Jobs that is, 7.4 million job openings. The internals were pretty steady. Who has the upper hand? It’s a bit of “it depends”. If you work in healthcare, great, in other industries the story is more mixed.
But at least a few things are going nuclear.
Radioactive Facebook?
When I think of social media companies and the term “radioactive”, I tend to associate them in a pejorative way, one in which both can cause harm. But nowadays when social media is going radioactive, it literally means they are buying nuclear power, specifically to power AI that sits inside data centers. Yesterday, Meta announced they’ve entered into a 20-year agreement to buy nuclear power from Constellation Energy’s Clinton nuclear facility in Illinois.
20 years seems like forever in the AI timeline, but things take time. Like growing the Federal debt level.
Like Radioactive Decay, There Are Exponents
Speaking of things that seem exponential, Ray Dalio promotion and his fears of the U.S. decline. Yesterday, Ray promoted his new book, “How Countries Go Broke” with a LinkedIn post.
In the post, Dalio reminds us that no matter how you cut it, even when you can print and tax, credit cycle dynamics are the same as Hyman Minsky theorized and we discussed back in January.
Dalio uses the human circulatory system as his analogy. Deficits are like plague, the deficits drive the supply of debt, the amount of which can overwhelm demand and act as plague breaking off, which ultimately causes a heart attack. Central banks’ can print to try to alleviate the blockage, but it distorts the normal flow of the system and doesn’t solve the problem. For Dalio the only solution is austerity and the accompanying lower rates.
Both Dalio and Treasury Secretary Scott Bessent both share a solution that is focused on 3% interest rates, reducing the budget deficit to 3% of GDP.
But What If You Created The Circulatory System In The First Place?
That’s likely what MMT proponents would retort to Ray’s analogy, after all, it’s your system, your currency, only you can cause the heart attack. The debt Dalio’s worried about, that’s not plague, it’s actually the blood, if you don’t create the money, the system stops. And interest service on debt, that’s nothing more than a policy choice. The real constraint isn’t the debt or the interest costs, it’s inflation. Unless you have inflation, you have fiscal space and the MMT crowd would say you should use it.
And Speaking Of Inflation
Fed Governor Lisa Cook didn’t sound overly convinced that inflation won’t remain a problem in light of trade policies and other factors.
Bridging Common Ground
What if both Dalio and the MMT crowd are right? What if you just need a way to connect them. Perhaps there’s where the concept of Fiscal R-Star comes into play. Remember, this concept is the equivalent of the neutral rate of interest for monetary policy, it’s the interest rate where fiscal policy is neutral. In essence it’s the idea that deficits can be destabilizing, but only when they exceed the economy’s ability to absorb them without excessive inflation or crowding out.
Just Say What’s On Your Mind: “It’s A Disgusting Abomination”
One Big Beautiful turd? Maybe, at least if you’re Elon. He’s certainly not ascribing to MMT - he tends to be a fiscal theory of the price level guy. In a sense, good for Musk for calling out the pork in this bill, as someone who at least reportedly cares about government waste, he at least needs to be consistent.
But That’s A Problem For Another Day
Until the fiscal problem is our fiscal problem, it doesn’t seem to be a problem (for now). The S&P rose to 5,970 led by AI chip stocks and optimism that falls into the TACO trade narratives.
The 2Y treasury yield moved up to 3.96% and the 10Y was at 4.47%, both flirting with their somewhat key levels.
We’ll see what ISM Services and the Bank of Canada has in store today.
Until then you can debate fiscal narratives.
XTOD’s:
XTOD: Bitcoin’s whole story is a staged illusion, scripted by insiders to convince you governments and institutions are “all in” — and that this market is booming on real demand.
This is the LARGEST bubble in human history, set to go down as the largest financial scandal ever. Ask yourself: If Bitcoin is so decentralized and powerful…Why do the same few entities control the narrative, the wallets, and the laws? It's all smoke and mirrors. Here’s proof. 🧵
XTOD: "Diplomacy turns out to be quite different from reality TV and real estate. The best diplomacy is conducted secretly, not on live TV. And when a national security strategy goes awry, bankruptcy is not an option. There is no Chapter 11 for a failed foreign policy."
XTOD: hot ai summer lfg…lots of great releases coming!
XTOD: In November next year, we fire all politicians who betrayed the American people x.com/matt_vanswol/s…
XTOD: Learn to ask, “If this is the only thing I accomplish today, will I be satisfied with my day?”
Don’t ever arrive at the office or in front of your computer without a clear list of priorities. You’ll just read unassociated e-mail and scramble your brain for the day. Compile your to-do list for tomorrow no later than this evening. I don’t recommend using digital to-do lists, because it is possible to add an infinite number of items. I use a standard piece of paper folded in half three times, which fits perfectly in the pocket and limits you to noting only a few items. There should never be more than two mission-critical items to complete each day. Never. It just isn’t necessary if they’re actually high-impact. If you are stuck trying to decide between multiple items that all seem crucial, as happens to all of us, look at each in turn and ask yourself, If this is the only thing I accomplish today, will I be satisfied with my day? To counter the seemingly urgent, ask yourself: What will happen if I don’t do this, and is it worth putting off the important to do it?
https://x.com/JacobKinge/status/1929798518744449522
https://x.com/nfergus/status/1929900199369158949
https://x.com/sama/status/1930040146034078061
https://x.com/elonmusk/status/1929984535456035202
https://x.com/tferriss/status/1929988784684220586
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