Yesterday was a light posting day, partly because I’m feeling overwhelmed by events—economics, war, geopolitics, you name it. But I did continue reading. With regard to AI, I assembled several key tweets that, presciently, came out shortly before Trump’s latest grand initiative to transform the American economy and usher in a Golden Age. Pay close attention to the first two. Sacks—Trump’s AI czar—appears to be saying that the AI companies—and no doubt their investors—are too big to fail. That’s the White House taking ownership of the bubble that I’ve been writing about in recent weeks.
David Sacks @DavidSacks
8h
According to today’s WSJ, AI-related investment accounts for half of GDP growth. A reversal would risk recession. We can’t afford to go backwards.
Mr. VIX @yieldsearcher
7h
Not that we did not know this before, but this is a state-sanctioned bubble.
That is what makes this cycle so unprecedented.
Luke Gromen @LukeGromen
4h
If AI doesn’t work, it will risk recession, blowing out fiscal deficits into insufficient foreign UST demand.
If AI works, it will undermine the U.S. fiscal position (~half of US Federal receipts come from employment), blowing out deficits into insufficient foreign UST demand.
Demetri Kofinas @kofinas
Nov 23
We’ve created a system where the only way to survive is to be destitute enough to qualify for aid or rich enough to ignore the cost. Everyone in the middle is being cannibalized. The rich know this and they are increasingly opting out of the shared spaces.
Luke Gromen @LukeGromen
8h
...
Popular anger in the US will continue rising for as long as the situation [above] remains true while US leaders gaslight Americans that the biggest threat to the US is Russia or China.
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
Section 1. Purpose. From the founding of our Republic, scientific discovery and technological innovation have driven American progress and prosperity. Today, America is in a race for global technology dominance in the development of artificial intelligence (AI), an important frontier of scientific discovery and economic growth. To that end, my Administration has taken a number of actions to win that race, including issuing multiple Executive Orders and implementing America’s AI Action Plan, which recognizes the need to invest in AI-enabled science to accelerate scientific advancement. In this pivotal moment, the challenges we face require a historic national effort, comparable in urgency and ambition to the Manhattan Project that was instrumental to our victory in World War II and was a critical basis for the foundation of the Department of Energy (DOE) and its national laboratories.
In a sense, this is an Anglo-Zionist Declaration of Global War. Trump compares this initiative to the development of nukes and says we’re in a race for “global technological dominance.” This will require America—that means, us—to invest in AI. Didn’t I just say yesterday that the tech lords would have “first dibs” on tariff revenues—which are really just taxes on you and me?
Ed Dowd saw this one coming:
Edward Dowd @DowdEdward
AI czar setting up likely government support narrative.
Basically the economy is so hollowed out that the only game in town is the race to build the digital gulag. Good times.
1:07 PM · Nov 24, 2025
Don Johnson states it as succinctly as you could wish:
Don Johnson @DonMiami3
12h
‘Genesis’ is one of the first steps for too big to fail, lets government come in and scoop up data centers and AI companies now under that project scope / umbrella - no Congressional approval needed for appropriated funds
Very obvious to see what they’re doing now
Is this part of the reason behind Trump’s hair’s-on-fire to get the hell outta Ukraine and get the hell into Venezuela? The fiscal shock and awe that started in April has been grinding to a halt amid increasing economic and geopolitical disarray. A quick fix is needed.
We noted the other day that the smart money looked to be bailing out of Nvidia. There was a reason:
Edward Dowd @DowdEdward
$NVDA Gross Margin compression incoming.
Quote
simple investing @simpleinvest01
14h
Meta Platforms in talks to spend billions on Google’s TPUs to use in data Centers in 2027.
This is such a strong validation for TPUs and the fact that TPUs are increasingly seen as an alternative to Nvidia’s chips.
OK, the bit about the “carry trade” is hugely important, but I’ll admit that it’s something I don’t understand. Nevertheless …
The term carry trade, without further modification, refers to currency carry trade: investors borrow low-yielding currencies and lend (invest in) high-yielding currencies. It is thought to correlate with global financial and exchange rate stability and retracts in use during global liquidity shortages,[3]but the carry trade is often blamed for rapid currency value collapse and appreciation.
Since the mid-1990s, the Bank of Japan has set Japanese interest rates at very low levels making it profitable to borrow Japanese yen to fund activities in other currencies.[6]These activities include subprime lending in the US, and funding of emerging markets, especially BRIC countries and resource-rich countries.
Here’s the intro to a video I listened to yesterday that refers directly to the Japanese carry trade and bond prices:
Japan. It’s the silent giant that’s been the global monetary printer for three straight decades, but it just pulled the plug earlier this month. Japan’s 10-year government bond yield punched through 1.7%. It’s the highest level since 2008. That single number just ended the greatest carry trade in financial history. For 30 years, Japan borrowed at basically zero, printed endless yen, and shipped trillions, $3.3 trillion to be exact, into US treasuries alone, keeping interest rates artificially low everywhere else. Your cheap mortgage, well, you could thank Japan. Skyhigh stock multiples, thank Japan. Governments borrowing like drunken sailors with no consequences, thank Japan. And now, well, the thank you notes are coming due. At 1.7%, Japan’s annual interest bill jumps by an extra 27 billion a year on a debt pile that’s already 263% of GDP. They just announced another 110 billion stimulus package because their economy can’t survive without it. But the bond market finally said no. The invisible bid that’s been propping up the entire developed world for a generation is vanishing in real time.
Among other things discussed in the very interesting video is the $550B that Trump claims Japan will give to the US to rebuild its economy. Not gonna happen. Japan’s debt to GDP is already at 230%. But, as you just read, lots of other things will change.
Now, pivoting back to AI, I highly recommend a perusal of MoA’s fine analysis of what’s up:
China is letting the first type of capitalism reign their Artificial Intelligence efforts:
Rather than pick winners and losers, China states the policy objective and hundreds of commercial initiatives compete using diverse strategies to fulfil the ambition. Instead of a ‘winner takes all subsidies’ China gets a diverse, agile, ecosystem growing in parallel to its rapidly innovative economy.
Many Chinese models are published as open source and can be run on smaller clusters.
The U.S. has however decided to let the second form of capitalism rule its AI endeavors. There are only a few companies working on large AI projects. Their models are private and blocked from scrutiny. They are promising too much and are spending a huge amount of money. They are in need of ‘safety-net socialism for overextended companies’.
To provide for this the White House issued an Executive Order[: Genesis].
…
Besides providing the instruments for a bailout the Executive Order is also creating the means of central control over AI and its application:
If you strip away the branding, Genesis is the U.S. government building a national AI backbone inside the Department of Energy and then inviting the biggest private sector AI players to plug into it. … But underneath, it centralizes the AI stack. Instead of letting the highest end compute and model capabilities drift entirely into the private sector, Genesis pulls them back into a structured federal environment. Access becomes conditional: follow the safety rules, share the data, integrate into the platform and you get to operate at the frontier. Don’t, and you’re on the outside looking in. … Genesis is the beginning of a nationalized AI infrastructure strategy. It will function as the bridge between government compute and private sector models, letting Washington influence which companies sit closest to the frontier and which capabilities get priority. It will speed up real scientific breakthroughs, but it will also quietly define the rules of the AI race on who participates, who gets access, and how the most powerful systems are directed.
By allowing for a bailout of over extended AI companies via ‘Manhattan Project’ sized federal spending Trump is also attempting to prevent a stock market slump that would cost the Republicans the majority in the House.
In other words, We the People will be on the outside looking in. Will we be happy? I doubt it.
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The black swans are already coming in to land for NVDA and all those irrational Data Centers that insiders have ALWAYS known would never return a profit.
This Google TPU that we are beginning to hear a lot about is one of the first to land. Built in Taiwan by the biggest and most advanced chip foundry around. Cheaper to buy and more efficient to run and already driving all of the cool Google stuff like Search, Maps,Gmail, etc. I've been noticing some really good new performance on Google Earth.
Deepseek (free) and the next Deepseek-like competitors to domestic LLMs have also landed, but people caught up in the NVDA hype seem to be pretending they aren't there.
Just in time for the Trump admin to go into totally wasteful panic trying to support an ongoing avalanche of unfathomable malinvestment. Putting bandaids on bubbles. Cronie capitalism at it's best (worst). Is this going to save the USA? Nationalizing some trillions of dollars of market capitalization in over-hyped tech companies?
Where were they when my Pets.com and Juniper Networks were crashing in the early 2000's?
The black swans are already coming in to land for NVDA and all those irrational Data Centers that insiders have ALWAYS known would never return a profit.
This Google TPU that we are beginning to hear a lot about is one of the first to land. Built in Taiwan by the biggest and most advanced chip foundry around. Cheaper to buy and more efficient to run and already driving all of the cool Google stuff like Search, Maps,Gmail, etc. I've been noticing some really good new performance on Google Earth.
Deepseek (free) and the next Deepseek-like competitors to domestic LLMs have also landed, but people caught up in the NVDA hype seem to be pretending they aren't there.
Just in time for the Trump admin to go into totally wasteful panic trying to support an ongoing avalanche of unfathomable malinvestment. Putting bandaids on bubbles. Cronie capitalism at it's best (worst). Is this going to save the USA? Nationalizing some trillions of dollars of market capitalization in over-hyped tech companies?
Where were they when my Pets.com and Juniper Networks were crashing in the early 2000's?
https://companiesmarketcap.com/juniper-networks/stock-price-history/
Politicians should not be making these decisions!
What a country!
"Genesis". That will get the Christian Zionists into the car.