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…

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.

The grassroots energy is real because the underlying grievance is real. Assessments that reset to market every few years in high-appreciation areas effectively price long-term owners out of homes they bought decades ago. That's worth fixing. Abolition is the wrong tool. A circuit breaker tied to income or length of ownership would solve the actual problem.

The Ohio government is officially panicking over a massive grassroots movement to completely abolish property taxes. ​Governor Mike DeWine just warned that eliminating the tax would devastate local schools and libraries, threatening that the state would have to jack up the sales tax to 20% just to cover the gap. ​But Ohio homeowners are fighting back with one simple reality: If you can lose your fully paid-off house for not paying the government, you don't actually own it, you are just renting it. ​The state already collects billions in income and regular sales taxes. Instead of threatening us with 20% sales tax rates, the government needs to figure out how to balance its own budget without holding our homes hostage.

@realEstateTrent The deeper issue is that cap rate compression created a generation of CRE investors who never had to be good operators. Rising rates didn't just change the math. They revealed who was actually creating value and who was just riding the curve.

I don’t believe in holding commercial real estate long-term. Doing so means you are relying on two things to happen in order to get appreciation: Interest rates going down, or rents going up I don’t have control of either. “Buy and hold” made many people look very smart, when what really happened was interest rates went down for basically 40 years straight. We can very easily see rates flat for the next 10 years - nobody has any idea. If that happens, you can’t make real money unless you: Find opportunity, use your skill and experience to create value, and bank the profit.

@SethCL Household debt to GDP at multi-decade lows while federal debt to GDP hits records is the story nobody wants to tell. The sector that can't print money got its balance sheet in order. The sector that can, didn't bother.

Unfortunately, households don't run the government or fiscal balance sheet. Households are the only place we see fiscal discipline. Only 2 places that always megaphone the plight of the household, Wall Street and D.C., also the 2 places that cause recessions. #economy #GDP #consumer

@zerohedge Tired: inflation is the problem. Wired: recession is the problem. Inspired: stagflation means both are the problem and the Fed's only tool makes one worse when you use it on the other.

Tired: rates rising on inflation expectations Wired: rates falling on recession expectations

The normalization story is real but incomplete. Apartment rents reverting to trend is supply working. The part that hasn't normalized is single family, where zoning, permitting, and NIMBYism kept supply constrained. Same demand shock, very different supply response, very different outcome.

The normalization of apartment rents back to their pre-Covid trendline of ≈3% annual growth is an underreported story. The combo of stimulus, wealth effect, home officing, and desire to ditch roommate in 2021 created massive demand shock. It just took time to build new supply.

Unemployment duration at a 4-year high. Job postings at 2021 levels. Entry-level hiring down 35%. But the headline unemployment rate holds at 4.4% because nobody quits and dual jobholders count twice. The data says stable. Every behavioral metric says deteriorating.

This is what a system optimized for its own survival looks like. Debt accumulates regardless of who wins. Spending commitments made by one party become politically untouchable by the next. The ratchet only moves one direction. Blaming the other team is how you avoid explaining that.

Politicians can take half of what you earn, run permanent wars, crippling deficits, & rampant fraud at our expense for 30 straight years and still produce 160 million adults who are absolutely certain it's the other team's fault and if we just flip back we can fix it