Grant Ellison

The U.S. just crossed a threshold most people haven't noticed. Interest expense on the federal debt now exceeds $1 trillion annually. It is the fastest-growing line in the budget. And it is financed almost entirely by more borrowing. That is not a deficit problem. That is a spiral. New post: The Debt Spiral → scndordereffects.substack.com/p/the-debt-spi…

The controlled gap is actually the more interesting number and it cuts both ways. $0.99 after controlling for job title, experience, hours, and industry means the remaining 1 cent is either unexplained discrimination or measurement error in the controls. At that precision, the honest answer is we can’t tell. The models aren’t good enough to distinguish a 1% bias from residual noise. “The gap should be zero” is correct. “This data proves it isn’t” is overconfident.

Payscale is concerned about the controlled gender pay gap — that is, the gender pay gap after all compensable factors are accounted for. It gravely intones: "The gap should be zero. It's not zero." The amount of the existing gap? One cent on every dollar.

@LibertarianLars The federal income tax was sold in 1913 as a small tax on the very wealthy to fund a limited government. The rate was 1%. The “but we need it for public goods” argument has been doing a lot of work since then.

No , we don’t steal from our neighbors because it’s theft . Stealing from our neighbors because the neighbors all voted to steal , does not change the fact that it’s theft.

@rhondalesley39 @LibertarianLars What’s stopping you from raising capital, putting your own capital at risk, and doing it? Just because you don’t want to try doesn’t mean we should penalize those than do try and are successful.

@LibertarianLars I don't have government contracts and preferential access, how about you?

@signulll The people who look productive at coffee shops are mostly just good at looking productive at coffee shops.

i tried working from a coffee shop today instead of my office & it was impossible to get anything done. i was constantly distracted by one thing or another, from sounds to ppl moving around etc. it’s unclear to me how anyone is able to be productive working from a coffee shop.

The framing is punchy but the conclusion is missing. Remove that spread and you remove the incentive to intermediate. No intermediation means no 30-year fixed mortgage, no small business loan, no car financing. The spread isn’t the bank extracting value from you. It’s the price of having someone willing to borrow short and lend long so you don’t have to find your own counterparty for a $400k 30-year commitment.

American banks are running the greatest legal arbitrage in history. They borrow your money at 0.5%. They lend it back to you at 7%. The spread is their business model. You are simultaneously their cheapest supplier and their most profitable customer. You’re not a depositor. You’re inventory.

@jeffreytucker Hiring rate at April 2020 levels. February payrolls at -92k. Unemployment at 4.5%. The indicators that lag are still okay. The indicators that lead are flashing. That’s the pattern that precedes every recession. The question is whether the Fed sees it in time.

Yep, labor market is locked up, hiring rate same as the depth of lockdowns.

@TheStalwart Hiring rate at April 2020 levels. February payrolls at -92k. Unemployment at 4.5%. The indicators that lag are still okay. The indicators that lead are flashing. That’s the pattern that precedes every recession. The question is whether the Fed sees it in time.

Wow, the hiring rate in February, per the latest JOLTS report, hit the same level it did in April 2020

Federal debt: $39T. Blended rate: ~3%. Annual interest: $1.17T. A 100bp rate increase adds ~$390B in interest expense. That's more than the entire federal education budget. Financed by more borrowing. Which increases next year's interest bill further. The cycle feeds itself. That's what a spiral means.

@Omamba256 @yubidad @ronrule I don't want to speak for @yubidad, but outside of some AI-revolution that is only good, for everyone, do you think go-forward growth rates are going to be better than growth rates in the prior 100 years? I think not.

@yubidad @ronrule @secondorderfx “Almost certainly not the experience for the next 100.” What metrics are you using to determine this?

If the average person getting $4k/mo from social security could have put that 12.4% of every paycheck into the S&P instead, they would currently be getting $32k/mo instead of $4k. And their kids would continue to get that $32k/mo after they died. Social Security is a scam.

That’s actually the stronger argument against the counterfactual. $1.1T in annual forced contributions flowing into equities every year for 50 years doesn’t earn the historical S&P return. It inflates asset prices, compresses future returns, and creates a system where the payout depends on the next generation contributing at the same rate. That’s just Social Security with extra steps.

@secondorderfx In reality, the S&P return would be even higher than the historic average if 100 million people were throwing 12% of their paycheck in every month and not touching it for 50 years.

@DrDiGiorgio The progressive rate structure, marriage penalty, phase-outs, and SALT cap together produce a combined marginal rate on the second physician’s income that is genuinely punishing. The system wasn’t designed to be coherent. It was designed to pass.

Finished our taxes and came to a realization: In a two-physician household, one spouse's income is entirely confiscated by the government.

A century of unbroken debt growth across every party, every ideology, and every economic condition is not a personnel problem. It’s a structural one. The incentive to spend is immediate and concentrated. The cost is diffuse and deferred. That math doesn’t change when the president changes. It changes when the rules change.

The last time ANY president, Republican or Democrat, actually left us with less debt than the day they came into office was Calvin Coolidge in the 1920's It has been A CENTURY and every president has sold us out, including republicans This is why everything is so expensive

@QuintenFrancois Centralized systems have a coordinator who can mandate the upgrade. Bitcoin doesn’t. Same vulnerability, very different remediation path. That’s the actual risk worth thinking about.

If quantum “kills” Bitcoin, it also kills: • The global banking system • SWIFT transfers • Stock exchanges • Military communications • Nuclear command systems • Every HTTPS website on earth If Bitcoin is dead from quantum, your portfolio is the least of your problems.

@Aidan_Regan Readers say they want investigative journalism. They click on polls and political drama. Revealed preference is the whole story. The journalists aren’t the problem. The incentive structure built on what people actually consume is.

The death of investigative journalism is a core part of the democratic malaise. Imagine how much better our democracies would be if journalists spent their days on corporate corruption and money in politics - instead of poll numbers and political soap operas.

The bullish case isn’t a catalyst list. It’s a sequencing argument. If the labor market softens fast enough, the Fed cuts before the credit cycle fully turns. If oil stabilizes, inflation expectations re-anchor. If housing corrects orderly rather than crashes, household balance sheets survive. Bulls aren’t betting on good news. They’re betting on bad news arriving in the right order.

Kinda feels like we’re walking into a perfect storm of: 1) 1970s style oil shock 2) Tech bubble 2.0 unwind 3) Housing price bubble popping 4) Private credit meltdown 5) Labor market collapse 6) Sovereign debt crisis What are the bullish catalysts?

Everyone quotes 4-5mm housing shortage. That uses suppressed household formation as baseline. Add latent demand from doubled-up adults at the highest rate since 1951. Real gap is 8-10mm. The headline is the optimistic version. scndordereffects.substack.com/p/the-housing-…

@nickgerli1 The crossover matters, but both groups are locked. Sub-3% owners won't sell because of the rate gap. 6%+ owners won't sell because of the price. Inventory unlocks when rates fall enough to close the gap, not when the cohorts swap.

With each passing day, the mortgage rate lock-in effect fades. Nearly 22% of mortgage holders now have a rate above 6%. Which is more than the share with a rate below 3%. Ultra-low-rate owners are slowly getting replaced with 6%+ owners. Meaning downward pressure on prices is coming.

@nickgerli1 Worth watching whether this is Tampa-specific or the leading edge of a Sunbelt-wide reset. Austin, Phoenix, and Nashville all have similar supply pipelines and similar post-pandemic demand normalization dynamics. Tampa may be first, not last.

What's going on in the Tampa Bay area? Apartment vacancies just spiked to 8.7%. Haven't seen anything like this in 10+ years. They're going vertical.