Jay Martin: AI Financing Is the Key (and It's Bonkers)

Finance U Public Finance U
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Originally published at: Jay Martin: AI Financing Is the Key (and It’s Bonkers) – Peak Prosperity

I only recently ran across Jay Martin’s incredible work when a PP subscriber posted a link to one of his recent videos where he compared the underlying dynamics that fueled the housing bubble to the current dynamics fueling the AI bubble.

I thought it was brilliant, and very well explained and produced. So, I started watching more of his videos and realized, “I’ve got to get Jay on my program.”

So, I reached out, we scheduled a podcast, and here it is.

The core thesis of his housing vs. AI bubble comparison is that asset bubbles don’t end when the assets fall in price; they end when the assets simply fail to go up in price fast enough to justify continued financial flows to the sector.

If the first derivative is the asset prices, the second derivative is the rate of change of those asset prices. Wonky, but essential to know and to track because it’s the second derivative that provides the early warning.

For the AI bubble, the metric to track will be the valuations that the big AI companies like OpenAI and Anthropic secure during the next round of fundraising.

Both OpenAI and Anthropic have committed to enormous future computing contracts, while generating comparatively puny revenues and large losses. As these bills come due, new capital must continually be raised to fund previous commitments, creating a circular financing structure.

Round and round it goes until it can’t anymore. At that point, look out below, because the US stock markets are seriously overweight AI and related companies.

Jay happens to be a resource investor and the organizer of the incredibly well-regarded and attended Vancouver Resource Investment Conference, so we also discussed gold, copper, and oil.

We then moved on to discuss how 2027 could be really disruptive due to food inflation from fertilizer shortages, as well as the large El Niño that has materialized this year. But also because of the growing signs of distress in the G7 bond markets, especially the U.S. Treasury market.

And we discussed a whole lot more, and we could have easily gone on 3x longer, which I have every intention of doing in future podcasts.

You’re in for a treat with this one.

Enjoy!

Timestamps

00:00 – The Money-Printing Endgame
01:21 – Why Jay Martin Started His Show
04:05 – The 2008 Housing Bubble Meets AI
06:25 – AI’s $2 Trillion Leverage Game
13:45 – China Is Coming for AI
19:40 – Why America Can’t Easily Reindustrialize
23:07 – Can the AI Bubble Be Stopped?
29:37 – The U.S. Treasury’s Creative Financing Tricks
34:38 – How Empires Debase Their Currencies
42:00 – Gold, China and the Next Reserve Currency
46:48 – The Coming Copper Supply Crisis
57:00 – Why “Drill, Baby, Drill” Isn’t Working
01:04:49 – The Debasement and Scarcity Trades
01:09:44 – Jay’s Two Investment Themes

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John Michael Greer who Chris has interviewed in the past wrote an excellent article on the fallacies of AI.

Excerpt: Behind the paper lay years of research into the way that civilizations unravel. Despite the usual assumptions, this isn’t a fast process. It unfolds over one to three centuries of repeated crisis periods separated by intervals of stabilization and partial recovery. The question I wanted to explore was why this happens.

The answer’s actually quite simple. Civilizations always build more stuff than they can afford to maintain. By “stuff” I mean anything that an economist would call capital: buildings, roads, trading systems, social networks, educational institutions, transport technologies, ideologies that encourage people to contribute to the system, you name it. If it’s produced by human labor and has to be maintained by inputs of labor and resources, it’s capital—or, as I like to call it, stuff. Different civilizations fixate on different kinds of stuff, but every civilization produces a lot of stuff: usually as much as its resource base will allow."

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My state has decided to put the kibosh on data centers automatically being created, just because Sam Altman tells us via word salad how great it will be for everyone. Finally people are starting to ask questions such as: costs to the environment, people and if we have the energy to supply these data centers.

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Great interview. I love this guy! With his breadth of knowledge and experience in the resources sector I expected him to have a broad, complicated answer when you asked him how he’s positioned in light of everything you talked about. But, no, he said, “Gold and silver,” which I assume includes physical, mining stocks and so forth. Maybe it’s just confirmation bias, but that was an encouragement to me with my amateur “portfolio” that would give Paul Kiker a stroke.

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Since, according to Yuval Noah Harari and Elon Musk, there won’t be any “Money” within 10 years when “Money” and “Finance” will be anachronistic concepts, then why do we even care about defunct “Markets”?

Don’t you think that it’s ironic that “The Peak Team” is apparently starting to use AI in production of the “Reports”, signage, etc.? Perhaps, I’m being a big Jerk or an “Asshole” for asking this question? But, who gives-a-Toss?

Here: How would you define the terms “Jerk” and “Asshole”? Are they synonymous?

Is it always appropriate to be a “Jerk”?

If the terms are not synonymous, then when should someone be a Big Jerk, and when should someone be a Big Asshole?

What if the other sniveling, craven, obsequious members of the Congregation start to complain to the Priest in the big Church that you are an “Asshole” or a Jerk?

Should you then just “Cure”, by throwing money at the Priest? If the Priest then still doesn’t “Play Ball”, then should you then accuse the Priest of pocketing the “Donation” to the big Church?

You can consult with the various church AI’s. Hell, I don’t mind. Maybe, ask the Catholic AI and the Jewish AI. Also, ask the Hindu AI and the Aghori Ai. Maybe, ask the new Los Angeles Crack Whore AI?

Thank you.

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The craven have petitioned the priest, the oracle, the shaman, the demigod and the soothsayer to the point they agree, they see nothing of substance. In order to question one must reason, in order to mock one reveals themselves.

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So, have the Craven, et al. agreed to stop Shadow Banning the paying Subscribers?
And…what about breaks on the Craven, et Al’s use of AI in producing and using Content?

Is that “Rational Enough” for the Oracle et al?

Thank you

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Chris and The Peak Team are already being absorbed into the AI’s, whether they realize it or not? Right?

No one is going to pay for more AI-generated content….Well, they probably will?

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Moreover, now that I think about it: When has Western Culture ever given Authority and Credence to what “The Group” thinks?

The Collectivist Mentality is per se a “Cult”.

The Group is almost always WRONG. Read the excellent book “The Crowd”. The Crowd and the Cult Leader who panders to The Group should always be mocked…lest the Cult goes Off the Rails and devolves into a Murder/ Suicide Cult as the US may have become.

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Remember, diversification is only useful when you do not know what you are doing :wink:

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Irresponsibly long - to describe PM allocation.
I like that Chris PP term.
With 5000 years of history i sleep well

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“Diversification is for people who don’t know what is going to happen.”

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You Blokes don’t have a Sense of Humor. That routine about offering Free Coffee and Donuts to attract “The Pigs” and about how Chris’s true Calling is to be a Cop was great!

Rich Cooper once did a Video entitled the “Pussification of the Western Male”.

He must have meant the “Pusillanimous Western Male”?

Try to get Rich on The Show…

Rich is always getting Shadow Banned by Pusillanimous Western Males.

https://m.youtube.com/watch?v=quo94wObehg&pp=ygUgZW50cmVwcmVuZXVycyBpbiBjYXJzIG9tbmlwb3RlbnQ%3D&ra=m

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I write every one of my words. When, rarely, I use an AI generated summary, I indicate that’s what it is.

I’ve said this before several times, but once more can’t hurt I suppose.

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I noticed AI tends to overuse patterns in language. I often notice it intuitively before even reading the text which tends to make me ignore the wall of text people think is useful that they probably didn’t read either - to save time.

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Yes!

A good writer can condense points effectively and reply to specific questions with a personalized style.

Reposting lengthy text says: I can’t be bothered to process this… so here you go.

Sometimes it makes sense to post something lengthy but yeah… it jumps out when it’s out of context.

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