United States from numerous nations in Latin America, and it sure is an awfully interesting coincidence that the one they’re focused on regime changing to stop the drug flow just so happens to be the socialist country with the largest proven oil reserves on the entire planet.

Americans who’ve been rejecting the propaganda for wars in the middle east but now fully buy into it for regime change in Venezuela are the weirdest. That’s like managing to pull your head out of your ass, taking a deep breath, and then shoving it right back in there. 

US regime change interventionism is reliably disastrous, and is always justified based on lies. This would be true even if Venezuela really was a major drug trafficking threat and even if Maduro really was the world’s most evil dictator, neither of which are the case. Only idiots and sociopaths are clapping along with the war drums.


All the boring stuff after defeat in Ukraine.

Pundits are providing us with a lot of innocent amusement these days, and generating a lot of colourful controversy, by punditing about such issues as possible peace plans for Ukraine, possible coups in Kiev, alleged western attempts to replace Zelensky, the potential impact of corruption investigations, theoretical future deployments of western forces in Ukraine, and so on. This is all (mostly) harmless fun, and keeps pundits in need of audiences and money but without any political or military expertise harmlessly occupied. But nonetheless, most of it remains at the level of feverish speculation.

For several years now, on the other hand, I have been trying to encourage people to look at longer-term and more fundamental questions concerning the adaptations that the West is going to have to make to a Russian victory and to Russian military preeminence in Europe. Today I want to discuss an issue which so far as I know has not even been raised, let alone properly considered. If the post-Ukraine relationship between Russia and the West is going to be tense and adversarial, and if the possibility of actual open conflict is not to be excluded, then how do we even understand what that might mean, and how, if at all, can we prepare for it?

Some politicians and pundits already believe they have the answer, of course. Thus, fantasies of spending 5% of GDP on defence, wild schemes for bringing back conscription (or sort of), trying to rebuild a military production capacity, buying more of this or that type of equipment … surely the answer is in there somewhere? But it’s not. As I have stressed repeatedly, none of this makes any sense, and most of it is a waste of money, until you have done a great deal of thinking, and have a clear idea about what you are trying to achieve. ..............................................................

................................................................................

In other words, the “war” that politicians and pundits seem gleefully to anticipate, will not take place, because it can’t take place. There are a number of things that could happen, ranging from small-scale air and sea clashes, to massive and paralysing Russian attacks on one or more western countries, to very small-scale political deployments on the flanks. But not much more than that. The idea of massive armoured battles in the Baltic States is a fantasy, and let us hope that no western government ever actually takes it seriously. There are more important and more fundamental things to worry about just now.



The EU/NATO combo cannot but play the role of pathetic yapping chihuahuas. That’s the price you pay for a matrioshka of supreme stupidity.

............................. Russia, meanwhile, behaves like Lao Tzu surrounded by rabid stray dogs. The conditions for a negotiation have been set in detail by Putin since June 2024. These are non-negotiable, and would allow the negotiation to start



Knowing who to trust and who to distrust at this point in history is the most important quality for anyone who expects to maneuver their lives and those of their loved ones through the final years of this Fourth Turning. I trust people who base their opinions on facts, not some government approved narrative regurgitated by legacy media bubble headed bimbos and “expert” talking heads. Michael Burry, Ed Dowd and Edward Snowden are men whose opinion I value. ....................................

Catherine Austin Fitts has been warning about the coming digital gulag for years. We now have a state sanctioned bubble in AI, with the billionaire club cheering it on, knowing they will be bailed out again when it all goes to shit, like bubbles always do.



Other Fare:


.................. People ask me if I’ve read them all, to which I waggishly respond that I’ve opened all of them (mostly), but while there is the stereotype of the book collector valuing status more than knowledge, whether the fool in Brandt’s illustration or Jay Gatsby with his uncut volumes, for me these titles represent the knowledge I’m anxious to acquire but which mortality prevents me from ever fulfilling. 


‘Genuinely Hard Problems’ pilots novel approach to scientific education




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