Markets/Econ
Why Trump Tried to Fire Federal Trade Commission Democrats. If the President can fire FTC commissioners, then he can fire members of the FOMC.
The White House is already embroiled in a bunch of fights over who runs which parts of government. And one way to understand this action at the FTC is as part of a legal strategy to tell the courts, in a uniform way, that Trump, as the democratically elected leader, believes the Constitution empowers him to execute all Federal policy however he chooses.
And that’s a reasonable view, though the alternative - that Congress should be able to design institutions with some flexibility - is also reasonable. That said, ultimately, all roads here lead to the Federal Reserve. The logic of Trump takes us there.
And that’s a fight Trump, and the Supreme Court, just don’t want to have, because Wall Street would absolutely freak out. Basically, the real Trump argument is that all the little people regulators must constitutionally be controlled by the President, but the one big guy, the Fed, is constitutionally run by Wall Street. I’m not kidding. In a case about the constitutionality of the Consumer Financial Protection Bureau, Justice Alito actually put that in a footnote in his dissent. His legal rationale for why the Fed should be treated differently is that the Fed “should be regarded as a special arrangement sanctioned by history,” as it is a “unique institution with a unique historical background.”
Alito is a very smart guy, yet that’s the best he could come up with. This rationale is the legal equivalent of a t-shirt they sell at the beach that says “I’m the Mommy that’s why.” In a sense, the unaccountable secretive Supreme Court looks at the Fed, and game recognizes game. If Trump succeeds in taking apart the FTC’s independence, the Fed’s independence comes next.
Another Bretton Woods? Scott Sumner is not a fan of the Stephen Miran note that is the basis of the Mar-A-Lago chatter.
Younger readers have no idea how demoralizing it is for an old guy like me to read something like this. Robert Mundell must be rolling over in his grave. The old Republican supply-siders used to argue for loose fiscal (tax cuts) combined with tight monetary policy. But loose fiscal and monetary policy? When has that ever worked? We’re going to run big budget deficits and the money-printing machine and prevent inflation by adjusting the term structure of our debt? I had thought “operation twist” was discredited in the 1960s. Have we learned nothing in the past 60 years? This is beyond even MMT.
Don't Throw out the Makeup Policy Baby with the FAIT Bathwater & Our Journey Begins with Athanasios Orphanides
In my last newsletter, I discussed Athanasios Orphanides' arguments in favor of monetary policy rules that are robust to uncertainty. Orphanides advocates specifically for rules targeting growth rates rather than levels. His reasoning, which is supported by empirical evidence, is that growth-rate targets are less susceptible to real-time measurement errors than level targets, which typically rely on uncertain and frequently revised estimates such as the output gap and the natural interest rate. By adopting a growth-rate approach, Orphanides contends that central banks could reduce vulnerability to data revisions and measurement inaccuracies, resulting in more stable and predictable monetary policy outcomes
So, should we give up on level targeting? I say, “Not so fast.” Yes, the Fed’s framework needs some adjustments, but I think it would be a mistake to throw the makeup policy baby out with the FAIT bathwater for three reasons. First, policymakers, like all humans, are subject to cognitive biases that may lead to macroeconomic policy errors without the discipline imposed by level targets…
To make this point, I want us to imagine an economy facing an unprecedented collapse. Nominal income—total current dollar spending across the economy—falls by nearly half. Factories shut down, businesses close, millions lose their jobs, and despair spreads. The general price level plummets nearly 30%, making debt burdens heavier and economic recovery elusive. After years of contraction, policymakers finally act to stimulate a recovery. But just as conditions begin improving, they grow anxious—not about depressed incomes or joblessness, but about inflation. Even with prices still far below pre-crisis levels, they fear a rapid rise and prematurely tighten policy, choking off the recovery and pushing the economy back into recession. Somehow, they miss the price level forest for the inflation trees.
If this scenario sounds absurd, you’re right—except it actually happened. It's precisely what unfolded in the United States during the Great Depression. Between 1929 and 1933, nominal GDP fell by roughly half, and prices plunged about 30%. Yet policymakers in the mid-1930s worried excessively about inflation and tightened macroeconomic policy prematurely, triggering the recession of 1937-1938 and delaying full recovery for years.
CoreWeave had intended to go public last week, with an initial valuation of $35bn. While it’s hardly a recognizable name — like, say, OpenAI, or Microsoft, or Nvidia — this company is worth observing, if not for the fact that it’s arguably the first major IPO that we’ve seen from the current generative AI hype bubble, and undoubtedly the biggest. Moreover, it’s a company that deals in the infrastructure aspect of AI, where one would naturally assume is where all the money really is — putting up the servers for hyperscalers to run their hallucination-prone, unprofitable models.
You’d assume that such a company would be a thriving, healthy business. And yet, a cursory glance at its financial disclosure documents reveals a business that’s precarious at best, and, in my most uncharitable opinion, utterly rancid. If this company was in any other industry, it would be seen as such. Except, it’s one of the standard bearers of the generative AI boom, and so, it exists within its own reality distortion field.
Dr. Frankenstein would like a word. What have you done to his monster?
But if you step back and think a bit more about the question, you can find yourself lost in a story of progress gone wrong. Recall that SP5 was created in 1957 (based on several prior versions dating back to 1926) to give investors and the media a way to track and analyze price changes of the US stock market on a daily basis. It was what it purported to be: a simple (market cap-weighted) index of stock prices. The SP5 allowed an answer to the question of how the market was doing based on the price of its constituents: Up, down, sideways, thank you, and goodbye. It was nothing less, and nothing more. SP5 was designed and initially served as a reasonably transparent reflection of the reality of the US stock market. Fast-forward nearly 70 years, and SP5 has become a Frankenstein’s monster. No longer a mere measurement of security prices, it has taken on a life of its own, and changed the whole nature of the market.
So where are we? Well, when Dr. Frankenstein’s experiment to conquer nature becomes Peter Boyle reading the WSJ in bed in a Mel Brooks movie, investors need to pay attention and think seriously about what they are getting, and what they are losing, for their 5 basis points. Recall that Mary Shelley’s original story was a cautionary tale about Enlightenment hubris. Its subtitle, The Modern Prometheus, should remind investors that there is a price to pay for their presumption that SP5 solves the challenge of investment decision making under conditions of uncertainty.
Balyasny taps pro athlete-turned-banker for global trading and capital markets role. DEI in Trump’s America means lax bros can come out the shadows.
Does Balyasny Have Good Timing With Its New Venture Fund? See Betteridge's law of headlines for the answer.
RXR Loses 340 Madison Ave. To Lender At Auction. 340 Madison was a ‘digital’ property according the RXR analysis, but just got sold for $161mm—$154mm less than the mortgage.
RXR owns millions of square feet of New York City office space, and in early 2023, it was beginning to sort its buildings into lists of keep or sell under an initiative that CEO and Chairman Scott Rechler named Project Kodak, Crain’s reported at the time. Properties were either designated as “film,” translating to obsolete, or “digital,” meaning they were worth holding onto. The Madison Avenue building was among the properties on the “digital” list.
Private Equity Firms Are Getting Rid of Their Equity
Last year saw the most US dividend recaps since 2021, according to data compiled by Bloomberg, and the pace in 2025 has been quicker still. Bankers are pitching them to every buyout firm willing to listen, people familiar said.
U.S. Private Credit Default Rate Rises to 5.7% in February 2025
A Hospital Empire Is Closing Its Doors—but the Stock Is on a Tear. Super shady.
MPT executives, whose compensation was calculated on the basis of the REIT’s deal volume, explicitly encouraged hospital bosses and private equity firms to gorge themselves on easy money in these transactions that left the hospitals with their ruinous rent obligations. Cerberus Capital Management and Leonard Green & Partners together pocketed roughly $1.5 billion for investors selling their hospital buildings to MPT. Steward founder and CEO Ralph de la Torre allegedly skimmed some $250 million out of the company in the four years before its collapse. Prospect Medical Holdings founders Sam Lee and David Topper allegedly pocketed more than $195 million from the hospitals in Pennsylvania and Connecticut that are now closing or on the brink.
Trump’s crypto time bomb Don’t trust his Bitcoin privateers. Yanis Varoufakis is either really dumb or writing on shrooms. First of all, wtf is a 10 year Treasury Bill. Secondly, his entire argument is that Trump will bully foreigners into selling their dollars, to buy stablecoins backed with dollar assets. Aside from the stablecoin issuer picking up the float, it would not change the market’s dollar exposure or the price of the dollar a jot or a tittle.
So, even if the stablecoin issuer truly owns an equal amount of dollars to the tokens it has issued, it will immediately trade these dollars for some safe, interest-bearing, dollar-denominated asset — like 10-year US Treasury Bills. This way the issuer is true to their word of backstopping their tokens with real bucks while, at the same time, earning interest. It is an arrangement after Donald Trump’s heart and, I believe, at the centre of the idea of his strategic crypto reserve.
Monetary policy and the secular decline in long-term interest rates: A global perspective
We find that on average almost 70% of the secular decline in long-term interest rates across advanced economies between the early 1990s and 2023 occurred in the three days surrounding Federal Open Market Committee (FOMC) windows. By contrast, other central banks' announcements had only limited effects on the long-run direction of long-term interest rates, both domestically and across countries. The persistent global effect of the FOMC window reflects the combination of the concentration of declines in US bond yields in this window and large interest rate spillovers from the US to other countries. We further find that this relationship is driven by monetary policy shocks, changes in expected interest rates and changes in real interest rates rather than information effects, term premia or inflation expectations.
Foreign
The Kingdom of Judea vs. The State of Israel
An angry plurality in Israel (led for now, by Netanyahu) have taken the reins of power after a long march through the institutions of Israeli society, and now have their sights focussed on dismantling the ‘Deep State’ within Israel. Equally, there is a furious push-back to this perceived take-over.
What exacerbates this societal fracture are two things: Firstly, it is ethno-cultural; and second it is ideological. The third component is the most explosive – Eschatology.
A Strange “Peace” in the South Caucasus and the Encirclement of Iran
While the Armenia-Azerbaijan “deal” could be viewed as a minor setback for Russia, it’s likely the larger target is Iran as one more piece in the US-led pressure campaign.
The NATO-Israel push to further isolate and destabilize Iran with a NATO Turan Corridor which sees the West link up hypothetical client states across Iran’s north looks to be steadily progressing.
As Armenia works with the West, Tehran sees both Israel and Turkey pursuing expansionary projects with the blessing of NATO while Azerbaijan is closely aligned with both Israel and Turkey.
America Is Missing The New Labor Economy – Robotics
This is a Call for Action for the United States of America and the West. We are in the early precipice of a nonlinear transformation in industrial society, but the bedrock the US is standing on is shaky. Automation and robotics is currently undergoing a revolution that will enable full-scale automation of all manufacturing and mission-critical industries. These intelligent robotics systems will be the first ever additional industrial piece that is not supplemental but fully additive– 24/7 labor with higher throughput than any human—, allowing for massive expansion in production capacities past adding another human unit of work. The only country that is positioned to capture this level of automation is currently China, and should China achieve it without the US following suit, the production expansion will be granted only to China, posing an existential threat to the US as it is outcompeted in all capacities.
China’s Latest Marketing Craze? Rent-a-Robot
Far From Normal: An Augmented Assessment of China’s State Support. More detail than you probably want to read about Chinese state support for manufacturing/exports.
Despite this, Beijing is not changing course, but explicitly doubling down. The Party’s twice-a-decade Third Plenum held in July 2024 pledged to maintain the supply-side expansion of high-tech industries, export manufacturing, and other favored sectors. While the December 2024 Central Economic Work Conference signaled a shift in rhetoric—placing household consumption at the forefront and pledging fiscal stimulus and trade-in subsidy programs—there has been no fundamental change in China’s industrial policy. Crucially, there was no discussion of deeper reforms to China’s financial system, the core driver of the distortions and spillovers affecting global markets.
China’s Government Is Short of Money as Its Leaders Face Trump. I’m just a simple caveman lawyer, but I would depreciate the Yuan.
Producer prices, essentially wholesale prices calculated as goods leave factories and farms, fell 2.3 percent in China last year.
Revenue from value-added taxes began weakening in 2018. That was when the government cut these taxes sharply for exporters to help them offset the impact of tariffs imposed by President Trump in his first term.
The cost of that tax break has soared since then as China’s exports have surged, producing a trade surplus of almost $1 trillion last year even as the rest of the economy stagnated.
Another problem lies in falling salaries and rising layoffs, especially during the second half of last year. Income taxes collected from individuals were 7.5 percent below expectations last year, the Finance Ministry said in its budget.
America's Most Pressing Enemy: Yes, Annexing Canada is the Only Solution. I’m not sure what the tongue in cheek/crazy ratio is here, but entertaining.
If any nation has ever deserved Green Berets in its forests training its radicals, it is Canada. If any Capital has ever deserved for its moderate rebels to receive shipments of Javelin missiles and Ar-15 rifles courtesy of Uncle Sam, it is Ottawa. If any party has ever deserved to have its leaders invaded and dragged into a US court to face espionage and organized crime charges like Noriega of Panama, it is the Canadian Liberals (and probably half the Conservatives once we start digging through the files).
I’m the Canadian who was detained by Ice for two weeks. It felt like I had been kidnapped.
US Politics/Culture
Paul Weiss Cuts A Deal With Donald Trump
What’s driving the administration’s attack on the world of large law firms? According to former Trump adviser Steve Bannon, a leading voice of the MAGA right, Biglaw partners are no longer “going to be walking around making four and five, six million bucks a year, because [Trump is] going to put those law firms out of business. Let me repeat this. There’s major law firms in Washington, D.C., and… what we are trying to do is put you out of business and bankrupt you.”
So be very clear about this: A law firm participated in a serious and sustained effort to find a way to put the Republican presidential frontrunner, a former President of the United States, in prison, in an election year, and they did so in an effort that started without a complaint or a victim. They didn’t have to do this. They chose to. They made the imprisonment of the political opposition a major pro bono project.
DOGE, Open Up the MAX Database!
All this might be easier illustrated using the counterfactual:
When Congress creates budget authorities—legal power to spend money—that authority is clearly assigned to a specific entity in the government. When Congress then appropriates money, those appropriations, too, are clearly designated to the government entities earlier given power to spend.
When agencies, bureaus, programs, and projects do things, their legal authorities are evident in contract documents and spending orders. The data trail leading back to congressional legislation means that the public, through data journalists or directly, can see that a given vote in Congress built a certain highway or paid for a certain bombing campaign. That vote in Congress produced that meal served to a student in Appalachia. That vote in Congress paid for that ambassador to represent us in Copenhagen. The stories available in the data are rich and enriching to our democratic processes.
Alas, nothing in the last two paragraphs is true.
Six Ways to Understand DOGE and Predict Its Future Behavior
Many of the models above help to explain the outwardly chaotic nature of DOGE’s actions. Horror at the resulting chaos is one reason why some advocates of smaller government recoil at DOGE. “Cut the government,” some of them would say, “but not like this!” To be sure, there are more orderly ways to reduce the size and scope of the federal government and there are legitimate and important legal and constitutional concerns about DOGE. Still, any reduction in the size and scope of an organization that spends approximately $7 trillion annually will be chaotic.
But where there’s a will, there’s a way. My guess is that the Court will look for escape hatches whenever possible, and that Trump will get a lot of hollow victories that do not establish the precedents he clearly seeks.
One likely outcome from all this is that the Court will eliminate, or at least substantially curtail, nationwide injunctions.
The shores of Tripoli, the Quasi-War, Free Trade and Sailors' Rights, Remember the Maine, the Lusitania, and other operations of various sizes—all these revolve around a simple rule we ask the world,
Seriously, don’t touch our boats.
Description of 32 Major Tax Subsidies for Tax Expenditure Madness Bracket
The selected items are the most expensive, economically distortionary, and targeted tax expenditures that are genuine tax loopholes. The descriptions below are brief and intended to highlight why critics may think the credit deserves to be repealed. The estimates of revenue losses are over ten years and primarily from Treasury’s tax expenditure tables, measured from a current law baseline.
Rickover’s Lessons—"The status quo has no absolute sanctity"
Nearly 75 years ago, Admiral Hyman G. Rickover, “Father of the Nuclear Navy”, pioneered a bold program to develop and operationalize nuclear power in the Navy. Under his leadership, the U.S. government harnessed the power of the atom, building the world’s first nuclear-powered submarine and the world’s largest fleet of nuclear reactors for civilian power.
Vanity Fair’s Heyday—I was once paid six figures to write an article—now what?
As I look back today, Graydon’s Vanity Fair does feel like some lost world, a gold-encrusted Atlantis ultimately inundated by economic and technological tsunamis, its glories only now being picked over by media anthropologists. I’ve never talked much about what it was like to write there. Because I have always worried about how I’d come off. I mean, the money alone. I’m probably breaking some unwritten law of publishing, but here it is: For twenty-five years, I was contracted to produce three articles a year, long ones, typically ten thousand words. For this, my peak salary was $498,141. That’s not a misprint—$498,141, or more than $166,000 per story. Then, as now, $166,000 was a good advance for an entire book. Yes, I realized it was obscene. I took it with a grin.
The benefit of credentialism for unqualified people is that it’s much easier to figure out how to game acquiring a credential than it is to be smart. Gaming a credential doesn’t make someone a better worker, so the substitution of selection with credentialism is a worse outcome for potential employers, and likely a worse outcome for society, too.
Related—How Many Administrators Do Colleges Have?
and—How Business Metrics Broke the University
When the decision to mount a suite of courses is driven by metrics, the rigor of each class matters less than its ability to attract students. Radical voices that spark controversy suddenly have an advantage. Assessment coordinators can point to high enrollment numbers and enthusiastic student feedback as evidence of success. Quality and rigor do not matter. And when departments are dissolved or merged, the traditional role of senior faculty in mentoring junior colleagues has been replaced by centralized “course development” training programs, and their influence over hiring and promotion is diminished by administrative mandates. Many have simply withdrawn from governance altogether, tired of fighting a bureaucratic system that values check-box compliance over academic judgment.
The Infinite Pu$$y Glitch (Part 2): The Census Data on Why NYC Dating is Broken
The reality of prostitution is not complex. It is simple
The philosopher Amia Srinivasan in The Right to Sex (2021) writes: ‘Third-wave feminists are right to say, for example, that sex work is work, and can be better work than the menial work undertaken by most women.’ I wonder if she has reflected on what that really means: that the female cleaning staff who mop floors and scrub toilets in the University of Oxford, her place of employment, could be better off with their mouths and vaginas full of strangers’ penises. If she stopped to offer this advice to one of the cleaning staff passing in the hallway, she’d be hauled up for inappropriate conduct.
Science/Tech/Health
What about the bull case? Squint with me for a second, and imagine a trajectory of AI progress that leads to a qualitative difference, genuinely moving us into a world of design rather than discovery. Imagine a model that spits out zero-shot predictions of the platonic antibody—perfect affinity and specificity, exquisitely optimized along every dimension—for any target. Put in a target product profile (TPP), get out a drug.
That would probably be a pretty big deal.
News you can use—Low-Cost Drone Add-Ons From China Let Anyone With a Credit Card Turn Toys Into Weapons of War
Coal Ash, It Turns Out, Is A Potentially Huge Source of Rare Earth Elements Needed for a Multitude of Products. Coal, the gift that keeps on giving.
Fertilizing the ocean does two things, both of them good
Ocean fertilization is the ultimate twofer: climate repair and marine ecosystem restoration, all in one go. This one technique offers the chance of affordable gigaton-scale CO2 removal and fisheries restoration, whale conservation and (in some versions) coastal ecosystem clean-up too. You can do it in ways that stress more one aspect or the other, but however you do it, you’ll be doing both.
I can’t help but notice that groups that are ideologically opposed to ocean fertilization struggle to articulate a reasonable objection to it. They end up hand-waving about unknown-unknowns or scaremongering about geoengineering; sure signs that they can’t come up with a specific negative effect without resorting to science fiction.
Lost in the tidal wave of doomerism, this simple message seems to have gotten lost: with a bit of sustained experimentation, we could reverse the buildup of carbon dioxide in the atmosphere with an affordable technique that also regenerates our marine ecosystem. Why on earth aren’t we focusing more on this?
Narcissism vs Psychopathy. But enough about me, what do you think about me?
Narcissists can also be charming and likable, but their charm is more rooted in attention-seeking and extraversion, while a psychopath’s charm is more manipulative and transactional. Narcissism is more bombastic and theatrical; psychopathy is more reptilian and cold-blooded. The classic attention-seeking narcissist is generally more entertaining than the typical psychopath.
People Are Using AI to Create Influencers With Down Syndrome Who Sell Nudes. People are the worst.
Newer accounts in recent months have started catering to increasingly specific niches and fetishes, including accounts of AI-generated women with amputated limbs. The AI-generated Down syndrome accounts are the latest and newest low for Instagram, which allows the rampant content theft that enables this practice and is now fueling a non-consensual fetishization and monetization of (fake) people with disabilities.
Frequent blood donations promote the regeneration of blood cells through genetic adaptation
Blood stem cells are true multi-talents: they renew our blood and ensure that we are always supplied with new red and white blood cells. Over the course of a lifetime, genetic changes accumulate in individual stem cells. Mutant stem cells can then grow into larger cell clones, whose cells all carry the same mutation and which may be present for life. This phenomenon is known as “clonal hematopoiesis” and is observed in more than ten percent of people over 60 and in more than half of people over 80.
The analysis showed that clones with certain genetic changes prevail, especially in frequent donors. It is a group of special mutations in the DNMT3A gene.
In a situation in which the body needs to replace lost blood as quickly as possible, the mutated cells have an advantage. Under the influence of the hormone erythropoietin (EPO), which is released in greater quantities after blood loss and therefore also after a blood donation, cells with these DNMT3A mutations can assert themselves against other stem cells and accumulate.
Related—Note I published last year about how men, especially, should donate blood.
How an American Radical Reinvented Back-Yard Gardening
Here’s the Ruth Stout Method. Start with a patch of grass. Don’t even bother to turn over the turf. Cover the grass with eight inches of hay or straw. Don’t skimp, and, ideally, don’t pay for it: you can get spoiled hay from a local farmer, or you can barter for it. Then, year-round, throw everything organic on top of it. Food waste, cardboard, newspapers, grass clippings, dead leaves, sticks, stumps. Anything. All of it. Always. When the time comes for planting, push the hay aside, toss some seeds on the soil underneath, and cover it up again. You’ll need to thin your plants and pick your vegetables when they’re ready. But that’s all. Your garden will be very ugly. You may hear from your neighbors. (Stout’s neighbors didn’t mind that her garden was not pleasing to look at, but she preferred to garden fully naked, so they kept their distance, anyway.)
300-year-old Polish beech voted Tree of the Year
Planet Ooze. Classic enviro-doom type article about phosphorous.
At the outset of the Industrial Revolution many nation-states figured out that they couldn’t feed their fast-growing populations without finding a lot more phosphorus than was available from manure and crop residues and naturally occurring in soils. Egan gives a grim global tour of the various predatory lengths to which imperial powers and modern multinational firms have gone to secure phosphorus. Soon after the Battle of Waterloo the British dug up their own fallen soldiers’ phosphorus-rich bones, shipped them home, then heated and ground them up as fertilizer to grow food for the living.