RaccoonHeadset

Financial Analyst | Finance Prof. | Seahawks

[RaccoonHeadset @RaccoonHeadset]

Boomer retirement exit strategy

[The Assembly @InTheAssembly]

JUST IN: Trump Accounts could expand to every American under 40, roughly 100 million more people.

70 million kids are already auto-enrolled. 3.5 million more are born into it every year.

Brad Gerstner is pushing legislation within months, and he wants the funding made permanent.

[RaccoonHeadset @RaccoonHeadset]

At yesterday's close of $23.64, $VCX is implicitly valuing Anthropic at roughly $1.1–1.35 trillion.

This is either a foresight into Anthropic’s IPO value, 0or an amazing opportunity to buy it at 50% discount before the IPO. #anthropicAI

[RaccoonHeadset @RaccoonHeadset]

@unusual_whales Mike Wilson is like Institutional Cramer. Fade his comments.

[RaccoonHeadset @RaccoonHeadset]

@dailydirtnap Opposite Day…

[RaccoonHeadset @RaccoonHeadset]

@Combustion_Zone @MFT_Get_Funded Any Chinese company. Those ADRs are a rug-pull in the waiting.

[RaccoonHeadset @RaccoonHeadset]

@vanazadian $EL is probably the biggest sleeper trade. Owner is great friends with Trump and Kevin Warsh is his son-in-law. There will be some free money heading their way somehow before 2028.

[RaccoonHeadset @RaccoonHeadset]

@vanazadian Their monopoly on search is over as consumers are moving to AI. You’re right though that their parts are worth more than the whole. They need to breakup to realize those gains.

[RaccoonHeadset @RaccoonHeadset]

@StealthQE4 If Dems win Pelosi will be back on top, the and targeted flow of funds trade will be on full tilt. Trumps trades are too random, Dems signal winners which makes it easy.

[Daily Roman Updates @UpdatingOnRome]

Check your feet immediately.

[RaccoonHeadset @RaccoonHeadset]

@TonyLaneNV Ponzi schemes

[Daron Acemoglu @DAcemogluMIT]

Third question on AI.

A question that also remains unasked is whether the AI boom can continue without leading to a massive increase in inequality.

A recent paper by Stijn Van Nieuwerburgh runs the numbers on how much revenue the AI industry needs to generate to recover its massive investment (summary and a link to the paper can be found here: https://t.co/QIGcoObcVc).

Van Nieuwerburgh’s arithmetic should make us more concerned. AI investments will average about 3.6% of GDP annually between 2025 and 2032. Van Nieuwerburgh calculates that, using a 10% rate of return, the industry would need to generate annual revenues of about $3.7 trillion by 2032 to recover these costs (growing from its current levels of about $200 billion or so). That is significantly more than 10% of current US national income, and will likely remain around 10% of national income by 2032, even if GDP growth rose from its current level.

A large fraction of this revenue will go to capital income. That means a massive increase in the share of capital in national income, which has already risen substantially over the last 25 years or so – now standing at an all-time high of about 47% (https://t.co/IuYldl173r).

Capital income is much more unequally distributed than labor income, so a massive increase in the capital share of national income will translate into a very sizable surge in inequality.

The rise in inequality may not stop with the capital share. My work with Pascual Restrepo documents that (automation-driven) increases in the capital share of national income are typically associated with rising labor income inequality as well (see, for example, https://t.co/2D9KUL3QfM). The same may happen in the next several years, boosting inequality further.

What is missing from our current debate is any discussion of a fundamental dilemma these numbers pose: can the AI boom avoid both an economically costly crash and a huge increase in inequality?
If the industry reaches these revenues, inequality surges. If the industry does not become profitable, a crash, with substantial costs in terms of lost output and jobs, becomes likely.

My assessment would be that the industry is unlikely to reach levels of revenue Van Nieuwerburgh calculates. First, diffusion has been and will likely continue to be slow. Second, competition from open-weight models, which are getting better, will limit how much proprietary models can charge. Third, despite important advances, I still believe that AI models will not be able to automate entire occupations anytime soon, thus limiting their value to businesses as cost-saving devices.

Whether this leads to a crash or not is more complicated and will depend on whether various AI companies are bailed out and what kind of support they receive.

Nevertheless, even if revenues fall short of these gargantuan amounts and we avoid a dramatic surge in inequality, I expect that the diffusion of AI will push up inequality between capital and labor and within labor.

If inequality does surge, a further question becomes central: can our democracy survive such astronomical levels of inequality?

[RaccoonHeadset @RaccoonHeadset]

@StealthQE4 Stable coins. Developing an entirely new currency in which they create and control.

[RaccoonHeadset @RaccoonHeadset]

@nadzi_mouad Remember in Atlas Shrugged when the government wanted to take Rearden Steele for the “benefit” of the people.

We were worried about a bailout, it might just be regulating it into government control

[RaccoonHeadset @RaccoonHeadset]

@jeremyct You need to backdate the analysis. If you did this in 2013 would you be ahead?

[RaccoonHeadset @RaccoonHeadset]

@DudeWhoInvests @brewmarkets Because the rate differential to Japan who will hike this week keeps the carry trade alive. Friday open direction will tell you if the unwind is happening or the trade is full back on.

[RaccoonHeadset @RaccoonHeadset]

@FinanceLancelot Bond prices are not a tell.

[RaccoonHeadset @RaccoonHeadset]

@RichardGabai @MarkTepperSWP Bonds will be mildly happy and everyone else will puke. Will be the blunder that started the AI crash.

[RaccoonHeadset @RaccoonHeadset]

@NoLimitGains Driving less because unemployed people only have to go to town once a week to collect their checks

[RaccoonHeadset @RaccoonHeadset]

@SamuelG5978 @WatkinsVivienne @NoLimitGains Fed is currently controlled by the son in law of a Ronald Lauder, who went to UPenn Wharton school with Trump. They are long term friends. Kevin Warsh is basically Jared Kusner 2.0

[RaccoonHeadset @RaccoonHeadset]

@heresyfinancial Hold is the right answer. Only thing that's happening is foreign held bonds are being sold. Fed Funds doesn't affect that.