economics

total global liquidity has historically risen and

fallen in these predictable tides of around 5 years this cycle is determined by the average five to six year debt maturity profile that you've spoken about the lows of each cycle nearly always coincide as you've said with some kind of financial crisis and central banks always step in to provide more

One thing that struck me about their core insight - that AI is having a negative impact on AI-exposed occupations - is that it seems a lot like what we’ve seen in prior sectoral crashes.

For instance, construction employment had a nasty contraction after 2006. And employment in younger age categories plummeted even as the employment of older workers

Capex spending for AI contributed more to growth in the U.S. economy in the past two quarters than all of consumer spending , says Neil Dutta, head of economic research at Renaissance Macro Research, citing data from the Bureau of Economic Analysis. [emphasis mine]

Worse still, remember that the government will not subsidize just any daycare, school, or hospital. Naturally, funding will come alongside regulations designed to ensure that the recipient of those funds meets a minimum standard of quality and care. But since such regulations will naturally favor incumbent industry players (which are already not

high-value manufacturing industries have economic effects that go far beyond their own activities; they generate service-sector employment and are vital to sustaining the kinds of pools of local talent that are needed to spur innovation and technological breakthroughs.

For these reasons, makers of mainframe computers, and makers of the 14-inch disk drives sold to them, historically needed gross profit margins of between 50 percent and 60 percent to cover the overhead cost structure inherent to the value network in which they competed.

What is “Cost Disease?”

William Baumol observed that as our economies grow, our “problem solving machine” operates at different rates in various sectors of the economy and thus productivity growth in one area of the economy can cause the cost of goods/services in other areas to rapidly inflate. He used the example of a string quartet to explain

What we can say is that countries generally become more efficient in their use of raw materials as their economies develop, and so we should not be surprised to see the same thing happening gradually in China.

US fiscal deficits will remain structurally large for the foreseeable future (i.e. for any investment time horizon of relevance, such as the next decade).

I outlined six reasons for this in my September 2024 newsletter, and they were the following:

1. Unbalanced Social Security


2. High healthcare costs


3. High defense spending


4. High interest expense


5. Political