A slowing in tech growth is about to be mandated by the US government.

Let’s talk about the real market risk. Government spending. We all know the national debt just passed 40 trillion and while this is a problem, it’s a problem in a way the mainstream media doesn’t portray well in my opinion. First of all let me paint you a picture for a second. The US government pays its debt payments by selling the responsibility to pay it to someone else at a premium. Right or wrong in your mind is irrelevant, this is what happens. They can get away with this because they are the global reserve currency so instead of only being able to sell this debt to private equity they can essentially sell it to the globe, other governments included. This usually works really well believe it or not because even though the total debt number rises the country’s GDP continues to rise so the bonds always get bought and payments always get paid. The problem right now is not that the debt surpassed some magical number and now it’s a problem. The debt is all the sudden a problem for one reason, a competitor. Big tech has officially become large enough to cause a debt problem for the United States government. Why? Building data centers is expensive, so big tech is also taking on debt. Well if you’re going to buy debt anyway it’s not like Google or META or any of these tech giants with dominate cash flows are going to go broke anytime soon so why not buy their debt? They’re growing at 20%+ a year so surely they will have the money to pay you back and because they’re not the government they have to offer a much higher yield to convince you. This creates a loop that just constantly cannibalizes bond buyers from the US government. If it’s not apparent already this is a huge problem. The government has to inflate away its debt otherwise it will be buried by the debt payments and the exact companies that drive the majority of the countries GDP growth (which is what allows them to inflate away the debt because no one will buy your debt if you’re not growing enough to pay them back) are growing so fast that they can offer yields high enough to make tons of people stop buying government bonds which keeps the government from being able to inflate the debt away. That being said they have already shown their hand on how they intend to fix this problem. The Federal reserve is trying to absorb the excess treasury supply. As we’ve all seen so far that has not materially slowed the climbing of rates in any meaningful way. Historically, the next step is to literally alter the rules of capital adequacy. For those of you that did not know this regulators can actually change the rules of what it considered “safe” or “low risk” REQUIRING commercial banks, pensions funds, and insurance companies to hold a higher percentage of “risk free” government debt on their balance sheets. (I believe private equity knows this is coming hence the reason the market seems unbothered by 5% yields) And if tech companies continue to grow faster and faster allowing them to offer higher and higher yields the government can actually tax corporate capital directly. I don’t think we will ever get to that point but it can happen which should slow you there is no world here where big tech wins, the government will get its way. In my opinion private equity will see this coming long before it ever happens and front run it causing the problem to more or less fix itself. Which is why I don’t see us getting to the taxing point. That being said when this problem “fixes itself” it will materialize as big tech not being able to actually acquire more debt, thus slowing down their ability to grow the segments of their businesses that make them money. So while the government will not come out and say “okay big tech makes to much money now we need to slow them down” the actions they have to take to prevent themselves from blowing up will inevitably force tech earnings to slow down. This will most likely be followed by a valuation reset within the tech sector which isn’t the same as a bubble popping because GDP does have to continue to grow otherwise inflating the debt away will not work because people won’t believe the government will be able to pay them back when the bond expires. But I know you’re all foaming at the mouth to scream AI BUBBLE! anyway so go nuts. THIS WILL TAKE MONTHS TO HAPPEN, it could honestly take longer, but my point is don’t be a bag holder or an idiot because it’s an inevitability. 1/3 of every dollar ever printed was printed in the last 5 years, Medium to high inflation is here to stay and GDP growth is about to be put in check to assure it so don’t get caught being greedy with high growth or with pockets full of cash because you’re going to feel the pain.