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birb_cromble  2mo ago (text post)   824 thread views

Weekly Finance Thread - 2026-08-29

A weekly thread to discuss financial matters - from personal all the way up to global.

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AI and government spending: teaming up to shiv the regular economy 🤝.

One bad thing about excessive government spending is that it increases the price of debt. Sure, I could loan you money for your new startup. But why do that when I can loan money to the government who will literally confiscate assets to pay me back?

The rapid AI buildout is having a similar effect. Hyperscalers like Amazon and Meta are borrowing hundreds of billions of dollars to build data centers. These are incredibly good credit risks with durable cash flows. Loan money to them and you will almost certainly get paid back.

So federal, state, and local governments are all increasing their borrowing at the same time that the largest corporations are doing the same. It's actually kind of surprising that the 30 year yield is only 5%.

Something has to break. There's just not enough liquidity in the system to finance everything that needs to be financed. And since AI productivity gains have thus far been elusive, we seem to be on a track to either austerity or inflation in the next couple years. Here's hoping it's inflation.

This is actually why I was asking about the commodity futures fund in the other thread. There are an increasing number of things occuring these days that seem similar to the runup to the stagflation era. Commodities did well during that era, compared to the alternatives.

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