the shrugflation triangle - kyla scanlon

The Shrugflation Triangle: How AI, Oil, and Treasuries are Impacting the Economy

warning! this is a long read. yes, it’s on substack. but for my money, kyla scanlon’s one of the best out there wrangling a variety of perspectives on the economy and i think her instincts and observations are: spot. on. totally worth the time.

The economy is reliant on a technology that the creators of said technology seemingly can’t control (OpenAI keeps hacking into the government) with no real moat and depreciating physical infrastructure and unproven demand at the prices needed to pay it back, while again, spending more money than any money has ever been spent ever, counting for 25% of US GDP growth and 8% of total GDP and more than 1/3 of the stock market, at the same time that we face a war that seems endless, pushing up the cost of oil, the foundation for any economy (and the AI buildout) and a government that is borrowing also a lot of money for bigger and weirder projects.

this is a great take on the current state of the AI labs and the cloud providers. such a house of cards.

Anthropic’s $500+ billion in infrastructure obligations is somebody else’s backlog. So the lenders are counting on the cloud companies, the cloud companies are counting on the labs, and the labs are counting on… people? To eventually pay for all of this? Who, per Anthropic’s filing, aren’t locked into long-term contracts and could cut spending. Nearly a quarter of its revenue last year came from two customers!

so. much. risk concentration.

Jensen Huang wants chips treated like an “investable asset class” like airplanes. So the company selling the chips is helping to arrange the loans to buy the chips, and now the insurance on the loans to buy the chips.

jenson’s been making this argument every time i turn around. from where i’m sitting it’s a crazy assertion. GPUs are fickle, delicate and incredibly tempermental beasts. they run hot and have short lifespans. to ascribe to them the same kind of durability that we do to truly durable assets like real estate, etc. is mind boggling to me. but then again, 5 years ago people were telling me that ape GIFs were a new kind of asset. at least this time around there’s a spendy chunk of sophisticated sand glued to the valuation.

The Trump administration has every incentive to boost AI as much as possible and to regulate as little as possible because it’s the thing holding up the stock market. The Atlantic reported that Trump “has expressed worry to those close to him that a halt to AI expansion could send the economy into a recession.”

perhaps grandpa fuckwits has a couple of useful marbles rolling around in that molest-o-noggin of his.

Wealth instead sits inside a self-referential loop, where hyperscalers borrow billions to buy chips from chipmakers, inflating stocks and GDP, while consumers report that they are near rock bottom.

yes. it’s the same $1T zooming around in the mo-money-mo-tron. the joe’s are gettin’ scr00d.