O ye of little faith.
Nvidia has hit its all time high. It’s $4 trillion in market cap., making it the world’s most valuable company.
Which, as they say in Australia, is substantially better than a slap in the belly with a cold fish.
Here’s its last two years:
Jensen is the world’s best salesman. Here’s 16 minutes of pure Jensen with signature leather jacket.
Meanwhile, there’s the $50 million Bezos Venice wedding.
Bride and groom in motor boat. If I were not jealous, I’d be appalled.
Secretly photographed after the wedding:
The exploding Federal deficit
Interest payments on the federal debt now exceed our government’s spending on the military. Interest payments are roughly equal to the annual cost of Medicare. Interest is more than the government spends on anything except Social Security.
The question that everyone and their uncle is weighing in: Will our exploding federal deficit cause a financial crisis –– a la the 2008 Global Financial Crisis (GFC) or worse, the Great Depression which lasted from 1929 to 1939.
Niall Ferguson warns: A great power that spends more on interest payments than defense breaches a threshold that historically has preceded a decline. The U.S. crossed that red line last year.
Our budget deficit has been running at an “astonishing” (Economist Magazine word) 6.7% of GDP and our debt to GDP ratio will exceed the 106% reached after the second world war.
Budget deficits can lead to inflation. The most notable case was post World War I Germany. Germany had reparations to pay and a broken economy. The value of the German mark was 320 marks per dollar in mid 1922. By December it had fallen to 7,400 marks per US dollar. This hyperinflation continued into 1923, and by November 1923, one US dollar was worth 4,210,500,000,000 marks. That’s 4.2 trillion — more than Nvidia’s valuation. (Fake math.)
The C.B.O. (the Congressional Budget office) believes that the Big Beautiful Bill will create a $2.5 trillion deficit in 2035, up from $1.9 trillion in 2025.
Economics is called the dismal science. It is the only “science” in which it is impossible to conduct a controlled experiment and get it right. The standing joke is that an economist is someone who doesn’t have the personality to become an accountant. There is also a theory that God invented economists to make weather forecasters and astrologers look good.
Economists are incredibly good at predicting the past. But the future? Forget it. People claim “If you laid every economist end to end, it would not be a bad thing.”
And there’s also, “If all the economists in the world were laid end to end, they still wouldn’t reach a conclusion. A
There is good news, economists were able to predict 12 out of the last five recessions.
Congress passed the Big Beautiful Bill.
I asked Perplexity some questions:
Q: If the Federal government runs a deficit, where does it get the money to fund its operations?
When the federal government runs a deficit, it means its spending exceeds the revenue it collects through sources like income taxes, payroll taxes, and corporate taxes12. To fund its ongoing operations in this situation, the government borrows money by issuing U.S. Treasury securities—such as Treasury bonds, bills, and notes342.
Here’s how the process works:
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The U.S. Treasury sells securities to investors, which include individuals, banks, pension funds, foreign governments, and other entities.
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The money raised from these sales is used to cover the gap between government spending and revenue.
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This borrowing increases the national debt, which is the total amount of money the government owes from accumulated deficits over time352.
In summary, when the federal government runs a deficit, it funds its operations by borrowing money through the sale of Treasury securities, thereby increasing the national debt342.
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Rising Yields: The immediate market response would be a drop in Treasury bond prices and a rise in yields (interest rates) to attract more buyers. This increases the government’s borrowing costs and can ripple through the entire economy, raising interest rates for businesses and households as well12.
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Payment Prioritization or Delays: If the government cannot borrow enough, it would be forced to operate only with incoming tax revenue. This would require the Treasury to prioritize payments, potentially delaying or missing payments for government obligations such as Social Security, federal salaries, or vendor contracts. Over time, this could lead to a partial government shutdown and disruption of essential services34.
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Risk of Default: If the Treasury cannot roll over maturing debt or meet interest payments, the U.S. could default on its debt. Even a perceived risk of default can trigger significant financial market turmoil, a loss of investor confidence, and a potential downgrade of the U.S. credit rating345.
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Global Financial Impact: Because U.S. Treasuries are considered the world’s safest and most liquid asset, failure to sell sufficient securities or a default would likely precipitate a global financial crisis, affecting markets worldwide and undermining trust in the U.S. financial system53.
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Extraordinary Measures: In extreme situations, the Treasury might use short-term “extraordinary measures” to manage cash flow, such as issuing cash management bills or altering auction schedules, but these are temporary fixes and often increase long-term borrowing costs3.
In summary, if the government cannot sell enough Treasury securities, the consequences would be higher borrowing costs, payment delays or defaults, severe market volatility, and potentially a global financial crisis.
+ How long do yo have a to keep documents for? Some forever. Some for three years. It’s fiendishly complex. Bottom Line Personal newsletter asked its tax expert Martin M. Shenkman, CPA, JD. Click here for the piece.
+ You can make an emergency call on your Apple Watch by holding in the button until the Emergency Call slider appears. This feature can save your life. It recently saved a dear friend of mine.
+ Google’s YouTubeTV has big pluses over cable or satellite: You’re not tethered to a box. It works fine with Wi-Fi. You can watch it in several rooms at the same time. You can watch on your laptop and your TV. You can watch programs from the beginning and skip the commercials. That saves you twenty minutes in each hour.
+ Don’t put portable power devices in your checked luggage. They may not also be a good thing to carry onto a plane. For one, you probably don’t need them since most planes now have power outlets. The airlines are cracking down on them, since they tend to explode and catch fire. Not good on planes.
+ I got rid of two Verizon landlines we hadn’t used in years. But I kept the one gig Internet line. Verizon tied to replace those landlines charges with a “Home Device Protect charge” of $25 a month. I said No and the nice lady removed the charge. My Verizon bill dropped by 27%. That was not as satisfying as when my Verizon wireless bill dropped to zero the day I moved our family’s four cell phone lines to Mint Mobile — $80 to $15 a month per line.
+ My iPhone is much faster for paying bills than my Visa credit card. Better: I don’t leave it in to the slot for the credit card.
+ Google is really good for dumb questions, like “How do I do this?” YouTube is better for showing you how to do it.
+ Color printers are useless. They run out of ink, print many red lines, etc. Solution: Find your “Printer properties” and make your color printer a black and white printer. Problem solved. Big savings in printer cartridges. All you need now is the black cartridge.
+ Worried about airline delays, changes and cancellations? Don’t ever check bags. Take Kindle books on your phone or laptop. Listen to Acquired’s Podcasts.
+ Sirius is another of those “Auto Pay” providers you can bargain with by simply saying “My bill is too high.” My monthly bill is now less than half.
Favorite recent New Yorker cartoons
Favorite Hudson Valley mansion for sale
Currently being bid on by two Californians who lost their houses in fires and are now joining a new movement, called Climate Migration.
Tennis
Wimbledon is on ESPN and ESPN2. My stunning down-the-line forehand this morning lives on, not in YouTube, but in my memory.
We’re doing OK. Though I’m not quite sure why. But I’ll take good fortune, any time it shines. — Harry Newton
