The Money Printer, The Debt, and Data Centers

To investors,

The US national debt continues to grow to the sky at an alarming rate. That isn’t a big secret. Frankly, thousands of people yell and scream about the problem online every day. But new data suggests the debt ceiling, which is supposed to limit how much the government can borrow, may actually contribute to a higher national debt over time.

You can see in this chart from Global Markets Investor on X that the national debt explodes higher as soon as the debt ceiling is raised or removed every few years.

It almost seems like the national debt is a coiled spring when it hits the debt ceiling. The second politicians strike a deal to raise the ceiling, the national debt flies higher.

And the problem has become even more widespread than merely a fast-growing debt. The United States is now paying more than $1 trillion per year on the interest for our debt.

That chart should scare the hell out of any American citizen. But you know what is even more insane than a $1 trillion annual interest payment? The fact that 1/3rd of all Chinese provinces were allocating their entire provincial revenue to simply service their debt back in 2022, according to Michael Arouet. One out of every three provinces! That is a ridiculous number.

And that was back in 2022, so imagine how much worse the situation is now. I share this data from China to highlight the debt problem is a global issue. Politicians and central bankers lost discipline since the Global Financial Crisis. It didn’t matter what language they spoke, what higher education degrees they boasted on their resume, or which geography they lived in — they all printed as much money as they could and it has led to total economic destruction of their finances and the debasement of their currencies.

But thankfully, the story doesn’t end in tears. There is still hope out there. If you want to be wealthy, you have to figure out how to own equity in a business. Nick Maggiulli shows “the poor own cars, the middle class own homes, and the rich own businesses.” Nick says “starting a business doesn't guarantee great wealth, but it's one of the few paths to get there.”

And we are watching the investment dollars from those businesses flow towards the future of software and artificial intelligence, rather than traditional office space with a high density of human labor. Michael Arouet shows the likelihood that data center construction spending will eclipse office construction spending in the coming months.

So what is happening to the businesses helping to fund this build out of the future technology? Well, they appear to be winning in a big way. Mike Zaccardi shows the top 10 largest companies in the S&P 500 are dominating the remaining 490 smaller companies. Mike explains “the 10 biggest US companies have driven almost all of the S&P 500's earnings-per-share growth in the past 2+ years.”

Welcome to the new economy. It is beating the old economy. Just take a look at Berkshire Hathaway stock. Opening Bell’s Phil Rosen points out “Berkshire Hathaway has dropped 15% since 94-year-old Warren Buffett announced his retirement in May. The stock has underperformed the S&P 500 by 26% since that date, which was also the last time BRK.B hit a record high.”

The national debt is not going to stop growing. The interest payments are a major problem, both domestically and internationally. So asset prices are all going up, but the most efficient companies positioned for the world we are hurdling towards — those are the areas where the best investment opportunities lie.

Have a great day. I’ll talk to everyone tomorrow.

- Anthony Pompliano

Founder & CEO, Professional Capital Management

Tether CEO Explains His Plan To Come To The United States

Tether CEO Paolo Ardoino explains his plan to come to the United States, what is happening in emerging markets, where Tether’s billions in profits is going, and how AI and bitcoin will lead us into the future.

Enjoy!

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