Miles Franklin CEO Andy Schectman argues that the AI hyperscaling boom is a railroad-style bubble built on unjustifiable revenue assumptions, warning that record public equity concentration, all-time-high margin debt, insider selling at 6-to-1, and the resignations of the private credit CEOs at both BlackRock and Blackstone signal that sophisticated players see trouble coming. He contends the bond market is flashing a loss of trust, evidenced by rates rising against the Fed while the dollar falls, and that Bessent’s push for Japan to use the Fed’s FIMA repo facility instead of selling its $1+ trillion in Treasuries is an intervention to postpone price discovery as the US must finance roughly $15 trillion in debt over 12 months. Schectman claims Tether — which bought over 14 tons of gold in Q2 and holds roughly $20 billion, more than any buyer except the central bank of Poland — is acting as a proxy for US government gold accumulation, part of a broader de-dollarization and BRICS-driven parallel financial architecture that investors should answer by saving in hard assets rather than currency.
AI hyperscaling as a Ponzi-style bubble: Schectman compares the AI capex race to the railroad and internet booms, where companies borrowed to pay interest on existing loans amid revenue assumptions that never materialized. He warns the concentration into roughly 10 stocks, record mom-and-pop participation, maximum margin leverage, and FDIC concerns about private-equity bank exposure could make AI the spark for a systemic collapse.
Japan, the carry trade, and Treasury intervention: He argues Bessent’s suggestion that Japan pledge Treasuries to the Fed’s FIMA repo facility rather than sell them keeps bonds off the market and postpones price discovery, since every bond Japan doesn’t sell is one less the market must absorb while the US refinances ~$15 trillion. He claims the yen is overvalued, reflecting a debt problem Japan can’t confront, and that a disorderly carry-trade unwind threatens US equities and Treasuries.
Bond market losing trust in the Fed: Schectman highlights the unusual combination of rising yields against the Fed’s guidance alongside a falling dollar, with the 30-year above 5%, calling it evidence the world is selling Treasuries and dollars on a loss of confidence. He says the Fed is painted into a corner: raising rates risks a 2023-style banking collapse, while easing ignites inflation already double the 2% target.
Government inflation data manipulation: He asserts M2 money supply growth is the true inflation while the BLS — which he says should “strip the L out” — reports only 3-4% using hedonics and owner’s equivalent rent, excluding taxation and asset inflation. He notes inflation hasn’t hit the sub-3% target in over 65 straight months and claims Warsh’s tighter outlier-stripped metric (~2.5%) is not credible.
Tether’s gold buying and BRICS parallel architecture: Schectman claims Tether’s $20 billion gold hoard and 14+ tons of Q2 purchases suggest it’s running proxy accumulation for the US Treasury under exchange stabilization fund cover, citing Bo Hines as CEO and Tether’s DOJ cooperation in freezing IRGC wallets. He also details BRICS Pay, the BRICS grain and precious metals exchanges moving to design phase, China’s yuan settlement deal with Africa’s largest bank, and Poland’s 82 tons of gold purchases year-to-date bringing reported holdings to 632 tons.
Mises Institute senior fellow Mark Thornton argues that AI data centers are the modern skyscraper curse — a cluster of malinvestment driven by artificially low real interest rates, with $725 billion in 2026 hyperscaler capex (up 77%) marking the blowoff top of a 16-year Fed-fueled boom that has left the economy “ripe for a crash.” He contends tariffs are acts of political hostility historically linked to war, drawing parallels from the 1860s Civil War-era tariffs to Trump’s current policies, the Persian Gulf conflict, and a looming global agricultural crisis driven by diesel and fertilizer shortages. Thornton predicts the Fed under Kevin Warsh will resort to financial repression — quantitative easing targeting the long end of the curve plus statistical redefinition of inflation — while forecasting zero-to-negative real returns on stocks, bonds, and real estate over the next decade with food and energy leading inflation higher.
The skyscraper curse and Austrian business cycle theory: Thornton traces record-setting skyscrapers coinciding with crises — the Singer Building/MetLife Tower (1908-09) with the Panic of 1907, the Chrysler Building (1931) with the Depression, the World Trade Center/Sears Tower (1974) with stagflation, the Petronas Towers (1998) with the Asian crisis, and the Burj Khalifa (2010) after 2008. Artificially low rates alter capital structures and force premature adoption of new technology, setting up clusters of entrepreneurial error.
AI data centers as the new malinvestment: With hyperscaler capex hitting $725 billion in 2026 (up 77%) and the 30-year yield at 5.2% after 27 straight sessions above 5%, Thornton calls the buildout “the most irrational process” he’s seen, suspecting a government angle rather than business productivity. He stresses AI itself is useful, but the timing and capital structure reflect Fed-created speculative bubble behavior.
Tariffs, refunds, and the path to war: He argues the 25-state lawsuit over 10-12.5% tariffs covering 99.4% of imports, plus refunds like Amazon’s $600 million, prove American consumers paid the tariffs all along. Citing his 2004 book on Civil War-era tariffs and World War I, he contends protectionism breeds hostility that escalates into military confrontation — including Venezuela, Greenland threats, and the attack on Iran’s spiritual and political leadership.
Persian Gulf war and structural energy/agricultural crisis: Thornton warns of diesel and jet fuel shortages, canceled flight routes, and a looming agricultural crisis within the next couple of crop rotations as fertilizer supplies dwindle for second- and third-world economies. He also flags sulfuric acid shortages from idled Persian Gulf refineries hitting copper processing just as copper sits at all-time highs amid AI and Chinese solar demand.
Fed trapped and asset return outlook: He expects Warsh to pursue financial repression via QE on 10- and 30-year bonds and to redefine CPI statistics toward the 2% target, which hasn’t been hit in over five years while Americans experienced 5%+ annual price increases. Thornton forecasts zero or negative real returns on stocks (on a 10-year moving average basis), bonds, and real estate, with land transactions going dormant and consumer prices led by food and energy heading higher.
Macro Mavens founder Stephanie Pomboy argues that the “higher for longer” rate environment is entrenched because record corporate debt issuance — with the private sector borrowing as much as the federal government this year while Treasury rolls $10 trillion — is crowding out the government and pushing long yields up, compounded by Bank of Japan Treasury selling to defend the yen. She contends AI-era earnings are illusory, citing mark-to-market gains like Amazon booking $16 billion of its ~$30 billion Q1 earnings from its Anthropic stake (now worth $75+ billion on an $8 billion investment) and roughly 12 points of the S&P’s 20% earnings growth coming from accounting rather than operations, while hyperscalers have turned free-cash-flow negative and stopped buybacks to become net equity issuers. Her conclusion: a cathartic cleansing of bubble excesses built since 2000 is coming, pension underfunding of ~$4 trillion virtually guarantees bailouts and a Fed balance sheet potentially exceeding $15-20 trillion, and hard assets and commodities should structurally outperform paper assets in the deglobalizing, inflationary decade ahead.
Illusory AI earnings quality: Pomboy details how mark-to-market gains inflate profits, with Amazon’s Anthropic stake growing from $8 billion to over $75 billion and contributing $16 billion of roughly $30 billion in Q1 reported earnings. One study found about 12 percentage points of the S&P 500’s ~20% year-over-year Q1 earnings growth was pure accounting, meaning true growth is roughly half the headline.
Hyperscalers turning cash-negative and issuing debt: The dozen companies that once made the S&P look flush with cash are now all free-cash-flow negative, issuing increasingly expensive debt as spreads widen and credit default swap costs rise. Companies have also stopped buybacks — once over $1 trillion a year of equity support — and become net issuers of stock, silently removing a massive market tailwind.
Crowding out and the deluge of paper: With Treasury needing to roll $6.7 trillion in T-bills plus $3.3 trillion in notes and bonds ($10 trillion total), $1.2 trillion in corporate rollovers, and new hyperscaler borrowing, SIFMA data shows private-sector issuance matching federal borrowing for the first time. Investors can now demand higher yields or choose corporate credit over Treasuries, backing up the 10- and 30-year while BOJ Treasury sales add pressure.
Pension underfunding and inevitable bailouts: Public and private pensions remain roughly $4 trillion underfunded (down from $6 trillion) even with markets at record highs, with heavy exposure to private equity and private credit marked in some cases at 50 cents on the dollar or less. Pomboy expects policymakers to bail them out despite social blowback, echoing Michael Pento’s forecast of a $6 trillion deficit in the next recession and a Fed balance sheet well over $15 trillion.
Secular case for hard assets over paper: Deglobalization reverses the 1980-onward disinflationary rate decline, and rising inflation siphons liquidity from financial assets into the real economy, ending the era of easy dart-throw returns. She recommends exposure to commodities, energy, and copper — noting AI bulls must be energy bulls — and reports her own positioning is unchanged: increased energy exposure, waiting on gold to recover, dry powder in T-bills, and no material Treasury bets yet.
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