🙌 The Informationist takes one current event or complicated concept and simplifies it for you in bullet points and easy to understand text.

🫶 If this email was forwarded to you, then you have awesome friends, click below to join!

Subscribe now

Today’s Bullets:

• What Is a Trump Dividend, Anyway?

• Doesn’t Congress Get a Say?

• Who Coughs Up the Dough?

• What Does This Do to the Price of Milk?

Inspirational Tweet:

Let’s be honest. We’ve all gotten quite used to politicians making all kinds of promises before elections. A tax cut here, a new program there, maybe a shiny new stadium back home.

It always seems to suggest the idea of buying votes, but hidden in just enough rhetoric to keep up the pretense of mere politicking, fair and square.

Recently, it seems we’ve edged closer to dropping that pretense.

Then Wednesday night, on the Republican midterm convention stage in Dallas, President Trump literally placed a cash bounty on the midterm elections. If Republicans win the House and the Senate in November, every adult citizen gets $5,000.

He even named the deal. The Trump dividend. Sounds pretty great, doesn’t it?

Election night, and perhaps a few weeks later, whammo, five grand hits your checking account.

That’s a lot of Chipotle burrito bowls.

But before we go mentally spending that cash, we should probably ask a few questions. Like, how would this even work? Doesn’t he need Congress to be involved? More importantly, how would it even be paid for? And most importantly, what would it do to our grocery bills and the savings we already have?

All good questions, important ones that we’re going to answer, nice and easy as always, right here today.

So pour yourself a big cup of coffee and settle into your favorite seat, as we follow the promise of $5,000 from a Dallas stage to your bank account, with this Sunday’s Informationist.

Partner spot

Reduce risk in your bitcoin setup

If you already self-custody and want to eliminate your reliance on a single device, Unchained can help.

A multisig vault requires multiple keys to move bitcoin. When those keys are stored on different devices, a problem with one device does not give an attacker everything needed to spend the bitcoin. Unchained has been helping hundreds of users on their platform move bitcoin into new vaults, review their setups, and make informed decisions about what to do next.

Strengthen Your Setup is Unchained’s Premium Service Suite for bitcoin holders who want to upgrade to collaborative multisig. Across multiple one-on-one sessions, a dedicated bitcoin expert guides you through creating your first vault and provides advanced security training.

You leave with a fully configured vault, a tested recovery plan, and a setup reviewed by a bitcoin expert. If you hold your bitcoin in a single device and have questions about what to do next, or know someone who does, contact Unchained.

Strengthen your setup with Unchained

What Is a Trump Dividend, Anyway?

First, let’s get Trump’s exact words from the Dallas stage the other night:

“If the Republicans win the House of Representatives and the United States Senate, I will issue a dividend to every adult citizen in the United States of America for $5,000, very much like a successful company will do a cash distribution to its shareholders.”

Notice the word citizen here. Watcher.Guru left that important detail out of its post on X. So it’s not every adult who happens to be currently living in the US, and there’s another catch.

When CBS News Texas asked whether Congress would need to approve the checks, the President said,“We don’t want to have that money spent in other countries.”

So much for that trip to Cabo.

In any case, what exactly is a dividend from the United States government?

I mean, when a company is a strong, cash-flowing type of business, it often takes profits and pays them out to the people who own the company, its shareholders. Like Coca-Cola, which pays one every quarter.

By his logic, the country here is the company, and we’re all shareholders.

And according to the White House, quoting the President, business is good.

“Because we’ve done so well, and because our country is making so much money, only I can make this promise to you.”

Remember that “profits” part of the dividend definition above? Yeah, we’ll come back to that part in a bit.

Of course, governments can pay dividends, too. Alaska sends one to its residents every year, paid from the earnings of a giant fund that was created by royalties from the state’s oil. In 2025, it added up to $1,000 a person.

A lot of money annually to a normal everyday person, but you still have to deal with grizzlies and arctic temperatures. No thank you.

Remember, this administration has toyed with the idea of federal dividends before. In February 2025, the President floated a DOGE dividend, a 20% share of the savings from cutting government spending. Then on November 9, 2025, he posted, “A dividend of at least $2000 a person (not including high income people!) will be paid to everyone.”

Whatever “high income” is these days.

In fact, this most recent dividend promise is the latest of its kind from Trump and Co. Though, as you know, none of the earlier ones actually materialized.

But what about this one? The President also seems to believe that he can make it happen without a vote from Congress.

Wait a minute, can he actually do that?

Hmmm. Let’s dig into that next, shall we?

Doesn’t Congress Get a Say?

Read more

WHAT I’M WATCHING THIS WEEK

Read more

Subscribe now

Full disclosure, and as many of you already know: I hold bitcoin and hard assets personally and professionally, and I sit on the board of a bitcoin treasury company, so weigh my opinion accordingly. Nothing here is individual advice, and I don't know your personal situation. If you have an advisor, these are conversations you should be having with them.

Today’s Bullets:

• Tale of the Tape

• The Case for the Bottom

• The Fine Print

• Can They Stand Up to the Macro?

Inspirational Tweet:

The bottom is in, the bottom is in!

I have to admit, when we look at a chart like the one above, as pointed out by Kobeissi, the Bitcoin rally does appear to just be gaining momentum.

That said, we’ve seen much stranger things than a sudden spike and then a just-as-sudden sell-off from this asset before.

It’s Bitcoin after all, and Bitcoin loves to do exactly what the least number of people expect. Especially after what has been such a welcome relief rally from over 10 months of pure pain in this market.

Then again, there does appear to be real evidence that Bitcoin may have bottomed out here. From cycle peaks and valleys to on-chain metrics, there are plenty of signals we can read.

Question is, are any of them strong enough, deep enough in their history to be solid indicators for this type of declaration? And if so, what exactly are the most useful ones telling us, and why? And perhaps most importantly, can they stand up to the current, and possible coming, macro-economic environment?

Great questions, all of them, and ones we will cover in deep enough detail here today. But don’t worry, and don’t feel intimidated by the thought of analytics or math, because we are going to do this nice and easy, as always.

So, pour yourself a big cup of coffee and settle into your favorite seat, as we make sense of the calls for a Bitcoin bottom with this Sunday’s Informationist.

Partner spot

Reduce risk in your bitcoin setup

The recent Coldcard incident is a good reason to review how your bitcoin is secured. If you already self-custody and want to eliminate your reliance on a single device, Unchained can help.

A multisig vault requires multiple keys to move bitcoin. When those keys are stored on different devices, a problem with one device does not give an attacker everything needed to spend the bitcoin.

Throughout the Coldcard incident, Unchained has been helping hundreds of Coldcard users on their platform move bitcoin into new vaults, review their setups, and make informed decisions about what to do next.

Strengthen Your Setup is Unchained’s Premium Service Suite for bitcoin holders who want to upgrade to collaborative multisig. Across multiple one-on-one sessions, a dedicated bitcoin expert guides you through creating your first vault and provides advanced security training.

You leave with a fully configured vault, a tested recovery plan, and a setup reviewed by a bitcoin expert.

If you use a Coldcard or hold your bitcoin in a single device and have questions about what to do next, or know someone who does, contact Unchained.

Strengthen your setup with Unchained

Tale of the Tape

To start this section, we must go back to the trading day of October 10th, last year.

And what a day it was.

There I am, sitting at my desk in my own office, same as usual. Outside, it’s a near-perfect, crisp October fall Friday in Las Vegas. The kind of day that begs you to take the day off, go golfing instead.

I should have, because inside a storm was brewing. A trading market hurricane.

First, the S&P 500 opened green, sitting a hair below the record it had set two days earlier. By the close it had given all of that back and a whole lot more, down 2.7% on the day. The Nasdaq Composite dropped right along with it, ending down 3.6%.

In direct contrast, both gold and silver ended up on the day.

Then there was Bitcoin.

Having closed at $121,705 on Thursday evening, Bitcoin seemed to hang in there, rallying alongside the general markets, and touching an intraday high of $122,587 that morning.

All is good. Maybe we’ll make another all-time high soon.

Or maybe not.

Because the markets began to soften, and Bitcoin drifted right with them.

From $122K to $120K, to $118K, and settling at just above $117K by the close of trading in New York.

Ouch, that was painful. Or so we thought.

Because it was not over.

Remember, Bitcoin itself doesn’t ever stop trading. We just get a closing price struck at 8pm Eastern Time, nightly.

So Bitcoin kept trading.

And at approximately 1:45pm my time on the Pacific, a mere 45 minutes after the NYSE closed. Out of nowhere.

The bottom. Literally. Fell out.

Bitcoin traded from $117,209 to $113,048, down over $4K in 15 minutes, before climbing back up to $114,364.

Then it dropped again, another $4K, to $110,209. Recovered for a few minutes to $112,354.

Then again. Fifteen minutes of punishing selling.

All. The. Way. To.

$105,617.

A fall of nearly $7K.

A total flush. Down $11,600, about 10%, in less than 45 minutes.

We’re not going to get into the reasons behind this leveraged flush, but it’s instructive to understand just how quickly things can change in Bitcoin.

After the dust settled and we all licked our wounds, Bitcoin seemed to find footing for a couple of weeks before it began to really grind lower, starting in November, with a steep drop-off to below $100K by the end of the month.

The selling plateaued in December with Bitcoin trading between $85K and $95K.

Then it dropped again by the end of January. Another sharp sell-off down to $60K in early February, marking over a 50% drop in just a few months.

By the middle of April, Bitcoin seemed to find its footing and climbed all the way back up above $80K in May.

Some investors were calling a bottom at that time because Bitcoin had already dropped over 50%.

And of course, hindsight being 20/20, this was optimistic.

Because by mid-May, Bitcoin started falling again. With a final push down to $57,748 on July 1st.

As I said before, a punishing period for Bitcoin.

Even worse, the markets had marched higher and higher in the same period to crest and reach new all-time highs, again and again, driven by the AI-trade.

But just a few weeks ago, Bitcoin began to recover. There are many reasons this latest wave of buying can be attributed to, and we will get to that in a bit. But for now, take a look at where Bitcoin has come from.

All the way back to over $82K. But then, jobs numbers came in three times consensus, and Bitcoin, gold and silver all got sold together. Bitcoin has since retreated back to $79,850 as I write this on Friday afternoon.

Of course, this could all change again by the time you’re reading this, as that’s two days from now, and this is Bitcoin, after all.

But that is not the point. The point is that Bitcoin has had a severe and prolonged drawdown, tipped off by the leveraged wipeout on October 10.

Confidence was shattered for short-term holders after an apparent exodus of OG’s (original holders from long ago) from Bitcoin. Bitcoin-related companies, like Strategy, were vilified on Twitter and in the media, and relentlessly sold.

It was a gut-wrenching and brutal period for new and long-time investors alike. Perhaps because there was no blow-off top, no Bitcoin mania or hysteria this past run-up to the all-time high. This may be a factor in Bitcoin’s favor, though, as we will talk about in a bit, too.

In any case, with the turmoil, the Bitcoin Fear and Greed index sat near all-time lows, signaling massive investor fear for months.

But as we have seen before, Bitcoin can have violent moves in either direction. And often it happens in a mirror image of a recent move, on no news at all. A total round trip that has earned the nickname of The Bart. And it looks like this.

So the question, and we are all in the right to ask it, is: has Bitcoin, in fact, bottomed for this so-called cycle?

And if so, how can we prove it against the last few times Bitcoin has “bottomed”?

Or are we, as some investors fear, just being set up for another Bart?

The Case for the Bottom

Read more

WHAT I’M WATCHING THIS WEEK

Read more

Subscribe now

Full disclosure, and as many of you already know: I hold bitcoin and hard assets personally and professionally, and I sit on the board of a bitcoin treasury company, so weigh my opinion accordingly. Nothing here is individual advice, and I don’t know your personal situation. If you have an advisor, these are conversations you should be having with them.

Today’s Bullets:

• What Warsh Actually Said

• Operation Verbal Twist

• The Part He Doesn't Control

• Where That Leaves Your Money

Inspirational Tweet:

If you’re an investor, professional or not, you likely knew all about Warsh’s speech on Friday morning.

You know, the one he was to give from a formal Fed lectern in the completely informal setting of Jackson Hole, Wyoming. The location of the annual Fed retreat, known as the US Federal Reserve Economic Symposium.

Affectionately known as the Central Banker’s Boondoggle on Wall Street.

But what we didn’t know is what the heck he was going to say. Especially because Warsh has been adamant concerning his stance that the Fed should not be giving forward guidance to markets anymore.

Regardless, there was quite a buzz and build up, even though most people, economists, investors and pundits alike, figured it would be a whole lot of nothing since he wasn’t going to give guidance anyways.

Oh, how they were so wrong.

Because Warsh started speaking and markets started reacting, almost immediately.

US Treasury bonds had some large moves, and as Joseph Wang points out above, the long bond liked what it heard. And stores of value, like gold, silver, and even Bitcoin, got hammered within minutes.

Question is, was it intentional? Did Warsh set out to make the market react like this? And if he did, why? More importantly, why did some of the bonds reverse much of their moves before the day ended? And most importantly, what does it mean for our own investments and portfolios?

All good questions, important ones that we’re going to answer, nice and easy as always, right here today.

So pour yourself a big cup of coffee and settle into your favorite seat, as we work through the new Fed Chairman’s voice and how powerful it really is, with this Sunday’s Informationist.

Partner spot

Was that the bears’ warning shot?

Bitcoin recently rallied past $80,000 as U.S. debt crossed $40 trillion and the Treasury moved to expand buybacks. It’s the first time bitcoin has traded above its 200-day moving average in nearly 300 days.

I’m sitting down with Mark Moss, Strive’s Matt Cole, and Jeff Vandrew for a live fireside chat on September 1st on the catalysts that could drive bitcoin’s next move.

The discussion covers:

• Whether this recent move suggests the bottom is in

• Where the next wave of demand could come from: ETFs, treasury companies, and institutional buyers

• How to prepare for the next leg, from custody to your long-term financial plan

  Register now to join live and bring your questions for the audience Q&A.

What Warsh Actually Said

For a guy who insists he’s not going to say anything to the press anymore, Warsh sure did seem to say a lot on Friday.

Let’s start with this little gem, for instance:

“…there should be no misunderstanding: The Fed’s price-stability objective of 2 percent, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target.”

No surprise that he mentions PCE, as it has long been the preferred inflation measure for the Fed and it’s been running hot for years now. Today it’s at 3.7%.

Once again, in no uncertain terms, the Chairman insisted that the Fed’s target is 2%, and that is not going to change. Period.

After all, as he said:

“The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank.”

Some quick math here, sixty-five months is almost five and a half years. And Warsh pretty much assumed the blame for the Fed itself.

Nuance. He knows he wasn’t there, he knows we know he wasn’t there during those years, but hey, he’s here to clean it up for us.

What a guy.

Once again forward guidance made the transcript:

“Here is a quick overview of what I’ll cover in my remarks this morning. You can call it an outline . . . you can call it a trail map . . . just don’t call it forward guidance.”

He closed with the stance of a man on a mission: “I stand here today committed to a discipline, not to a decision.”

Okay, we hear you Kevin.

But what exactly is he getting at with all this talk about no talking?

Well, he also said this:

“The economic literature has long described the distorting effects: a hall-of-mirrors problem. If markets rely materially on the Fed’s guidance and the Fed relies on market prices, we are all more likely to be blinded to new developments . . . more likely to be caught unprepared for a turn of events . . . and more likely to commit errors in policymaking.”

In other words, if the market is focused on guessing what the Fed will do and the Fed worries about what the market expects, then the two of them are just feeding off of one another.

A near-perfect circular reference.

And then, nobody ends up reacting to the actual economy itself. Which makes all that economic data pretty much useless.

Well, it’s hard to argue that it’s actually useful a lot of the times, but I digress.

In any case, Warsh says he wants a quieter Fed, and he wants cleaner information coming back the other way. His words:

“The Fed needs clear market signals, as unfiltered as possible.”

For some reason, as I was watching this and listening to his words and him saying over and over and over again that 2% is the inflation target and it will not budge, a certain movie scene came to mind.

Some of you more experienced readers may remember the film Cool Hand Luke with Paul Newman. In a famous scene, the prisoner chain gang is out in the fields, and the Captain, Strother Martin, is standing over Luke (Paul Newman) after beating him. And he says, “What we’ve got here is failure to communicate. Some men you just can’t reach. So you get what we had here last week, which is the way he wants it. Well, he gets it. And I don’t like it any more than you men.”

In other words, Luke’s refusal to submit will only bring harsher punishment, like the beating they just watched.

And Luke does break. There’s a scene late in the film where he tells them he’s got his mind right, and it guts every man around him.

But it doesn’t hold. He goes right back to being Luke.

Well, perhaps the long bond here is Luke. And maybe what Warsh was really speaking to was the bond market's refusal to recognize that the Fed has a new chairman, and that he is absolutely intent on keeping inflation in check.

And so, in his speech on Friday, Warsh said the words “2 percent” four times and the word “inflation” thirty times.

There would be no failure to communicate.

And the market took a beat-down for it.

The result?

Well, before the speech, Fed Funds futures were pricing odds of a rate hike in September at about 36%. By close of the day, it was 57%.

Even more, looking across the next two years, expected rate hikes moved from 1.8 to about 2.4. That’s about two-thirds of an extra hike, all priced in on the back of a speech that not once articulated where rates were headed.

Remember, every one of those rate hikes, if they do ever show up, lands squarely on what you and I, and every company in the country pays to borrow.

These days, when the Fed speaks, trading floors have the volume turned up and hang on pretty much every word until the moment it’s over. And then we are hit with a flood of analysis and interpretation of the speech from economists and pundits on every corner for the rest of the day.

Friday was one of those on steroids.

Anna Wong, the highly respected Bloomberg economist, summed it all up in a single line.

Well said, Anna.

Remember, at the Fed’s July meeting, the vote was 9-3 to keep rates unchanged, and the three dissenters wanted an immediate rate hike. So to her point, and I agree with her, the chairman appears to have saddled up alongside those three now.

For those of you who have been reading me for a while, you won’t be too surprised by any of this, because back in July we dug into exactly how Warsh uses his voice.

What we basically concluded was that he talks hawkish in public, possibly to protect his own credibility, and then refuses to commit to anything and keeps every door open to him later.

That’s apparently the exact same playbook he ran on Friday. Because even though he said nothing about rate hikes, the market immediately started pricing some in.

Now the question is, do they actually hike in September?

Even though the market is now leaning toward a yes, I’m not there yet because I think what Warsh wants is some breathing room to operate.

He wants to hold things where they are, and see more data before he makes any concrete moves.

At least that’s how I see it.

One interesting thing, the federal deficit didn’t come up once, neither did the national debt, or the Fed’s balance sheet, or the long end of the curve. The word Treasury was uttered just once in the whole monologue, and only as an example of a market that they’ll be watching.

Of course, this is not surprising or unusual, especially because this was a one-way speech, and there was no press Q&A session.

Though with the debt where it is, those are exactly the questions we would have wanted somebody to put to him.

That’s an extremely important point, though, and we’re going to dig into it in a bit.

But first, let’s talk about the market reaction and how powerful, at least temporarily, Warsh’s words were.

Operation Verbal Twist

First a little history. Don’t worry, we’ll keep it short, but it helps make sense of what happened Friday.

To do so, we head back to 1961, when the Kennedy administration had a problem. See, they wanted short-term interest rates high because money was fleeing the country for higher yields. Raising short-term rates here would help keep that money at home, invested in US markets, not abroad. On top of this, they wanted long-term rates low because those rates are what American businesses, consumers, and home buyers actually borrow at, and the economy needed a boost.

They were so desperate to make this happen, that the Fed and Treasury teamed up.

And so they sold short-term government paper and used that cash to buy long-term bonds. Remember, selling pushes bond prices down and their yields up, and buying does the exact opposite. And so, at the front of the curve, yields rose, and at the back end of the curve, yields fell.

The move was originally called Operation Nudge because the plan was to nudge long rates down while holding the short end rates up. Then someone clever noted that the yield curve itself was pivoting around its middle, and likened it to a super popular song at the time.

Chubby Checker’s, The Twist.

And just like that, the Fed/Treasury move would forever be known as Operation Twist.

So, did Operation Twist work? Sort of. Long rates came down about 15 basis points or 0.15%. Not nothing, but not really helpful either.

Flash forward to the period after the Great Financial Crisis, and the Fed ran it again, this time alone, in 2011. Operation Twist Part 2. That time, they got about a quarter of a percent out of it. Again, not nothing, but pretty expensive for such a small move.

In any case, that’s the play. Lift one end of the curve, push the other one down, and never touch the overnight rate at all.

Now you may be asking, why would they want that today?

Put simply, high short rates would make the Fed look serious about inflation. Lower long rates would ease the cost of mortgages, car loans, and of course, corporate borrowing.

Problem is, if bond buyers recognize you are running Operation Twist, then they inherently know that will just wind up causing more money printing, and eventually more inflation.

And so, I believe the question that both Warsh and Bessent are asking themselves and each other is, how can you run Operation Twist without making it so obvious?

This is how.

Nine days before Warsh stood at the lectern in Wyoming, Scott Bessent doubled the size of the Treasury’s long bond buybacks, then went on CNBC and called it a Treasury Twist.

Not Operation Twist, mind you, because that would mean the Fed was involved, and that would mean more money printing.

If you want to know more about this Treasury Twist, we covered the whole incident just last week. You can find that right here.

To be clear, that move does cost money. Real money, going into the open market to buy real bonds.

But what about the Fed side?

Well, like we said, the Fed is not involved in the Treasury twist.

And on Friday, Warsh didn’t buy a single bond. He didn’t sell one either. He didn’t move the overnight rate by a single basis point. He can’t do that for another two and a half weeks.

At least not without an emergency mid-meeting move, and that would just look like panic. Something that no new Fed chair would ever want to communicate.

So how do you impart inflation seriousness without policy?

Words.

He just talked. And talked and talked.

“Two percent.” Four times.

“Target.“ Twice.

“Inflation.” Thirty times.

And the market reacted. Hook. Line. Sinker.

During the speech, the super-short end, the bills that mature before the next Fed meeting, didn’t really move.

But then look at what the rest of the curve did.

First, the short-end.

With every utterance of the word inflation, the 1-year yield ticked just a little bit higher, moving up from 4.04% and peaking at 4.13% by end of the speech. About a third of a Fed hike of 25bps.

The 2-year moved up 10 bps. About 40% of a full Fed hike.

Meanwhile, the 30-year Treasury yield went from 5.21% before the speech started to 5.16% before the end of the speech. The 20-year had a virtually identical move.

In other words, the reaction of the market as the chairman spoke, was that short yields rose and long yields fell.

I’ve been at this for many years, and that was as clear of a real-time market repricing as anything I can remember seeing.

But no dollars were spent on this one, just words. Lots and lots of one word in particular.

And so we’ll have to call it Operation Verbal Twist.

And for a few hours that morning, it worked exactly the way Warsh would have wanted.

But then, of course, the bond market, as it always eventually does, came to its senses.

The Part He Doesn’t Control

So what did all that talking actually buy Warsh?

To answer that, we need to look at it from three different directions, and they each tell us something different.

Start with the Twist itself.

You could actually see it happen live while he was speaking. The question is whether it lasted.

Here’s the gap between the 30-year and the 2-year throughout the day.

As you can see, it falls off a cliff within the first 20 minutes of the speech, tightening from about 0.96 just before he spoke to around 0.86, and then it just parks there. All morning. All afternoon. All the way up to the close.

It finished 10.7 basis points narrower than Thursday.

Bond investors call that flattening, and for reference, 10 basis points of flattening in a single session is a pretty big move.

OK, now the second direction.

Remember the ten-year breakeven? Exactly, the market’s forecast of what inflation will average over the next ten years. We’ve talked about it a bunch lately because it’s about the best live readout of inflation expectation that we can get.

As Warsh said himself Friday, “It’s the Fed’s job to make sure that inflation expectations do not get unanchored.”

OK then, let’s have a peek at those expectations.

On Thursday, the 10-year break-even closed at 2.3335%. By 8:45 am Friday morning, it had drifted up to 2.3406%

Warsh started speaking at 10am.

Twenty minutes later it had moved to 2.3118%.

This spread never came back either. It closed at 2.3175%, below where it started, and sat parked there for the rest of the afternoon.

OK. Two for two now.

Which brings us to the third direction.

The 30-year Treasury closed Friday at 5.210% right back where it stood before he opened his mouth, and a basis point and a half above Thursday.

And it wasn’t just the 30-year. By the close of trading Friday, every single Treasury bond and bill closed with higher yields on the day. The 1-year rose 12.6 basis points, and from there it falls away, smaller and smaller, all the way down to 1.5 at the 30-year.

Which is also how the flattening ended up sticking. The front end came up hard and stayed up, and the back end barely budged.

So now let’s add it up.

Short-term yields rose, because investors expect rates to go higher as a Fed response to and fight against inflation.

The break-even rate, or expected inflation according to the markets, eased a few basis points.

The 30-year Treasury yield fell at first on Friday, and then it marched higher and ended up on the day.

The question is, if investors expect inflation to be tackled by the Fed, then why would they demand higher rates in the future???

I thought you’d never ask.

It’s because the rent on money has gone up.

If you’ve read the last few Informationist newsletters, you’ll remember this one and what it is all about.

For those of you who have not yet read it, the rent on money is the return that a buyer demands for tying up cash for thirty years. This is on top of whatever they figure inflation is going to do. Bloomberg’s model priced it at about 1.45% on Thursday.

This is against a five-year average of about 0.47%, meaning it is currently priced at about three times the recent norm.

Two more facts.

1. That number hit a five-year high on August 17.

2. The Treasury announced it was doubling the size of its long-bond buybacks on August 19.

Two days apart.

My guess is that somebody at the Treasury was looking at that same exact screen of expectations.

Which brings us right back around to Scott Bessent.

Two men. Two completely different tools. Nine days apart.

Bessent went first, and he chose the path of using money. Real dollars, into the open market, buying real bonds. The 30-year rallied 9 basis points on his announcement and then handed every one of them back within two days.

Then Warsh went, and he chose to use words. The 30-year fell 5 basis points while he spoke and then gave every one of those back by the close, finishing at 5.21, right where it started.

Just about the same round trip, nine days apart.

Interesting.

Look, the US Treasury has to sell the paper either way.

We have gone through this math many times over the years, and we went through it again last Sunday, so I’m not going to repeat it ad nauseam here.

One important number, though.

Over $10.5 trillion of existing debt matures and has to be refinanced, with roughly $2 trillion of fresh deficit borrowing stacked on top of it.

All in the next year.

That is what has to get sold. And it gets sold whether inflation prints at 3.7% or 5% or 2%.

Bottom line, inflation promises can’t shrink a deficit. They can’t retire maturing notes. And they sure can’t conjure up new buyers for the onslaught of new notes that are coming.

We still need old buyers and new buyers together to show up at every auction between now and the end of 2027 to take that paper down. And if you can see the tsunami of debt that’s coming at you, you’d be smart to want to be paid a little more for it.

Which brings us all the way back to the original question for today.

Can the Fed just talk rates down?

Friday proved that Warsh can talk the front end around, and he can talk the market’s inflation expectations down, make them stick. At least for one day. But the long end went its own way.

Where That Leaves Your Money

So what did Friday actually do to the things you might own?

Start with the ones that got hit hardest.

Gold peaked at $4,625.30 an ounce, at 10am ET, on the dot, the minute he opened his mouth. It closed the day at $4,453.67.

That’s $171.63 off the high, down 3.7%.

Silver did the same thing at the same time. High of $71, close of $66.37. Down $4.63 from the peak, or 6.5%.

Both metals started to break right at 10am and continued to bleed all day long, both finishing right near the lows of the day.

Bitcoin ran roughly the same pattern on the day. High of 79,775, close of 77,384.

Ouch.

Gold, silver, and bitcoin are all known as assets to own when money is devalued. They are at the core of the debasement trade.

None of them pay yields, and so higher yields usually lead to some selling in these assets. Kind of expected, especially if the market is telling you that inflation expectations are lessening.

At least for a day.

Because, let’s go back to what we just spoke about.

The Treasury still has to unload more than $10.5 trillion of maturing paper over the next 12 months, with about $2 trillion of deficit borrowing on top of that.

Nothing’s changed there, and as far as I can tell, nothing ever will.

And remember the yen?

Right.

On Friday, the yen closed at 160.09 per dollar. The same day that Japan’s Ministry of Finance published the official intervention total: ¥15.4 trillion over the four weeks to August 26, or somewhere around $97 billion.

The largest four-week intervention they’ve ever run.

Good golly Miss Molly.

If you were with us on August 9, you’ll remember the line. Intervention can move a price, and only policy can move a trend. Four weeks and ¥15.4 trillion later, the yen is right back through 160. Remember that one when September comes back around.

Now, what can we do with all of this?

Here is how I personally think about it, which is pretty much the same way I have been thinking about it for four years now.

When a government has to sell that much paper, the value of the money it’s printed against tends to go in one direction only over time. Friday changed none of that, it just gave it a tough afternoon.

And so, the next time you see a long-term yield jump, and you will, ask yourself one question before you listen to a single word of any pundit or analyst’s own take on it.

Is that a rate problem, or a supply problem?

A rate problem is the market responding to the Fed, and it manifests at the front of the curve. A supply problem is the market responding to the sheer amount of paper coming at it, and it shows up at the back.

It appears Friday’s moves were almost entirely in response to a rate problem. As the day wore on, the supply problem reared its ugly head.

Don’t worry, you’ll get to ask it again soon enough.

The next Fed meeting is September 15 and 16, with a rate decision on the 16th. Almost poetic, the Bank of Japan meets the very next day, the 17th and 18th.

And the Treasury’s expanded buyback window opens on September 9 and runs through November 4.

That’s three shots for us to ask the same question in less than a month.

One more thing, and this one’s for a select group of you. I’ve had a number of RIAs and analysts request deeper dives into some of the topics we’ve covered here in recent months.

If you invest or advise for a living, I’ve been building something meant for you.

The Informationist Institutional launches in September.

It’s a quarterly letter, ten to fifteen thousand words, delivered through Substack with a designed PDF you can print, mark up, and forward to a client or a committee. Institutional depth, written the way I write everything else here, so you never have to translate it for anybody.

Every quarter, the same standing departments.

The state of the system, the Fed’s balance sheet, Treasury issuance and who is actually holding the paper, the credit markets, the dollar, and rates.

Hard assets, including bitcoin.

A running scoreboard of the numbers I watch to gauge debasement, updated every quarter.

And what would break the whole thesis, named well in advance.

Plus a live quarterly Roundtable call with me. We’ll walk through the letter and the themes in it, and then it opens up. You ask whatever you want, about anything in the letter or anything that has happened since I wrote it.

The first issue is free. It’ll land right here, same as everything else.

It’ll address the shift in who owns US Treasuries, and what that shift does to duration and to hard assets from here. Which is to say, it’s the long-form answer to the questions you’ve been asking.

The founding rate is $1,800 a year, and for those who want access to the underlying metrics and the data behind the letter, there will be options for that, too.

Informationist Institutional

That’s it for today. I hope you walk away a little smarter about what a Fed Chairman’s voice can actually move and why the long end of the curve keeps moving on its own.

If you found value in this one, please share it with someone you think would too.

And if you’re not yet a premium subscriber, we’d love to have you join us.

Subscribe now

Join 1,500+ premium readers who get both issues in full every week: the Sunday deep dive, and the Monday Macro Brief before the open.

Talk soon,

James✌️

Read more

Subscribe now

Today’s Bullets:

• What Bessent Did

• The Treasury’s Bar Tab

• To QE or Not to QE

• The Market’s Response

Inspirational Tweet:

We sure seem to be talking about the US Treasury Secretary Scott Bessent, quite a bit lately, don’t we?

Fact is, if you’re an investor or an economist, he’s given us little choice. Because the things he’s doing and what he’s been saying have been both newsworthy and impactful to markets.

Like this gem from last week.

“You know what I would call a Treasury Twist.”

-US Treasury Secretary Scott Bessent

Bessent said that on CNBC Thursday morning when describing the newest US Treasury buy-back program. And Joseph Wang nails his assessment of the new bond buying nickname above, which we’ll get into later.

As for the bond market, it reacted almost violently to the announcement and then shifted right back again.

But why did they move in the first place?

And then there was Bessent right back on TV the next morning, promising even more of the operation.

The 30-year didn’t care. At all, as we will get into as well.

So what’s the operation that Bessent is talking about here? Why did the market love it at first and then turn its back right on it the very next day? Is this QE? Is it yield curve control? What does it mean for our own mortgage rates?

All good questions, important ones that we’re going to answer, nice and easy as always, right here today.

So pour yourself a big cup of coffee and settle into your favorite seat, as we work through what the Treasury is really up to here and what it means for both investors and regular people, with this Sunday’s Informationist.

Partner spot

Was that the bears’ warning shot?

This week bitcoin rallied past $77,000 as U.S. debt crossed $40 trillion and the Treasury moved to expand buybacks. It’s the first time bitcoin has traded above its 200-day moving average in nearly 300 days.

I’m sitting down with Mark Moss, Strive’s Matt Cole, and Jeff Vandrew for a live fireside chat on September 1st on the catalysts that could drive bitcoin’s next move.

The discussion covers:

• Whether this week’s moves suggest the bottom is in

• Where the next wave of demand could come from: ETFs, treasury companies, and institutional buyers

• How to prepare for the next leg, from custody to your long-term financial plan

  Register now to join live and bring your questions for the audience Q&A.

What Bessent Did

Let’s talk about Scott Bessent now, shall we? A little history.

Scott knows money. I mean, really knows money. He spent decades of his career at hedge funds, in the trenches, actually buying and selling the exact instruments he’s now charged with governing.

This immediately sets him apart from his predecessor at the Treasury, Janet Yellen.

And so he understands how some hedge funds have been known to call their prime broker and purposely ask about levels or inquire about prices for a certain security or mix of securities. Especially if the prime broker he’s calling is prone to information leakage.

Leading to a whisper, whisper, big hedge fund asking about such and such, you may want to look into it, type of leakage.

Maybe they are seeking to move markets outright or perhaps just to gauge the liquidity of something.

Which brings us to The Notepad Incident.

Just a few weeks ago, the Treasury Secretary of the United States sat down in a cabinet meeting and placed a clearly legible note on his desk.

Sitting right behind him, a Reuters photographer snapped a pic, and a few hours later it was all over the news.

Oops?

No.

Deliberate? To maybe get investors to move the market for him?

How?

Well, if you’re a macro investor and you see that the Treasury is tipping off the world that they’re about to buy yen, you’d want to get ahead of it. You’d want to buy yen first, cover short positions, get out of the way.

Why?

The Treasury has arguably the largest balance sheet in the world. Not a freight train you’d want to step in front of, and certainly one you’d want to get out of the way of.

And so sometimes the announcement itself is the operation.

Okay, so what does this have to do with the buybacks that he’s talking about?

First, the program he’s talking about is the Regular Treasury Buyback program that Bessent inherited from Janet Yellen.

What is it?

A little story time. Back in 1994, when an injury effectively ended my short pro hockey career, I was making the rounds on Wall Street, looking for a job, any job that could help me pay back my loans and bills.

One of the shops I ended up interviewing at was Prudential. Located in mid-town Manhattan off of Sixth Avenue, aka Avenue of the Americas, Prudential housed a floor of bond traders. Big guys, former football players, intimidating physically and over the phone. And on every desk of every trader sat a large stack of dot matrix printouts.

You know the kind of printer that continuously prints sheet to sheet, all connected with a perforation and little wheel holes down each side of the paper?

These things.

They would print these things out every few days, and in the stack was a list of every single bond and the price that was fair value at the time. There was no screen you could pull up with a live, reliable price on every bond, which is exactly why the stack existed. It’s not like stocks, where there were centralized exchanges that aggregate prices and are easy to display on a screen.

The dot-matrix stacks of bond prices were known as the Bond Run.

On the desk, if a customer called and wanted to trade a bond and it was not listed in this stack of papers, then it was treated as off the run.

The trader pretty much had to use a calculator and some bond math, figure out what he would be willing to buy or sell the bonds at.

Because of this, they would often build in a nice big cushion, knowing that they would have trouble unloading these things themselves. Just like a car dealer will only underbid the Blue Book value of a car, knowing that it’s illiquid and their profit can easily be eaten up.

Today, most prices are on a screen somewhere, and off the run means the same thing it meant on that desk, just defined a bit tighter: on the run is the newest issue in that maturity, and everything issued before it is off the run.

Back to the Regular Treasury Buyback program that Bessent has been talking about.

Stay with me, it’s simpler than it sounds.

Basically, the Treasury goes into the open market and buys back its own bonds. Not the new ones. The older ones, the ones that are known as off the run. The treasury pays cash for them, and then raises that cash by selling new Treasury bills.

And abracadabra, markets become more liquid. QE, not QE, yield curve control or not, like I said we’ll get into that.

First, before we go blaming Janet Yellen for this brainchild, it came long before her.

It began because the United States had too much money. Believe it or not, back in the year 2000, DC was actually running a surplus. And, Treasury Secretary Larry Summers announced a program to buy back old high-coupon debt. Flush with cash, the Treasury went shopping for its own bonds. After picking up $67.5 billion of them across 45 operations, the surplus dried up and the program ended just two years later.

It was resurrected by Janet Yellen in May of 2024. Except this time she did it for the exact opposite reason. See, the market for older off-the-run bonds had gotten thin, and Treasury entered the market as a buyer to enhance that liquidity. Since the relaunch, the Treasury has repurchased $450 billion of its own paper. Like clockwork, every week.

Until last Wednesday, of course.

No formal warning, no press conference. Just a two-paragraph bulletin put out by the Treasury stating that the buybacks of long bonds, long-dated Treasuries were going from a maximum of $2 billion per operation to at least $4 billion. And that the operation would run from September 9th through November 4th.

That was it.

And long bonds took off. The 30-year yield dropped from 5.28% to 5.19% in a single session. The 10-year dropped 6 basis points. Gold jumped about $100 an ounce within an hour.

But the move-in bonds didn’t last.

Almost a full round trip on yields by Thursday morning.

And Bessent was on CNBC, telling Sara Eisen “It could be more than the $4 billion per issue.”

And as you can see in the chart, by Friday afternoon, all of the gains the 30-year made had evaporated.

Two days, a total round trip. Nothing to show for it.

So, what happened?

And why did other securities and assets keep moving in the direction they had upon the announcement?

Excellent question, and one that should be the underpinning for every investor’s portfolio today.

Exactly what we’re going to get into next.

The Treasury’s Bar Tab

So why now?

Why would The Treasury Secretary suddenly double an operation that had been running at the same size for two years?

Read more

Read more

Subscribe now

Today’s Bullets:

• A Tale of Two Charts

• Statistics Can Be Biased

• The Prices Matter

• Who’s Actually Falling Behind?

• What This Means for Your Money

Inspirational Tweet(s):

Forget politics. What we care about today is paychecks. Specifically, are the paychecks we receive keeping up with inflation?

Not theoretical paychecks, actual paychecks. The ones that pay our bills, the ones that pay for the groceries that seem to never stop going up in price.

On the one hand, Treasury Secretary Scott Bessent gives an emphatic yes, pointing out that Main Street wages are growing faster than any other group, and so-called median wages are doing pretty well, too.

But hold on a minute.

In complete contrast, and the very next day, Heather Long says, “Inflation is totally wiping out wage gains.”

She continues with, “many workers will struggle in the months ahead.”

Optimism versus ominous-ism.

I mean, we’re talking about the same country here, right? We’re all using the same numbers from the Bureau of Labor Statistics here, aren’t we?

So, who’s right? Are wages really keeping up with inflation or not? How can two professionals read the same exact government data and give two completely different viewpoints on it? And most importantly, are we in the camp of workers who should be worried about struggling in the months ahead?

All good questions, super important ones. Ones we are going to answer, nice and easy as always, right here today.

Stick with me to the end on this one, because it all has to do with a lot more than just wages.

So pour yourself a big cup of coffee and settle into your favorite seat, as we untangle these wage numbers and see how they actually affect you and your money, with this Sunday’s Informationist.

Partner spot

Reduce risk in your bitcoin setup

The recent Coldcard incident is a good reason to review how your bitcoin is secured. If you already self-custody and want to eliminate your reliance on a single device, Unchained can help.

A multisig vault requires multiple keys to move bitcoin. When those keys are stored on different devices, a problem with one device does not give an attacker everything needed to spend the bitcoin.

Throughout the Coldcard incident, Unchained has been helping hundreds of Coldcard users on their platform move bitcoin into new vaults, review their setups, and make informed decisions about what to do next.

Strengthen Your Setup is Unchained’s Premium Service Suite for bitcoin holders who want to upgrade to collaborative multisig. Across multiple one-on-one sessions, a dedicated bitcoin expert guides you through creating your first vault and provides advanced security training.

You leave with a fully configured vault, a tested recovery plan, and a setup reviewed by a bitcoin expert.

If you use a Coldcard or hold your bitcoin in a single device and have questions about what to do next, or know someone who does, contact Unchained.

Strengthen your setup with Unchained

A Tale of Two Charts

Looking at the two charts above, if you’re a normal everyday person, e.g., not a PhD economist or econ-obsessed investment advisor, you likely thought something along the lines of, is one of them greatly exaggerating? Or worse, outright lying?

On one hand, you have Bessent saying wages are outpacing inflation, and on the other hand, Heather Long says inflation is wiping those gains out.

And then there’s you and me standing at the checkout line of Costco doing the math in our heads. Ground beef was way cheaper a few years ago.

Like half the cost that it is now.

And that’s exactly what’s so irritating about this whole conversation.

You know exactly how much your money can buy, you’ve watched it change month-for-month, year-over-year. You have the receipts!

But then a PhD economist, or maybe the US Treasury Secretary himself, goes on TV and says everything is great. Wages are outpacing inflation. Americans are doing just fine.

Uh huh. Which Americans, you ask.

Or are you somehow calculating it all wrong?

Hold on to that question, we’re going to come back to it.

Because the important part is that both of the claims above are mathematically correct. Or at least defensible with the data we have from the BLS.

The almighty Bureau of Labor Statistics.

If you’ve been reading me for a while, you know where I usually go from here. I’ve spent plenty of time showing you how the agency creates a basket and then changes the weights of the items in that basket to come up with a number that they can stomach, even if it isn’t exactly founded in reality.

Now you may be asking, is the same thing going on here? Are they cooking the books again?

In short, no.

What’s happening here is not a conspiracy, and it’s actually valuable to understand.

Scott’s measuring what the middle full-time worker earns in a week.

Heather is measuring what the average hour of work pays, including all the private payrolls in the country.

Two completely different surveys answering two completely different questions, and so, of course, they don’t match up.

And there are actually four different main ways to look at wages. Four. All of them published by experts and defensible. Neither of them admitted that.

Scott merely chose one, and Heather chose another.

Question is, which one relates to you and your paycheck? Which one tells us about what’s really going on with the economy?

Because only one of those four follows the same person from one year to the next. Same worker, this year against last year, no averaging, sorting, or mixing.

That’s the one to watch. And be honest, it hasn’t been doing all that great lately.

That’s what we’re going to sort out here.

To recap: Two people read the same government numbers and claimed opposite things about our paychecks. One measured which workers got the biggest raises. The other measured whether the average raise beat the average rise in prices. Both are right, but using entirely different context.

Statistics Can Be Biased

Read more

WHAT MOVED

Payrolls printed -23K vs. a survey of +80K, with 103K of downward revisions behind it. The 3-mo average is 20K, from 111K as first reported. So the market repriced September’s hike odds from ~72% to 44%, and took 12 basis points off the implied peak. Everything priced against tighter money moved with it. Nasdaq +5.2%, semis +9.3%, gold +7.3%.

And the long end stood still. The 30-year fell 6.5 basis points, the 2-year six, so 2s/30s closed at 100bps, where it opened. A print that bad usually steepens the curve. Not this one.

THE READ

The refunding answered the question.

Last week we said Wednesday's sizes would matter more than September's dot. Here's the answer.

Read more

Subscribe now

Today’s Bullets:

• What Eighty-Seven Billion Dollars Bought

• What’s Actually in the War Chest

• The Door They Didn’t Use

• What Broke a Year Ago

• What Would Actually Turn It

Inspirational Tweet:

If you’ve been plugged into the markets this last week, you’ve likely gotten a large dose of reporting about the United States Treasury joining the Bank of Japan to prop up the yen.

A full-scale drama worthy of a B-grade Hollywood movie, complete with public accusations and conflicting reports about what exactly was done and why.

We even got suspicious photos, like the one above.

That’s a photograph of the Treasury Secretary’s notepad.

That’s right. A Reuters photographer snuck a snap of it at a Cabinet meeting at Camp David a week ago Friday. Written out by hand, sitting face up on the table, in a room full of cameras.

To Do. Buy Japanese Yen. $5 to 10 billion dollars.

Seems a bit careless for a man who ran money for a living, doesn’t it? Well, I have a theory about how a note like that ends up right in the line of fire of a Reuters lens, and we’ll come back to that.

For now, read the headline Nick Timiraos superimposed over it.

Prop up? Leaning on the Fed?

That’s about as pointed as it gets from a reporter who has covered this beat for twenty years and one who doesn’t need hyperbole to get attention.

Bessent’s answer came the next morning. He called Timiraos a stenographer posing as a journalist.

High drama indeed.

But what exactly are we talking about here, and why? What did the Treasury, the Fed, and the Bank of Japan actually do last week? Was all of it orchestrated by Scott Bessent, and if so, what was he really after?

And for those of us on the ground, investing our own portfolios and our clients’, the one that matters most: what does a yen falling out in Tokyo have to do with the rate on your mortgage?

All good questions, important ones. And ones we are going to answer in full, right here today.

But don’t worry, we’ll keep the acronyms to a minimum and all the concepts crystal clear for you, as always. There’s some serious, and important, financial plumbing in this one, though, just like last week, and you’ll find a short version at the end of every section.

So pour yourself a big cup of coffee and settle into your favorite seat, for a candid look at what that note on the table actually set in motion, with this Sunday’s Informationist.

Partner spot

Reduce risk in your bitcoin setup

The recent Coldcard incident is a good reason to review how your bitcoin is secured. If you already self-custody and want to eliminate your reliance on a single device, Unchained can help.

A multisig vault requires multiple keys to move bitcoin. When those keys are stored on different devices, a problem with one device does not give an attacker everything needed to spend the bitcoin.

Throughout the Coldcard incident, Unchained has been helping hundreds of Coldcard users on their platform move bitcoin into new vaults, review their setups, and make informed decisions about what to do next.

Strengthen Your Setup is Unchained’s Premium Service Suite for bitcoin holders who want to upgrade to collaborative multisig. Across multiple one-on-one sessions, a dedicated bitcoin expert guides you through creating your first vault and provides advanced security training.

You leave with a fully configured vault, a tested recovery plan, and a setup reviewed by a bitcoin expert.

If you use a Coldcard or hold your bitcoin in a single device and have questions about what to do next, or know someone who does, contact Unchained.

Strengthen your setup with Unchained

What Eighty-Seven Billion Dollars Bought

Before we get to the why, let’s tackle the what immediately, because the reporting on this has been all over the place.

Start with what Timiraos was referring to.

A Federal Reserve facility built for the dollar shortage of 2020, being used for something it was never designed to do. And a Treasury Secretary who has spent years complaining about the Fed wandering outside its lane, asking for that facility to be made bigger.

Meanwhile, I had the yen up on my screen Thursday, it’s one of the things that’s pretty much always on my screen, and I watched it fall five full yen in about an hour. Not over a week or even a day. In an hour. That was Tokyo on its own, spending more than anybody has ever recorded spending in a single day on a currency.

By that evening it had given back half of it.

So they went at it again on Friday, and this time the NY Federal Reserve came along, the first time our two countries have bought yen together since 1998. Somewhat more effective, that one held longer. It’s coming back now too. And then Friday morning a negative jobs report landed, nobody spent a dollar, and the yen moved more in twenty minutes than the entire rescue managed all week.

Now let’s put some numbers on it, because they’re genuinely hard to keep track of mentally.

Thursday, Tokyo is estimated to have spent about $53 billion. Friday, roughly another $34 billion. Call it $87 billion in two days to move one exchange rate.

Before we continue, a note on those figures. They’re estimates only, worked out by watching the Bank of Japan’s accounts vs. what the money brokers expected. Japan’s Ministry of Finance doesn’t confirm the actual number until the end of this month. But if they hold up, Thursday was the largest single day any country has ever spent defending its own currency.

Here’s the thing, though.

Japan already broke that record once this year. On April 30, during the Golden Week holidays when the market is thin and a shove goes a bit further, the Ministry of Finance spent 6.28 trillion yen, about $40 billion, in a single day. They confirmed it last week, all-in they spent nearly twelve trillion yen.

Yowzers.

Three months later the yen was weaker than when they started, and they had to do it again. Even bigger.

Which brings me back to that notepad.

Look at when it happened. Thursday’s money had already come and gone, half the move surrendered before dinner. Friday morning, a Cabinet meeting, cameras in the room, and a handwritten note facing up on the table telling the world the United States is about to buy yen.

Huh. Isn’t that interesting?

Here’s how I read it.

A hedge fund lifer knew exactly what he was doing. Telling the market what you’re about to do is free. Actually doing it costs money. If the note moves the tape on its own, you may never have to spend that money. Or maybe just have to spend less.

Traders front-run you, the yen rallies, and it cost you a note pad and some highly legible chicken scratch.

Still, whatever that note was meant to do, the US went ahead and spent the money the same day

So, let’s check in on the yen now, see what happened and where it all stands.

The yen went into last week near 164 to the dollar, the weakest in forty years. At its best moment through intervention it touched 155.4.

As I write this it’s back at 157.76, which means roughly a quarter of everything eighty-seven billion dollars bought has already been handed back. Before Friday’s jobs number it was up at 158.60, or closer to forty percent.

Five trading sessions. That’s what the most expensive currency defense on record has purchased so far.

Which leaves the question I keep circling, and it’s the one the rest of this letter is going to answer.

If two governments can spend that kind of money and move a price for less than a week, then what is actually setting that price? And why couldn’t the two of them, together, with the largest checkbook anybody has ever brought to a currency, hold it?

The short version: Japan and the United States spent more money defending the yen last week than anyone has ever spent defending a currency, and just over a week later a good chunk of it has already unwound. A jobs report that cost nobody anything moved the yen further in one morning. When the biggest check in history buys you five days, the price isn’t being set by the check.

What’s Actually in the War Chest

So the United States went out and bought yen.

But with what, exactly?

Sounds like a pretty simple question, right? Especially for the US Treasury that sits on all those dollars at its instant disposal.

Well, it turns out it wasn’t so simple after all.

Read more

WHAT MOVED

Starting with Thursday. Japan bought yen and USD/JPY fell three percent in about an hour. Bloomberg puts the day’s spend near ¥8.45 trillion, or about $52.8 billion, on an estimate built from BoJ accounts. That would be Tokyo’s largest ever in a session. Then on Friday, Washington joined. The Financial Times reported the New York Fed sold euros for yen on the Treasury’s behalf, through Goldman and Morgan Stanley. How much Washington bought is still not reported, and the official record of it does not land until the New York Fed's quarterly report in November.

The Fed held overnight rates Wednesday at 3.50 to 3.75, on a 9 to 3 vote. Hammack, Kashkari and Logan all preferred a quarter point. June was 12 to 0. The statement itself changed by exactly one word. And the long end sold off anyway, the thirty-year at 5.267%, its highest since 2007.

THE WEEK AHEAD

Read more

Subscribe now

Today’s Bullets:

• The Case for Spending Every Last Dollar

• Who Ends Up Holding the Promise

• The Last Company to Finance Its Own Customers

• It Doesn’t Stop With the Names You Know

• How I’m Weighing It

Inspirational Tweet:

If you’re anything like me, you’ve stopped feeling the numbers lately. You’ve become numb to them.

A hundred billion here. Half a trillion there. A deal announced on a Friday that would have been the largest in corporate history a decade ago, and by Monday it’s barely a memory. Heck, I read this stuff for a living, and even I find myself skimming past the headline figures to get to what actually happened.

Lately, though, more and more people have started asking where all those numbers actually come from.

It goes something like this. The biggest companies in AI have been investing in each other, lending to each other, and buying from each other, all at the same time. Nvidia puts money into a company that turns around and buys Nvidia chips. A cloud provider borrows billions to build data centers for a customer Nvidia also owns a piece of. Round and round it goes.

They’re calling it circular financing, and the worry is simple enough. If the same dollars keep turning up at more than one stop, demand can look a whole lot stronger than it really is.

Which brings us to the post above.

The one from Michael Burry, with a Bloomberg chart of what it costs to insure Nvidia’s debt against default for five years.

Sound familiar?

Exactly. Burry is the one who called the housing bubble, and they made a whole movie about how he made billions buying insurance against a massive default on all those mortgages.

Now he’s pointing straight at the same type of insurance and saying that Nvidia has overreached and pushed the circular spending to biblical proportions.

Maybe.

Merely writing about circular financing is one thing, but paying real money, every single year, to insure against it is quite another.

And somebody is doing exactly that.

So is he right? Is this the most expensive capital cycle of our lifetime, or is it the smartest one? Are these companies doing something wrong, or is this simply what a boom looks like from the inside while it’s still working? And why should any of it matter to somebody who doesn’t own a single AI stock?

All good questions, important ones. And ones we are going to answer, nice and easy as always, right here today.

Because of the way these companies are tangled up in one another, there’s some machinery in this one. So to keep it easy to follow, you’ll find a short version at the end of every section.

So pour yourself a big cup of coffee and settle into your favorite seat, for a clear look at who is actually on the hook in the AI build-out, with this Sunday’s Informationist.

Partner spot

Wealthy families might not be leaving their bitcoin to a will. They could be putting it in a trust. Here’s why:

A will goes through probate. Probate is public, slow, and exactly where you don’t want a record of your bitcoin holdings sitting. Trusts skip all of it, and it’s a standard practice for wealth succession.

The Inheritance Boot Camp gives you that same structure. Our team with deep bitcoin expertise guides you through the key complexities.
They know estate structure, they know bitcoin, and they will tell you exactly what you need to do and in what order. You make the decisions, while they guide you through the process.

Here is what that looks like in practice:

• Map your current situation and surface the gaps you didn’t know you had

• Build a succession structure tailored to your assets and your family

• Create a trust and draft estate documents with language that actually accounts for bitcoin.

• Set up and fund a trust vault with your heirs legally documented.

You can’t control the price of bitcoin, but you can control your legacy today.

Learn more about the Inheritance Boot Camp

The Case for Spending Every Last Dollar

Before we go anywhere near what could go wrong, the bull case deserves a solid hearing. Because the case for spending this money is a strong one, and the people making it are putting their own capital behind it.

Start with the simplest fact in the whole story.

The demand is real. Right now, today, and more of it than anybody can serve. Every company in this business says the same thing, which is that they cannot build capacity fast enough to meet what customers are already asking for. Andy Jassy said it out loud on Amazon’s call Thursday night, that even after raising his spending plans again, he still won’t have enough to go around.

The man is apologizing for a shortage.

And yes, somebody is getting paid for all of it.

Nvidia generated roughly $48 billion of free cash flow in a single quarter. Not revenue, free cash. The money left over after every bill is paid and every investment is made, sitting right there for shareholders. In three months.

Now notice what Nvidia never has to do. It ships the racks, it collects the money, and the question of whether that hardware ever earns a return belongs to somebody else entirely.

Let’s turn our attention to Oracle.

A company most people still file under “databases” is now sitting on $638 billion of contracted future business, more than four times what it had a year ago. If even half of that converts into revenue, it goes down as one of the great corporate reinventions of our lifetime.

Then there’s CoreWeave, which is where a lot of those Nvidia chips actually end up. It buys them, racks them in data centers, and rents the computing power out to AI companies on long-term contracts.

And it has pulled off something nobody had managed before.

It took loans backed by graphics chips, an asset most lenders wouldn’t have touched three years ago, mind you, and got that paper rated investment grade. As a result, its borrowing costs came down substantially.

How?

By ring-fencing. The chips, the customer contract and the data center lease all get put into a separate company, so the lender is lending against the contract instead of against CoreWeave. Same assets, same operator, and a credit rating six notches higher.

It helps that more than 70% of its contracted business now sits with investment-grade customers, which is to say customers extremely likely to pay.

Now, about that phrase we keep hearing.

Circular financing.

If you separate them out, one by one, every single arrangement in this story is ordinary. A supplier taking a stake in a customer happens constantly, in every industry, and always has. A company disclosing an enormous contracted backlog is complying with an accounting rule that requires it. And lending against a contracted stream of payments is what project finance has done for a hundred years.

None of it requires a villain.

Which brings me back to a number.

On September 22 of last year, Nvidia and OpenAI announced that Nvidia intended to invest up to a hundred billion dollars.

You read that right. One hundred billion. With a capital “B”.

At least ten gigawatts of systems. With the money going in progressively, as each gigawatt got deployed. That headline then set the tone for everything that followed, and it is still the figure people point at when they describe this tight relationship.

Two months later, Nvidia filed its quarterly report with the SEC.

In it, the company disclosed its total investment commitments. Every commitment, to every counterparty on earth, added up.

Six and a half billion dollars.

Five of which was Intel.

OpenAI appears in that filing once, described as a letter of intent with an opportunity to invest.

Whoa, whoa, whoa. What?

What happened to the $100 Billion, with a capital B?

Well, in February, talking to reporters in Taipei, Jensen Huang put it about as plainly as a chief executive ever puts anything.

“It was never a commitment.”

The short version: The demand is real, the money being made is real, and every one of these arrangements is perfectly ordinary on its own. But the number that started this entire conversation, the hundred billion dollars, turned out to be an intention rather than an obligation, and Nvidia’s own filing said so two months later.

Which leaves one question worth the rest of your Sunday. If that number was never binding, which ones are?

Who Ends Up Holding the Promise

Read more

📈 The setup. The levels, yields, and calendar catalysts I’m watching, and the ones that change the picture if they break.

📶 The signal. What the tape, the balance sheet, and the flows are saying underneath the headlines, and where the week could turn.

Yesterday I talked about which half of the ten-year had been moving. This week the other half gets its turn, and the thing driving it changed direction after Friday's close.

Where we left off

Let’s start with what’s on all our screens.

As of Friday’s close, the dollar sits at 101.47, about a third of a point under the 101.80 line we keep drawing. Gold is at $4,052, and it spent part of the week trading under $4,000. Crude is what moved. Brent settled at $98.25 after trading as high as $101.11 on Friday and giving all of it back, its first look at three digits since May, and WTI finished at $89.31. The yen is at 163.82, weaker than the 162.84 it touched on the first of the month. The two-year closed at 4.34% and the ten-year at 4.68%.

*Correction: Last Monday I quoted gold at $4,108. It closed that Friday at $4,018. My error, apologies.

Oil went up a lot last week, and almost nothing else behaved the way you would expect alongside it.

Now let’s turn to the things that don’t show up on a quote screen.

Read more

Subscribe now

Today’s Bullets:

• The Market Moved First

• The Number Inside the Number

• Thirteen Years on Sale

• Everything Priced Off Zero

• Can Washington Afford Honest Money?

Inspirational Tweet:

For two years now, the most common question I get from bankers, real estate agents, home buyers and sellers, and anyone who is operating with credit is some sort of version of this.

When do rates finally come back down?

Behind that question sits a hope, and I understand it completely, because it is the world most of us built our financial lives inside. Cheap mortgages. Cheap car loans. A market that climbed for years in part because money cost almost nothing to borrow. Somewhere in the back of our minds, most of us are still waiting for the world of low rates to come back.

Jim Bianco’s chart above is the most honest answer to that question I have seen anywhere.

Look at the red stretch through the middle, 2009 to 2022. That’s the era we all remember, when borrowing money, after inflation, was effectively free. Bianco calls it the money-printing era, and he has a two-word verdict on its ending. “Thank god.”

Now look at the blue on either side of that chart. The left side is what money cost before any of that started. The right side, the part climbing at the far edge, is where we are sitting today.

Those two blue stretches look alike because they are alike. The price of money has gone back to what it was before the printing began.

Which means the thing we have all been waiting to come back is the thing that already left.

And Bianco’s read is that it has room to go further from here before it even begins to hurt.

So what actually changed, and how much of it has already happened? Who was standing there for thirteen years holding that price down, and where did they go? And what happens to a house, a portfolio, and a government carrying more debt than it ever has, once money costs something again?

All good questions, and super important ones. And ones we are going to answer, nice and easy as always, right here today.

Stick with me on this one. By the end you'll be able to build the single number underneath all of it in about ten seconds, and you'll know exactly what to do with it every week from here.

So pour yourself a big cup of coffee, and settle into your favorite seat, for a look at what happens when the rent on money goes back to normal, with this Sunday’s Informationist.

Partner spot

You’ve spent years thinking about what happens to the dollar. Have you spent any time on what happens to your bitcoin after you are gone?

Most bitcoin holders think they have an inheritance plan, but they don’t.

Knowing where your keys are isn’t a plan. Neither is telling your spouse the seed phrase. And the will your attorney drafted years ago might not account for any of it. Bitcoin inheritance isn’t just a technical problem, but a legal one too. Your heirs need both the keys and the legal authority to actually use them.

There’s a quick way to find out how exposed you actually are. Get your free bitcoin inheritance readiness score in under 2 minutes.

Take the bitcoin inheritance quiz

The Market Moved First

The Federal Reserve meets this coming Tuesday and Wednesday, an important second meeting from a newly chaired Fed, and with it comes its next rate decision.

With the Fed saying almost nothing leading up to it, market speculation of the outcome has been pretty volatile recently.

Look at last week, for instance.

On Friday July 17, Fed Funds Futures priced the odds of a rate hike at about 14%. In other words, not likely but not off the table entirely.

Fast forward one week, and by this past Friday (the 24th), the same odds are now 38%.

More than two times as likely as just a week before.

A single meeting can be noise, though, so let’s look further out on the calendar.

What do we see?

Over the last week, December pricing went from expecting roughly one more quarter-point hike by Christmas to expecting closer to two.

And when we look as far out as the curve goes, the picture doesn’t get much better. Rates peak in the spring of 2027 and barely ease from there. There isn’t a single full cut priced anywhere in it.

The Treasury market mirrored this last week, as the 2-Year US Treasury Note (the one that tells the Fed what the market expects them to do) jumped sixteen basis points in five sessions.

In truth, the market has been changing its mind steadily, in one direction, session after session, since February. For investors, this type of move is far more useful to us than a violent move would be, because a steady grind is much harder to dismiss as noise.

And because there is no dot plot at this meeting, and the next set of projections doesn’t arrive until September, everyone will be hanging on every single word from the new Chairman, Kevin Warsh, himself.

At his first meeting last month, Warsh was asked about the dot plot. His answer?

“I did not submit a, a dot. For me, it’s not helpful in the conduct of policy.”

Ah, but Mr. Chairman, Mr. Market loves speculation on speculation.

Yet, as we talked about recently in How to Read a Fed That Stopped Talking, forward guidance is gone, dropped as “not well suited to the current policy conjuncture.” And the official Fed policy statement came out shorter and simpler, stripped of older language.

Now there’s no guidance to lean on, no fresh forecast to argue with, and no pre-meeting hint to parse. And if Warsh stonewalls reporters like he did in his first meeting, then Wednesday’s statement will be the entire information set given to investors.

Here’s the thing, though.

While we all sit around and debate what the Fed is going to do, where they’re going to price the cost of money through the Fed Funds Rate, there’s a different rate that matters a whole lot more.

Every stock you own, every house on your street, and every dollar the Treasury owes is discounted against it. And on Friday afternoon it printed a twelve-month high.

For thirteen years that number averaged 0.23%.

Somebody was standing in the market making darned sure of it.

Unfortunately for Mr. Market, that somebody has stopped.

The Number Inside the Number

So let’s talk about that number.

Read more

📈 The setup. The levels, yields, and calendar catalysts I’m watching, and the ones that change the picture if they break.

📶 The signal. What the tape, the balance sheet, and the flows are quietly saying underneath the headlines, and where the week could turn.

Yesterday, I showed you a market with no cushion left: record margin debt, the smallest cash reserve in decades, and hidden leverage the FINRA number can't see. This week, that cushionless market meets an oil shock, an earnings gauntlet, and a Fed nine days from its next decision.

Where we left off

Start with what you can pull up yourself, because for once the screens actually moved. Crude ran from about $71 a week ago to $81.78 on Friday, as the Middle East reignited. The chip complex, measured by the SOX, fell 20.2% from its June 22 record into a bear market, even while it holds a gain of more than 60% on the year. The dollar finished at $100.75 on Friday, with gold at $4,108 and the yen at $162, the lowest we’ve seen in over 35 years. The two-year US Treasury sits around 4.18%, right in the band it has held for weeks, and the ten-year at 4.55%.

Now let’s turn to the things that don’t show up on quote screens.

Read more

Subscribe now

Today’s Bullets:

• The Case for Panic

• Why the Scary Chart Mostly Measures Price

• What’s Actually at a Record

• The Dynamite, Not the Spark

• How to Read It

Inspirational Tweet:

Well, well, well, the world lives on debt, and by extension, the stock market is no stranger to the dangerous jet fuel.

As such, the above chart has been making the rounds these last few weeks.

Showing margin debt measured against the size of the economy, with a red arrow on every major top of the last sixty years, it looks to be launching like a rocket in 2026.

Hence Hussman’s comparison of the situation to the hubris of a VP of White Star Line, the owner and operator of the ill-fated Titanic.

“Unsinkable.”

On one side, the raw facts behind the argument of doom are concerning, as we will get into in a moment.

But there is plenty more to this debt story and the history behind the rise in margin debt being associated with market tops and crashes.

So which is it?

Does record margin debt mean a crash is coming? If it does not tell you that, what does it tell you? And is there another number inside these same figures, one that genuinely is at an extreme, that has earned more of your attention than the one filling your feed?

All good questions, and important ones. And ones we are going to answer, nice and easy as always, right here today.

Fair warning, this is a longer one than usual. It's the kind of institutional-grade breakdown that normally lives on a research desk, just written plainly enough that none of us needs a Bloomberg terminal to follow along. Let’s get at it.

So pour yourself a big cup of coffee, and settle into your favorite seat, for an honest read on what today’s record margin debt is really telling us, with this Sunday’s Informationist.

Partner spot

You’ve spent years thinking about what happens to the dollar. Have you spent any time on what happens to your bitcoin after you are gone?

Most bitcoin holders think they have an inheritance plan, but they don’t.

Knowing where your keys are isn’t a plan. Neither is telling your spouse the seed phrase. And the will your attorney drafted years ago might not account for any of it. Bitcoin inheritance isn’t just a technical problem, but a legal one too. Your heirs need both the keys and the legal authority to actually use them.

There’s a quick way to find out how exposed you actually are. Get your free bitcoin inheritance readiness score in under 2 minutes.

Take the bitcoin inheritance quiz

The Case for Panic

Back in 1998, I was trading arbitrage at a hedge fund, the same corner of the market where Long-Term Capital Management lived. So I had a front-row seat when it came apart.

A firm run by actual Nobel Prize winners, the finest models on the Street, levered to the eyeballs. It worked beautifully, right up until it didn’t. When the trades turned south, the borrowed money didn’t just sit idle, waiting for a recovery.

Losses fed on the leverage, the margin calls went out, and the whole thing unwound so fast it nearly dragged a large part of the global financial system down with it.

I wrote a whole issue about hedge fund leverage recently, and it covers LTCM in more detail. If you want the full story, it’s right here:

I bring it up because I know, firsthand, what borrowed money does to a market when it turns. And it’s why margin leverage charts seem to be popping up all over my feed lately (and likely yours).

First, a word about margin, nice and easy for those of you who don’t stare at this stuff all day.

Buy stocks with your own cash, and when the market drops, you’re annoyed at best, frustrated at worst. If nothing is changed and your conviction remains, you either add to your positions or you wait. Eventually it comes back or it doesn’t, but either way, the call to sell is yours to make.

Buy those same stocks with borrowed money, and you’ve handed a piece of that decision to somebody else. Your portfolio is the collateral on the loan, and when the market falls, that collateral shrinks while the loan stays exactly the same size. If it falls far enough, no human on the phone anymore, just an automated notice from a machine that has already decided.

Cold and clinical, it goes like this: Wire in more cash today, or we sell your stocks for you.

At the bottom. At the worst possible moment. You don’t get a vote.

That borrowed money is called margin debt. On the way up, it’s about the most fun you can have in a brokerage account, because leverage turns a good year into a great one. On the way down, however…you get the point.

So when I see margin debt going vertical, I pay pretty close attention. LTCM taught me why.

And right now? It’s been going vertical.

Margin debt just hit an all-time record. Just over $1.5 trillion of borrowed money riding on US stocks. It jumped 49% in the last year, and 23% in just the last three months. Stack it against the size of the whole economy, and it’s sitting near the highest level we’ve ever recorded, close to double what’s normal.

That number is worrisome enough on its own.

Now go back across the last two generations of markets. Each time this borrowing has spiked to an extreme against the size of the economy, a major top has been sitting right there beside it.

2000: The Dot-Com Bubble.

2007: Right on the doorstep of the Great Financial Crisis.

Late 2021: Right before the worst year for stocks since ‘08.

Every single time. Borrowing races to a record, the market rolls over, and all that leverage that drove prices up flips into forced selling on the way down. The same cascade I watched swallow LTCM, just spread across an entire market instead of one fund.

Compare those two lines stacked on each other.

As InvesTech Research shows with the dotted lines connecting them, each of the spikes in borrowing and the peaks in the market land on nearly the same dates.

The top chart here is similar to the one that John Hussman posted with that Titanic quote, the unsinkable ship. And you can see why it’s starting to hit investors’ nerves. We’ve run this experiment three times in my career, and it ended in a fair amount of blood every time.

So, yes, it’s unnerving and the bears aren’t wrong about any of it. The record is 100% real. The market truly has topped every other time we’ve been here.

So that settles it, right? Record leverage, matched only at the biggest tops in modern history, flashing red. Sell it all, go to cash, call it a day.

Not so fast, my friend.

Because in all my years of watching this, I’ve learned that a scary chart is only worth acting on after you’ve asked it a second question.

So we go back to first principles.

Before acting on the initial read and information, we must first ask: Is this market actually carrying more leverage than it did at those old tops? Or is that line rocketing higher for a reason that has almost nothing to do with danger, and everything to do with something a lot more ordinary?

When we get to that answer, this whole chart starts to look a whole lot different.

Why the Scary Chart Mostly Measures Price

Read more

🙌 One big topic, exposed and explained, so you understand the forces at work and can make better decisions with your own money.

🫶 If this was forwarded to you, you have awesome friends. Join 45,000+ readers here.

Today’s special issue is sponsored by Plan B, Katie’s firm (now part of CitizenX). As many of you already know, I only put my name next to people I’d actually use, and accordingly, on this one I’m a client myself: I’m working my own citizenship case with Katie and her team right now. Everything below is my own view, in my own words. I’m not a lawyer or a tax advisor, so take this as a way to think about the subject, not as legal advice for your situation.

Today’s Bullets:

🔋 The concept of flag theory

🧮 The Sovereign Individual thesis

💰 Citizenship by investment

🧬 Citizenship by descent

🧭 How to actually start, and what to watch for

Inspirational Tweet

That’s the whole argument in two lines, and it comes from Katie herself. Bitcoin made your capital exitable. A second passport makes you exitable.

Once people can actually pick up and leave, governments have to compete to keep them, their capital, and their talent. Keep that thought, because it’s exactly where we are headed today.

Working in institutional finance, I spent a good part of my career learning how governments behave when money gets tight. I watched it from hedge fund desks, and I’ve written about it here for years.

When the bill comes due, they print, they freeze, they inflate, and they quietly reach into accounts that were never as private as people assumed.

You already know all of this. It’s why you hold your own keys.

Awesome, you’ve hedged your money against a single government. But that still leaves a gaping wide hole of vulnerability, and a serious question:

Have you hedged yourself?

Your physical presence. Your legal identity. Your right to be somewhere, to travel, to leave.

The same logic that drew you toward Bitcoin points straight at your passport. Unfortunately, most people never spend a single minute on it.

So that is exactly what we are going to fix today, nice and easy, as always.

So, pour yourself a big cup of coffee, settle into your favorite seat, and let’s talk about flag theory, jurisdictional arbitrage, and the very practical business of a second passport.

🔋 The Concept of Flag Theory

Jurisdictional arbitrage is one of the more elegant ideas to come out of the classical-liberal tradition. The premise is almost embarrassingly simple.

Concentrating your entire life inside a single country is a concentrated risk. And like any concentrated risk, it can be diversified.

You already run your money this way. You wouldn’t hold one stock, in one currency, at one custodian, and call it a portfolio.

So why would you hold your citizenship, your residency, your assets, and your family’s future all in one jurisdiction, subject to one government’s decisions?

Flag theory says you shouldn’t. The idea is to plant your ‘flags’ in different countries, so no single government controls all of them.

A flag can be a second citizenship, a residency somewhere else, a business domicile, where your assets sit, even where you spend your time. Plant them thoughtfully, and no single authority holds the whole of you.

For most of the twentieth century, this was a game of privilege reserved for the genuinely rich, the people with family offices and lawyers on three continents.

The good news for all of us is that’s the part that has changed, and changed fast.

Before we get to how, we should take a peek at the book that saw all of this coming. It also happens to be the closest thing our world has to a founding text.

🧮 The Sovereign Individual Thesis

The Sovereign Individual was written by James Dale Davidson and Lord William Rees-Mogg, and published in 1997. If you’ve read it, you know exactly where I’m going. If you haven’t, I urge you to move it up your list.

Put simply, in 1997, the Internet was barely a consumer product. Smartphones didn’t exist. ‘Cryptocurrency’ was not a word anyone used in a serious sentence.

And yet the authors argued that cryptographic technology would eventually let individuals hold and move value entirely outside the reach of any government.

Unseizable, uninflatable, unprintable.

They described the essential properties of Bitcoin roughly eleven years before Satoshi published the white paper in 2008.

Their larger argument is the part that matters for today. Throughout history, whoever controls the dominant form of violence controls taxation, and by extension, governance.

Gunpowder empires displaced feudal lords. Industrial nation-states displaced the gunpowder empires. Each transition rewired who held power, and how much they could extract from ordinary people.

The Information Age, they said, would trigger the next transition. When value becomes digital and decentralized, governments lose their monopoly over it.

And when that happens, the relationship between citizen and state begins to invert. Governments have to compete for citizens, rather than the other way around.

That simple concept right there is the whole ballgame.

Today, you’re born into a country and become, legally, its subject. You didn’t choose it. You don’t negotiate with it. You mostly just comply, because the alternative has always been expensive, complicated, and for most people, effectively impossible.

The thesis says that changes.

Countries that treat productive people well will pull in capital and talent. Countries that overtax, overreach, and abuse will watch both walk out the door.

You can see the early innings of this right now in the UK, where the end of the non-dom regime has sent a wave of high earners looking for the exits. Capital and talent are mobile. They vote with their feet.

And this is not only a UK story. Look at what the policymakers themselves are circulating.

That’s the European Commission, on paper, studying how to raise wealth taxes, inheritance taxes, and exit taxes without making you angry enough to leave.

When the people who run the system are openly workshopping how to tax your departure, the departure itself becomes the thing worth protecting.

This is exactly what Bitcoin was built to do for money. And it is exactly what a growing number of people are now doing with their legal identity.

Which brings us to the practical part, and the two doors most people choose to walk through.

💰 Citizenship by Investment

Citizenship by investment, or CBI, is the direct one. You make a government-approved contribution, you pass a background check, and you receive a second passport, legally and above board.

It is, quite literally, a market for jurisdictions.

Let’s review the lay of the land, without the sales gloss. Roughly a couple of dozen countries now offer a straight path to citizenship through investment.

The five Caribbean nations that pioneered the modern industry are still the value end of the market. Dominica starts around $200,000 as a donation, with Grenada, Antigua and Barbuda, St. Lucia, and St. Kitts and Nevis running from roughly $230,000 to $250,000. Timelines run from about five months in St. Kitts to well over a year in a couple of the others. Move up-market and Turkey grants citizenship on a $400,000 real estate investment.

At the far end, El Salvador rolled out a program that grants citizenship for a one-time $1 million contribution paid in Bitcoin or a stablecoin, capped at 1,000 people a year. If you want a signal for where all of this is heading, a sovereign nation pricing its passport in sats is a loud one.

The reason people in our world care has nothing to do with the beach. It is optionality.

With CBI, you can actually choose a jurisdiction that fits your goals: visa-free travel, a stable legal system, sensible tax treatment, a place your family could land on short notice.

In other words, you’re no longer stuck with the single hand you were dealt at birth.

In essence, CBI is the Sovereign Individual thesis showing up in the real economy. It turns the relationship between nations into something that behaves like a market, where citizens become clients that governments have to compete to keep.

From there, the game theory takes care of the rest.

🧬 Citizenship by Descent

Citizenship by descent is the other door, and it is the one that might already be open without your knowing it.

Somewhere back in your family line, a grandparent or great-grandparent may have left you something you have never claimed: a legal right to citizenship based on bloodline. If you are eligible, you already hold the right.

You’re simply claiming a passport that was arguably yours by birth.

The tradeoff is that you do not get to choose the country. It was chosen for you a century ago, by wherever your family emigrated from. But if the lineage lines up, the price is mostly paperwork and patience rather than a six-figure contribution.

Italy has long been the most famous example, and this is where I have to update the old story, because the rules just changed.

For years, Italy effectively had no generational cutoff, as long as the bloodline was unbroken. That era is over.

In a reform that took effect in May 2025, Italy now generally limits citizenship by descent to people with an Italian parent or grandparent, plus a ‘genuine link’ test. Plenty of people who would have qualified a year ago no longer do.

That shows how quickly these doors can narrow. If you think you have a claim somewhere, the calendar is not your friend.

Beyond Italy, Ireland offers one of the most accessible routes for anyone with an Irish-born grandparent, through the Foreign Births Register. Poland, Germany, Croatia, and Lithuania, among others, carry meaningful descent provisions of their own.

The work itself is genealogical: birth records, church documents, civil registries, official papers from a country your family may have left generations ago.

It is tedious, and it is exactly the sort of thing worth handing to specialists who do it every day.

I know, because I am going through it myself right now with Katie’s team, and yes, it is every bit as tedious (for them, not me) as it sounds.

🧭 How to Actually Start, and What to Watch For

Before you get excited and start googling island real estate, let me put on my CFA hat and give you the part the glossy brochures tend to leave out.

If you are a US citizen, a second passport does not get you out of the IRS. The United States is one of only two countries on earth that taxes its citizens on worldwide income, no matter where they live.

A second passport buys you options: a place to go, a way to travel, a hedge against any single government having total say over your life. It does not, on its own, lower your tax bill.

The only way an American steps fully off the US tax rolls is to renounce citizenship, and the government charges an exit tax on the way out for anyone above certain thresholds. So anyone who pitches you a passport mainly as a tax dodge is either confused or aggressively selling you on partial information.

Or worse, suggesting you commit tax fraud. Avoid those people like the plague.

Instead, I would treat a second passport the way you treat the Bitcoin in your treasury: insurance and optionality, held for the day you are grateful to have it.

As you can imagine, the firm you work with matters enormously. This is a field where real professionals and real charlatans stand suspiciously close together.

The programs themselves are legitimate and government-run. But the process runs through applications, due diligence, source-of-funds documentation, and genealogical research, and mistakes there are slow and expensive.

You want people who do this every single day.

Which is the honest reason I partnered with Plan B for today’s issue. Katie built the firm specifically for people who already think in terms of self-custody and sovereignty, and it is now part of CitizenX. They handle both doors, investment and descent, and they are the team I trusted with my own case.

If you’ve been meaning to look into this for years and never started, consider this your nudge. Katie’s team put together a page just for Informationist readers, where you can see which door actually fits your situation and book a no-pressure call to walk through it with someone who does this every single day.

Start here

Or schedule a free 1-on-1 call with Katie here:

One-on-one with Katie

And tell them James sent you. 😉

I truly believe that Bitcoin and a second passport are two of the most important pillars of individual sovereignty, and I am not willing to skip either one. That’s the entire idea behind flag theory.

Do not let any single government hold all of you.

Simple as that.

That is it for today. I hope you come away a little sharper on flag theory, the Sovereign Individual thesis, and the very practical ways real people are applying these ideas to their own lives right now.

If it got you thinking, forward it to someone who would want to think about it too.

Talk soon,

James ✌️

I went back through four years of The Informationist, more than two hundred issues, and pulled the ones that matter most into rooms. How the money actually moves, decoding the Fed, the debt spiral, where money goes to hold its ground, and plenty more.

It’s pinned at the top of the Informationist Home page now, so the whole body of work is one click away instead of buried in a feed. You can get to it right here:

The Informationist Library

A few doors in every room are open to everyone, so you can wander in and see how it reads.

The rest opens with a subscription, along with both weekly issues in full: the Sunday deep dive, and The Informationist Radar every Monday morning before the open. Plus the comments, where you can put your questions to me directly.

If you’ve been meaning to go deeper, or just want to revisit past issues, this is the easiest place to start.

Talk soon,
James ✌️

Four years of work lives in here. I went back through the whole archive, more than two hundred issues, and pulled the ones that are essential. Each is built to explain a single piece of how money, markets, and the Fed actually work, and I have sorted them into rooms so you can find what you need without digging.

Here is how I think about the place

Every Sunday, I stand in this library and give a talk about what is happening to your money right now. That talk leans on everything in these rooms. The letter is the lecture. This is the collection it draws from.

And the collection keeps growing. Rooms that earn their place will be added periodically. That is the part I love most about a library. It keeps getting deeper.

With that out of the way, let’s take a walk, nice and easy as always.

Two ways to use this

If you came to wander, start with the short walk just below, then roam the rooms in whatever order pulls you. If you came with one question already on your mind, a repo, the yield curve, why your mortgage rate will not budge, scan the room names, walk straight to the right one, and help yourself.

A few doors in every room are marked open to everyone, so anyone can step in and see how the place feels. The rest open with your subscription.

New here? Take this walk first.

Seven issues, in this order. The shortest path from I keep hearing these words to seeing how the whole thing fits together the way I see it. Not a requirement, just the tour I would give you if we walked in together.

1. What is the Cantillon Effect?

2. Money Printing Simplified

3. CPI and How the Measure of Inflation is ‘Inconsistent’

4. Currencies, Foreign Exchange Rates, and Is the US Dollar Too Big to Fail?

5. Target, Neutral, Terminal, and More: Deciphering the Fed

6. What’s a Debt Spiral, and is the US already in one?

7. Should Bitcoin Be in Your Portfolio?

Walk through those and the rest of the library reads differently. You will recognize the ideas the moment they show up in Sunday’s letter.

The Rooms

Wander in any order. The first rooms are about your money and your life. The deeper rooms are the machinery that drives all of it.

Why Your Money Buys Less Every Year

the dollar, currency, and debasement

Start here if you have ever felt like you are working harder and staying in the same place. This room is why a dollar buys less every year, who quietly benefits, and the force sitting underneath almost everything else in the building.

• Currencies, Foreign Exchange Rates, and Is the US Dollar Too Big to Fail? · open to everyone

• Interest Rate Parity and Implications for the Yen

• What’s an Anti-Fragmentation Tool, and How’s the ECB Using It?

• The Dollar Index (DXY) and Dollar Milkshake Theory

• TARGET2 and is Europe Doomed?

• Can BRICS Topple the US Dollar?

• Could the US Dollar Hyperinflate?

• Informationist Real Talk: Inflation

• The Bank of Japan Experiment

• Money Printing Simplified · open to everyone

• What is the Cantillon Effect? · open to everyone

• Do Price Controls Work?

• Is The US Becoming an Emerging Market?

• The Debasement Trade: Wall Street’s Fancy Answer For Currency Destruction

• Why Did the US Treasury Just Rescue Argentina?

• Is Wealth Just a Rigged Game of Monopoly?

• Why Can’t You Get Ahead? (And How to Finally Fix It)

• The Casino in Your Pocket

Where Money Goes to Hold Its Ground

bitcoin, gold, and hard assets

When the dollar leaks, money looks for somewhere to keep its value. This room is hard assets from first principles, so you can weigh the next bitcoin or gold headline on the merits instead of the noise.

Disclosure: I hold personal positions in several Bitcoin-related securities, including MSTR, ASST, STRC, and SATA.

• FASB and the Bitcoin Accounting Win (Yes, It’s a Big Deal!)

• Merkle Trees and The Simple Problem with Proof of Reserves

• How Bitcoin Solved The Byzantine Generals’ Problem · open to everyone

• What is the Risk-Reward of Bitcoin?

• How is the Bitcoin Supply Limited?

• What is The Bitcoin Power Law?

• MicroStrategy’s Bitcoin Strategy

• Bitcoin Battery Finance

• Should Bitcoin Be in Your Portfolio? · open to everyone

• Is BlackRock Buying Bitcoin?

• Can Bitcoin Bonds Save the Treasury?

• MSTY: Renting out MSTR Volatility

• Bitcoin and Risk-Adjusted Returns

• Are (Micro)Strategy’s Preferred Stocks for You?

• The Truth About Tulip Mania and Bitcoin

• Bitcoin-Backed Yield: A Boring Chart and a Beautiful Coupon

Reading the Market Like a Pro

markets, volatility, and the tools of the trade

The working toolkit of a professional, the same measures I use on my own book. Walk out able to size up risk, read volatility, and look at your own portfolio with clearer eyes.

• The Informationist Weekly: What the Heck is Arbitrage, Anyway? · open to everyone

• The Difference Between Correlation and Beta (yes there is one!)

• Index Funds vs. ETFs (and what exactly is the GBTC Trust)?

• The VIX ‘Fear Index’, And The Truth About Capturing Volatility! · open to everyone

• Using Standard Deviations and Z-Scores to Predict the Future

• 0DTE Options: Will They Cause A Market Avalanche?

• Stock Buybacks: The Good, the Bad, and the Ugly

• The Exploding World of ETFs

• What is Risk-Adjusted Return?

• Greeks and Gamma Walls

• The Buffett Indicator is Flashing BRIGHT RED

• What is Log, Anyway? · open to everyone

• The 50-Year Mortgage: Financial Innovation or Expensive Trap?

• The Fed’s Cutting Rates, Why Are Mortgages Still Expensive?

• When There’s No Safe Haven

• Diamonds Are Forever. Their Prices Aren’t.

Decoding the Fed

the Fed and monetary policy

The most powerful hand on the value of your money speaks in code. This room teaches you to read it, so Fed day stops being noise you wait to have explained and becomes something you follow along with me.

• The Fed and Its Pickle

• Target, Neutral, Terminal, and More: Deciphering the Fed · open to everyone

• Is the Fed Bankrupt?

• The Fed, The Treasury, The White House…Who’s Really in Charge of the Economy?

• Fed Fund Futures: Predicting the Fed

• The Fed Dot Plot: Rate Trajectory or Reading Tea Leaves?

• What Happens When the Fed Pivots?

• How to Read (Between the Lines) of The Fed · The Fed and Its Pickle

• Target, Neutral, Terminal, and More: Deciphering the Fed · open to everyone

• Is the Fed Bankrupt?

• The Fed, The Treasury, The White House…Who’s Really in Charge of the Economy?

• Fed Fund Futures: Predicting the Fed

• The Fed Dot Plot: Rate Trajectory or Reading Tea Leaves?

• What Happens When the Fed Pivots?

• How to Read (Between the Lines) of The Fed · open to everyone

• The Fed’s Elusive R-Star

• When Will The Fed Fully Pivot?

• The Fed Has a Big Problem

• The Fed’s Favorite Lie: This Isn’t QE

• The Fed’s Elusive R-Star

• When Will The Fed Fully Pivot?

• The Fed Has a Big Problem

• The Fed’s Favorite Lie: This Isn’t QE

The Nation’s Balance Sheet

the debt spiral and government finances

The fiscal machine behind the debasement, and the arithmetic that keeps pushing the same direction. See the mechanism once and you will track the story in real time, issue by issue.

• What’s a Debt Spiral, and is the US already in one? · open to everyone

• Debt Jubilees, and Why We Won’t See One for US Treasuries

• What Happens When a Country Defaults on its Debt?

• Informationist Halloween Edition: The Zombie Sovereign Apocalypse

• The Debt Clock is Ticking

• The Trillion Dollar Coin: Genius or a Joke?

• The CBO and Taking the Treasury’s Debt Temperature

• The US Twin Deficit Syndrome

• Is Social Security Doomed?

• The Treasury’s $175 Trillion Hole

• The Laffer Curve and Do Lower Taxes Work?

• Debt Ceiling Crisis: Part 2?

• The Dubious 6% Club

The Biggest Market in the World

bonds, Treasuries, and the yield curve

The market that prices money itself, larger than every stock market combined. The signals buried inside it tend to warn before the headlines catch up, and this room teaches you to spot them.

• Yield Curves, Inversion, YCC, and how the Eurodollar fits into all this (super simplified!) · open to everyone

• Can the Fed Prevent a Disorderly Treasury Market?

• Are TIPS a Good Investment?

• Can a Treasury Auction Fail?

• The Great Inversion

• Term Premium: Bessent’s Brewing Nightmare

• Are Swaps Ringing a Warning Bell?

How the Money Actually Moves

banking, funding, and the financial plumbing

The wiring underneath the market: how banks fund themselves overnight, how credit gets priced, and how your deposits are actually protected. Learn to watch it and you will see stress in the plumbing before it reaches the headlines.

• Repos, Reverse Repos, and the Mystery of the Overnight Lending Market · open to everyone

• Credit Default Swaps and Contagion: The Simple (yes, really) Explanation

• Credit Ratings, Credit Spreads, and the Path to Default

• How the TED Spread Gives Us Clues of Systematic Risk

• Bond Ratings vs CDS Spreads. Which Can You Trust?

• Is Fractional Reserve Banking Doomed?

• Bank Bail-Ins: Can They Really Seize Your Deposits?

• GSIB, SIPC and How to Protect Yourself!

• Are Fed Swap Lines Really Foreign Bank Lifelines?

• The Reverse Repo Reaper

• SOFR Sends Up a Smoke Signal

• THE TREASURY’S CHECKING ACCOUNT: A Trillion Dollar Liquidity Bomb

  ---

The Hidden Leverage Machine

shadow banking, hedge-fund leverage, and systemic risk

The borrowed money stacked behind calm markets, from the basis trade to private credit to the pension blowups nobody saw coming. This room is how leverage builds quietly and where it has snapped before, so you can spot the next one forming.

• LDIs and the UK Pension Meltdown · open to everyone

• Shadow Banking and Private Credit: The $1.7 Trillion Leverage Machine

• The Dangerous Hedge Fund Basis Trade · open to everyone

• Will Hedge Funds Blow Up From Leverage?

• SLR: Why Banks are Warning The Fed

• Should We Be Worried About Credit Spreads?

• ISDA and Its Endgame - Part 1

• ISDA and its Endgame - Part 2

• ISDA and its Endgame - Part 3

  ---

What the Official Numbers Aren’t Telling You

inflation, jobs, and the economic data

How inflation, jobs, and growth actually get measured, and where the official story bends. Walk out able to read the next big print with a skeptical, informed eye.

• CPI and How the Measure of Inflation is ‘Inconsistent’ · open to everyone

• The Case-Shiller Index and the Health of the Housing Market

• Let’s Talk About GDP...

• Narrow Money, Broad Money, and Predicting Inflation

• PCE and the Supercore Inflation Reading

• What is a Recession, and Are We Headed For One?

• What is the Sahm Rule Telling Us?

• The Confusion with Unemployment

• The Misery Index

• Can Consumers Predict Inflation?

• The BLS Random Number Generator Strikes Again

  ---

Behind the Curtain on Wall Street

how funds, fees, and capital stacks really work

The structures the pros take for granted, the funds, the fees, the capital stack. This room turns the machinery from a black box into something you understand from the inside.

• Five Hedge Fund Codes

• How do Hedge Funds, Private Equity, and Venture Capital make their money? Breaking down the fees simply! · open to everyone

• Capital Structure & Claims on Assets: What Equity Investors Need to Know! · open to everyone

• Angels, Seeds and SAFEs...How Venture Funding Works!

• What is a SPAC?

  ---

Before you go

That’s the library. Every room in it built to make one more piece of the financial world make sense, and a new lecture landing in your inbox this Sunday to put it all in motion.

The card is yours. Come back as often as you like. I’ll be in here every week.

Talk soon,

James ✌️