admski

reality checks on markets and businesses

[admski @admskei]

The issue is that the EPS growth you’re pointing to is largely a function of buybacks, not organic business or operational improvement.

Over the last decade, the core business was growing at roughly 20% per annum. That growth rate was then cut by about half to ~7-8%, and has since been cut by another ~50% to ~4-5%. That sustained slowdown in the core business is what the market is responding to.

When the underlying growth engine is decelerating, EPS optics driven by buybacks don’t change the fundamental picture. To explain the stock price decline, you have to address what’s happening to the business itself, not just the headline EPS number.

$PYPL

[admski @admskei]

@MarioNawfal Doesn’t the higher pricing for the UAE and Saudi more than offset the drop in output? In fact, at current prices, they should be generating higher overall revenue than before?

[admski @admskei]

If AI replaces human output rather than complements it, the equation changes.

It produces. It does not consume.
It replaces wages. It does not earn them.
It does not pay taxes. It does not spend.

The productivity it creates does not recycle back into the system through household consumption or income taxes.

If labor income shrinks, demand shrinks.
If demand shrinks, prices fall. Deflation pressure builds.

But nominal debt does not fall. Government liabilities remain. Pension promises remain and the deficit?

So what happens when the production engine detaches from the income engine while the debt stack stays fixed in nominal terms?

Is that science fiction? Maybe.
But even if part of it proves true, the implications are enormous.

How likely is it? How fast does it happen?
To what extent would governments step in with regulation?
How would that regulation look?
And if society has to be restructured around redistributed output rather than earned income, does the way we have operated for decades fundamentally change?

Would that shift strengthen us or weaken our ability to innovate, compete, and allocate capital efficiently?

Many of us have read the Citrini’s report thought experiment.

The real question is not whether it sounds extreme.
It is whether our economic architecture can adapt if intelligence becomes abundant but human income does not

[admski @admskei]

1971.

Before that, if you wanted to print dollars, you had to back them with gold. There was a hard constraint.

After 1971, that constraint was gone. The dollar became pure fiat.

Governments run deficits, issue debt, and fund it by printing money out of thin air. Administrations change every four or eight years, but the habit stays. Spend more than you take in. Borrow more. Print more.

When money grows faster than real output, the excess does not disappear. It goes into hard assets.

Houses did not necessarily become five or six times more valuable. The unit measuring them was diluted.

[admski @admskei]

If AI takes the jobs, people have no income.
If people have no income, demand collapses.

If demand collapses, how do prices go up?

You cannot have mass unemployment and structurally higher prices at the same time (supply aside).

If AI truly replaces labor at scale, the first-order effect is deflation, not inflation.

[admski @admskei]

Yes, past technology removed the easy part and pushed humans toward higher value work.

But this may be different.

This is the first time technology is replicating human intelligence itself. Not just automating tasks, but potentially replacing full cognitive output and the full stack of human work. Analysis, writing, coding, design, even judgment.

If AI can perform all of that, it is not just freeing us up. It is competing directly with human output.

The question is not whether new problems get created. Humans always create new problems.

The real question is whether humans remain central to solving them and earning the income from doing so.

That is where the real risk sits.

And we are still early, but the pace of development is accelerating fast.

[admski @admskei]

The “AI complements humans” case absolutely could make sense.

But what if this time it replaces human output rather than complements it?

If AI can fully replicate what people do, wages fall, jobs disappear, and household income shrinks while output keeps rising. Production and consumption move out of sync.

That’s not just deflation risk, that’s fiscal strain, weaker demand, asset repricing, and potential social instability.

No one knows how fast adoption goes or how far replacement reaches. But one thing is clear: AI development is accelerating fast.

[admski @admskei]

In some cases, yes, importers may absorb part of the cost, which can affect margins and potentially slow hiring or investment.

But that’s not the only outcome.

Exporters often cut prices to stay competitive in the US market. When that happens, part of the burden shifts back to the foreign producer, and tariff revenue flows to the US Treasury, not entirely from American consumers or firms.

The real answer depends on competition, substitutes, and pricing power.

It’s rarely as one-sided as people make it sound.

[admski @admskei]

Exporters don’t want to lose access to the US markets, it’s the largest consumer market in the world.

So the claim that “Americans pay 100% of tariffs” is too simplistic.

Take a $10 product hit with a 20% tariff.

If the exporter keeps charging $10, the cost jumps to $12, and at that point, importers may look for domestic alternatives.

To stay competitive, the exporter can lower the price to about $8.33. Add the 20% tariff (~$1.67), and the American importer still pays around $10.

Before tariffs: the exporter received $10.
After tariffs: the exporter receives $8.33, and $1.67 goes to the U.S. Treasury.

That’s margins and money shifting from foreign producers to the U.S. government.

It’s not black and white. The burden isn’t automatically 100% on Americans.

@PeterSchiff #tariffs

[admski @admskei]

@JamieBonkiewicz I’m not sure that’s entirely an accurate statement.

[admski @admskei]

You say Bitcoin is severely undervalued.

Undervalued relative to what, though?

When we call a company undervalued, we can point to cash flows, margins, balance sheet strength, growth in customers, competitive advantage, something tangible that anchors the valuation.

So what’s the equivalent framework for Bitcoin?

I’m not dismissing it, I’m genuinely asking: what fundamental theory are you using to conclude it’s undervalued rather than just volatile or sentiment-driven?

[admski @admskei]

@theRealKiyosaki Why do you think Bitcoin is a better reserve asset than gold today?

[admski @admskei]

Looking at the U.S fiscal position and persistent deficit funding via monetary expansion, I understand the concern around fiat losing purchasing power/value. But ultimately, we still need fiat to transact in goods and services, so there’s always some structural demand for it, don’t you think?

Is your bullish view on gold based solely on the idea that reserve holdings, whether by households, institutions, or central banks gradually shift from dollars into gold? Or are there other key factors driving that view as well?

I’m also curious, what stops markets from coordinating around another scarce asset (e.g. palladium) as a reserve store of value instead?

[admski @admskei]

But haven’t many major economies historically imposed tariffs and other protective measures to shield their domestic industries from American goods and services, assuming those were even competitive in their markets, while at the same time benefiting from strong access to the US, the world’s largest consumer market, which has generally maintained relatively low import barriers?

They have been able to combine lower labour costs with export access into a high-purchasing-power market like the US, often selling at higher end-market prices than would be possible domestically.

So I’m just curious, when you say America was “ripping them off,” what do you mean by that?

Even if one argues that the dollar’s fiat nature leads to long-term debasement, exporting nations are effectively hedged in real terms, because as the dollar weakens, the nominal value of the goods they produce and export rises alongside it, meaning they receive more dollars for the same real output over time.

[admski @admskei]

Just a question here, if fundamentals weaken, how much do short-term technicals ($56/50 support levels) really matter in any meaningful way? Isn’t it, in the end, price follows fundamentals, not the other way around?

Shouldn’t the discussion instead be about the likelihood of fundamentals strengthening or weakening, rather than debating specific technical support levels? If you buy at $56 because it looks like support, and a month later earnings come down, that earnings deterioration reflects fundamental pressure. In that scenario, the $56 “support” level often gets taken out anyway.

So just trying to understand from your point of view, what is the thought process for prioritizing technical levels here, when a shift in fundamentals can invalidate them so quickly?

[admski @admskei]

I am curious to hear your thoughts, in your framework where empires move through distinct stages before eventual decline, how do you reconcile that with the current position of the American empire in terms of innovation and technological leadership? The U.S is clearly leading the AI race, dominates the list of trillion-dollar companies by a wide margin, and continues to produce globally scaled platforms that no other country really matches. China may be the closest competitor, but it does not appear to be there yet, while Europe is structurally struggling and other regions lag further behind.

American products and services are used daily across the world, from the most basic to the most sophisticated, and their penetration into global societies does not seem to be retreating, if anything, it is increasing. How does that reality fit into the stages you describe? Does this level of innovation and global integration materially change the path or timing of the later stages, or can an empire still progress from stage five toward stage six despite maintaining such a dominant innovation edge?