as AI accelerates the shift of income from labor to capital, are you positioned inside the asset economy — or still trying to get there?
Dear friends,
If I had to describe the past fifteen years in one word, it would be more.
More liquidity layered into the system. More credit extended further down the risk curve. More stimulus deployed at every sign of instability. What began as emergency medicine has slowly become the operating diet — and it appears nothing is going to stop that liquidity train in the near or distant future.
Every downturn of the past fifteen years has been met with a larger response than the one before it. Every fracture patched with additional liquidity. Over time, the response has become automatic: when something falters, we don’t remove pressure — we add supply. More money, at a faster rate than the economy can produce the goods and services that money is supposed to measure.
For a long time, that approach worked. Markets stabilized. Asset prices climbed via asset inflation. The system felt resilient.
Not all assets. Select ones.
The scarce ones. The necessary ones. The ones that can’t be printed, coded, or manufactured with a keystroke. The ones Sam Altman can’t easily touch.
Here is where the numbers make it real.
Stick with me here — because the numbers that matter are large. So large they almost numb the senses. That’s part of the problem. When figures reach a certain scale, the human brain stops registering them as real. A million dollars feels like money. A trillion dollars feels like a word.
So before I give you the numbers, let me give you the translation.
The United States currently carries debt equal to roughly 122% of its entire annual economic output — $38.86 trillion against a GDP of approximately $31.5 trillion. That is not an alarmist projection from the financial fringe. That is the current figure, as of the end of 2025.
And it is climbing. The Congressional Budget Office — the government’s own nonpartisan scorekeeper — projects that number reaching 136% of GDP by 2045 and 156% by 2055. Not in some dystopian scenario. In their baseline projection, assuming laws broadly remain as they are.
But the number that stopped me — the one that makes the abstraction suddenly felt — is this:
In fiscal year 2025, the United States spent $1 trillion servicing the interest on its debt.
One trillion dollars. Just in interest.
That made interest payments the second-largest expenditure in the entire federal budget — behind only Social Security. Larger than what we spend on national defense. Larger than Medicare. Larger than Medicaid, veterans’ benefits, transportation, education, and scientific research — combined.
Think about what that means structurally. The money that was used to build infrastructure, fund research, support families, and invest in the future is increasingly being redirected — not to any program, not to any constituency, not to anything that produces a return — but to the cost of carrying yesterday’s promises forward into tomorrow.
And because the deficit continues to run at roughly 6% of GDP annually — nearly double the 50-year historical average — the interest bill grows every year. The CBO estimates interest payments alone will nearly double over the next decade, from $1 trillion today to $1.8 trillion by 2035.
To put that 6% in plain terms: in a year with no war, no pandemic, and no financial crisis, the United States is overspending its income by six cents on every dollar the entire economy produces — and has been for years. That’s not an emergency response. That’s the new normal.
This is the architecture of drift made numerical.
Not a crisis. Not a collapse. A system that has quietly committed more of its future output to servicing its past than any prior generation of Americans ever has — and that shows no structural path toward unwinding that commitment.
When I wrote in my first letter about the money supply expanding three times faster than the real economy, this is the mechanism underneath it. The deficit spending that drives that expansion isn’t going anywhere. The interest payments that compound it aren’t going anywhere. The political incentives that sustain both aren’t going anywhere.
Which brings me back to the central question this letter is trying to answer:
If this is the water we’re all swimming in — if structural deficit spending and persistent monetary expansion are the permanent operating conditions of the system, not a temporary emergency — then what does that do to the value of things?
What reprices?
Not a Crash — A Condition
The great repricing will happen not as a sudden collapse or dramatic reset. But as a long reconciliation between what has been promised and what can realistically be delivered. A grinding adjustment between infinite claims and finite resources. It will unfold gradually enough that most people will adapt without naming it — until one day they realize the ground beneath them feels different.
I’ve been asked many times how the great repricing will manifest. Will it be a bond market revolt? A currency crisis? How long will it take?
I don’t have a forecast to offer — and I’ve grown wary of those who speak as if they do. Attempting to predict the form of repricing creates two unhelpful reactions: panic or paralysis. Some people sell everything in fear of imminent collapse. Others freeze, waiting for a cinematic crash that may never arrive.
History rarely gives us clean endings. It gives us drift.
And drift can last decades. Japan crossed 200% debt-to-GDP years ago. It did not implode. It was absorbed. Yields compressed. The central bank accumulated assets. Life continued. The adjustment was not explosive — it was persistent.
We are moving into something similar: a world where financial cycles stretch longer, where trillion-dollar deficits are not anomalies but baselines, where debt levels that once sounded alarming are simply embedded in the structure. The rhythm I grew up assuming — deficits widening in recessions, narrowing in expansions — has faded. Today the shortfall rarely dips below six percent of GDP. Entitlement spending grows automatically as populations age. The arithmetic doesn’t pause for optimism.
Policymakers are left with three tools: cut spending, default explicitly, or dilute quietly. We already know which lever has been pulled most consistently.
The result is not hyperinflation. It is embedded inflation. The kind that runs at three, four, five percent year after year. The kind that doesn’t shock headlines but reshapes lives over decades. Inflation used to be treated as an error. Increasingly, it functions as a release valve.
A few years of inflation can be managed. Twenty years rewrites a family’s financial map.
But here is what most conversations about inflation miss, particularly people who are not just consuming but also acquiring. There are really two inflations running simultaneously, and they are not moving at the same speed.
Consumer inflation — the price of groceries, services, healthcare, gas, rent, for instance — will remain a persistent irritant. Technology will provide some counterbalance here since automation, AI-driven efficiency, and global competition will exert downward pressure on certain goods and services. I still remember my parents paying over $500 for our first VCR when I was in grade school in the 80’s. Remember those? Now we have the whole media universe and all its attributes in our pocket for a fraction of that. Consumer inflation will be real, but it will have natural limits.
Asset inflation is a different animal entirely and impacts readers of these 10 letters I’m writing the most. The same monetary expansion that lifts consumer prices also flows — often more forcefully — into the things people buy not to consume but to own, and more to the point: buy to store economic value into the future. Real estate in desirable locations. Stakes in productive businesses. Farmland. Artwork. Supply constrained digital assets. Scare, durable, income-producing assets of every kind. These do not benefit from the deflationary pressure of technology in the same way a television or a subscription to YouTube TV does. If anything, technology accelerates their appreciation by making the businesses and systems that depend on them more productive, and therefore more valuable.
The practical consequence is this: select assets will inflate faster than consumer prices for the foreseeable future. The gap between what things cost to live on and what things cost to own (store value in, that is) will continue to widen. For those already inside the asset economy, that gap is largely a tailwind. Their holdings appreciate as the entry price rises. For those still trying to cross that threshold, each year of delay makes the crossing more expensive. The game does not pause while one saves up. It reprices upwards while one waits.
Longevity magnifies this. When people live into their eighties and nineties, even a hundred plus years old, drift doesn’t affect one chapter — it stretches across half a life. Repricing is not an event. It is a condition you inhabit.
Where Value Flows
In environments like this, economic value does not disappear. It migrates. It flows away from AI-generated digital abstractions that can be expanded infinitely, and toward realities that remain bounded by physics. Not because innovation stops, but because human needs do not.
This does not mean technology will fail. Some of the greatest fortunes of the next decade will be built in AI, biotech, and digital infrastructure. But betting correctly on which innovation will dominate — and when — requires a level of precision that most investors simply don’t possess, and that even the most sophisticated analysts rarely achieve in real time.
Consider what that kind of certainty would have required in practice. In 1985, IBM was the undisputed king of computing — the most dominant technology company in the world. Suggesting it would become a second-tier player by 2026 would have seemed not just wrong but almost absurd. By August 2000, Intel had reached a market cap of over $500 billion, the third most valuable company on earth, its chips inside virtually every computer that mattered. Anyone who suggested then that Intel would spend the next two decades gradually ceding ground — to AMD, to ARM, to the foundries it never built — would have been dismissed. These weren’t marginal companies making marginal bets. They were the consensus. They were the obvious answer. And the obvious answer turned out to be incomplete.
The pattern repeats. It always has. Technology creates genuine value, but it concentrates and redistributes that value in ways that are almost impossible to predict with the precision required to act on it correctly. The gap between understanding that AI will be transformative and knowing which companies, sectors, and time horizons will capture that transformation — and sizing a portfolio accordingly — is enormous. Most investors who try to close that gap with conviction end up taking on more risk than they realize, often at exactly the wrong moment in the cycle.
This is why, at the foundation of everything I think about capital, I keep returning to the same core principle: durability through utility.
Not growth for its own sake. Not exposure to the next wave. But ownership of things that are genuinely necessary — assets with a high degree of proof-of-work embedded in them, things that are difficult to replicate, costly to replace, and whose fundamental purpose will look largely the same ten and twenty years from now as it does today. But they share something that I have come to value more than almost any other quality in a long-lived portfolio: they are not easily disrupted by the forces that are rewriting everything else.
Will AI touch the assets I’m describing? Of course. It already is. Better pricing engines, smarter logistics, more efficient operations — technology will make these assets more productive, more responsive, and ultimately more valuable. But here is the crucial distinction: AI will enhance the utility of these assets rather than compress it.
The same technological force that may hollow out a software company, a law firm, or a financial services business will make a well-run storage facility cheaper to operate and more profitable to own. It will make supply chain infrastructure more essential, not less. It will make the scarce, the physical, and the necessary more valuable in a world where so much else is becoming abundant and cheap.
Beyond everything else it will do, AI is also almost certainly the largest liquidity-generation event in modern history, as governments respond to its disruptions the only way they know how… Print more, that is…
Which means the liquidity train — the one that has been running for fifteen years — doesn’t slow down as AI accelerates. It speeds up. More money chasing a physical world that cannot expand at the same pace. More dollars flowing toward the scarce, the necessary, the real.
This is the asymmetry I am building around. Not a bet against technology — but a recognition that the assets most likely to survive and compound across decades are the ones whose value is rooted in something that technology cannot simply replicate or replace. The ones that require land, location, relationships, operational expertise, and time. The ones where proof of work is baked into the asset itself.
These are the foundations I want under a life that may last much longer than the systems around us were designed to support.
Liquid, But Anchored
Repricing doesn’t unfold smoothly. It brings volatility — markets swinging between optimism and fear, yields moving sharply, narratives changing overnight.
It is easy to mistake that motion for danger. But volatility isn’t the enemy. Fragility is.
Financial longevity requires a posture that is both liquid and anchored — flexible enough to adjust, grounded enough to endure. Assets that can absorb inflation rather than be eroded by it. Balance sheets that prioritize survival over spectacle. Capital structured so you are not forced to sell at the worst possible moment.
Longevity raises the stakes. If you expect to live thirty years beyond peak earning, you will experience multiple repricing cycles. The goal is not to avoid them. It is to design your financial life so that repricing does not dictate your choices.
From Prediction to Alignment
The most difficult shift in this era is psychological.
We have been trained to watch central banks, inflation reports, quarterly earnings — to react quickly, to reposition constantly. But financial longevity demands a quieter orientation. Less obsession with prediction. More attention to alignment.
Dollars are infinitely expandable. Scarcity is not. Benchmarks fluctuate. Human needs persist.
When you begin thinking in decades rather than quarters, the question changes. It is no longer “What will outperform next year?” It becomes “What will still function regardless of policy drift?”
That shift is not dramatic. It is steady. And over time, it becomes stabilizing.
I don’t pursue financial longevity because I enjoy complexity. I pursue it because the system now requires it.
And here is the closing thought I keep returning to — the one that ties everything in this letter together.
We started with more. More liquidity. More credit. More stimulus. More money expanding faster than the goods and services that money is supposed to represent. That was the premise of this letter and it remains the defining condition of the era we are living inside.
More is not going away. If anything — for the reasons we’ve explored, from entitlement obligations to AI-driven displacement to the political incentives that make restraint almost impossible — more is going to get more.
Which means the question was never whether liquidity expands. It always was — and always will be — what liquidity reprices when it does expand.
In a world built on expanding promises and structural liquidity, repricing is inevitable. It may be slow. It may be uneven. But it is already underway — visible in rising baseline costs, in the quiet migration of value toward what remains necessary, in the widening gap between what can be printed and what cannot.
When I think about the next twenty years, I don’t try to guess the headline.
I ask a simpler question — one my father would have appreciated:
If conditions tighten, what still works?
Warmly,
Gino
P.S. In my next letter, I’ll step back from macro forces and explore something more fundamental — the difference between money and value, and why understanding that distinction may matter more than any forecast.