📈 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.

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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

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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

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🙌 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 ✌️

📈 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 told you to follow the cash in the AI boom. This week, the cash starts reporting.

Where we left off

Let’s start with what you can pull up yourself, because most levels moved less than the noise around them would have suggested.

As of Friday the dollar is still holding near the top of its range at about 101, a hair under its late-June high of 101.80. Gold is holding just over $4,100, crude jumped early in the week and then slid to around $71, and the yen is near its multi-decade low at 161.7, though even that eased back from the 162.84 it touched on July 1. So in short, nothing there broke. The dollar never lost 100, and the yen never forced Tokyo’s hand.

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

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A quick note before we begin.

The Monday piece some of you have followed as “What I’m Watching” has grown into something that deserves its own name and its own standing. As of this week it is The Informationist Radar: a full second issue, every Monday morning, before the market opens.

Think of it as the forward-looking companion to this one. Where Sunday’s letter explains the force that just moved the market, the Radar gets you ready for the week ahead, my read on what’s set up, what could break it, and where I think the tape turns. And so, The Informationist has two issues per week now. One to understand what just happened, one to be a step ahead of what’s coming. Premium subscribers get the Radar in full every Monday, and I’ll say a bit more on that at the end today.

Today’s Bullets:

• The Chart Everyone’s Posting

• Follow the Cash, Not the Hype

• We’ve Seen This Movie Before

• A Transfer of Cash Is a Transfer of Risk

• You Own This Whether You Meant To or Not

Inspirational Tweet:

Artificial intelligence is everywhere we look right now, and if it all feels like a lot, that is because it is.

It is in our work and our kids’ homework. It is in every earnings call, every other headline, every third post in our feeds. Everyone you know has a take, half of those takes contradict each other, and it is genuinely hard to tell what is real, what is hype, and what any of it means for you and your money.

So here is the one piece of this we can actually get our arms around.

Most of what makes AI so overwhelming is unknowable right now, even to the people building it. Whether the machines outrun us, whose job is safe, which of these apps is still standing in five years. Fair enough. The money, though, leaves a trail. We can see, close to the dollar, where it is going, who is spending it, and how it is quietly reshaping the markets that hold your retirement.

And this past week, one chart put that money trail in sharp relief.

That light blue line breaking down on the right edge is the combined free cash flow of five of the largest companies in the American market. It marks the greatest run of corporate cash generation in history, and it is rolling over hard, even as the companies behind it stay as profitable as they have ever been.

So where did all that cash go? Who is quietly getting rich on the other side of that line? Is this the smartest capital bet of a generation, or the top of a cycle we have watched end badly before? And why does any of this reach into your own portfolio, even if you have never bought a single AI stock?

All good questions, important ones. And ones we are 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, for a clear look at where the money is really going in the AI boom, with this Sunday’s Informationist.

Partner spot

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The Chart Everyone’s Posting

So let’s read this thing together, because it’s actually far less complicated than the noise around it would suggest, and once it clicks, you will see how it applies to plenty of other situations.

It comes down to cash. In a world drowning in AI narratives, cash is the one thing that we can anchor to, so that is what we are going to follow.

Start with what these five companies used to be.

For fifteen years, Amazon, Microsoft, Alphabet, Meta, and Oracle were the closest thing capitalism has ever built to a money-printing press.

How?

Their asset-light businesses, software and ads and services, threw off cash with almost no effort. At the peak, the five of them together generated roughly a quarter of a trillion dollars a year in free cash flow.

Not revenue, free cash: the money left over after every bill is paid and every investment made, sitting right there for shareholders.

That was the whole bull case for owning them, and it held for a decade and a half. Own the toll booths of the digital economy, and the tolls just pile up.

Now look back at the chart and the light blue line plummeting on it.

On the path these five are on, their combined free cash flow crosses zero this year, for the first time in fifteen years.

What changed is that the AI buildout arrived, and all five decided, at once, to bet the house on it. The four largest alone are pouring $725 billion this year into chips, servers, and data centers, and the figure is still climbing. Over seven hundred billion dollars, in a single year, from four companies.

In other words, the greatest cash machines ever built have become the greatest spenders ever recorded, almost overnight.

And that money went somewhere specific.

Straight down the supply chain, to the companies that sell the gear, the semiconductor makers, Nvidia, Micron and the rest. Their cash flow is running the mirror image of the hyperscalers’, climbing toward the $400 billion mark and still rising. One line falls off a cliff, the other rockets higher, and it is the same dollars changing hands.

That is what Bank of America meant by a generational transfer in free cash flow. The richest companies in the world are quietly handing their crown to their own suppliers.

And since these are the biggest names in the market, the ones sitting at the top of nearly every index fund and 401(k) in the country, this is unfortunately not some distant or inconsequential Wall Street drama. It’s absolutely impacting the accounts that hold your retirement, whether you chose to bet on them individually or not.

Which is why this chart was shared all over the place this week, and why the internet promptly split into two camps talking past each other.

One side sees catastrophe, the cash machines finally breaking.

The other sees genius, one of the boldest land grabs in corporate history. Both are staring at the same falling blue line and reaching opposite conclusions.

But the good news is that with just a simple understanding, you can look at this same chart and make perfect sense of it yourself. It comes down to how the cash actually moves, line by line.

Once we define that piece, the rest of the picture just falls into place.

Follow the Cash, Not the Hype

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Who’s going to buy all this debt?

Yesterday’s letter left us at the long end of the bond market, where the 30-year is pushing toward 5% and lenders want a fat real yield just to hold US debt for thirty years. That worry has less to do with this month’s inflation and more to do with how much Washington now has to borrow.

This week we get some more clues to how real that worry is. The government has to go raise the money, out in the open, using important maturities.

Treasury sells 3-year notes Tuesday, 10-year notes Wednesday, and 30-year bonds Thursday. The 10-year lands the same afternoon the Fed releases the minutes from Warsh’s first meeting. So Wednesday hands us two answers to the same question a few hours apart.

Does the Fed have the will to hold the line on inflation? And does the world still want to fund us cheaply while it does?

Pretty quiet calendar otherwise. That’s part of why these few events matter. Less noise to hide in.

Let’s get to it. I’ll start with the minutes everyone’s watching, then the pieces I think matter more.r

📝 The first Warsh-era minutes

Wednesday at 2 p.m. Eastern, the Fed releases the minutes from the June 16-17 meeting, Warsh’s first in the chair. It’s the earliest look we get at what was actually said in the room.

Yesterday we laid out the case that Warsh is quietly dovish under the hawk act, and that his plan runs through a committee that has already pushed back on both halves of it. The bet that AI productivity pulls inflation down for him. And the push toward a cooler way of measuring inflation.

The minutes are where we can check that read against the record.

I’m looking for three things.

How many members lean toward a hike, and how hard. Whether anyone brings up the measurement question, the idea of leaning on trimmed-mean or median PCE instead of core. And any mention of the “first principles” review Warsh keeps floating.

Remember the votes: four dissents at the meeting just before he took over, the most since 1992, and nine of eighteen projections now penciling in a hike this year.

One note that cuts his way. Micron just reported a strong quarter, another sign the AI buildout is still running hot. That helps his productivity argument a little, even if most of his committee still won’t buy it.

How I read it: the minutes tell us about the Fed’s will. Will is only half of it, though. That same afternoon, the market gets to vote with real money on whether it believes any of it.

That vote is the auctions, and I think they matter more.

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Today’s Bullets:

• 🦅 The Hawk on the Sintra Stage

• 🕊️ The Dove Hiding Underneath

• 🧮 The Ruler Warsh Wants to Swap

• 🪤 The Trap in Changing the Measure

• 💰 What a Stealth Dove Means for Your Money

Inspirational Tweet:

Look closely at the highlighted text from today’s Inspirational Tweet, because it appears that Warsh just told on himself.

Reporters have been grumbling that the brand-new Fed Chairman won’t say where rates are headed. So he points them straight at the bond market. Volatility down. Yields down. Inflation expectations down.

Then the wink: the people wagering real money “understand quite well.”

This is the same man who spent the prior week sounding like the fiercest inflation hawk in a generation.

And look at the tone he lands on. Not worried in the slightest.

He calls it a “rare moment” to go back to first principles and rethink what the Fed is doing, and says he is encouraged. Keep that phrase in your back pocket. First principles is where the ruler we use to measure inflation comes back into play.

So which is it? Hawk, or something else entirely?

Picture the scene in Sintra.

Kevin Warsh, barely six weeks into the biggest job in global finance, sits down on a stage in Portugal next to Christine Lagarde and two other central bankers (we won’t waste a single breath on them here, don’t worry), and spends the afternoon talking like the toughest hawk in the building. Prices are too high. The Fed will deliver price stability.

Anyone waiting for him to go soft would be, in his own word, disappointed. The headlines wrote themselves. Hawk. Done.

But the tough talk on top and the bond-market wink underneath contradict one another. One says the fight is just beginning. The other says the fight is nearly over and the market has already figured it out.

Yet both came from the same man, on the same stage, in the same week.

And so, what Warsh built in Portugal is a setup to declare the inflation war won, start cutting rates, and never once admit to going dovish to get there. And there is a single technical lever, buried in how we measure inflation itself, that makes the whole thing work.

So what’s he going to do? How is he going to do it, and perhaps most importantly, how is he going to justify it?

All good and super important questions for any investor, and ones we are 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, for a look at the dove hiding inside Kevin Warsh’s hawk, 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 Hawk on the Sintra Stage

Let’s start with what Warsh actually did in Portugal, because on the surface it was a clinic in sounding tough.

As we explored last Sunday in How to Read a Fed That Stopped Talking, Warsh spent his first weeks running the Fed doing an impression of the most hawkish chairman in years.

He held rates at a target range of 3.50% to 3.75%.

He gutted the policy statement down to a skeletal 130 words.

He refused to pencil in his own dot on the dot plot.

And he told the country the Fed would deliver price stability, in his words “strong, unanimous, and unambiguous.”

Then he flew to Portugal and did it again, louder.

Every summer, the European Central Bank gathers the heads of the world’s major central banks in the hill town of Sintra to sit on panels and talk shop. Think Davos, but for the people who actually set your interest rates.

This year the guest of honor was the new American, and the room wanted an answer to one question.

Is Kevin Warsh a hawk or a dove?

He gave them the hawk.

Prices are still too high, he said. The Fed is going to deliver price stability in the US, and that is that.

And when the conversation drifted toward the idea that maybe the Fed could learn to live with inflation running a little hot, a little above its sacred 2% target, Warsh shut the door on it. Anyone counting on that, he said, would be disappointed.

Wall Street took him at his word.

In the days after his first official Fed meeting in June, traders piled into the bet that the Fed’s next move would be a rate hike, not a cut.

Fed funds futures, the contracts where the smart money wagers on where rates are headed, tilted toward an increase as soon as this summer, and the odds of a hike by the fall jumped sharply.

For a country that has spent two years waiting on cheaper mortgages and cheaper car loans, that was a splash of ice water.

And that silence carries a cost.

As we explored last Sunday, Warsh has pulled out the Fed’s old shock absorbers. No forward guidance, a bare statement, a buried dot plot.

Unfortunately, when the Chairman goes quiet and hawkish at the same time, the market is left to guess. And guessing shows up in our mortgage rates, our car loans, and everything else keyed to the US bond market.

We got a live demonstration on his very first day, when a routine decision to hold rates jolted the two-year Treasury yield 16 basis points higher in a single afternoon, purely because Warsh would not tip his hand.

So the story writes itself, right? Tough new sheriff, inflation in the crosshairs, hikes back on the table, cheap money cancelled.

Hawk. Done.

But that was only the performance the room was meant to see.

Because in that same trip, on that same stage, Warsh did something no true hawk would do.

He turned and pointed at the bond market as proof the inflation fight was already winding down. He talked, almost cheerfully, about going back to “first principles.” And for a man supposedly at war with rising prices, he sounded strangely, conspicuously relaxed.

Which leaves the question this whole letter is going to answer.

If Warsh is really the hawk he played in Portugal, why did he spend the same trip quietly laying out every reason the Fed is about to be done?

And what is the single lever he is already reaching for that lets him declare the war won without firing one more shot?

🕊️ The Dove Hiding Underneath

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🙌 What I'm Watching. The levels, catalysts, and signals on my screen this week, so you can start the week a step ahead.

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Did the dollar just blink?

Yesterday’s letter made the case that the dollar is the asset to watch right now, because when it turns, the hard assets it’s been draining tend to turn with it. And late last week, the dollar did something it hasn’t done in a while. It blinked. It eased back from its 13-month high after Thursday’s PCE landed in line and the market trimmed its bets on how hard this Fed hikes.

Right on cue, gold clawed back above $4,000 and silver caught a bid.

One pause is not a turn. We’ve watched plenty of them fail. But this holiday-shortened week hands us two events that could settle it. Warsh steps to a podium Wednesday, his second public outing since taking the chair, and the June jobs report lands Thursday, pulled forward a day because the market is closed Friday for the Fourth. A hot labor number or a hawkish Warsh feeds the dollar and the squeeze holds. A soft one gives the bounce in hard assets room to breathe.

That’s the question sitting on my screen all week. Pause, or turn.

Below is the rest of what I’m tracking, the specific levels and the read I’m carrying into each one.

📈 The dollar’s two lines

The Dollar Index is sitting around 101.3 after backing off a recent high near 101.8, which was itself the strongest the dollar has been in 13 months. I’m not interested in the daily wiggles.

Two lines frame the whole week for me.

Above, that 101.8 area. Reclaim it and push through, and the breakout I walked through yesterday is alive and well, the milkshake keeps pulling, and the pressure on gold, silver, and Bitcoin stays right where it’s been.

Below, the round 100 mark. A clean break under it would be the first real evidence the pressure is lifting, and it’s the level I’d want to see give way before I’d trust that the bounce in hard assets is more than a breather.

Everything between those two is noise.

The dollar and the metals are two ends of the same rope right now, so I’m watching which line breaks first. That, more than any headline, tells me whether the bleed in the hard assets built to outlast the dollar eases from here or picks back up. One number does the work of a dozen this week.

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Today’s Bullets:

• 🌍 What the Dollar Is Actually Telling You

• 🥤 The Dollar Milkshake

• 💸 The Wrecking Ball

• 🚰 The Relief Valves

• 💰 How I’m Reading It From Here

Inspirational Tweet:

Unless you've been ignoring markets lately, you’ve noticed that just about everything you might own to protect your purchasing power from a debasing dollar has been selling off.

Gold, down about 28% from its January high. Silver, cut in half. Bitcoin, down more than 50% from last October and back to a five handle. Month after month of red in the very things you bought to stay safe.

Hard monies getting hit hard.

And the one thing that’s climbed the entire time?

The dollar itself.

Yep, that dollar. The same one we all know is being quietly debased year after year, buried under deficits and money printing. What gold, silver and Bitcoin are supposed to protect us from.

Somehow it’s the strongest asset on the board right now.

I’ll admit. Watching them bleed while the dollar climbs, day after day, has worn on me right along with you.

Respected economists (yes, there are still a few out there) have taken note, too. Like former PIMCO CEO and now Chief Economic Adviser at Allianz Mohamed El-Erian, who flagged the Japanese yen. Pinned at its weakest since 1986, El-Erian reminds everyone that when Japan fights to defend it, it has had to sell US Treasuries to do it.

A whole country dumping Treasuries to prop up its currency, and still losing to the dollar.

And so it’s natural to wonder how the dollar can be losing so much purchasing power over time and still be the strongest thing standing? Is the debasement trade unraveling? And if we own these hard assets, should we be worried?

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

So, pour yourself a big cup of coffee and settle into your favorite seat as we get to the bottom of what the dollar is really doing in this Sunday’s Informationist.

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🌍 What the Dollar Is Actually Telling You

Let’s start with the contradiction at the center of all this.

The dollar is being debased. We know this. There’s no argument against it.

Deficits with no end in sight, a Fed that prints when it’s cornered, Treasury debt that only climbs. Anyone who’s bought groceries or priced a house lately can feel the dollar losing its grip.

And don’t even get me started on the cost of insurance.

Yet the grand ol’ US dollar is strengthening versus hard assets into this debasement.

Why?

Two things are actually working against gold, silver, and Bitcoin right now, let’s visit each.

The first is a rotation. Those hard assets had monster runs before these sell-offs began and a lot of fast money that rode them up has been cashing out, selling the winners to chase the AI trade and everything orbiting it. When the shiniest object in the room is artificial intelligence, the money parked in gold and Bitcoin gets tapped. That’s real, and it’s part of why the debasement trade has felt so heavy lately.

But a rotation is a flow. Hard to see, and even harder to time.

The second force you can read on a chart every single day. The foreign exchange value of the dollar.

Don’t worry, we’re going to keep this simple.

Some of you have heard me break down the Dollar Index before, but if you have not, you can find the full explanation here:

TL;DR on the DXY: When we hear “the dollar is strong,” what they almost always mean is the DXY, the US Dollar Index. And the DXY measures one thing: the dollar against a basket of six other paper currencies.

• The euro, at a whopping 57.6% of the entire index

• The Japanese yen, 13.6%

• The British pound, 11.9%

• The Canadian dollar, Swedish krona, and Swiss franc splitting what’s left

Let’s go back to that euro weight for a second.

Nearly 58 cents of every point in that index is really just the dollar versus the euro. When the DXY climbs, mostly what it’s telling us is that the dollar is beating the euro, with a little yen and pound mixed in.

Which makes the DXY a bit of a beauty contest among paper currencies. And right now the dollar is winning it. But winning that contest doesn’t make the dollar healthy. Like my good friend Greg Foss likes to say, “the US dollar is just the cleanest dirty shirt in a pile of dirty laundry.”

Every currency in that basket is being debased too, the euro and the yen arguably faster. The dollar can win the race among the sick and still be sick itself.

And there’s the knot, untangled. Two different yardsticks, and the world, including most of mainstream media 🙄, mixes them up constantly.

One measures the dollar against other paper: the euro, the yen, the pound. That’s the DXY. That’s what’s “strong” today.

The other measures the dollar against real things: what it buys in groceries, in gold, in a roof over our heads, across years and decades. That’s debasement. That’s the slow bleed we've all felt for years.

And no, it’s not going to stop.

Remember, when gold and Bitcoin are red while the DXY is green, what’s in front of us is the dollar winning the paper race, with real consequences for everything priced in dollars. The debasement story is still running underneath, on its own slower clock.

Now let’s actually look at it, because a single number on a screen tells us almost nothing. We have to zoom out.

The dollar across half a century

What do we see?

The spike to its all-time high of 164.72 in 1985, the long fall, the 2008 bottom near 71, the swings since. At today’s ~101, the dollar is middle of the pack, nowhere near historically strong. “Strong” here means strong versus recent months, not versus history.

Keep that 1985 peak in mind, it comes back later.

The dollar since 2021

Now, what do we notice?

The dollar topped near 114 in 2022, checked back a few times, with 100 as support, then spent most of 2025 grinding lower, all the way toward 97. For most of last year the dollar was falling and hard assets were having the time of their lives.

Then, this spring, it turned.

Daily DXY, last 12 months

And finally, what we notice is that from a February low near 96, the dollar has run all the way back above 100 to a 13-month high just over 101. And during that stretch, no surprise, Bitcoin began selling off early, and then gold and silver followed at the beginning of this year.

The dollar is winning the paper race, and the timing of that win is leaning right on our portfolios. Bitcoin cracked first, late last fall. Gold and silver followed early this year. Same dollar, same pressure, just in sequence.

Which leaves the one question that actually matters for our money now.

Why is the dollar winning, right now, all at once? And when does it stop?

Because a strong dollar feeds on itself. The higher it climbs, the more it pulls money toward it from every corner of the world, until something out there finally bends.

Or breaks.

Understand that loop, and we understand the only thing that really matters right now. When the pressure lifts, and our hard assets stop bleeding.

That’s exactly where we’re going next.

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James ✌️

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As promised, here is the full un-cut video recording from today.

Roundtable Recording: Q2 2026

A…

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Your link:

Roundtable Live

Just click the link to join. I’ll open the room a few minutes early.

If you’ve got a question you haven’t sent yet, reply now and I’ll fold it in, or just bring it live once your mics are open. I’ll start with a quick read on where we are at quarter end, then ge…

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The details:

Thursday, June 25, 1:00 PM PT (4:00 PM ET). Plan for 75 minutes. It’s on Zoom, and joining is one click. No app, no account, nothing to set up beforehand.

Roundtable Live

The format is simple. You ask, I answer. No script, no PowerPoint presenta…

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🙌 What I'm Watching. The levels, catalysts, and signals on my screen this week, so you can start the week a step ahead.

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First, welcome to a new Monday ritual.

Every Sunday we take one big idea apart slowly. This is the other bookend, a fast read before the bell on what I am actually watching this week. And it matters more than usual right now, because we just met a Fed that decided to stop narrating itself. When the Fed goes quiet, the job shifts to us, reading what it does instead of waiting on what it says.

Now let’s get right to it!

📊 The first inflation read of the Warsh era

Thursday morning, before most of us are even awake on the West Coast, the Bureau of Economic Analysis drops May PCE and core PCE. This is the inflation gauge the Fed watches above all others, and it is the first real reading since Kevin Warsh took the chair.

And the setup this time is unusual. At his first meeting, Warsh and the Committee did not soften their inflation outlook. They raised it, penciling in PCE around 3.6% this year, well north of the 2% target. So Thursday tells us whether the Fed’s own worry is showing up in the data, or whether prices are finally starting to cool as the energy shock fades.

The headline number, though, is only half the story. Warsh has said for years that he does not love the way the Fed measures inflation in the first place, and there is a quieter gauge he prefers that has been reading meaningfully cooler. Which ruler the Fed decides to trust may end up mattering more than any single print. We started pulling that thread Sunday, and we will follow it all the way down soon.

For now, Thursday at 8:30 a.m. Eastern is the week’s main event. It also lands the same day as our first live Roundtable, so we will have plenty to talk through that afternoon.

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🙌 One topic. Exposed and explained so you can make better decisions with your money. Like a simple walk down Wall Street.

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Today’s Bullets:

• 🤫 What Warsh Just Deleted

• 🔵 The Dot Plot Problem

• 🛠️ The Five Task Forces

• 🏦 The Balance Sheet Tell All

• 💰 What a Silent Fed Means for Your Money

Inspirational Tweet:

Wait, what?

The Fed isn’t going to give us guidance anymore? No clues to what they are thinking about rates and action in the future?

The new Chairman made it abundantly clear in his first presser.

The Fed, the institution that has spent the last two decades explaining itself in exhausting detail, will stop guiding us now.

Leaving us to wonder whether our mortgages get cheaper. Whether our savings finally earn something. Whether the market we are all counting on for retirement keeps climbing or rolls over.

For years we have had an important place to look for the answers. Eight times a year, the Fed laid out its plan, drew us a map of where rates were headed, and put a chairman in front of the cameras to walk us through it.

But Kevin Warsh just took the map away.

He scrapped the guidance that told us what comes next. And he made clear there is far more of this coming, meaning far less communication from him and the Fed.

So what are we supposed to do now? How do we know where our money is headed when the Fed stops telling us? How can we make decisions about our own investments if we don’t have at least the Fed’s guidance as an anchor for how they are thinking about and addressing inflation and other market matters?

Good questions, serious ones that can make a big difference in how we approach our own finances. Our own investments.

But have no fear, because we will answer all of them and more, nice and easy as always, here today.

So, pour yourself a big cup of coffee, and settle into your favorite seat for a look at how to read a Fed that just went silent with this Sunday’s Informationist.

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🤫 What Warsh Just Deleted

First, let’s talk about the term “forward guidance,” because it’s a concept that Wall Street has become somewhat addicted to in recent years.

In short, forward guidance is the Fed telling us, on purpose, what it expects to do next.

Not the rate it sets today, but the signal about tomorrow. And when the Fed wants to steer us, it says so out loud, and it gets specific.

For instance, in August 2011, with rates already pinned near zero, the Fed told us it expected to keep them “exceptionally low at least through mid-2013.” A promise nearly two years out. When that was not enough, it stretched the date to late 2014, then to mid-2015.

And in June 2020, in the teeth of lockdowns, Jerome Powell said it in plain English: the Fed was “not even thinking about thinking about raising rates.” Once again, reaching into the future and setting our expectations on purpose.

Now, the reason those words land on us has almost nothing to do with the rate the Fed sets that day. The Fed sets one rate, the overnight rate banks charge each other. By itself, that rate does not price our mortgage.

What prices our mortgage, our car loan, the cost of borrowing money for years at a time, is the 10-year Treasury yield. And the 10-year is built from three things stacked together:

1. Where the Fed has rates right now,

2. where the Fed signals they are going next along with its own read on inflation,

3. and what the market itself expects inflation to do.

Forward guidance is the Fed leaning hard on that middle piece.

Shift the expectation, and the 10-year moves. Move the 10-year, and mortgage rates, auto loans, and the cost of long-term borrowing move right along with it, before the Fed has touched its actual rate at all.

Go back to that August 2011 promise. The Fed did not cut a thing. It simply told us rates would stay low for two more years, and Treasury yields dropped as if the Fed had cut by the better part of a full percentage point. Borrowing costs eased right behind them.

The words did the work of a rate cut.

That is the addiction. When the Fed guides, our financial lives move. It has conditioned the market to pay attention to Fed communications almost religiously.

The Fed has shown us their hand in three main ways.

The statement. Eight times a year, the Fed puts out a short written statement after its meeting. The clues live deep in the words, the choice of words, the absence of them, and especially the elimination of them. These clues can often tell us if the Fed is leaning toward cutting, hiking, or holding. And especially whether they are adding liquidity to markets or taking it away.

The dot plot. You’ve likely seen this plot before. I’ve talked about them extensively. Four times a year, every official anonymously marks where they think rates are headed over the next few years. (Hold that thought. This one has a checkered history we will get into.)

The press conference. After the meeting, the Chairman stands before the cameras, explains the Committee’s thinking, and takes our questions from reporters in the room.

That is the main instrument panel. For years, that is how we read the Fed.

This past week, Warsh went after all three.

Start with the statement.

Powell’s final statement in April ran 341 words. Warsh took it all the way down to a mere 130 words.

I mean, look at this red-ink bloodbath.

Look at what Warsh cut.

The whole passage about how the Committee “will carefully assess incoming data, the evolving outlook, and the balance of risks,” the careful language that always hinted at what came next, deleted. In its place sit a few plain sentences about the economy and one flat promise: the Fed will deliver price stability.

That’s it. A few facts and a pledge. No roadmap whatsoever.

Then the dots.

The other eighteen officials submitted theirs. Warsh refused to submit his own. The one person whose view moves markets more than anyone else’s left his blank. (We will get into exactly why that is such a loaded move in a moment.)

And the podium. In his first press conference, Warsh leaned on a line from his old mentor, former Secretary of State George Shultz: a press conference is only worth holding when you actually have something important to say.

Translation for the rest of us: do not expect to hear from this Chairman often.

So in a single afternoon, the new Fed took a chainsaw to all three communication channels. The statement, the dot, the podium.

Quieter on every one.

The question is why. And the answer starts with the one piece of the old system that has embarrassed the Fed the most.

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Today’s Bullets:

• 🧮 How Do You Measure the Richest Person Ever?

• 💸 The Number Nobody Can Actually Spend

• 🔑 How the Ultra-Rich Turn Paper Into Cash

• 💰 What This Means for You and Your Money

Inspirational Tweet:

“Officially the first trillionaire in human history.”

That crossed my feed Friday morning, along with countless other posts with similar sentiment. In fact, it’s pretty much the only thing people on Twitter were talking about all day.

For the first time in history, a trillionaire has been minted, so to speak.

And it made me think about how someone becomes so insanely wealthy.

Forget a trillion dollars, let’s start with a billion.

I grew up middle class in a small town in upstate New York. Modest. Nobody that I knew had money like that, not anywhere close. Then, in my twenties, I landed on Wall Street. Suddenly surrounded by and trading in millions of dollars daily.

Eventually I began to see multi-millionaires and billionaires do things with money I had no idea were even possible. Things I didn’t know were necessary, until I saw for myself why people with that much actually need them.

Before we get into that, though, let’s step back and ask a few questions that may already be on your own mind.

Is a trillion today even bigger than the billion that crowned the first man ever to hit that mark, a hundred years ago? If almost none of that trillion is money Musk could actually spend, how does he live like the richest man alive? And perhaps the most important question on your mind: what does the way these people really handle their money tell you about handling your own?

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

So pour yourself a big cup of coffee and settle into your favorite seat for a look at what the biggest number in history is really worth, with this Sunday’s Informationist.

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🧮 How Do You Measure the Richest Person Ever?

To begin, let’s go back to the last time this happened.

September 29, 1916. Newspapers across the country woke up and crowned a man the first billionaire in history. Not because he had sold anything or cashed a check. His shares of Standard Oil had simply soared, somebody did the calculation, and the number crossed ten figures for the first time anyone had ever seen.

His name was John D. Rockefeller.

Sound familiar? It should.

If you grew up like me, then you would have heard the phrase, “What do we look like the Rockefellers?” any time you asked for something that was not in the budget. More than a century later, the name still means rich beyond reason. That is how completely a single fortune can stamp itself onto a country.

Rockefeller was crowned the richest man alive by a moving stock price, on paper, before he sold a single share. A hundred and ten years apart, Musk on Friday and Rockefeller in 1916 earned their crowns the exact same way.

The Breakup That Backfired

Now, the wrinkle. Five years earlier, in 1911, the Supreme Court ordered Standard Oil broken into 34 separate companies, the most famous forced breakup in American business history. The government meant to cut Rockefeller down to size. Lo and behold, just like almost every single other government-driven intervention, it backfired, spectacularly.

The reason is worth understanding, because the same piece of market machinery is still in use today.

Rockefeller owned about a quarter of the old trust, so when it was split, he received a quarter of the stock in every one of the 34 pieces. Then something strange happened once those pieces traded on their own. Investors added them up and found the parts were worth far more than the whole had ever been.

A giant, opaque monopoly sitting under a legal cloud is hard to price, so the market discounts it. Cut it into clean, separately traded companies, and that discount melts away. Suddenly investors could see exactly what each piece was worth, and they bid them up. Within two years the combined value of the “Baby Standards“ had doubled.

By 1913 his fortune was pushing $900 million, and within a few years the press would hand him the billion-dollar crown we started with.

Wall Street has a name for what happened to him. Unlocking the sum of the parts. The very same argument gets made in boardrooms and antitrust fights to this day.

The breakup meant to humble him made him richer than ever.

oops.

The Rulers

Alright, back to the question of the day. Is Musk’s trillion actually bigger than Rockefeller’s billion?

Depends entirely on the ruler you use. And there are three of them, each one fairer than the last.

The Raw Ruler

A trillion is a thousand billions.

Inherently, you know this is a flawed comparison. Line the two up and Musk wins a thousand to one. Except that tells you almost nothing, because a 1916 dollar and a 2026 dollar are not the same animal, and neither are the two economies they lived inside.

The Inflation Ruler

Then adjust for it. Ask what Rockefeller’s billion would buy in today’s money. Britannica runs that math and gets about $30 billion, which makes Musk roughly thirty-five times richer.

Closer to fair, but still bent.

The dollar has fallen even harder than the official inflation figures admit, so that $30 billion is, if anything, light. But the bigger flaw is what it ignores: the economy Rockefeller loomed over was a tiny fraction of today’s.

The Economy Ruler

Now the only question that is truly apples to apples. How big was each man’s fortune against the entire economy of his day?

In 1916, the whole United States produced about $48 billion in Gross Domestic Product, or GDP. Rockefeller’s billion was therefore around two cents of every dollar in the country.

Today the US economy runs about $32 trillion in GDP. Musk’s trillion comes to roughly three cents of every dollar.

Good God, man.

In any case, two cents then. Three cents now. That is the honest comparison, and look how far it sits from where we began. The raw numbers scream a thousand to one. Inflation says thirty-five. Measured against the economy each man actually stood on, it is three cents against two.

Musk is still ahead. But three-to-two is a different universe from a thousand-to-one.

The dollar is a piece of chewed gum, at best. As it stretches and stretches, the “richest man in history” changes right along with it.

Even once you pick a ruler, though, two things stay true about Musk’s trillion that were never quite true about Rockefeller’s billion.

First, he can’t actually spend most of it.

And it is a fundamentally different kind of wealth than the kind that made Rockefeller rich.

Let’s walk through each of those to understand how and why, and then we will talk about how this all may relate to you and your own financial situation.

💸 The Number Nobody Can Actually Spend

Start with that first claim. He cannot spend most of it.

To see why, you have to know where the number even comes from. Because nobody counted Musk’s money on Friday. They calculated it. A net worth headline is a math problem, and once you can see the equation, the whole illusion comes apart in your hands.

Where the Number Comes From

Every net worth figure you have ever read rests on one piece of arithmetic. Take the price of the last single share that traded, and multiply it by every share a person owns. That is the entire formula. Wall Street has a name for it: mark to market. You take whatever the market last paid, and you mark the whole pile to that price.

Watch it happen in real time on Friday.

Before the opening bell, SpaceX was a private company with no public price at all, and the trackers pegged Musk somewhere in the high hundreds of billions. Then SpaceX shares, ticker SPCX, started trading. They priced at $135, opened around $150, and by the close had run to $160.95.

Musk owns roughly 4.8 billion of those shares.

Do that multiplication and, by CNBC’s tally, the listing piled more than $180 billion onto his fortune in a single session. He crossed a trillion dollars somewhere in the middle of a Friday afternoon.

Now ask the question that actually matters. What did he do that day to earn that $180 billion?

In certain corners of Washington, the answer is “nothing,” and the follow-on is that a number this size is really just untaxed cash the government ought to be helping itself to.

Senator Elizabeth Warren’s Ultra-Millionaire Tax Act, back on the table this spring, would tax a billionaire’s net worth directly, the paper figure itself, whether a single share has been sold or not.

It’s a seductive idea to gain votes, right up until you understand what the number actually is.

Musk didn’t pull that $180 billion out of a vault, because there is no vault.

The market simply slapped a public price tag on a company he already built, the calculator multiplied that tag across his pile, and his number leapt. He sat there and watched it happen, the same as you or I would.

Here’s an important part of that tally.

The price that re-marked all 4.8 billion of his shares was set by the last shares to trade. Maybe a few million changed hands at $160.95. That one price then got stamped onto every share behind it, including the billions that never moved an inch all day. The marginal share, the very last one to sell, sets the official value of every share standing behind it.

You already know this feeling. Open your brokerage app tonight. The number it shows you runs on the exact same metric: the last price someone paid for the stock, multiplied by however many shares you happen to hold. You didn’t sell anything. Nobody handed you cash. A screen multiplied two numbers and called it your wealth.

Musk’s trillion is your brokerage balance with a few more zeros, built the very same way.

Well, let’s be honest. A lot more zeroes.

Try to Cash It In

Which leads straight to the trap. That marked price only holds as long as nobody tests it.

Picture the other side of every trade. At any given moment, a stock has only so many buyers standing there willing to pay near today’s price. Traders call that market depth: the stack of real, live bids waiting in the order book. Sell a hundred shares and you barely scratch the top of that stack. The price doesn’t budge. Sell ten thousand and you start eating down through it.

Now try to sell 4.8 billion.

There is no wall of buyers that deep. Not even in the neighborhood.

No. You blow through every bid sitting near $160, then every bid below that, and below that, chasing the price down with your own selling the entire way. The act of cashing out destroys the very price your trillion was marked at. By the time you’d unloaded any serious chunk of it, the shares still in your hands would be worth a fraction of where they started.

And it gets worse, simply because of who he is. Musk heading for the exit is not a quiet transaction. The moment the market so much as smells him reaching for the door, every other holder sprints for it first.

Bloomberg put it plainly this week: he cannot cash this fortune out like a checking account, and even a hint of him dumping SpaceX or Tesla could crater the price overnight.

I concur.

The trillion, then, is real and unreal at the same time.

Real, because the arithmetic is honest and the shares genuinely exist.

Unreal, because the figure survives on one condition only, that he never seriously tries to turn it into money. The largest paper fortune ever printed, holding its shape right up until the instant someone asks it to become cash.

A Different Kind of Rich

Here is where Musk’s trillion and Rockefeller’s billion part ways for good.

Rockefeller’s wealth paid him. Standard Oil and the 34 companies that came out of it were gushers of cash, and they sent him a steady river of dividends, his cut of the profits, mailed out quarter after quarter whether the share price climbed, sank, or sat dead still. He could light cigars with the cash flow and never once touch the underlying stock. His fortune was a claim on oil already pumped, refined, and sold. Money that existed, in hand, today.

Now, a fair objection. Of course Musk gets paid. Salary, bonus, the works, like any chief executive.

Let’s split two things that get tangled together. A dividend is a return on ownership, the company passing its profits back to everyone who holds the stock. A salary is pay for the job. Most executives collect both.

Musk collects neither in cash. And this is where he turns out to be the exception that proves the whole point.

Neither company pays a dividend. SpaceX never has, and Tesla has never paid a single cent of one in its history.

As for his actual paycheck, that Tesla package shareholders approved back in November, the one the headlines breathlessly call a “trillion-dollar pay deal,” is built entirely out of stock options, twelve tranches of them, with no salary, no cash bonus, and no time-based stock attached (it’s right there in Tesla’s own filings).

They pay out only if he hauls Tesla’s market value from roughly $1.5 trillion toward $8.5 trillion over the next ten years. SpaceX ran the identical play this year, handing him a billion fresh shares that vest only if the company is worth $7.5 trillion and there are a million people living on Mars.

Yes Mars. I am not making that up.

Which means the richest man in history draws no dividend and takes essentially no cash salary. Every last dollar of that trillion, his “pay” very much included, is made of the same stuff: equity. Shares. The exact paper we just spent this whole section watching him fail to turn into spendable cash without setting fire to it.

And the reason these companies hand him stock instead of a fat dividend check comes down to what kind of companies they are.

A growth company exists to be fed.

SpaceX pulled in $18.67 billion in revenue last year, up a blistering 33%. And the more it sold, the more it lost. As the chart shows, the losses on its core business widened right alongside the revenue, from under a billion dollars to nearly three billion in a single year. The faster it grows, the more cash it swallows.

At least for now.

In direct contrast, Rockefeller’s billion was a claim on a business minting money right then and handing it over. Musk’s trillion is a claim on what his companies might someday become, a wager that the future shows up and pays.

One man owned a printing press for cash. The other owns a brilliant, ravenous promise.

That distinction is going to matter enormously when we get to your own money in a bit. Tuck it away for now.

Which leaves us with a strange knot. The richest man who has ever lived sits on a fortune he can’t spend without wrecking it, attached to companies that don’t send him a dime to live on.

Then how on earth does he, or anyone with wealth shaped like his, actually live?

Because they certainly do. The ultra-rich buy the yachts and the islands and the influence without ever, as far as the public record shows, selling the golden goose out from under themselves. They cracked this exact riddle generations ago, and the answer is quieter, and a good deal stranger, than almost anyone would guess.

Let’s walk into that room next.

🔑 How the Ultra-Rich Turn Paper Into Cash

Welcome to the room.

This is the part I have watched up close for most of my career, and it is the answer to the riddle we just tied off. A man with a trillion dollars he cannot sell, attached to companies that pay him nothing, still buys the islands and funds the rockets. How exactly?

He borrows.

Buy, Borrow, Never Sell

The whole strategy fits in three words, and the estate lawyers have framed them so effectively, they have built entire, and incredibly lucrative, careers around them.

Buy, borrow, die.

Buy assets that grow. Borrow against them when you need cash to live. Never sell if you can possibly help it, and let the next generation sort out the rest.

The genius hides in that middle word. Borrow.

When you sell a stock that has climbed, you hand the government a slice. Sell a billion dollars of stock you bought cheap, and a couple hundred million can go straight to the IRS as capital gains tax, gone, before you have spent a dime of what is left.

A loan plays by entirely different rules, and this is the hinge the whole game swings on. Borrowed money comes to you tax-free. You have to pay it back, so the law treats it as a debt, and a debt is not income. No gain, no tax. You can borrow a hundred million dollars against your shares tomorrow morning and owe the Treasury exactly nothing on it.

You keep the asset. You pocket the cash. And the taxman waits at a door you simply never walk through.

As for the die part, that is the closer. Under current US law, when assets pass to your heirs, their cost basis resets to the market value on the day they inherit. A lifetime of gains that was never taxed, because it was never sold, resets for tax purposes. The estate clears the outstanding loans, the heirs keep the asset, and the capital-gains bill nobody ever paid quietly disappears.

That is the whole reason the strategy ends on that particular word.

The Loan That Lives on Your Shares

Here is the actual machinery, the part everyday people don’t get a chance to see.

The vehicle has a name: a securities-backed line of credit, an SBLOC for short. The private banks dress it up with grander titles for their biggest clients, pledged asset lines and the like, but it’s essentially the same animal.

Here’s how it works:

You pledge your shares to the bank as collateral → the bank opens a credit line against them, and → you draw on it like an enormous checking account

The stock never leaves your name. You still own every share, still keep any upside, still hold the votes. The bank simply gets a claim on them if you stop paying.

How much will they lend?

A portion of the collateral’s value, set by the loan-to-value ratio. Against a big, liquid, blue-chip holding, that amount can run well north of half the value. The richer and more diversified you are, the better your terms, because the bank sees a safer pile to lend against.

Here’s the key, though.

The first dollar is always the hardest to borrow. After that, money gets cheap.

You want to see who runs this play better than almost anyone alive? The man this whole letter is about.

Musk has used his own stock as a cash machine for years, right out in the open in Tesla’s filings. Back in 2020, the proxy showed he had borrowed roughly $515 million against 265 million Tesla shares, which had a market value on that date of $52.9 billion, more than 100 times the amount of the loans (per the Institute for New Economic Thinking’s read of the filings).

Sounds like a lot to borrow until you do the math. Just look at the ratio.

A half-billion-dollar loan, secured by fifty-three billion dollars of stock. The loan is a rounding error against the collateral behind it.

And he continues to run the same playbook. Tesla recently disclosed Musk had pledged roughly a third of his Tesla shares to secure personal loans, with the board capping what he can actually draw against them at the lesser of $3.5 billion or 25% of the value of the stock.

And he funds his life the same way he built his fortune. Without selling a thing.

The Engine Underneath It All

Now the piece that turns a clever tax maneuver into something close to a wealth machine. Longtime readers, you can already feel where this is headed.

Debasement.

When you borrow, you lock in a debt denominated in today’s dollars. A fixed number.

The melting ice cube itself.

Like I have said before, it does not matter who is in office, who is at the helm of the Fed, the reality is the math. And the math is ugly.

Year after year the dollar gets debased, quietly bleeding purchasing power, and that fixed debt you owe shrinks right alongside it in real terms. You end up repaying tomorrow’s cheaper dollars on a loan struck in today’s more valuable ones.

See, the very same debasement that eats away at the dollar tends to lift the price of the scarce, real asset you borrowed against. The stock. The Bitcoin. The land, the building.

Look at what that combination does. Your debt melts. Your collateral climbs. You are, in plain terms, short the currency and long the real thing, and the spread between the two is yours to keep.

That is the quiet engine humming under a great deal of generational wealth: a loan against an appreciating asset, serviced by a steadily depreciating dollar.

And once you get to a certain level of wealth, banks will just start to lend to you based on your balance sheet alone. It’s called an unsecured line of credit. I watched my hedge fund boss draw from an unsecured line of credit to the tune of over $20 million. No assets pledged against it, no collateral. Just the strength of his personal balance sheet and a promise to pay it back.

But of course he was also borrowing against actual securities and investments in private equity. Massive amounts of collateral to play with and borrow against.

God only knows what that total tally was. I wasn’t privy to that one.

What a world, eh?

The Catch, Because There Always Is One

Before anyone files this under free lunch, hear the other half, because it is the half that wrecks people.

You’ve heard me say it before. Loud and unabashed.

Leverage cuts in both directions.

The entire structure rests on the collateral holding its value. Let the asset fall far enough and the bank issues a margin call: post more collateral, or we sell yours to cover the loan, right now, at the worst possible moment, straight into the very weakness that triggered the call.

It is not hypothetical, even for Musk.

When Tesla stock has slid hard, a deep enough fall could push his pledged shares toward exactly that margin-call line, the same trapdoor that sits under anyone running this play. And for all his aversion to selling, when he needed real money to close the Twitter deal, even he had to unload billions of dollars of Tesla stock to get it done. The master of never-sell, forced to sell.

That, my friends, is the bill leverage always eventually sends.

Hear me clearly on what this is. It is the machine the wealthy actually use, laid bare. Not a recommendation. I am not telling you to phone your broker about a line of credit, and that margin-call story is precisely why.

I am showing you how the gears turn, so that the next part, the part about your money, lands with both eyes open.

Because the surprising thing is how much of this very same machine may already be sitting in your own life. You might even be running a piece of it without realizing.

Let’s go find it.

💰 What This Means for You and Your Money

Start with the biggest thing most people own. The roof over your head.

If you own a home with a mortgage, you are already running a small, quiet version of the exact play we just watched the billionaires run.

Look at the pieces.

You bought an asset that tends to appreciate. You borrowed against it, the mortgage, instead of paying all cash. And you have no intention of selling it to fund your life. Buy, borrow, don’t sell.

Sound familiar?

Now add the part that turns it into an engine.

Your mortgage is very likely a fixed number, locked at the rate you signed years ago. The dollar, as we have established, melts relentlessly. Every year it gets debased a little more, and every year the real weight of that fixed payment gets a little lighter. The $2,500 you owe the bank this year is the same $2,500 you will owe in 2034, except 2034 dollars will buy noticeably less.

You are repaying a yesterday-sized debt with tomorrow-sized dollars.

Meanwhile, that same force tends to push the price of the house itself up over the years.

Look at what you pulled off, quite possibly without ever thinking about it. Your debt is quietly melting. Your asset is quietly climbing. You, the ordinary homeowner with a thirty-year fixed, are short the dollar and long a real asset, the very same position Musk holds with his pledged shares.

Smaller, yes. The same machine, though. Almost exactly.

Now, the usual caution, and you have heard me say it a hundred times. I cannot and will not tell you what to do with your own money. My job here is to help you see the dollar clearly. Because the very same debasement you feel as a pickpocket at the grocery store wears a second face. On your savings, it is a slow leak. On a fixed-rate debt held against a real asset, it works quietly in your favor.

Learning to see both faces at once is the whole point.

Two Questions to Keep in Your Pocket

Set Musk aside for a moment. The reason we walked through any of this is so that the next time a giant number lands in front of you, yours or anyone else’s, you can take it apart yourself. Two questions do most of the work.

First. What is the ruler?

We opened this letter learning that Musk’s trillion and Rockefeller’s billion only mean something once you choose what to measure them against. Raw dollars said a thousand to one. Inflation said thirty-five to one. Set against the whole economy each man stood on, it came down to three cents against two.

Same two men. Three completely different verdicts.

Hold your own numbers to that same test. A portfolio that “doubled” over a decade did what, exactly, after inflation? A gain of 4% in a year when inflation ran at 5% moved you which direction, honestly?

What I’m saying is, the number on the screen tells you very little on its own. The ruler you measure it against tells you the rest.

Second. What is it a claim on, and could you actually spend it?

Every asset you own is a claim on something. A dividend stock or a rental property is a claim on cash showing up today. A growth stock, a stake in a private company, even Bitcoin, those are bets on a bigger tomorrow. Each has its place.

Knowing which one you are holding tells you whether it will ever feed you or only ever grow.

Then the harder half, the half Musk’s trillion just taught us.

Could you turn it into real money if you had to, without wrecking the price on the way out the door?

A few hundred shares of Apple, easily. Your house, slowly and expensively. A large, concentrated position in your own company’s stock, maybe not without the market moving against you the whole time you sold. Wealth on paper and wealth you can spend are two entirely different animals, and the distance between them has humbled people far richer than you or me.

Back to the Crown

Which brings us right back to where we started.

Is Elon Musk really the richest human being in history?

The honest answer is that there is no clean answer, and now you understand exactly why. Line up enough rulers and the question splinters into a dozen different ones.

By raw dollars, he laps the field and everyone who ever drew breath.

Against the economy he stands on, he sits a whisker ahead of a man from 1916.

And measured by what he could actually walk into a bank and spend tomorrow, the honest figure is a small slice of that trillion, the very same bind Rockefeller was in a century before him.

The crown was only ever the hook that got us in the door.

What you carry back out is the better prize. You can read a giant number now and put the right questions to it. You understand why the richest man alive borrows rather than sells, and why the same dollar that nibbles at your savings can quietly help retire your mortgage. And you can look at your own modest balance sheet and recognize the very same machine, turning slowly, that runs the largest fortunes on earth.

Nice and easy, as always.

Which brings me to the short list of things I will be watching in the days ahead.

👀 What I’m Watching This Week

A quick word before the list. Every Sunday, paid subscribers find this same forward look in their inbox: the handful of things I'm tracking, and why they matter for your money. Today it's open to everyone. Glad to have you reading it.

• Warsh’s first meeting, the decision Wednesday at 2pm. The rate is a near-lock hold at 3.50 to 3.75%. What matters is everything riding alongside it: the fresh dot plot, the new projections, and Warsh’s first press conference as Chair. Does the plot push the first cut out to 2027, or leave September open? His tone sets the table for the rest of the year.

• The 20-year bond auction, Tuesday. Long-end supply landing the same day the Fed sits down and Tokyo reports. The 20-year is a clean stress test of real appetite for long US debt. I’m watching the tail, the bid-to-cover, and the foreign bid. A soft auction into two central bank meetings is how a long-end wobble starts.

• The Bank of Japan, deciding the day before the Fed. The bigger story for our long end may be in Tokyo. The BOJ meets June 15 and 16, its scheduled checkpoint on how fast to taper its own bond buying. With the yen pinned near 160 and the 10-year Japanese Government Bond (JGB) near 2.6%, just off an all-time high, the risk is simple: climbing Japanese yields pull Japanese capital home out of US Treasuries, thinning demand for our debt right as we sell that 20-year. Watch the yen and the JGB.

• The consumer and housing, Tuesday into Thursday. The last real read before the Fed speaks: May retail sales around Tuesday, housing starts just behind. Retail sales show whether the consumer, nearly 70% of this economy, is still spending. Housing shows what high rates are doing to the corner we spent this letter inside. Jobless claims land Thursday, the last data before Friday’s holiday.

• The paper trillion itself. A fitting close. This is SPCX’s first full week trading publicly, the first real price discovery for the stock that minted the world’s first trillionaire. Does the mark hold above a trillion, or do a few red days hand the crown back? Either way, a live lesson in what we just covered: paper wealth is only ever worth the last price someone paid. An observation, plain and simple.

That's it. I hope you feel a little bit smarter knowing what Musk's trillion is really worth, why he can't simply spend it, and how the world's biggest fortunes get borrowed against, never sold.

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Talk soon,

James✌️

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