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K-Shaped Capex
Although the "K-shaped" macro motif's a bit tired by now, it has a lot of utility as a framework for
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Maybe we just need to learn how to stop worrying and love the bomb.
I have not looked at 3Q but looked at 1H and concluded that excluding AI investment, real GDP growth was somewhere between zero and 0.6%. That remaining growth includes upper-K consumer spending which in turn is partly supported by market gains from AI investment.
That doesn’t seem like an improbable estimate. Put another way, look at the rest of the economy excluding AI investment and upper-K consumers, how much strength is there?
Unfortunately and to the economic detriment of everyone in the lower portion of the “K”, I think that the upper K group of people (individually and within corporations) will not only continue to leverage the workers from the lower portion of the K, but also will also leverage AI- all to boost their consumerism and to boost their wealth. After all, if someone is given a hammer, they’re going to use it.
For anyone who has visited other countries where wealth inequality is even more pronounced than what it is in the US- overall, It doesn’t look good – except for the very, very small group in the upper K.
In the US, we better prioritize raising, and not just maintaining, the living standards of those in the lower portion of the K, The more out of whack things get, the more barriers that get put in place around the upper portion of the K. Not a fun way to be forced to live for anyone; even for the upper K’ers.
To grow the economy, consumers need to spend more. Over time the system has been jiggered so that more and more wealth ends up in the hands of the few. If we want to keep the economic party going in the short term then the wealthy need to step up and spend, spend, spend until we can get a bigger share of the pie into the hands of the bottom majority. I haven’t seen a viable plan yet for that. My limited experience is that the more money someone has, the tighter they hold on. And how many $2.5 million homes, $100k+ cars and $1k sweaters does one need, especially given you can only use one at a time. So you billionaires get out there and buy like there’s no tomorrow. And remember if you buy a chevy you’re making us great again and if you buy a bmw you’re helping a washed up, weakling european country who deserve whatever sand Russia wants to kick in their face.