🧠 Idaho, AI, and the New American (Socialist) Experiment

Micron Technology (MU) reports earnings after the close today.

Most investors will treat it as another earnings report in another busy week dominated by artificial intelligence headlines, Fed speculation, and political theater.

That would be a mistake.

Micron’s story tells us something important about how wealth is actually created. Last night, two events in New York outlined what “other people” intend to do with it. 

In an address before the Economic Club of New York, Treasury Secretary Scott Bessent outlined Trump’s economic blueprint and democratic socialists sweep New York primaries.

The lessons are poignant and a precursor to November’s midterms. Let’s dive in. 

🚜 The Potato Farmers Who Took On Silicon Valley

Our friend and frequent guest on Grey Swan Live!, George Gilder, loved the Micron story because it read less like a business case study and more like a Western. Not the Hollywood version with polished boots and good teeth. The real thing. Dust on the horizon. Long odds. A handful of stubborn men betting the ranch against the railroad.

Micron Technology was the ultimate computer-chip cowboy tale.

The Parkinson brothers — Ward and Joe — weren’t minted in the venture-capital salons of Sand Hill Road. They were Idaho boys. Potato-country entrepreneurs. The sort of men who viewed Silicon Valley’s gatekeepers the way a cattle rancher views a city zoning board: an obstacle to be ridden around.

When they took their semiconductor dream to California’s venture capital aristocracy, they were shown the door. The experts, armed with spreadsheets and certainty, concluded that a group of Idaho upstarts had no business challenging the established order of the chip industry.

So the Parkinsons did what Americans have always done when the establishment says “no.” They found someone else.

Their unlikely patron was J.R. Simplot, the Idaho potato king whose french fries fed half the fast-food industry. Simplot developed the formula McDonald’s uses to keep its fries crispy on the outside and sweet and juicy on the inside. His goal was simple… to get McDonald’s to buy more of his potatoes.

Simplot understood risk the way a farmer understands weather. He knew that fortune rarely arrives with guarantees attached. While Silicon Valley financiers were counting reasons to decline, Simplot was writing checks.

The decision to build in Boise turned out to be Micron’s secret weapon.

While California was already becoming an expensive monument to its own success, Idaho offered wide-open spaces, cheap power, abundant water, affordable land, and a workforce hungry to prove itself. 

Micron was a dot-com darling back in the day. The chart above depicts what happens to investor money when they take a flyer on bubble stocks. It’s a great company, but as you can see, anyone who bought at the top of the 2000 bubble had to wait 21 years to realize any capital gains on the stock. The right side moon shot this year is, well, insane. (Source: Yahoo! Finance and Andrew Packer)

Micron’s factories rose from the high desert like grain silos built for the Information Age. Against all conventional wisdom, the company found it could manufacture memory chips more efficiently than competitors in California — and in many cases more competitively than the vaunted industrial giants of Japan.

For Gilder, Micron validated a larger truth that runs through all his work. The real capital of capitalism is not money. Money is merely the scorecard. 

The true source of wealth is human imagination — what Gilder called the triumph of mind and spirit over matter. Factories depreciate. Machines rust. Balance sheets age like milk left on a summer porch. But ideas compound. Ingenuity multiplies. The human mind remains the only asset capable of creating something from nothing.

Gilder was so taken by Micron’s improbable ascent that he carried one of the company’s early 16K DRAM memory chips into the Oval Office and presented it to President Ronald Reagan.

It was a tiny sliver of silicon, scarcely larger than a postage stamp.

Yet in Gilder’s eyes, it represented something far bigger: a declaration that America’s future would not be built by bureaucracies, industrial policy, or financial engineering. It would be built by risk-takers, tinkerers, dreamers and a few stubborn Idaho potato farmers who refused to accept the limits imposed by smarter people.

If you haven’t read Gilder’s book Recapturing the Spirit Enterprise, we recommend you do so. It’s a critical look at how wealth is created and deployed effectively in the American capitalist system. 

🏛️ Bessent’s Five-Legged Stool

Speaking before the Economic Club of New York last night, Treasury Secretary Scott Bessent laid out what amounts to the architectural blueprint for Trump’s second-term economic experiment. And a vocal defense of the American economy and capitalist system. 

To make it easy, Bessent wanted his audience to think of the plan as a five-legged stool. If one leg snaps, the whole thing tips over.

The first leg is domestic manufacturing. The administration wants America making things again — not merely designing them in air-conditioned conference rooms while factories hum somewhere across the Pacific. Semiconductors. Pharmaceuticals. Critical minerals. Steel. The goal is to rebuild industrial muscle that has atrophied after decades of outsourcing.

The second leg is trade reciprocity. For years, Washington tolerated trade relationships that resembled a poker game where one player could see everyone else’s cards. Bessent argues those days are over. If another country taxes American exports, America taxes theirs. If they subsidize their industries, Washington responds in kind. Whether that leads to fairer trade or simply a larger collection of tariff lawyers remains to be seen.

Third comes something few Treasury Secretaries have ever discussed with a straight face: writing the rules for artificial intelligence. America wants to establish the standards governing AI the same way it once shaped global banking, shipping lanes, and telecommunications. Whoever writes the rules often ends up owning the tollbooths.

The fourth pillar is preserving dollar dominance. We’ve written gads of words supporting Bessent’s Dollar 2.0 initiative. It boils down to this. As central bankers acquire more gold and alternatives to U.S. Treasurys for their reserves, Bessent wants digital assets – namely stablecoins tied 1-1 to the dollar and Treasury bonds – to offset the decline in central bank purchases. 

Dollar dominance sits beneath all the others like the concrete foundation under a skyscraper. Bessent understands something many Americans do not: the dollar isn’t merely money. It’s an instrument of statecraft. It’s an aircraft carrier disguised as a currency. It finances deficits that would sink other nations. It allows the United States to consume more than it produces and borrow more than prudence might recommend.

And finally comes broad prosperity — the political promise that ordinary Americans won’t merely watch asset prices rise from the cheap seats. They will supposedly participate in the gains. Stocks up. Retirement accounts up. Household wealth up. A rising tide with enough water to reach beyond the Hamptons and Silicon Valley.

Whether that promise survives contact with reality is another matter entirely.

🤖 The AI Gold Rush

What makes Bessent’s framework different from the economic orthodoxy of the past two decades is his faith in artificial intelligence.

“Faith” may actually be the right word.

Listening to him describe AI, one gets the sense of a preacher discussing a technological Second Coming.

Bessent believes AI will at least double productivity throughout the economy. Factories will produce more with fewer workers. Software will replace layers of management. Medical research will accelerate. Supply chains will operate with machine-like precision. Entire categories of waste will simply evaporate.

In his telling, AI is less a new technology than a giant economic flywheel.

The AI arms race is becoming an investment race, with tech giants committing record amounts of capital to power the next generation of artificial intelligence. From advanced chips to sprawling data centers, Big Tech is investing billions in the hardware backbone needed to bring artificial intelligence to the masses. (Source: S&P Capital IQ)

He compares the current moment to the internet boom of the 1990s, when Alan Greenspan’s Federal Reserve watched productivity surge fast enough to allow economic growth without unleashing inflation. The economy expanded like a prairie fire racing before a favorable wind, yet consumer prices remained surprisingly tame.

Today, Bessent sees something even larger.

Meta Platforms (META), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN) and their hyperscaler brethren are preparing to spend roughly three-quarters of a trillion dollars building AI infrastructure. That’s more than an investment strategy. It’s a continental engineering project. Cathedrals once consumed the wealth of medieval kingdoms. AI data centers are becoming the cathedrals of the digital age.

The administration’s wager is straightforward: productivity rises faster than costs.

🏦 The Warsh Doctrine, According to Bessent

Perhaps more revealing than Bessent’s enthusiasm for artificial intelligence is his enthusiasm for Kevin Warsh.

Treasury secretaries and Fed chairmen traditionally maintain the public warmth of two neighboring monarchs whose kingdoms share a disputed river. Polite. Formal. Occasionally suspicious.

Bessent sounds more like a man who believes the cavalry has finally arrived.

Appearing on CNBC, he praised Warsh’s opening weeks at the Federal Reserve, noting that the new chairman “came out tough” on inflation while avoiding the theatrical chest-thumping that often accompanies central banking these days.

Bessent believes Warsh can thread one of the most difficult needles in finance: maintaining price stability while preserving economic growth.

That’s easy to say. It’s a bit like promising to land a crop duster on a moving train.

Yet Bessent seems convinced Warsh possesses the combination of credibility, market experience, and institutional skepticism needed to pull it off.

More importantly, he insists Warsh will remain independent.

The financial press has spent months worrying that Trump would eventually install a compliant Fed chairman who treated monetary policy like a campaign rally. Bessent pushed back on that concern, reminding viewers that Trump explicitly stated during Warsh’s swearing-in ceremony that the Fed would remain independent.

Whether Washington can resist meddling with interest rates is one of those questions history answers rather brutally.

As Bessent put it, Trump understands that “bond markets have taken out more governments than howitzers.”

That’s not merely a colorful observation. It’s one of the oldest lessons in Empire of Debt.

Governments can ignore voters for a while. They can ignore editorial pages almost indefinitely. But when bond investors lose confidence, they can humble presidents, prime ministers, kings, and central bankers with breathtaking efficiency. 

The bond market is the closest thing modern civilization has to a financial law of gravity.

📉 Killing the Dot Plot

Where Bessent’s admiration becomes almost evangelical is on the subject of Fed communications.

Warsh’s decision to scrap the infamous “dot plot” earned enthusiastic applause from the Treasury secretary.

For years, the Federal Reserve published charts showing where policymakers expected interest rates to go. Investors stared at those little dots the way medieval villagers studied chicken entrails, searching for clues about the future.

Kevin Warsh is taking aim at one of the Fed’s most closely watched communication tools: the dot plot. Warsh argues that policymakers should spend less time projecting where interest rates might be headed and more time responding to economic data as it arrives, a stance that could reshape how investors interpret future Fed guidance. (Source: FOMC)

Bessent never bought it. As a hedge-fund manager, he says he routinely traded against the dots because they were almost always wrong.

His verdict was blunt.

The dot plot represented groupthink masquerading as foresight.

A room full of economists attempting to forecast the future with decimal-point precision has always resembled a weather forecast written six months in advance. The confidence is impressive. The accuracy, less so.

Warsh has also slashed much of the Fed’s forward guidance, preferring a central bank that responds to incoming data rather than chaining itself to promises made months earlier.

🗽 The Left Bank Takes Manhattan

Something else curious happened in New York City last night. Or perhaps “predictable” is the better word.

A slate of democratic socialists marched through the June primaries like Sherman through Georgia, toppling establishment Democrats who only a few years ago looked as secure as granite monuments.

In Manhattan’s 10th Congressional District, Brad Lander flattened incumbent Dan Goldman, capturing nearly 66% of the vote. In Brooklyn and Lower Manhattan, Claire Valdez cruised to victory in the race to replace retiring Representative Nydia Velázquez. And uptown, Darializa Avila Chevalier pulled off the biggest upset of the night, knocking off six-term incumbent Adriano Espaillat.

Three races don’t make a revolution. But they do tell a story. If you recall, on December 31, 2025, we forecast the socialist would take the House in the November 3, 2026, midterm elections. That’s not something we said lightly. Or want. In fact, quite the opposite is true. 

The interesting part isn’t that socialists are winning elections. The interesting part is why.

When a city produces more billionaires than babies, somebody eventually notices.

For 20years New York has been the financial equivalent of a luxury penthouse built atop a crumbling foundation. Wall Street bonuses soared. Luxury towers climbed higher. Art auctions started looking like Saudi defense budgets.

Meanwhile, the average resident found himself paying twenty-five dollars for a hamburger, four thousand dollars for a one-bedroom apartment, and enough in taxes to fund a small Balkan republic.

Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the world, has spent years studying the rise and decline of empires. Rome. Britain. The Dutch. The United States. Different flags. Different languages. Same euphoric promises.

The trouble begins when people stop believing they’re climbing a ladder and start believing they’re staring at a castle wall.

During healthy periods of capitalism, Americans don’t mind if their neighbors own bigger houses. They assume they can build one too.

During late-cycle periods, they watch asset prices float skyward like Macy’s Thanksgiving balloons while their wages move like a turtle in wet cement. The stock market celebrates. The homeowner celebrates. The private-equity manager celebrates. The renter wonders what exactly he’s supposed to be celebrating.

That’s when economics becomes politics. Not because people suddenly become socialists or populists. Because they become frustrated. And frustration is the raw material from which both socialism and populism are manufactured.

The rise of democratic socialists in New York isn’t some freak political accident. It’s not a meteor strike. It’s not a social-media fad.

It’s a symptom.

Like a fever.

Like smoke curling beneath the door.

Like weeds pushing through cracks in a marble floor.

The underlying problem is older than Wall Street, older than New York, older even than capitalism itself.

It’s the wealth gap.

New York may simply be the first major American city where those tensions have become impossible to ignore.

Whether these newly elected socialists can solve the city’s problems is another question entirely.

🕊️Don’t Kill The Messenger

“Who the samhill is Liz Wolfe?” writes Grey Swan member Bob E.  “and who does she think she is trying to decide the President’s course of action?”

“She should shut her pie hole and let us wonder if she is stupid instead of opening it and removing all doubt! 

“The President is so far ahead of this clown and other pundits that think they know so much and have no idea how to do the ‘art of the deal’ and what it takes to win in the big time. Their yack and second guessing is precisely why no other President took the initiative to beat the stuffing out of the Iranians, and so many have no idea of the amount of destruction our Military did to that country.

“History will prove just how really stupid all these talking heads really are, and how badly they have been mislead by the Main Stream media idiots!”

~ Addison

P.S. Tomorrow, we’ll host good friend and Jim Rickard’s investment strategist Dan Amoss for Grey Swan Live! You’ll want to tune in to Dan’s aggressive warning about the midterm Fed and Treasury tactics:

Grey Swan Live @ 2 p.m. EST/11 a.m. PST Thursday June 25, 2026.

In a brief conversation we had with Dan following Warsh’s first press conference, Dan, skeptical, explained how he believes the Fed, even under Warsh, will be forced into “financial dominance,” a fancy way of saying monetary policy will be under Trump’s thumb at least until November.