The Dutch central bank says gold held in London can be accessed and traded more quickly during an emergency than gold stored in New York or Canada.

That is some wonderfully sanitized central-bank language to deliver a message that seems to me to be “confidence in the U.S. holding the world’s gold…and likely being a cornerstone of the global economic machine…is dwindling.”

Either way, it means the Netherlands has effectively decided that if the world goes sideways, it would prefer substantially less of its ultimate crisis reserve sitting in North America.

Before the move, 31.3% of Dutch gold was in New York, 19.7% in Ottawa and 18.1% in London. Now New York and Ottawa each hold 18.5%, while London has jumped to 32.1%. The Netherlands owns 612.4 tonnes of gold altogether.

Technically, all 86 tonnes weren’t loaded onto planes and flown across the Atlantic. DNB sold roughly 59 tonnes in New York and bought equivalent market-standard gold in London. More than 27 tonnes were physically moved from the U.S. and Canada to the Netherlands, while a similar quantity moved from the Netherlands to London.

The distinction matters operationally. Economically, not so much. The result is fewer Dutch reserves in New York and considerably more in London.

And we’ve seen this before. In 2014, the Netherlands physically brought 122.5 tonnes home from New York. Germany later completed the relocation of 300 tonnes from New York to Frankfurt. And between July 2025 and January 2026, France eliminated its remaining New York gold position, replacing 129 tonnes held there with market-standard bars now stored in Paris. France says that decision was about trading efficiency, not politics, which is fair enough. The bars nevertheless wound up in Paris instead of New York.

India has also dramatically reduced the portion of its gold stored overseas, although most of that repatriation involved gold held in London rather than America.

This seems to be me to be a very obvious trend toward central banks wanting greater control over the one reserve asset that is nobody else’s liability.

Gold doesn’t require Washington to pay you back. Funny how attractive that feature becomes when Washington owes more than $40 trillion.

As I have droned on about for a decade, the entire modern financial system is ultimately held together by confidence and fiat. The dollar works because everyone believes everyone else will continue accepting dollars. Treasuries work because the world believes the United States will honor its debts without destroying the purchasing power of the currency used to repay them.

Confidence…not basic math or economics…is what encourages people like Paul Krugman to say things like “debt is money we owe to ourselves”.

It’s what allows Stephanie Kelton to write a book called “The Deficit Myth”.

For decades, that confidence allowed America to enjoy the greatest financing arrangement imaginable: running up a tab with no worries about paying it back, while we turn into entitled chickenshit cowards about equity markets because we feel like the Fed can, and always will, bail us out at the very first sign of trouble.

But there are little cracks appearing everywhere.

The dollar still dominates global reserves, so claims that it is about to disappear are nonsense. It represented 57.13% of disclosed foreign-exchange reserves in Q1 2026. But that’s down substantially from levels above 70% around the turn of the century.

Meanwhile, central banks can’t seem to get enough of the barbarous relic.

They bought 863 tonnes of gold in 2025 after three consecutive years of purchases above 1,000 tonnes. The World Gold Council’s 2026 survey found 89% of reserve managers expect global central-bank gold holdings to increase over the coming year, while a record 45% expect their own institution to buy more.

Apparently nobody told the world’s central bankers that gold is just a shiny rock. Also, as I’ve constantly talked about here with my friend Andy Schectman, something unusual has also happened at COMEX.

DBS data show roughly 289,000 gold delivery notices during the first nine months of 2025, versus approximately 119,000 during the same period of 2024…about 2.4 times as many. A delivery notice transfers title to deliverable metal; it doesn’t necessarily mean somebody immediately backs a Brinks truck up to the warehouse. But it is another indication of heightened demand for physical settlement.

Gold is moving. Central banks are buying it. Countries are repositioning it. And increasingly, they want to know exactly where it is and how quickly they can get their hands on it. All of which would be merely interesting if America’s fiscal situation weren’t simultaneously becoming absurd.

U.S. federal debt has now crossed $40 trillion, while some Treasury yields have reached their highest levels in nearly two decades. For some reason, it feels like 6% on the 10 year Treasury is looming closely….

The global bond selloff reflects several forces: inflation, huge government borrowing requirements, geopolitical pressures and expectations for interest rates. So it would be too simplistic to blame rising yields entirely on declining confidence in America.

But the bond market is sending Washington a message nonetheless: Money isn’t free anymore and something is horribly wrong with the status quo.

And that creates the problem I have been writing about for years. At $40 trillion of debt, higher interest rates produce higher interest expense. Higher interest expense produces larger deficits. Larger deficits require more borrowing. More borrowing creates more Treasury supply. And eventually investors demand still-higher yields to absorb it.

It’s a fiscal snake eating its own tail, except the snake has a Bloomberg terminal and an Excel spreadsheet that allows it to temporarily fuck with the numbers. There are only so many ways out. Washington could slash spending, dramatically raise taxes or…as Treasury Secretary Bessent suggested this week, somehow grow its way out of the problem. I’ll pause for laughter.

But my longstanding view is that eventually Washington chooses another solution: yield curve control.

We’ve done it before. Beginning in 1942, the Federal Reserve pegged Treasury bill rates at 0.375% and effectively capped long-term Treasury yields at 2.5%. Maintaining those rates required the Fed to buy government securities whenever necessary. Federal Reserve historians explicitly note that the policy forced the Fed to surrender control over the size of its balance sheet and money supply.

That is the endgame I continue to worry about. If the free market eventually demands 6%, 7% or 8% to finance America’s debt and Washington decides those rates are economically or fiscally intolerable, somebody has to buy the bonds at lower yields.

That somebody is the Federal Reserve. Call it yield curve control. Call it QE. Call it an “emergency market functioning facility” if you’d like to make it sound sufficiently boring for financial TV. It amounts to the same basic choice: suppress the cost of financing the debt and let the currency absorb some of the consequences.

And that is why these seemingly obscure gold stories matter. The Netherlands isn’t abandoning America. France isn’t declaring war on the dollar. Germany didn’t empty the New York Fed because it expected the apocalypse. Something subtler is happening.

Central banks are buying enormous quantities of an asset with no counterparty risk while increasingly emphasizing physical control, accessibility and geographic diversification. At the same time, America’s debt has crossed $40 trillion and the bond market is demanding increasingly expensive compensation to finance governments around the world.

The monetary system is a confidence game. This is why I focus my efforts on highlighting potential areas of the market that cannot be printed and can sidestep, or benefit, from inflation.

So when another American ally decides that, for the next crisis, it would prefer substantially less of its gold sitting in New York, I pay attention. They can call it diversification, crisis preparedness, or improved tradability.

These assholes in charge always have a wonderful vocabulary for avoiding the obvious. I just call it as I see it: taking chips of the table as you lose confidence in the U.S. financial system.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning, meaning if I’m long I could sell or if I’m short I could cover at any time.

Contributor posts and curated posts have been hand selected by me, but have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

I cannot guarantee the accuracy of any or all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional, which I am not.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things I’m bearish on. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

Also as of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions, mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

Again. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. Many times I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour.

Also, again I just straight up get shit wrong a lot. I mention it multiple times because it’s that important you understand.

Today’s piece is a portion of another sector I had never thought about before, but after spending some time reading about it yesterday, I am already interested and think it could deserve a closer look.

Read more

The following analysis breaks down the Fed balance sheet in detail. It shows different parts of the balance sheet and how those amounts have changed. It also shows historical interest rate trends.

Breaking Down the Balance Sheet

The Fed has quietly been doing Quantitative Easing since February. The pace of accumulation has slowed in recent months, and was even negative in August. When QE was turned back on, it was intended for purchases of Bills to keep liquidity high. As shown below, this is still happening with the Fed accumulating $29B of Bills in August. The net drop came from MBS and 5-10 year notes rolling off.

Figure: 1 Monthly Change by Instrument

Zooming out to 10 years and grouping the data by year shows the chart below. What you should notice is how quickly the Fed will un-do all the “hard work” in reducing the balance sheet during the next crisis. It took 4 years to reduce the balance sheet about $2.2T. However, in 2020, it took a few months to grow the balance sheet by $3T and 2 years to grow it by $4.5T.

So far this year, the Fed has increased the balance sheet by $90B. While this is a small increase relative to past years, it should be noted that the balance sheet is growing and not shrinking. This makes it harder for inflation to come down.

Figure: 2 Monthly Change by Instrument

The table below provides more detail on the Fed’s activities and its recent efforts to manage the balance sheet.

The biggest thing to notice is how the Fed has increased the holdings of Bills by $344B over the last year! That is an increase that should not go unnoticed. Why is the Fed focused on buying Bills? Bills are typically the most liquid asset in the Treasury issuance list, so it’s confusing why the Fed has stepped in for liquidity reasons.

Figure: 3 Balance Sheet Breakdown

The weekly activity can be seen below. It’s very obvious in this chart to see the continued buying of Treasury Bills each week.

Figure: 4 Fed Balance Sheet Weekly Changes

The chart below shows the balance on detailed items in Loans and also Repos. These were the programs set up in the wake of the SVB collapse. All of the programs have dropped down to zero at this point, but as mentioned above, the Fed would like to see more usage of the Repo market (Standard Repo Facility or SRF).

Figure: 5 Loan Details

Yields

Yields have been fluctuating within a band since Sept 2022, ranging mostly between 3.25% and 4.75%. That range was broken in June with 30-year rates breaking decisively over 5% and the 10-year breaking above 4.5%. This is why the Treasury has stepped into the market. They are seeing cracks in the bond market and it could have major implications.

Figure: 6 Interest Rates Across Maturities

The yield curve spread has also started to widen again which means investors are demanding more compensation for keeping dollars locked up for longer periods.

Figure: 7 Tracking Yield Curve Inversion

The chart below shows the current yield curve, the yield curve one month ago, and one year ago. Again, it is clear to see how the yield curve has started to steepen. This makes the Treasury’s job much harder.

Figure: 8 Tracking Yield Curve Inversion

Loss of Appetite for US Debt Abroad

Perhaps the most concerning thing is the dropping interest in US Debt internationally. Total holdings of US Debt has actually fallen from the $9.4T peak seen in Q1. While the US treasury issues ever more debt, it is a very bad sign to see foreign holders not stepping in to buy.

Note: data is updated on a lag. The latest data is as of June

Figure: 9 International Holders

The chart below shows a breakdown of the bigger countries. China’s US Debt holdings have fallen to $630B, a drop of $100B since last year. The UK now holds more US Debt than China does. Japan holdings have basically been flat for the last decade floating between $1T and $1.25T. The Japanese cannot turn into sellers or it would add even more pain. This is why the US has stepped into the currency market as well.

Figure: 10 Average Weekly Change in the Balance Sheet

Historical Perspective

The final plot below takes a larger view of the balance sheet. It is clear to see how the usage of the balance sheet has changed since the Global Financial Crisis. This also highlights the rapid increase and steady decrease. The Fed can never actually shrink its balance sheet back to the previous state, it just does minor reductions when it can before the next crisis blows it up again. Based on the trajectory of the Fed balance sheet, that next crisis might be closer than anyone thinks!

Figure: 11 Historical Fed Balance Sheet

Conclusion

Warsh has come in with a new message: after 5+ years, the Fed is ready to get inflation under control. That’s much easier to say than do. This is really a situation of math more than anything else. If the Fed raises rates then the government borrowing costs will continue to increase. That cannot happen. The only option is to keep rates flat or lower them. They just need the right excuse.

Warsh Vows No Excuses on 2 Percent Inflation

Federal Reserve Chairman Kevin Warsh used his Jackson Hole podium on Friday to draw a bright line around the central bank’s credibility, declaring that the long-promised 2 percent inflation goal on the Personal Consumption Expenditures (PCE) index is “a firm, fixed target.” Price stability, he said, “is not self-executing…it’s the Fed’s job to deliver stable prices, no excuses.” Investors took note as gold touched an intraday high near $4,612 per ounce on Thursday, a reminder that markets continue to hedge against the possibility that inflation remains well above the Fed’s comfort zone.

PCE inflation is running 3.7 percent year-over-year, with the six-month pace running above 4 percent. Even after cooling from post-pandemic peaks, 54 percent of the PCE basket has risen more than 3 percent in the past year, compared with a pre-COVID norm of 32 percent. Warsh said that the responsibility for “65 months of sustained elevated inflation” sits squarely with the central bank. Comparable Consumer Price Index data show the same stubborn pressure, a sign that price growth has not yet meaningfully improved.

Warsh called the labor market “broadly consistent with full employment.” Business investment in equipment and intangibles is advancing at a 9 percent clip, more than half of it tied to artificial-intelligence projects. S&P-listed firms have booked profit growth above 20 percent, leaving margins “quite elevated.” Corporate-bond spreads and leveraged-loan spreads trade near the low end of their historical ranges, while July’s Senior Loan Officer Survey flagged easier commercial-and-industrial loan standards.

Separately, Warsh addressed the Fed’s own communication practices. He warned that routine forward guidance can trap policymakers and market participants in a “Hall of Mirrors,” in which each side reacts to the other’s signals rather than to the underlying economy. He argued that short-term interest rates should remain the predominant tool of monetary policy, adding that balance-sheet experiments and other unconventional measures “should otherwise be used sparingly, if at all.” Referring to monetary traditions that predate quantitative easing, he said “money matters” and urged the Fed to watch the money created by both the central bank and the broader financial system.

Warsh also flagged artificial intelligence as a “new variable” that could influence productivity, noting that annualized token sales at the two leading AI labs already exceed $100 billion, an increase of more than 500 percent from a year earlier. Faster productivity could help contain prices over time, though the pace of AI-related investment has raised questions about overheating, a concern also visible in gold’s recent ascent.

Whether the Fed can tame prices without another round of unconventional policy remains to be seen. For now, investors appear to be hedging against that uncertainty by continuing to hold and buy gold, an asset that has weathered inflation and downturns for decades.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning, meaning if I’m long I could sell or if I’m short I could cover at any time.

Contributor posts and curated posts have been hand selected by me, but have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

I cannot guarantee the accuracy of any or all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional, which I am not.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things I’m bearish on. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

Also as of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions, mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

Again. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. Many times I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour.

Also, again I just straight up get shit wrong a lot. I mention it multiple times because it’s that important you understand.

Before I get into today’s idea, let me remind readers that I believe there is a very real chance that the AI boom could be coming to an end later this year and into early next year.

I detailed my thoughts on why the AI boom could end in an article called “The Real AI Crash Will Start This Year” that I published two weeks ago.

I supplemented this piece with another article last week called “8 Sharp Bear Cases You Must Read Today”, which explores almost all of the possible reasons I can think of to be bearish on the stock market today.

I suggest reading both of these pieces carefully and keeping in mind that today’s article is a very first look into a sector that may or may not ever catch on in the US and will likely be highly dependent on AI’s continued expansion as a catalyst to flourish.

Having said that, if you’re still bullish on the AI build out and the market at this point, there’s an emerging theme that may be under-noticed and worth a look.

Read more

Maj is from the Peter Lynch school of investing. For 7 years working at his office, I listened to Maj quote Peter Lynch non-stop and try to emulate his strategy of getting 6 or 7 names out of 10 right and aiming for multi-baggers…stocks that can hopefully double, triple, etc. over time.

The last name from Maj I pointed out this summer is down about -5% from the time I published but it still remains on my speculative bullish watchlist, where I have also added today’s name.

Prior to that, a call I highlighted from Maj back in April is about even and, back in March, I had identified three other names Maj pointed out to me. One is down about -5% since January of this year when it was first highlighted, one is up about +42% from the March article, and the third is up just about +157% as of Friday pre-market.

Today, Maj has offered a new name for me to watch that I wanted to share with my subscribers. I’ve read this thesis and to me, it seems like it could have promise. And it’s in an industry I’m bullish on to begin with.

But as always, this is not financial advice, readers are advised to consult their financial advisors and the information is just being provided for research purposes. Read my full disclaimer below.

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The story centers on a man named Daejon Love who, according to federal prosecutors, allegedly spent years convincing women that he was a professional football player for the San Francisco 49ers when he wasn’t.

Not trying out for the 49ers. Not once affiliated with the team. Not played professionally somewhere else and exaggerated the details. He convinced women that he was an actual NFL player for one of the most famous franchises in American sports when we wasn’t.

Yes. You read that right. In an era in which the entirety of all human knowledge is accessible from a 6 inch by 2 inch rectangle sitting in literally everyone’s front pocket, this 35 year old allegedly constructed an elaborate fictional life around himself that everyone believed and no one took the time to fact check. He did it by, among other things, carrying a 49ers helmet and gear around with him and wearing them…no matter how absolutely fucking ridiculous it looked…all the time.

He even had a 49ers birthday cake made with his name on it and apparently created a video of himself “signing” with the team. He carried the helmet everywhere, including to the beach, where he filmed himself running some of the worst wide receiver routes ever captured on camera while some rando with a vermicelli noodle for an arm underthrew him passes as he lumbered around full sized telephone company construction cones set up on a beach.

Eventually, according to reporting on the FBI investigation, Love’s fake online footprint became convincing enough that search engines and artificial intelligence occasionally helped perpetuate it. AI started listing him as a professional NFL wide receiver when he wasn’t.

I couldn’t help but read the story yesterday and realize it is a perfect analogue to our modern stock market. You don’t have to be an actual NFL player anymore. You just need the helmet, the jersey, some followers, a few pictures standing next to expensive shit and enough people repeating the story. Eventually an algorithm looks around, sees that everybody else appears to believe you’re an NFL player and concludes that you must, in fact, be an NFL player.

Look, many of today’s big name stocks are exceptional businesses generating actual free cash and net income. Just like Jerry Rice used to actually make his way onto the field and catch actual passes in real NFL games.

But there’s also a growing number of Daejon Love companies in today’s market, because somewhere along the way Wall Street decided that actually turning a profit no longer mattered. If Jerry Rice is a fat free cash flow yield, Daejon Love is the 10-K of a company posting massive losses while pointing to its revenue, narrative and bullshit future projections instead of its net income and capital needs.

Nowadays, revenue can be projected decades years into the future and slapped with a multiple that would have gotten you involuntarily committed in 1995.

Revenue projections are faking you’re an NFL player when you’re not. Like with Daejon, narratives get you “investors”. If you’re a 35 year old dipshit pretending to be someone else with all your free time instead of working an actual job for a living, revenue projections get you laid under false pretenses by women who’d never want to talk to you otherwise.

Net income, on the other hand, is terribly inconvenient. The line of thirsty women dries up quick when it comes down to profit and loss. The second that reality starts inching into the picture, you become the guy no one can stand or wants to talk to.

The modern market would much rather hear that revenue grew 48% than that you lost $2 billion last year.

Nowadays, when investors ask, “Did the company actually make any money?” analysts respond, “Why are you being so negative? Revenue grew 48%!”

When investors ask, “Okay, but did free cash flow grow?” analysts respond, “You’re missing the opportunity. Revenue grew 48%.”

When investors ask, “How much capital expenditure did it take to generate that growth?” analysts respond, exasperated, “This guy just doesn’t understand AI. Revenue. Grew. 48%.”

This is essentially the Daejon Love method of equity valuation: don’t ask whether I play for the 49ers. Just look at my helmet.

Federal prosecutors say Love and his alleged accomplice, Taylor Jamie Chan, built an elaborate system designed to convince women that Love was extraordinarily wealthy. Fake investment accounts were allegedly displayed. Chan allegedly played the role of Love’s successful financial adviser. Three way FaceTime calls reportedly showed supposed investment gains. The government says at least 26 women ultimately sent approximately $1.3 million.

The appearance of wealth established credibility. Credibility attracted money. The incoming money helped finance the appearance of wealth. That appearance attracted additional money. Every additional participant therefore helped validate the story for the next participant. Daejon invented the public relations department of a Ponzi scheme.

The stock market has developed its own similar loop. A company projects enormous future revenue, investors bid up the stock, and the higher valuation gives the company access to more capital. It raises money, makes acquisitions, increases spending, and uses its expensive stock as currency to generate the growth needed to justify its valuation. That growth pushes the valuation higher, allowing the cycle to repeat. In effect, the company is trying to grow into a valuation that is itself financing the growth. It works until the market stops providing cheap capital, the promised cash flows fail to materialize, and the entire loop begins to reverse.

This is when everyone in the world discovers you don’t play for the 49ers.

This is what makes the Love story such a wonderful metaphor. Again, Love’s fabricated internet presence became substantial enough that Google searches and AI generated results occasionally identified him as an actual 49ers player. The internet had effectively begun marking his bullshit to market. He could point toward the search result and say, effectively, don’t take my word for it. Google says I’m an NFL player.

Wall Street does this every day. Don’t believe the narrative? Look at the stock price. Don’t believe the stock price? Look at the market capitalization. Don’t believe the market capitalization? Look at the revenue growth. Don’t believe the revenue growth? Look at total addressable market. Don’t believe total addressable market? Look at the analyst price targets.

Why did the analysts raise their price targets? Because the stock price went up. Excellent. Due diligence complete. Look at the fucking helmet.

Then, at some point nobody remembers which piece of evidence was originally supposed to independently validate which other piece of evidence. The machine is simply validating itself.

This isn’t entirely irrational. Rapidly growing companies should often prioritize expansion over maximizing near term profits. Amazon famously spent years reinvesting enormous amounts of money into its business. Many of the greatest companies in history would have been badly misunderstood if investors had looked exclusively at current year earnings.

But Wall Street has taken a reasonable idea and, as Wall Street tends to do, driven it directly through the guardrail. Remember WeWork’s “Community Adjusted EBITDA”?

We have entered an environment where investors can seemingly forgive almost anything if the revenue chart points northeast. No profits? Growth company. Negative free cash flow? Investing for the future. Massive stock based compensation? Noncash expense. Enormous capital expenditures? Building the infrastructure for the future. Constant dilution? Funding growth. Acquisition spending? Expanding the platform. Adjusted EBITDA? Now we’re talking.

This becomes especially entertaining when discussing AI. The AI revolution is real. The demand is real. The infrastructure buildout is real. The revenues are real. And some of the companies supplying the boom are producing extraordinary amounts of actual free cash flow and net income.

But the market doesn’t stop with those companies. It takes the legitimate economics at the center of the boom and radiates them outward. The chip company makes enormous profits, therefore the data center company deserves a giant multiple. The data center company is growing rapidly, therefore the electricity provider deserves an AI premium. The electricity provider needs generation, therefore nuclear is an AI trade. Nuclear needs uranium, therefore uranium is an AI trade. Data centers need cooling, so cooling is an AI trade. They need copper, so copper is an AI trade. They need buildings, so buildings are an AI trade. They need financing, so private credit is an AI trade.

Eventually the non-English speaking man on an e-bike from Senegal delivering the DoorDash lunch to another man responsible for emptying the portable shitters at the construction site of a data center will soon trade at 28x revenue himself…because he has “exposure to the AI infrastructure ecosystem.”

This is how things lead up to a crash.

Once the narrative attaches itself to a company, investors begin valuing revenue differently. Revenue is where imagination lives. Net income is where imagination goes to die. Free cash flow is worse because it asks the deeply antisocial question of whether shareholders will ever actually receive any money.

You can build magnificent valuation models when you don’t concern yourself with that detail. Take a company with $1 billion in revenue. Assume the addressable market is $100 billion. Assume it captures 20% of that market. Assume 30% margins once it reaches scale. Assume the market continues paying a premium multiple in 2032. Discount everything back using whatever rate produces the number you wanted before opening Excel. Congratulations. Your $15 billion company is worth $60 billion.

Valuation increasingly seems to work the same way. A company worth $20 billion can look speculative. At $50 billion, it becomes interesting. At $100 billion, institutions start paying attention. At $250 billion, analysts explain why it has a defensible moat. At $500 billion, portfolio managers explain why they have to own it. At $1 trillion, CNBC installs a permanent camera outside headquarters. At $2 trillion, somebody explains that you’re thinking too small. At $4 trillion, the valuation itself becomes part of the bull case. Obviously the market wouldn’t value it at $4 trillion if it weren’t worth $4 trillion. Right?

Price creates legitimacy. Legitimacy attracts capital. Capital pushes up price. Price creates more legitimacy. It’s the custom 49ers helmet of finance.

And if the stock gets there before the earnings do, simply extend the forecast another five years. Again: look at the jersey. Don’t ask who’s wearing it.

But when someone asks Daejon to suit up on Sunday? That’s where things get interesting. And that day is coming for the market and AI eventually…

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. I cannot guarantee the accuracy of all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

Now, eight months into running the city, Mamdani appears to have made an ironic discovery: He needs people who know how an economy actually works to help him.

On Thursday, the mayor announced a 15 member Business Advisory Council, declaring that “the doors of City Hall are always open to New York’s business leaders.” How gracious. Apparently someone finally explained to the mayor that the people who build companies, employ New Yorkers, invest billions of dollars and generate enormous amounts of tax revenue might be worth having a chat with before he finishes chasing them out of town.

The problem, of course, is that Mamdani has spent much of his political career giving those same people reasons to wonder whether they should walk through City Hall’s newly opened doors or simply leave New York as quickly as possible in favor of tax and business friendly states like Texas and Florida.

This is the mayor who embraced the standard progressive fantasy that rich people and successful businesses are basically permanent pieces of municipal furniture, put there only for the good of the elected officials in charge to carry out whatever circus of an agenda they can fantasize while wearing a beret and typing out a PowerPoint slide titled “My Version of Utopia” at a Brooklyn coffee shop. The prevailing sentiment was that the rich can be taxed, squeezed and insulted indefinitely and, for some mysterious reason, will never change their behavior.

In just 8 months, Mamdani met reality.

Capital moves. Wealthy taxpayers move. Businesses reconsider investments. Entrepreneurs decide that perhaps their next store, office or headquarters would be easier to open somewhere that does not regard their success as evidence of a crime. Every dollar of investment that leaves New York is a dollar Mamdani cannot tax to pay for the enormous pile of shit he made back when governing consisted mostly of speeches, slogans and finding new things to declare “free.”

Even his government grocery store fantasy has encountered the annoying problem of actual grocery stores. Local operators have objected to the prospect of competing against stores backed by the city government and taxpayer money.

Who could possibly have anticipated that businesses might dislike being forced to finance their own government subsidized competition?

And so, like a college freshman majoring in Economics who has instead spent half the semester smoking pot, writing poetry and playing “Lesbian Seagull” on acoustic guitar in the park, Mamdani is now in a rush…looking for people who actually know the material.

Enter the Business Advisory Council. According to New York magazine, the council includes figures such as former Blackstone COO Tony James, tech investor Kevin Ryan, RXR’s Scott Rechler and former UBS Americas CEO Robert Wolf, along with entrepreneurs and executives from several other industries. These are, in other words, people familiar with the obscure concepts of investment, payrolls, risk, revenue and making sure more money comes into an enterprise than goes out.

Former Partnership for New York City CEO Kathryn Wylde called the council an important “sounding board” that could give Mamdani advance warning when concerns are developing in the business community. She also suggested that better communication could prevent “a repeat of the Ken Griffin video,” referring to Mamdani’s stunt outside the hedge fund billionaire’s penthouse announcing his proposed pied à terre tax. No shit.

That is an extraordinary recommendation when you think about it. One purpose of the mayor’s shiny new council is apparently to have successful adults nearby who can tell him when he is about to do something stupid.

This is sad. But this is progress.

Successful cities do not merely need businesses after politicians finish writing policy. They need politicians who understand how businesses will react before writing it. People respond to incentives. Investors respond to risk. Businesses respond to costs. Taxpayers respond to taxes. This is not some dark Koch brothers conspiracy or secret lesson taught at Davos. It is Economics 101.

Raise the cost of doing something and eventually people do less of it. Make New York dramatically more expensive or hostile to investment and some investment will go somewhere else. Treat affluent residents primarily as stationary revenue sources and eventually some of them discover that airplanes exist and land in Miami occasionally.

A government is perfectly entitled to dislike those reactions. It just cannot repeal them.

There is also evidence that Mamdani’s sudden friendship offensive is not exactly causing titans of industry to stampede toward City Hall. New York magazine reports that the council includes no active executives from household name technology companies or top financial firms such as JPMorgan Chase, Citigroup or BlackRock. One business leader told the magazine that five major CEOs declined invitations.

“I know of five major CEOs who said ‘no,’ so this was not the group that they initially targeted,” the source said.

Apparently the doors of City Hall are open. The problem is getting people to come inside.

Even some of Mamdani’s most prominent critics welcomed the outreach. Billionaire John Catsimatidis called the council “a step in the right direction.” Partnership for New York City CEO Steven Fulop said any attempt by the mayor to solicit input from business leaders is positive, although he also dismissed a council that meets quarterly as a “performative board.”

They are right that reaching out is a good idea. In fact, it is such an obviously good idea that it raises an awkward question for Mamdani: Why did a politician whose entire agenda depends upon extracting gigantic amounts of money from New York’s economy need eight months in office to discover that perhaps he should listen to the people responsible for producing much of it?

That question gets to the larger problem with Mamdani’s politics. His worldview tends to treat economic outcomes as political choices. Housing is expensive? Government can make it cheap. Groceries are expensive? Government can open stores. Child care is expensive? Government can provide it. Taxes are not producing enough money? Find somebody richer and tax him more. Apparently somewhere beneath City Hall is a giant money faucet that previous mayors were simply too cowardly to turn on.

Every problem has a government solution, every government solution requires more money and the answer to where that money comes from is always some variation of “rich people.”

But governing has a nasty habit of introducing politicians to the second half of every policy proposal: Then what?

Tax wealthy residents and then what happens when some of them leave? Raise the cost of doing business and then what happens when businesses invest elsewhere? Open government grocery stores and then what happens to the private grocers expected to compete against City Hall? Promise billions of dollars in new spending and then what happens when the tax revenue required to pay for it fails to materialize?

Campaigns are wonderful places for fairy tales because consequences have not arrived yet. Governments are where the invoice shows up.

Mamdani may finally be beginning to understand that. If so, good. New Yorkers should hope the council succeeds because a mayor capable of learning from reality is considerably better than one determined to lose an argument with it.

But nobody should confuse the correction with vindication of the original course. The creation of this council is, in its own small and hilarious way, an admission. The capitalist class Mamdani spent years treating as something between a nuisance and an ATM turns out to possess something City Hall desperately needs besides money.

Knowledge. They know what makes businesses expand and what makes them leave. They understand investment, costs, incentives and risk. They know that wages ultimately have to be paid by something, that revenue must exist before government can tax it and that wealth must be created before politicians can redistribute it.

These are apparently startling revelations at Mamdani City Hall.

The socialist mayor came into office promising to remake New York’s economy. Eight months later, he is assembling a room full of capitalists to explain to him how that economy actually works.

Call it the Business Advisory Council if you want. It looks a lot more like Mamdani begging any adults in the room for help.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. I cannot guarantee the accuracy of all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

I thought it would be a great supplement to my recent piece on why I think the AI crash could start as soon as this year:

In his note, Doug makes it clear that he believes the funding cycle for artificial intelligence may already have peaked. Doug thinks that one of the clearest signals is the apparent urgency with which OpenAI and Anthropic are moving toward the public markets.

After years in which AI companies enjoyed abundant private capital, rapidly rising valuations, enormous strategic investments, and relatively little quarterly financial scrutiny, the obvious question is: Why the rush to go public now?

Read more

Let’s throw out a hypothetical and talk about what I’d buy if I could only buy one stock or ETF with a 10 year investment horizon. I’ll lay out my reasoning and the risks so that readers can decide whether or not it makes sense to them. Today I wanted to talk about my favorite investment in the world right now.

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He has a knack for finding opportunities where others aren’t looking, blending a sharp macro perspective with a pragmatic investor’s mindset.

In his latest, he writes about inflation and nominal GDP growth. I know my subscribers will benefit from his perspective and wanted to share it with you all this morning.

What is Inflation?

What exactly is inflation? We’ve all been told it’s bad, and we all get annoyed with things increasing in price. Economists intuitively understand that it’s the lagged effect of money printing, but is it that simple?

When stocks go up in value, is that inflation? What about when homes appreciate? No, those are financial assets, even if homes are technically durable consumer goods. For some reason, this is a good thing, even when it prices many people out of homes. What about when wages go up? Is that inflation? No, that’s also a good thing, except when wages go up too fast, then it’s a bad thing because it squeezes corporate profit margins, even though real wages have lagged corporate profits for decades. What about when an airline raises ticket prices? Is that inflation? No, that’s a sign of economic strength where demand is pushing prices higher, so it’s also a good thing, unless you’re shopping for a flight at that moment—in which case it’s inflationary. What about when the price of beef goes up? That has to be inflation? Except, we understand that many ranchers, and most abattoirs are currently losing money, even at currently elevated beef prices. As a result, we grudgingly accept it, without asking why these businesses cannot earn a profit at all-time high beef prices. What about when the price of gasoline goes up? For some reason, gasoline is where we draw the line. As a rule, we all universally agree that higher gas prices are a terrible thing. Except, how is this any different from airlines seeing increased demand, and getting pricing power? Besides, it’s not like oilmen are having it much better than ranchers over the past decade.

Inflation is a funny thing culturally. There’s good inflation, inflation we sort of accept, and then bad inflation. It’s odd, because these are all different forms of inflation, but our collective reaction function is quite different.

Let’s take a step back and think abstractly about inflation.

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As many have already pointed out, there was something almost too neat about Citadel’s timing before the Situational Awareness blowup. In late June, Citadel Securities published a market-structure review warning that U.S. equities had become unusually concentrated, that investors were increasingly expressing bullishness through leverage, and that leveraged exposure was piling particularly aggressively into technology and semiconductors. They also warned of a rate hike possibility.

Leveraged ETF assets had reached roughly $218 billion; semiconductor exposure in those products was up 175% since the end of March. Financing was getting more expensive too. It was not a prophecy about one hedge fund, but it was a pretty good description of the tinder.

Then July supplied the match. Situational Awareness, the spectacularly successful AI fund run by Leopold Aschenbrenner, got caught in the semiconductor selloff with a leveraged and concentrated book. Its portfolio fell 67% in July. Margin pressure followed, most of the public-equity portfolio had to go, and the fund that had looked like a genius machine suddenly discovered one of finance’s oldest technological breakthroughs: the margin call. Aschenbrenner did what, in my opinion, all market cowards unable to accept responsibility do: blamed short sellers.

The interesting bit is who showed up with a checkbook after. Citadel, Ken Griffin’s hedge fund, bought most of Situational Awareness’s roughly $16 billion public-equity portfolio. Some positions were acquired at discounts of more than 10%. Within weeks Citadel had already eliminated more than 80% of the aggregate risk it had taken on, including through nearly 100 block trades worth more than $4 billion. Citadel gained roughly 6% in July while quite a few AI tourists were discovering the difference between conviction and collateral.

To be precise, Citadel Securities and Citadel the hedge fund are separate businesses. There is no evidence that Citadel Securities issued its market-structure warnings because Citadel wanted Situational Awareness’s assets on the cheap. That would be a much more exciting story, unfortunately requiring the minor inconvenience of evidence.

But it’s definitely worth…noting. And that’s what this piece is about. You don’t need a conspiracy theory to notice the lesson. Citadel Securities warned that a particular market structure was fragile. That structure cracked. Forced sellers appeared. Citadel then had the balance sheet and trading machinery to buy what those sellers could no longer hold. The warning and the purchase did not appear to be contradictory. They looked to me to be two different moments in the same trade. But there’s no evidence of that.

Still, that makes it worth remembering now that Citadel Securities is warning about the Treasury market. Its latest note, “Hard Choices,” attacks Scott Bessent’s expanded buybacks of long-dated Treasury securities, describing them as “financial repression at the margin.” The argument is that Treasury is trying to lean against long-term yields without addressing the reasons those yields are high in the first place: deficits, inflationary pressure and an economy already running hot enough to make additional easing questionable.

Citadel’s argument is straightforward. If policymakers prevent the adjustment from happening through lower bond prices and higher yields, the pressure does not politely disappear. It goes looking for another door. Citadel thinks that door may be the dollar: constrain the adjustment in Treasuries, weaken the currency instead, loosen financial conditions, import some more inflation, and congratulate yourself on having successfully moved the fire from the kitchen to the living room.

Read literally, this is a warning against long-duration Treasuries. But after Situational Awareness, I feel like there should be another way to read it. Maybe the most useful question is not whether Citadel is right that bonds are vulnerable. Maybe the useful question is what happens if Citadel is right enough to create the kind of price Citadel would eventually want to buy bonds at…

That is the distinction Wall Street macro commentary regularly obscures. “This market is dangerous” is not remotely the same statement as “this asset will be unattractive at every price.” A 30-year Treasury at one yield can be an awful proposition. The same instrument after a violent liquidation and another hundred basis points of yield is literally a different investment.

Suppose Citadel is correct. Treasury intervention fails to resolve the fiscal problem. Long yields rise and bond funds take losses. Leveraged players reduce positions, risk managers demand smaller books, and everyone who was reaching for duration six months earlier suddenly explains that they were always fundamentally a cash investor. At some point the sellers stop being people with opinions and become people with instructions. That is usually when the interesting buyers arrive.

That was the interesting part of Situational Awareness. The warning “leverage and concentration are dangerous” ultimately led not to “never own these assets,” but to a moment when somebody very sophisticated was delighted to own them at somebody else’s distressed price. This is the way investment-bank macro should be read: not backwards in the childish sense that Goldman says buy, therefore sell, but structurally backwards. If this thesis becomes consensus, what positions does it create? What liquidation could it eventually force? And who gets the much better entry after everybody obeys it?

There is a mildly uncomfortable possibility here. A macro analyst can be completely sincere, analytically correct and still produce a conclusion that eventually becomes most valuable in reverse. “Bonds are vulnerable” can eventually mean bonds are becoming cheap. “The dollar is doomed” can eventually produce a very crowded short. “Credit is too tight” can cause spreads to blow out until lending becomes attractive. Markets are annoying that way. They insist on changing the price after everyone agrees on the story.

You cannot prove that an investment bank secretly believes the opposite of what its strategist publishes, and in most cases that is probably the wrong framing anyway. Giant financial firms do not possess one brain and one position. The research desk, market maker, trading desk, clients and asset-management businesses can all have different exposures simultaneously. Asking “what does Goldman really believe?” is often like asking what all of New York City thinks about lunch.

But the broader lesson goes well beyond Citadel, Goldman, JPMorgan or any particular investment bank. And the lesson applies to not just macro, but also sell side equity research: trust no one on Wall Street. Not because everyone is lying. That would actually make things easier. The problem is that everyone is talking from somewhere. Everyone has a book, a mandate, a time horizon, clients, incentives, constraints and a definition of risk that may bear almost no resemblance to yours. The billionaire telling you an asset is dangerous may be able to withstand a 40% drawdown that would liquidate you. The bank telling you something is attractive may be simultaneously financing the people selling it. The hedge-fund manager predicting disaster may simply be describing the event that would give him his dream entry price.

And don’t be hypnotized by the number of zeroes involved. Managing $10 billion does not make somebody ten times more correct than somebody managing $1 billion, and working at an institution overseeing trillions does not confer access to the tablets from Mount Sinai. Large institutions possess extraordinary data, talent and market access. They also produced Long-Term Capital Management, the mortgage crisis, Archegos, countless consensus trades and enough catastrophic “research notes” to fill the East River. Capital is evidence that somebody has successfully accumulated or attracted capital…it is not a certificate of omniscience.

The correct response is not cynicism for its own sake. It is independence. Listen to everyone precisely because you trust no one. Go ahead, read Citadel and Goldman. Read JPMorgan, the Fed, the bears, the bulls and the lunatics on X. Hell, read it all. That’s why you’re reading this after all, right? Then, steal their facts, inspect their arguments, understand their positioning where you can, and then make the irritatingly adult decision yourself.

Because the most important question in markets is rarely “Who is right?” It is: right about what, at what price, over what time horizon, with how much leverage, and with whose money? Two investors can hold opposite positions and both make money because their constraints are different. Two investors can believe exactly the same thesis and one can go bankrupt because he borrowed too much to express it.

I read Citadel’s Treasury warning carefully. They may be exactly right about the underlying problem. Long-term yields may need to rise. Treasury buybacks may merely relocate the pressure. The dollar may ultimately have to absorb some of the adjustment. But then read the warning again and ask the question Situational Awareness makes impossible to ignore: if this goes badly enough, who is waiting to buy?

Trust no one. Do your own work. And whenever Wall Street tells you what you should desperately want to sell, at least ask what price would make Wall Street delighted to buy it from you.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. I cannot guarantee the accuracy of all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

I was only a few days into my role at AIER when Pete Earle penned “$34 Trillion and Climbing” in January 2024. Six months later, he published “$35 Trillion—and Counting” on July 31, 2024. Now, just two years and 18 days later, gross federal debt passed the $40 trillion mark on August 18, 2026. Although the debt held by the public (gross federal debt minus intragovernmental holdings) is “only” about $32.3 trillion, both measures indicate a clear warning: America’s fiscal institutions need serious reform.

Perhaps more concerning than the number itself is how little attention the milestone received outside those already interested in the subject. That indifference is perhaps unsurprising. For the average American, daily life appears (at least on the surface) to have changed relatively little, despite doomsday predictions that frequently accompany national debt headlines. Historic debt markers come and go, and somehow the sky has yet to fall and we all must still get up and go to work in the morning.

The rising debt nevertheless deserves attention, because the underlying fiscal trajectory threatens our standard of living and is compounding the affordability pressures Americans already face. Those who care about the national debt, however, should avoid the doomsday rhetoric. Every uneventful milestone we pass makes exaggerated warnings easier to dismiss and the case for serious reform harder to sustain.

Apocalypse Now?

Nothing economically decisive happened when the gross debt moved from $39.99 trillion to $40 trillion. There is no magic number at which the US suddenly becomes insolvent. The Congressional Budget Office has long acknowledged that no identifiable debt-to-GDP “tipping point” can reliably predict whether or when a fiscal crisis will occur.

Debunking an imminent catastrophe should not be confused with defending the status quo. The relevant question is whether current policy leaves the country more prosperous and financially capable a decade from now. CBO projects that debt held by the public will rise from 101 percent of GDP in 2026 to 120 percent in 2036, exceeding the postwar record. Over the same period, the annual federal deficit is projected to grow from $1.9 trillion to $3.1 trillion.

Those figures reflect a structural imbalance. Under current law, federal spending is projected to remain persistently higher than federal revenue. Economic growth may narrow that gap, but CBO does not project growth sufficient to close it.

This is a very different concern from imminent bankruptcy. A fiscal crisis might never arrive on a predictable schedule. The more probable danger is a gradual erosion of economic growth, household purchasing power, and the government’s freedom to respond to future challenges.

As Pete himself wrote back in the halcyon days of 2024 and a $34 trillion national debt, “Too much credibility has been squandered on the futile endeavor of predicting fiscal tipping points.” Instead, he recommends, and I concur, that the better strategy is explaining the effects of unsustainable debt on the average person.

What $40 Trillion Actually Means for You

The national debt did not single-handedly make housing, cars, groceries, or healthcare expensive. Prices and borrowing costs reflect monetary policy, relative price changes, and productivity among other factors.

Still, persistent federal borrowing can intensify affordability problems through several channels.

First, the federal government competes with private borrowers for capital. When the Treasury issues more debt, some savings that might otherwise finance homes or business expansion instead are crowded out to finance government spending. As Nobel Prize-winning economist James M. Buchanan stated, this is “in effect chopping up the apple trees for firewood, thereby reducing the yield of the orchard forever.” Greater federal borrowing can put upward pressure on interest rates, although it is only one of many forces affecting credit markets.

Recent events illustrate both the connection and its complexity. On August 19, the Treasury announced that it would at least double the size of its buybacks of 10- to 30-year securities, from $2 billion to $4 billion per operation. The announcement was followed by a decline in long-term Treasury yields, temporarily relieving some of the pressure that high government borrowing costs place on mortgages and other private credit.

The buybacks did not reduce the national debt because that was not the goal. They were intended to improve liquidity in parts of the Treasury market, but they may also complicate monetary policy. If Treasury actions push down long-term borrowing costs while the Federal Reserve is trying to restrain inflation, fiscal debt management and monetary policy can work at cross-purposes.

At the margin, higher government borrowing can make mortgages, car loans, and business credit more expensive. For families already struggling to purchase a home or replace a vehicle, even a modest increase in financing costs matters.

Second, weaker private investment can slow wage growth. Businesses increase worker productivity by investing in technology, properties, and employees. When less capital flows toward those investments, workers produce less than they otherwise would and their compensation grows more slowly. That cost is nearly impossible to observe directly. It appears as a business that does not expand, a job that is never created, or a raise that never materializes.

Third, persistent deficits can add inflationary pressure under some economic conditions. Debt does not automatically produce inflation, and $40 trillion does not mean hyperinflation is around the corner. It does, however, increase the temptation for Congress and the White House (regardless of which party is in power) to pressure the Fed to accommodate expansive fiscal policy by purchasing Treasury debt.

The debt’s clearest present cost, however, appears right in the federal budget. Net interest payments cost taxpayers more than $970 billion in fiscal year 2025. Put another way, for every dollar the federal government spent in FY 2025, 13.5 cents went to net interest payments. That’s more than defense spending (5.5 cents) or income security programs (12 cents).

Those interest payments highlight a serious budgetary trade-off. A dollar spent servicing past debt cannot simultaneously finance an agency, reduce a tax, or prepare for the next emergency.

For the average American, that does not mean receiving a bill labeled “national debt.” It means future lawmakers will have less room to fund core services of government, reduce taxes, or respond to new priorities.

They will eventually have to choose between spending cuts, higher taxes, higher inflation, or some combination of the three. They arrive through a slightly more expensive mortgage, slower wage growth, higher taxes, or a weaker dollar. None resembles an apocalypse. Together, however, they can materially lower Americans’ living standards.

Pain Delayed Is Pain Multiplied

Government must be able to borrow during wars, recessions, and genuine emergencies. The problem becomes financing recurring regular commitments and structural deficits with debt.

The unprecedented level of debt does not automatically prevent the government from responding to another crisis, but it makes any response more expensive and adds to an already large net interest burden. Lawmakers and financial markets might also become less tolerant of aggressive emergency borrowing.

Fiscal space matters most when the country suddenly needs it. Using that space to finance routine deficits leaves less room for the unexpected.

Delay also changes who bears the cost. Current voters receive the benefits of government spending and tax reductions while future taxpayers, whether ourselves in the future or future generations, inherit the obligation to restore balance.

The longer policymakers wait to stabilize the debt, the larger the eventual tax increases and spending cuts must be. The consequences of delay will also fall disproportionately on younger and lower-income Americans.

Interest compounds financially and delays compound politically. Every year without reform creates new beneficiaries, new expectations, and new commitments. Policies that could have been adjusted gradually become more difficult to change.

Early reforms can be phased in while late reforms are more likely to be abrupt. They arrive when interest costs have already narrowed the available choices and when households have less time to prepare.

That is why the appropriate alternative to complacency is not panic-driven austerity. Sudden tax increases or indiscriminate spending cuts can result in disruption and political backlash. The goal should be a credible path that begins soon, proceeds at a steady pace, and stabilizes debt relative to the economy.

The longer reform is postponed, the more disruptive it is likely to become.

Toward a New American Fiscal Constitution

A new fiscal constitution means durable rules governing how government makes financial commitments, pays for them, departs from ordinary constraints during genuine emergencies, and then returns to them once the emergency subsides.

The status quo divorces those decisions. Congress authorizes spending and taxes first, then confronts the resulting borrowing through conflicts over the statutory debt ceiling. This limit, however, fails to control fiscal policy. Elected officials threatening to not raise the debt limit merely risks default, rather than affecting commitments already made.

An effective fiscal constitution starves the beast of both revenue and responsibility. Fiscal rules such as a Taxpayer Bill of Rights (TABOR), Swiss Debt Brake, or a BRAC-style commission for federal spending could help constrain how much a government taxes and spends. Limiting the government’s scope of authority helps prevent policymakers from finding workarounds to budget rules through regulation or accounting gimmicks.

Pessimism, however understandable, is unproductive. Americans went to work the morning after the debt crossed the $40 trillion mark. We will probably do the same when it reaches the current $41.1 trillion limit. The costs will instead emerge gradually through higher interest expenses, tighter budgets, weaker investment, and less capacity to respond to crises.

The danger is that every uneventful milestone will make the next trillion dollars seem normal. The sky does not need to fall for the debt to matter.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. I cannot guarantee the accuracy of all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

Not because the bears are always right. Usually, they aren’t. Bull markets can run much further than skeptics expect, and betting against technological change has destroyed plenty of smart investors.

But the best bears force you to ask the questions everyone else has stopped asking. Hopefully, most of my readers understand that this is one the main points of this entire blog…sharing my ideas that would generally fall on deaf ears to the herd.

But it’s not just me now.

In 2026, some of my favorite investors I follow are raising unusually serious questions…about AI spending, private credit, government debt, interest rates, valuations and the increasingly fragile foundation underneath this bull market.

What’s fascinating is that they aren’t all making the same argument. I found this interesting so I thought I’d combine them all here for you to get a broad spectrum of all the possible “blind spots” that the mainstream financial media doesn’t cover.

Read more

It is common for commentators and economists to refer to something called the “economy,” which sometimes performs well and, at other times, poorly. The “economy” is presented as an entity apart from individuals. Within this framework, the “economy” is assigned paramount importance, while the role of individuals is barely mentioned. It must be realized that, at no stage, does the so-called “economy” have a life of its own, independent from individuals.

According to this way of thinking, the “economy” produces goods and services. Once the output is produced by the “economy,” what is required is its distribution among individuals in the fairest way.

In reality, goods and services are not produced in totality. Every individual is preoccupied with his own production and consumption of goods and services. Consequently, there is no such thing as the total real national output. Furthermore, it is not possible to establish the total real output given that, arithmetically, we cannot coherently add potatoes to tomatoes (i.e., heterogeneous goods). All that we could establish is the numerical amount of money spent on goods and services (i.e., the monetary turnover). The employment of the average price metric to convert the monetary turnover into the real output does not solve this issue since the average price cannot be meaningfully established.

For example, suppose two transactions are conducted. In the first transaction, one loaf of bread is exchanged for $2. In the second transaction, one gallon of milk is exchanged for $1. The price, or the rate of exchange, in the first transaction is $2 for one loaf of bread. The price in the second transaction is $1 one gallon of milk. In order to calculate an average price, we must add these two ratios and divide them by two; however, it is conceptually meaningless to add $2 exchanged for one loaf of bread to $1 exchanged for one gallon of milk. This in turn means that various macroeconomic indicators compiled by government statisticians are detached from the real world.

Consequently, various policies to influence an undefined entity—the “economy”—via undefined indicators inflict damage to the well-being of individuals. Even government statisticians admit that the whole thing is not real. According to J. Steven Landefeld and Robert P. Parker from the Bureau of Economic Analysis,

In particular, it is important to recognize that real GDP is an analytic concept. Despite the name, real GDP is not “real” in the sense that it can, even in principle, be observed or collected directly, in the same sense that current-dollar GDP cannot in principle be observed or collected as the sum of actual spending on final goods and services in the economy. Quantities of apples and oranges can in principle be collected, but they cannot be added to obtain the total quantity of “fruit” output in the economy.

By lumping the values of final goods and services together, government statisticians concretize the fiction of an “economy” by means of GDP statistics and other economic indicators. Once the “economy” is concretized, policymakers could navigate the “economy” along the growth path that is considered by the experts as desirable.

Thus, whenever the growth rate slips below the outlined path, government and central bank policymakers are expected to give the “economy” a suitable push by means of fiscal and monetary policies. According to Rothbard,

Bureaucrats as well as statist reformers. . . in order to get “into” the situation that they are trying to plan and reform, they must obtain knowledge that is not personal, day-to-day experience; the only form that such knowledge can take is statistics. Statistics are the eyes and ears of the bureaucrat, the politician, the socialistic reformer. Only by statistics can they know, or at least have any idea about, what is going on in the economy.

Moreover,

. . .one of the major reasons put forth for government intervention is that it “corrects” the market, and makes the market and the economy more rational. Obviously, if the government were deprived of all knowledge whatever of economic affairs, there could not even be a pretense of rationality in government intervention. Surely, the absence of statistics would absolutely and immediately wreck any attempt at socialistic planning.

The “Hampered” Environment and Macro-Economic Data

To succeed in a hampered market environment, entrepreneurs tend to respond to prevailing conditions, which are influenced by central bank and government policies. A businessperson cannot afford to ignore changes in various economic indicators such as GDP given that government and central bank officials react to changes in these indicators. For instance, if the central bank is expected to tighten its monetary stance in response to a strengthening in the GDP, a businessperson must take this into account in order to succeed in his business.

Note that the government—in order to construct various economic indicators—collects the data from businesses that are allocating resources to supply the government with the information. The construction of various economic indicators generates employment opportunities for economists and experts in other fields such as mathematics and statistics. These experts are employed not only to compile various economic data; they are also employed to interpret the data and provide guidance to businesses.

Do We Need to Know Macroeconomic Data in a Free Market Environment?

In a free market environment—free of government and central bank interference with businesses—it does not make much sense to measure and publish various economic indicators. This type of information will be of little use to entrepreneurs.

In a free market environment, what possible use can an entrepreneur make of information about the growth rate in gross domestic product (GDP)? Alternatively, what possible use can be made out of the data showing that the national balance of payments has moved into a deficit or a surplus? According to Rothbard,

The individual consumer, in his daily rounds, has little need of statistics; through advertising, through the information of friends, and through his own experience, he finds out what is going on in the markets around him. The same is true of the business firm. The businessman must also size up his particular market, determine the prices he has to pay for what he buys and charge for what he sells, engage in cost accounting to estimate his costs, and so on.

The only indicator to which entrepreneurs should pay attention to is profitability in their concerned activity. The higher the profit, the more a particular business activity is in tune with consumers’ highest priorities.

Paying attention to consumers’ wishes means that entrepreneurs have to organize the most suitable production structure for that purpose. The information on various macroeconomic indicators will be of little assistance in this regard.

What an entrepreneur requires is not general macroeconomic information, but rather specific information about consumers’ demand for a product or a range of products. Government-aggregated macro-indicators will not be of much help to entrepreneurs. The entrepreneur would have to establish his own network of information concerning a particular venture. If a businessperson’s assessment of consumers’ demand is correct then he will make a profit. An incorrect assessment will result in a loss.

The profit-and-loss paradigm penalizes those businesses that have misjudged consumer’s priorities and rewards those businesses who have exercised a correct appraisal. Hence, by the profit-and-loss framework, resources are withdrawn from those entrepreneurs who misjudged consumer’s priorities to those entrepreneurs who accurately appraised consumer’s priorities. According to Mises,

Thus, profit and loss are generated by success or failure in adjusting the course of production activities to the most urgent demand of the consumers.

We have seen that the construction of various economic indicators generates employment opportunities for economists and experts in other fields such as mathematics and statistics.

These experts are employed not only to compile various economic data, they are also employed to interpret the data and provide guidance to businesses. However, in a free unhampered market, businessmen in the pursuance of their goals are unlikely to require macroeconomic indicators. Therefore, there would be little interest in the services of economists, statisticians, and mathematicians in a free unhampered market.

Conclusion

Macroeconomic data is employed by government and central bank policymakers to navigate the so-called “economy” towards the growth path that was set by the policymakers. As a rule, this navigation culminates in the boom-bust cycle menace and a weakening in the process of wealth generation. By lumping the values of final goods and services together, government statisticians concretize the fiction of an “economy” by means of GDP statistics and other economic indicators.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. I cannot guarantee the accuracy of all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

With Treasury already panicking, I expect bonds to “break” the Fed next and the first signs to show up at Jackson Hole this Friday (assuming we can make it until then). Already, the Treasury market spent much of last week making it abundantly clear that Kevin Warsh’s honeymoon as Federal Reserve chairman is over.

The 10 year yield climbed toward 4.74%, while the 30 year briefly pushed above 5.3%, reaching levels not seen since before the financial crisis.

Even after Treasury Secretary Scott Bessent announced plans to at least double certain long dated bond buybacks, yields merely retreated from their most alarming levels rather than signaling that the underlying problem had disappeared. That underlying problem, of course, is now $40 trillion in debt and reckless fiscal spending.

That’s why as of Monday morning, the 10 year was still around 4.71% and the 30 year near 5.25%, leaving the long end of the Treasury market shaky, unconvinced and very much in charge.

I have always said that the Federal Reserve will have a spine right up until the moment it can no longer afford one. There is an old market saying that markets stop panicking when the Fed starts panicking, and there is more truth embedded in that sentence than in most economics textbooks.

Central bankers can talk about discipline, credibility and price stability for as long as financial conditions remain orderly, but when the bond market begins threatening the federal budget, the housing market, equity valuations and the plumbing of the financial system simultaneously, the definition of “responsible monetary policy” tends to become much more flexible.

That is why Warsh’s first Jackson Hole speech as Fed chairman, scheduled for Friday, August 28, could be so important. He is scheduled to speak at 10:00 a.m. Eastern time, 3:00 p.m. in Dublin. Arguably this speech will be the most consequential guidance he’ll give the market since assuming his role.

Every single word will be paid attention to. If Warsh chooses a bagel over his regular flapjacks for breakfast, that will be analyzed. His tie will be analyzed. The number of bathroom breaks he takes will be international news. The market, now begging for reassurance, will be looking for anything optimistic to cling to.

Jackson Hole gives Warsh an opportunity to recalibrate expectations between formal Federal Reserve meetings without explicitly announcing a policy change or committing the central bank to a particular rate path. He does not need to promise a rate cut, restart quantitative easing or unveil yield curve control. He merely needs to acknowledge that higher long term yields are tightening financial conditions, recognize that inflation can continue moving lower without another increase and suggest that the Fed remains prepared to respond if stress in financial markets begins threatening the broader economy.

In other words, he can become more dovish without ever using the word “dovish.”

The Wall Street Journal spent much of its Sunday podcast previewing precisely why the speech carries so much weight. The Journal’s chief economics correspondent, Nick Timiraos, said the consensus after Warsh’s July press conference was that his “tight-lipped, less-is-more strategy” had not paid off. Warsh has not merely stopped promising what the Fed will do next. He has also been reluctant to explain how he views the economy, why the Fed held rates steady in July and how he weighs the trade-offs facing policymakers. That information vacuum has left market participants (in the bond market, at least) unsettled not only by what Warsh has said, but by what he has refused to say.

On the podcast, Fed governor Frederic Mishkin argued that persistent inflation and an economy operating near full employment could justify a more hawkish posture. But the discussion nevertheless also laid out several reasons why I think Warsh may use Jackson Hole to soften the message and calm the long end of the bond market.

Timiraos noted that other Fed officials have already articulated a credible “show me the money” case for waiting. Wage growth may still be consistent with 2% inflation, and Governor Christopher Waller has argued that inflation could continue declining without another rate increase. Warsh could embrace that theory without abandoning the Fed’s inflation target, giving the bond market a reason to believe that the chairman is not eager to compound the tightening already being delivered by long term yields.

Warsh has already argued that higher market yields may perform some of the Fed’s work for it. That position has created an obvious communications problem because Warsh previously cited falling yields as evidence that markets considered the Fed credible, only to characterize rising yields later as helpful tightening that might reduce the need for Fed action. He cannot indefinitely claim that every possible movement in yields validates his policy.

Jackson Hole gives him a chance to resolve that contradiction by acknowledging that the rise in long term borrowing costs has materially tightened financial conditions and therefore reduces the urgency of another rate increase.

And the political reality remains impossible to ignore. Mishkin described Warsh as an exceptionally skilled political operator and suggested that he may be able to serve as something of a “Trump whisperer,” insulating the Fed from some of the president’s pressure. But Donald Trump wants lower interest rates, the Treasury Department is visibly uncomfortable with long term yields above 5% and Bessent has already shown his hand by expanding long dated bond buybacks. Trump recently moved some of his portfolio to shorter duration bonds, as I wrote this weekend.

Warsh may be more independent than Trump hoped, but independence does not require him to drive the Treasury market through a plate-glass window simply to prove that he possesses it.

The discussion concludes by noting that Warsh has talked about shrinking the central bank’s balance sheet, but that becomes much more difficult when the 30 year yield is around 5.3% and the Treasury secretary is simultaneously attempting to remove duration from the market through larger buybacks. Selling duration into that environment would be the monetary equivalent of throwing gasoline onto a fire that Washington has just begun trying to extinguish.

This supports a theory I have held for a while: eventually, the bond market will force Washington’s hand.

With the way we are heading, it’s simple: the United States can attempt something resembling a hard default through austerity, deflation, collapsing asset prices and the politically impossible fiscal adjustments required to honor its obligations in sound money. Or it can pursue a soft default by suppressing interest rates, tolerating inflation, weakening the dollar and repaying creditors in currency that purchases less than it did when the debt was issued. The former…just will never happen…I’m sorry. The latter…is the “easy” way out.

Given those choices, I have never believed that any modern Federal Reserve chairman, including Kevin Warsh, would voluntarily choose the hard route once the consequences became sufficiently severe. Warsh may tolerate higher yields for a while, and he may even welcome some additional tightening as evidence of his inflation-fighting credibility, but there is a level at which the fiscal arithmetic, equity market and financial system will force a change in posture. The only serious questions are where that level sits and how much damage policymakers permit before acknowledging it. It’s why I wrote that Warsh had an “impossible” job when taking over for Jerome Powell.

That is also why I continue to believe some form of yield curve control may eventually arrive. It probably will not initially be called yield curve control, of course. It will be presented as a temporary liquidity operation, a Treasury market-functioning program, an adjustment to balance-sheet composition or an effort to improve the transmission of monetary policy (and it’ll have some stupid name or acronym, as discussed last week). The vocabulary will be carefully chosen, but the objective will be straightforward: prevent long term government borrowing costs from rising to a level the federal government and financial system cannot tolerate.

Given my analysis, Washington’s unmatched record of bipartisan cowardice and the nation’s long-running streak of chickenshit monetary policy, there is a case that the long term trade remains gold, gold miners, silver, silver miners and nearly anything with a finite supply that cannot be conjured into existence by a committee in Washington.

This includes well-selected real estate and other scarce tangible assets, although valuation and financing costs obviously still matter. Gold is already trading around $4,600, so a move toward $5,000 would no longer require a grand monetary revolution. A sufficiently dovish Warsh speech, combined with Treasury’s increasingly visible attempts to contain long term yields, could be enough to put that level squarely back into play.

If Warsh stays hawkish at Jackson Hole, refuses to acknowledge tightening financial conditions and leaves the possibility of another rate increase on the table, I think all hell breaks loose. In that case, scarce assets could be hit alongside everything else in the short term. A genuinely hawkish Fed confronting a 30 year Treasury yield above 5% could also be the catalyst that finally pops the AI bubble, forcing investors to deal with an equity liquidation before the eventual monetary response arrives.

But that would not necessarily invalidate the hard-asset thesis. It might merely delay the payoff and create a much uglier path toward the same destination. A sharp equity decline, widening credit spreads and deteriorating Treasury liquidity would eventually increase the pressure on both the Fed and Treasury to intervene, perhaps far more aggressively than they otherwise would have.

That leaves Warsh with two broad choices this week. He can remain hawkish, risk popping the AI bubble and test how much pain a heavily indebted economy can withstand (not much). Or he can begin capitulating, validate Washington’s growing discomfort with long term yields and potentially send gold soaring higher.

Either way, we are about to be reminded who the real boss is. It is not Donald Trump, Scott Bessent or Kevin Warsh. It is the bond market.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. I cannot guarantee the accuracy of all facts and figures included in this article though I made my best effort to get them right. I have been wrong before and will be wrong again, and encourage you to always double check, do your own research and speak to a licensed financial professional.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I am attempting to no longer actively trade as much as I once did (read my story here). My eventual goal is for investing/saving to be mostly done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

The obvious temptation is to comb through every line looking for some hidden message about what Trump thinks markets, interest rates or individual companies are about to do. I think there is a more useful way to look at it: ignore most of the tiny transactions, focus on where the biggest chunks of money appear to have moved, and see whether any broader themes emerge.

Before doing that, there are some caveats. These trades should not necessarily be interpreted as Trump personally sitting behind a computer deciding to buy one name on Tuesday and sell another on Wednesday. The White House has previously said Trump’s assets are held in a trust managed by his children, and reporting on his disclosures has indicated that at least some of the activity comes from independently managed accounts using systematic investment strategies.

The government disclosure also gives us ranges rather than exact transaction amounts, and it does not tell us the size of Trump’s total position in each security before or after a transaction. In other words, we are looking through a very foggy window at portfolio activity, not reading Trump’s personal trading diary.

With that qualification firmly in place, there are still some interesting patterns in where the biggest money moved.

Read more

For years, markets have asked how high interest rates can go before something breaks. I think that question is about to change. The question now is how high Treasury yields can go before Washington decides they are no longer allowed to go higher. My guess, for the 10-year, is that the number begins with a six.

I have been warning non-stop for many years that math doesn’t cease to exist because Christine Lagarde wears fancy spectacles.

Nor does math cease to exist every time Paul Krugman gets another cat.

Nor does math cease to exist every time Stephanie Kelton writes about a book about why deficits and debt are figments of our imagination.

Boring old reason and common sense have continued to suggest that eventually the sheer size of the debt and deficits would collide with the bond market. For a long time, that warning was easy to dismiss. Deficits did not matter until they did. Debt did not matter because there was always another buyer. The Treasury market could absorb anything Washington threw at it because, well, it always had before.

Now federal debt is above $40 trillion, interest expense is enormous, Treasury issuance is relentless and the marginal buyer is starting to ask for more compensation. Apparently the free market has developed the annoying habit of wanting to be paid more for lending money to an entity that believes, kid’s fairy tale style, that dollars can be conjured up out of thin air using alchemy any time they are needed. The nerve!

A 6% 10 year would be more than another 100 or 125 basis points of tightening.

Markets have adapted surprisingly well to yields between 4% and 5%. At 6%, the arithmetic gets considerably uglier. Mortgage rates move higher, housing affordability deteriorates further, corporate refinancing gets more expensive, equity multiples face another compression and, most importantly, the federal government’s interest burden accelerates.

The problem is that the forces pushing yields higher are increasingly outside the Fed’s direct control. The bond market is pricing enormous deficits, relentless issuance, higher energy prices, rising corporate borrowing and a larger term premium. At the same time, some of the world’s traditional sources of demand for Treasuries are becoming less dependable.

Japan is an important part of that story. Japanese government bond yields have risen to levels not seen in decades, giving one of the world’s largest pools of savings an increasingly attractive alternative at home. The sovereign bond selloff is global, which means governments everywhere are competing for capital just as they all seem to have discovered an insatiable appetite for borrowing it.

Energy is making the problem worse. Oil has surged as tensions with Iran have increased, while refined products, particularly diesel, have moved even more aggressively. That feeds directly into transportation, agriculture, manufacturing and consumer prices. It creates exactly the combination the Fed does not want: weaker growth alongside renewed inflation pressure.

The consumer is beginning to feel it, too. Just ask companies that are in the business of offering people 30 year mortgages to buy a Domino’s Pizza. They are lending more and taking on new customers faster than ever. I think this means two things: 1) massive defaults are not going to be far behind and 2) the American consumer absolutely cannot afford higher interest rates from this point.

This is where the path toward 6% becomes dangerous. Higher Treasury yields increase federal interest expense. Higher interest expense increases deficits. Larger deficits require more Treasury issuance. More issuance forces investors to absorb more duration, which can require an even higher yield. For those of us that would rather watch Steve Irwin than Steve Liesman, it means the snake begins eating its own tail.

And no, the United States does not need to refinance $40 trillion at 6% tomorrow morning for this to become a problem. Markets price assets at the margin. Once investors begin believing that something around 6% is becoming the marginal cost of long term financing for the U.S. government, nearly every other asset has to reprice around it.

This week may have given us an early preview of what happens next. Treasury increased the size of its longer dated bond buybacks as yields surged. The announcement initially calmed the market.

Then, as I predicted would happen, the rally faded and yields started climbing again. That is the part worth remembering.

Buybacks can improve liquidity. Treasury can alter the maturity composition of issuance. Officials can hold press conferences, change spectacles, rearrange the deck chairs and explain that everything is functioning normally. None of those things solves the problem. They can change the composition of the debt, but they cannot manufacture unlimited structural demand for it.

But, my dear friends, the Federal Reserve can. And this is where the free market enthusiasts, especially those long gold and silver, could have some fun.

We are about to find out how committed policymakers really are to letting markets determine prices when the price in question is the borrowing cost of the United States government. My suspicion is: not very.

Anyone who convinced themselves that monetary policy would somehow be fundamentally different under this political regime may be in for an unpleasant surprise. When the bond market is cooperative, everyone can talk about discipline, independence and sound money. When the 10 year is screaming toward 6%, mortgages are getting crushed, equities are repricing and federal interest expense is exploding, those principles are likely to become considerably more flexible.

Central bankers always seem to love markets…right up until markets produce the “wrong” price (hereinafter referred to as the actual free market price).

A 10 year approaching 6% fundamentally changes the policy debate. The question stops being whether the Fed cuts 25 or 50 basis points. It becomes how the Fed prevents the long end from tightening financial conditions regardless of what it does with overnight rates.

The first response would probably be dressed up in familiar language. The Fed could restart quantitative easing and purchase longer dated Treasuries. Nobody would call it yield curve control at first, of course. There would be talk about market functioning, liquidity, transmission mechanisms and restoring orderly conditions. Central banking has an impressive vocabulary for buying bonds when buying bonds becomes politically inconvenient to describe.

They’d call it something innocuous. It’s not QE…it’s the DILDO plan: Debt Instrument Liquidity and Duration Operations.

But if yields continued rising, the destination would become increasingly obvious. Under quantitative easing, the Fed determines how many bonds it wants to buy and lets the market determine the resulting yield. Under yield curve control, the Fed determines the yield it is willing to tolerate and buys whatever quantity is necessary to defend it. At that point, price discovery becomes a quaint historical concept.

There is precedent for this. During and after World War II, the Fed capped Treasury yields to help the government finance enormous deficits. It worked. Of course it worked. If an institution capable of creating unlimited dollars promises to buy a bond above a certain price, arguing with it is not a particularly attractive trade.

The problem comes afterward. Suppressing the government’s borrowing cost does not eliminate the underlying fiscal imbalance. It merely relocates the adjustment. Instead of occurring through nominal interest rates, it can occur through inflation, currency weakness, negative real rates and higher prices for scarce assets.

Imagine the 10 year approaching 6% while oil remains elevated and inflation is still above target. Keeping policy tight could intensify the Treasury selloff. Cutting aggressively could weaken the dollar and push inflation expectations higher. Allowing yields to keep climbing could crush housing, credit and equity valuations. Buying enough Treasuries to stop the move would raise the uncomfortable question of whether monetary policy had become subordinate to fiscal policy.

There is no clean option, which is exactly why I expect the supposedly unthinkable option to become thinkable very quickly.

One of the more interesting signals this week was that the dollar weakened even as Treasury yields rose. Normally higher U.S. yields attract foreign capital and support the dollar. When yields rise while the currency falls, the message can be considerably less flattering. Investors may not be celebrating American growth. They may simply be demanding more compensation to finance America.

Gold and Bitcoin appear to have noticed. Both surged while Treasuries sold off. Investors facing uncertainty were not simply fleeing toward government bonds. Some capital moved toward scarce assets outside the sovereign liability structure instead.

That is worth paying attention to because yield curve control would pour fuel on precisely that trade. YCC does not solve the government’s financing problem. It changes who absorbs it. Instead of allowing Treasury yields to rise until private investors willingly finance the deficit, the central bank suppresses those yields and forces the adjustment somewhere else.

Maybe it shows up in inflation. Maybe it shows up in the dollar. Maybe it shows up in gold, Bitcoin and other scarce assets. Most likely it shows up in some combination of all three.

Nobody knows exactly where Washington’s pain threshold sits. It could be 5.5%. It could be 6%. The market could blow straight through 6% before policymakers panic. The exact number matters less than the reaction function.

What we learned this week is that Washington is already paying attention. The 30 year crossed 5.3%, Treasury responded, the market rallied and then investors started selling bonds again.

If yields keep climbing, we are going to learn whether all the fashionable talk about fiscal discipline, central bank independence and letting markets work survives contact with an actual bond market revolt. I have my doubts.

Somewhere between today’s 4.7% 10 year and a 6% 10 year lies the point where higher yields stop being treated as useful price discovery and start being described as disorderly market conditions. That linguistic transition will tell you almost everything you need to know about what comes next.

Treasury can buy time, alter issuance and improve market plumbing. Ultimately, though, there is only one institution capable of creating unlimited demand for U.S. government debt.

If we get to 6%, the most important question in markets will no longer be whether the Fed cuts rates. It will be how long the free market is ever allowed to keep setting the price.

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According to Treasury data, total U.S. debt crossed $40 trillion this week, only about five months after it crossed $39 trillion in March, while government spending continues to exceed revenue by more than $2 trillion annually.

Ten years ago, the debt was around $19 trillion, meaning we have managed to more than double the national credit card balance in roughly a decade. Meanwhile, interest expense has become the government’s second largest expense behind Social Security, and interest costs through the first ten months of this fiscal year were already 15% higher than during the same period last year.

In other words, the U.S.’s financial statements are starting to represent those of a third world country. And once we start buying our own bonds, the transformation will be complete.

The speed at which the odometer is turning is perhaps even more disturbing than the $40 trillion headline itself, because it took the United States 192 years to accumulate its first $1 trillion of national debt, which it finally crossed in 1981. We crossed $30 trillion in 2022, $38 trillion in October 2025, $39 trillion in March 2026 and now $40 trillion roughly five months later.

At the beginning of July, the Joint Economic Committee calculated that the debt had increased by $3.16 trillion in just the previous twelve months, equivalent to more than $8.6 billion per day and about $100,000 every second. We used to measure trillion dollar increases in generations, then we measured them in years, and now apparently we are going to measure them in months.

I also think that smug idiots who joke about the debt, dismissing it as some meaningless nominal number that simply goes up forever, are missing the most alarming part of the story.

The problem isn’t that $40 trillion sounds scary in isolation, because in a growing economy virtually every nominal number gets larger over time, but rather the extraordinary rate at which the debt itself is now accelerating, with the total having more than doubled from roughly $19.4 trillion just ten years ago.

At this trajectory there are no visible brakes, and the increasingly popular argument that America can simply grow its way out of the problem becomes harder to take seriously when the debt is expanding faster than the economic base expected to support it.

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Growth can absolutely make a large debt burden more manageable, but growth cannot solve a fiscal trajectory in which borrowing and interest expense continually compound faster than the economy, which is why the acceleration rather than the headline number is what should scare the hell out of people.

If nothing else, crossing $40 trillion should finally put to bed the idea that the Trump administration’s fiscal policy bears any meaningful resemblance to the cost cutting, budget balancing and fiscal restraint that was talked about before (and right after) the election with DOGE and the likes.

Whatever your opinion of Trump, and readers know I have supported plenty of his policies, the numbers are the numbers, and there is no serious definition of fiscal conservatism under which adding debt at this pace qualifies.

The federal government is still spending dramatically more than it takes in, annual deficits remain enormous, interest expense is compounding into one of Washington’s largest expenditures and there remains no credible political constituency willing to cut spending deeply enough to change the trajectory.

At some point this stops being an argument about whether Republicans or Democrats are more irresponsible and becomes an argument about whether the political system itself is capable of imposing austerity voluntarily before the bond market imposes it involuntarily. It’s why I called monetary (and now fiscal) policy in this country the devil that neither political party can name.

That brings me back to something I’ve been writing about repeatedly, which is that eventually I believe the bond market is going to force the government and Federal Reserve into some form of yield curve control. The problem isn’t simply that the United States owes $40 trillion, because a sovereign government issuing debt in its own currency can obviously continue borrowing for a very long time.

The problem arrives when the marginal buyer of that debt begins demanding an interest rate that the government, economy and financial system cannot comfortably tolerate, particularly when trillions of dollars of existing debt must continually be refinanced at those higher rates. Once the price demanded by the bond market collides with the price Washington can afford to pay, somebody eventually has to blink, and history tells me it probably isn’t going to be Washington voluntarily deciding to default.

We may have gotten our first meaningful glimpse of that conflict yesterday, when Treasury Secretary Scott Bessent announced that Treasury would double the size of certain buyback operations involving longer dated Treasuries from $2 billion to at least $4 billion per operation. The operations cover debt in the 10 to 30 year portion of the curve and came after the 30 year Treasury yield reached 5.34%, its highest level since 2007, as investors wrestled with inflation, enormous government financing requirements and the broader deterioration in America’s fiscal position.

The reaction was immediate, with long duration Treasury yields dropping sharply and the 30 year falling back toward 5.18%, while the dollar weakened and gold exploded higher. Gold surged more than 3% on Wednesday as the market immediately interpreted the announcement through the lens of easier financial conditions and potential government support for the bond market.

Some people are already describing Treasury’s move as a kind of stealth yield curve control. I think that description may slightly get ahead of what has actually happened. A $4 billion Treasury buyback is still tiny relative to a Treasury market containing more than $30 trillion of marketable debt, and Treasury itself isn’t technically setting a ceiling on yields or promising unlimited purchases at a particular price.

What matters to me isn’t necessarily the size of yesterday’s intervention, but rather the signal it sends about how uncomfortable policymakers have become with what is happening at the long end of the curve. Treasury has now shown the market that sufficiently violent increases in long term borrowing costs can provoke a policy response, and I am not convinced bond traders are going to interpret that exclusively as a demonstration of strength.

In fact, I think there is another possibility that is far more interesting and potentially much more dangerous…and I think could actually happen.

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