The Big, Beautiful Sellout

One of the most important data points to understand the coming years is debt-to-GDP.

Yes, you can argue about how to measure GDP. And there are some forms of debt, like those debts tied to entitlement programs, that aren’t even included.

But using the government’s own baseline numbers, things are getting ugly. And they’re getting worse, not better.

Turn Your Images On

History tells us that when a nation’s debt-to-GDP ratio reaches 130%, it is a point of no return.

Servicing that level of debt means lower systemic growth – making it even more challenging for those who want to ignore the debt and try to grow the economy out of the problem.

The latest spending boondoggle does nothing to change the trajectory, and the extension of the 2017 tax cuts and higher SALT deductions, among other goodies, will accelerate the timeline.

If the party of so-called “small government” is just looking to juice the private sector now rather than avert a crisis – then such a crisis has always been inevitable. Be prepared.

~ Addison

P.S. With out-of-control spending still the norm in Washington, two assets look attractive as safe havens: gold and bitcoin. With the dollar weakening on top of everything else, we see the potential for gold prices to soar far higher over the next 18 months. It’s also no surprise to see silver breaking higher, finally jumping past $35 and topping $36.

Meanwhile, with all the institutional interest in bitcoin, which is getting over 98% of the capital to the broader crypto market right now, it’s possible that bitcoin could also be on a similar trajectory in the months ahead as a crisis looks increasingly likely.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

One of the most important data points to understand the coming years is debt-to-GDP.

Yes, you can argue about how to measure GDP. And there are some forms of debt, like those debts tied to entitlement programs, that aren’t even included.

But using the government’s own baseline numbers, things are getting ugly. And they’re getting worse, not better.

Turn Your Images On

History tells us that when a nation’s debt-to-GDP ratio reaches 130%, it is a point of no return.

Servicing that level of debt means lower systemic growth – making it even more challenging for those who want to ignore the debt and try to grow the economy out of the problem.

The latest spending boondoggle does nothing to change the trajectory, and the extension of the 2017 tax cuts and higher SALT deductions, among other goodies, will accelerate the timeline.

If the party of so-called “small government” is just looking to juice the private sector now rather than avert a crisis – then such a crisis has always been inevitable. Be prepared.

~ Addison

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

As AI clusters demand more light at every layer — from rack to package — Coherent’s share of that energy pathway increases. The startups illustrate what’s possible; Coherent ensures it happens.

As light enters the data center — step by step, layer by layer — Coherent is the most experienced and scaled name in the field. It carries the light forward.

For decades, Moore’s Law — that the number of transistors on a chip doubles every two years — was the quiet metronome of progress. It defined an era. AI just smashed that clock.

Global data center spending will hit $900 billion by 2028, Kobeissi notes. AI servers are growing at a compound rate of +41%, with the overall market expanding +23%.

Just building the facilities, not including chips or servers, now costs $43 billion a year — up 322% in just four years. There are $40 billion worth of U.S. data centers under construction right now, up 400% since 2022.

For the first time in history, the total value of U.S. data centers under construction will soon exceed office buildings.

More than a metaphor, we’re living through a civilizational shift. The upside Grey Swan event, in our opinion, is that the narrative unfolds without any political interruptions or blowouts in the currency and credit markets.

Technology is a double-edged sword. We’re still living in the long tail of a hard money, capitalist society – and reaping new technologies out of it.

But the destruction of the purchasing power of the dollar stands to create a crisis – and drive investors back to safe havens like gold.