The Money Printer Is Back On with Lyn Alden

— AI Impact on Employment: AI is suppressing white-collar job creation and enabling automation, similar to how manufacturing automation affected blue-collar work in the 80s-90s. One person can now oversee work previously requiring five, but physical robotics adoption remains slow (Roomba example cited).

— Software Stock Repricing: SaaS valuations face structural pressure due to AI competition and reduced switching costs. Companies built on recurring revenue models are being repriced downward; not obsolete, but less certain and thus warrant lower multiples (30x to 10-15x earnings).

— Government-AI Relations: Anthropic rejected Pentagon contracts over two red lines: no mass surveillance of US citizens and no autonomous kill decisions. Pentagon shifted to OpenAI; geopolitical and ethical tensions around AI deployment are escalating.

— Fiscal Deficit Trajectory: US debt will grind from ~$40 trillion to ~$50 trillion over five years. Pressures against deficit reduction are structural (aging population, defense spending, entitlements). Interest payments consume an increasing share of tax revenue.

— Monetary Policy Shift: Central banks are transitioning from balance sheet reduction back to gradual expansion in line with nominal GDP growth. The Fed may use yield curve control as a last resort; softer methods (standing repo facilities, liquidity provision) are more likely near-term.

— Money Supply & Inflation Distribution: Broad money supply growth (~7% annually, offset by ~3% productivity) produces inflation concentrated in scarce assets (Bitcoin, gold, real estate, waterfront property) rather than abundant goods (electronics, automatable services).

— US total debt: ~$40 trillion currently, projected ~$50 trillion in 5 years; growing ~$2 trillion annually

— Money supply growth: ~7% average; productivity offsets: ~3%

— Treasury yields: Currently low relative to money supply growth; expected to remain suppressed via softer central bank intervention

— Interest expense: Becoming structural constraint on budget flexibility

— 2020s mirrors 1940s wartime financing (monetized fiscal deficits, not bank lending)

— Inflation shows up in scarce assets: Bitcoin (no dilution beyond security fees, less than gold near-term), gold (~1.5–2% annual dilution), treasuries (~3% net dilution if 4% yield, 7% money supply growth)

— Holdings of cash/bonds underperformed equities, real estate, gold, and Bitcoin significantly since 2020

— Software stocks down materially; no clear bottom yet

— Private credit exposure in US banking system: ~$1.9 trillion of $25 trillion total bank assets (7–8%); not systemic risk if defaults occur

— Own Scarce, Non-Diluting Assets Over Multi-Year Horizons: Avoid cash and bonds as long-term stores. Bitcoin offers near-zero dilution (excluding security costs); gold offers ~2% annual dilution. Treasury returns (~3–4% net yield) lag money supply growth. Prioritize assets with limited supply and no self-dilution (share buybacks in quality equities, hard assets, Bitcoin).

— Monitor SaaS/Software for Capitulation Entry Points: Don't buy falling knives, but watch for stabilization signals and evidence of valuation bottoms. AI-driven repricing is structural, not cyclical; companies will become leaner but less valuable. 18–36 month trades possible once sentiment and prices stabilize; thesis risk remains high.

— Expect Yield Suppression & Continued Real Dilution: Policy makers will use softer tools (liquidity facilities, regulatory adjustments like SLR reform) rather than explicit yield curve control. Real returns on cash and bonds will remain negative relative to money supply growth. Position accordingly—short-term (multi-month) Treasury holdings acceptable for near-term safety, but structurally inadequate for wealth preservation over 5+ years.