For this week’s post, I’d like to turn our attention to something else — another battlefield in which I actually have some experience: the media industry. Specifically, how it’s changed and where it’s going. Heads up: This isn’t another think-piece about the streaming wars or the death of cable. Those trends are old news. This is about something newer and more structural, a seismic shift that’s transforming the way we consume information at a global scale. Not streaming. Not AI. Clips.

Yes, clips, those one-minute videos you see every day on your social media feed. Some would simply call this “short-form content,” but clips are slightly different. They are specifically snippets of long-form content — things like podcasts, livestreams, and TV shows — a byproduct of something else. In other words, every clip is short-form content, but not all short-form content is a clip.

Why belabor the details? Because they’re important. As we’ll see, this specific format has taken over not just social media, but the entire media ecosystem itself. It’s therefore incumbent on all of us who care about the future of media to understand it.

So let’s dive in. Our journey into the world of clips starts with an unexpected character: OpenAI.

Technology Brothers

Last week we read a striking headline: OpenAI acquires popular tech talk show for ‘low hundreds of millions’. The tech talk show in question was TBPN, a live daily podcast that’s gotten quite popular in Silicon Valley. I was soon told by a friend that the deal was worth $200 million. That’s not confirmed, but for the sake of this post let’s assume it’s correct.

Let me put into context how much money $200 million is. The largest podcast deal in history was a $250 million agreement between Spotify and the world’s most popular podcast, The Joe Rogan Experience, which reportedly rakes in more than ten million listeners per episode. Another one of the most popular podcasts is Call Her Daddy, which inked a deal with SiriusXM for $125 million. This deal is larger than that. It also makes TBPN three times more valuable than Dish TV, and nearly ten times more valuable than BuzzFeed. In sum, the deal is enormous.

That’s why you’ll probably be surprised to hear the following statistic: The average TBPN show receives roughly 7,000 views per episode. For context, my show (Prof G Markets) reaches roughly a quarter of a million people per episode. So why on earth would OpenAI pay $200 million? One word: clips. Despite its relatively small live audience, TBPN reaches hundreds of thousands every day with its clips. The average TBPN clip receives around 257,000 views, thirty-seven times larger than the viewership of the show itself.

This is the part where legacy media says, “Cute, but clips don’t make money.” This is where they’re wrong. Unlike most media organizations, TBPN bakes ads directly into their clips. At the end of each one-minute snippet: “This clip was brought to you by …” Ads in clips are what enabled TBPN to generate $5 million in revenue last year, on track for $30 million in 2026. The podcast isn’t so much a podcast as a vehicle for generating clips. The same could be said of many podcasts, by the way, but the ingenuity of TBPN is that they are the first organization whose business model actually reflected that.

Creators → Clippers

TBPN is the tip of the iceberg. Over the past couple of years, clips have birthed an entire generation of media stars. There’s Nick Fuentes, for example, the new king of the far-right. Or Hasan Piker, the controversial progressive livestreamer. Or Clavicular, the viral looksmaxing star. You might not have heard of these people, but for Gen Z, they’re practically household names. All of them have one thing in common: Their clips go extremely viral.

Despite a modest livestream audience of less than 20,000, Nick Fuentes reaches more than half a million people on average through his clips. One of his most recent clips reached eleven million people. That’s more than the population of New York City. Clavicular’s reach is similar: His actual show averages only 16,000 viewers, but his clips average a quarter of a million. Meanwhile his past ten TikToks reached roughly seventy million, more than the population of France. From TBPN to Clavicular to Hasan Piker, the pattern is roughly the same — the shows are small, but the clips are massive.

The craziest part about these clip numbers is that they’re actually underestimates. That’s because they reflect only the views of clips that are posted directly by the creators themselves, but don’t account for the millions of times those clips are re-clipped by other social media accounts (“fan accounts”), which often draw even larger audiences. (We’ll discuss this more in a moment.)

Soon you realize most of the hot new “shows” you see today aren’t actually about the show — they’re about the clips. I’ve even experienced this with my own show. Whenever a fan recognizes me in public, I ask them if they listen to the podcast, and every now and then I receive a striking answer: “No, but I watch your clips.” The first time I heard this I was confused. I thought our clips were the promotional material for our content. It soon dawned on me that wasn’t the case. For much of our audience, the clips are the content.

This is the crucial point to understand: Clips are no longer the byproduct of the main product — they’re the main product. Once you grasp this you start to realize how the entire media ecosystem is being flipped on its head. We’re entering a new media economy, what I call “the clip economy.”

Subscribe now

The Clip Economy

The clip economy has gotten enormous, but as with any economy, it can be gamed. The man who pioneered this happens to be one of the first clip-stars: Andrew Tate. Tate realized that the best way to win the clip economy isn’t to post clips yourself, but to have other people post them for you. So in 2021, he started an online course (pyramid scheme) called Hustlers University. The stated goal was to help young men “escape the matrix,” but the real goal was to get young men to post his clips.

The business model was simple: Tate instructed his subscribers to clip his livestreams and post them on social media with an affiliate link to his “community,” and with each new subscriber, the clipper received a commission. The result? Clips of Andrew Tate were viewed over 11 billion times on TikTok before he was banned. Despite the ban, however, Tate clips still regularly go viral on the platform. That’s the other great thing about having a clipping army: Even if you get cancelled, your clips live on.

The pay-to-clip model has since gone mainstream. “Clipping agencies” are now popping up all over the internet. In fact, one popular streamer known as “N3on” recently revealed how much he pays his clippers collectively each month. Answer: one million dollars. His clippers are paid on a per-view basis, and the best ones make millions of dollars a year.

But N3on is just one streamer, and not even in the top ten. MrBeast recently launched his own clipping platform — he pays clippers to post clips of his new theme park, Beast Land. Kick, one of the largest streaming platforms, also started a clipping program. It’s even trending in Washington: Last presidential election both Trump and Harris hired employees to clip their content. Clips are already the beating heart of every new media endeavor and we’re just getting started.

The Path Back

It’s no secret that legacy media isn’t doing well. Over the past five years, companies like Disney, Warner Bros. Discovery, and Comcast have all lost more than a third of their value. No amount of streaming acquisitions, rebrands, or spinoffs has been able to stop the bleeding.

Their problem is simple: People don’t watch traditional content anymore, they watch clips. Since before the pandemic, time spent watching video content on social media has more than doubled, and in that same period Meta’s revenues have nearly tripled and TikTok’s have grown tenfold.

This really hit home for me the night of the Oscars. I asked my girlfriend (who is a Chalamet fan) if she wanted to watch it, and to my surprise she said no. “Why?” I asked. Her answer was clarifying: “It’s too long and boring. I’ll just wait for the morning and watch the clips.”

There’s only one path back for legacy media: They have to win the clip economy. The bad news is it’ll feel beneath them. The good news is it will be easy. Legacy media is better at original content than anyone, and original content is to clips what light sweet crude is to gasoline. Put another way, Disney and Warner Bros. are sitting on a clip-field the size of the Permian Basin.

The next step will be monetization, which will also be easy. “This clip of the New Year’s Eve Ball Drop was brought to you by Heineken.” “This clip of Fareed Zakaria GPS was brought to you by T-Mobile.” “This clip of Shark Tank was brought to you by Capital One.” Sure, it’s a little dystopian. But the way I see it, legacy media has two options: Either sell clips, or die.

Call Me

If any media executives are reading this and want to discuss, feel free to reach out. I think about this every day for my own business, and I also find it fascinating.

And for those of you who find this all mostly depressing, I hear you. There is indeed a large body of evidence that suggests short-form content isn’t good for us. It decreases our attention span, makes us more anxious and depressed, and it’s very addictive. The clip economy will also exacerbate our polarization problem, which I’ve written about.

But the point of this post isn’t to say the clip economy is a good thing or a bad thing. It’s simply to tell you the truth about where we’re headed.

See you next week,
Ed

We’ll get to why this matters in a moment. But first, a quick refresher on this ballroom. Last summer, President Trump announced plans to build a 90,000 square-foot ballroom for a proposed budget of $200 million. (That budget has since doubled.) In order to do this he needed to demolish the East Wing, a historic portion of the White House complex that was built more than a hundred years ago. This was a controversial decision that required permission from Congress, however Trump didn’t seek any permissions and tore down the East Wing anyway, giving rise to one of the most iconic and disturbing images in recent memory.

That was the East Wing seven months ago. Fast-forward to today, the structure remains obliterated, a giant crater in the middle of our nation’s most historic site. It’s an unpleasant sight, but one we assumed was temporary … until last week. A federal judge ruled the ballroom project unconstitutional, which means the ballroom may never get built — but more importantly, the East Wing will remain in ruins for the foreseeable future.

This matters for historic, ceremonial, and architectural reasons obviously, but also for a more profound reason. The ballroom has become a metaphor for the President’s entire approach to policymaking. It is the mirror image of every major executive decision that has reverberated across economies, markets, and borders. It’s U.S. policy, if U.S. policy were a building.

I have a name for this strategy. I call it BNFL: “Break Now, Fix Later.” It describes the President’s tendency to break things (often old and historic), promise to build something “bigger” and “better” in their place, until he realizes he doesn’t actually have the wherewithal (or the constitutional authority) to get it done — at which point he becomes bored and moves onto the next shiny object. The end result is that “the builder” never actually builds anything, but mostly just destroys things. Break Now, Fix Later.

As we shall see, BNFL describes almost every important decision the President has ever made — and it may help us predict those he’ll make in the future as well.

Iran

Let’s start with the crisis du jour: Iran. It’s still not entirely clear why we invaded Iran. Supposedly it’s because Iran’s nuclear capabilities had grown significantly, even though he literally told us last summer that they were obliterated. Either way, the general idea was that Iran posed an “imminent threat” due to its belligerent regime led by Supreme Leader Ayatollah Khamenei. The solution, then, was obvious: Install a new regime. Indeed, Trump said regime change would be the “best thing that could happen.”

As with the ballroom, the regime change operation kicked off by tearing things down. The U.S. launched more than 12,000 airstrikes on Iran, hitting 11,000 targets and more than 150 vessels. It also (according to preliminary investigations) destroyed a girls’ elementary school, killing over a hundred children in the process. Trump quickly swept those details aside and hailed the successful assassination of Ayatollah Khamenei that brought the murderous dictator’s regime to an end.

A few days later, we learned who’d be running the new regime: the dictator’s son. Yes, the Iranian succession plan went exactly according to script — only instead of the 86-year-old Ayatollah dying of natural causes (which was already imminent), he was assassinated by the nation’s sworn enemy. So not only did we not install a more friendly regime, we made the existing regime even angrier and more radical.

Soon after Khamenei Jr. was installed into power, Trump arrived at the “fix later” part of the operation. The “goal has been attained” he said. “We’ll be leaving very soon … within two weeks.” Few believe his new timeline after he blew the first one. But what’s more important is the sentiment: The operation was more tiring and complex than he bargained for — he’s over the whole Iran thing.

A trail of destruction is left in his wake. Not just in terms of lives (nearly 4,000 and counting) but the economy too. U.S. gas prices have risen more than 30%. In Europe, they’re up more than 50%. Fertilizer prices, an essential input cost for food, have risen nearly 50%. Construction material prices are ballooning, which will lead to even higher housing costs. Investors went from expecting multiple rate cuts this year to expecting a rate hike, and recession odds have risen almost 10%. As I wrote a couple weeks ago, this war is making all of us poorer. In sum: lots got broken and nothing got fixed.

Tariffs

The same pattern played out last year in what has become Trump’s most defining policy: tariffs. On Liberation Day, Trump invoked the International Emergency Economic Powers Act to authorize the largest tariff hike on foreign imports in nearly a century in an attempt to rein in the trade deficit. Many of our closest allies were blindsided with tariff rates as high as 50%. He even tariffed the Heard and McDonald Islands, a territory inhabited by only seals and penguins.

Chaos immediately ensued. The S&P 500 sold off nearly 10% – its largest weekly drop since the pandemic. $5 trillion in market value was erased. As Trump started to ease and pause tariffs, markets recovered — but supply chains didn’t. Nearly a third of all sea shipments were cancelled immediately. As import costs rose, companies began to pass those costs onto their customers. Within a few months inflation was ripping upward again, as nearly 80% of the tariff burden was funneling down to the consumer. The financial loss for the average American household was estimated to be nearly $2,000.

Things got even stupider when the Supreme Court determined in February that the tariffs were illegal. This wasn’t a difficult decision: Trump had falsely claimed emergency powers and levied a tax on Americans without congressional approval. As our founding father James Madison put it, “Congress alone has access to the pockets of the people.” The U.S. government must now return the $160 billion it had collected over the course of the tariff saga. (In other words, this was all for nothing.) Ironically, despite bearing the majority of the costs, consumers won’t see a penny back as they did not directly pay the tariffs themselves. So not only did we not get anything done, we also set back American households even further. #BNFL.

DOGE

A major component of the Trump 2.0 agenda was to reduce wasteful government spending. The goal was, in Trump’s words, “to do what has not been done in 24 years: balance the budget.” So he created the “Department of Government Efficiency” and employed Elon Musk to get it done.

Within days it was clear how Elon and Trump had a shared passion for blowing things up. They immediately ripped up thousands of contracts, fired more than 200,000 government workers, and fed an entire agency known as USAID “into the wood chipper.” It’s estimated the elimination of USAID (which specialized in foreign assistance) will lead to nearly 10 million preventable deaths over the next four years. A high price, but a price they were willing to pay.

That was until DOGE got shut down. After a highly predictable falling-out between the President and Mr. Musk, the agency was quietly dissolved and its employees let go. The department said it saved $215 billion. Independent analyses have concluded the real number was a fraction of that, but for simplicity’s sake we’ll go with it. On their own terms those results were underwhelming: Elon’s original projection was $2 trillion.

It wouldn’t be a true BNFL, however, if Trump didn’t actively make matters worse — and in the case of government efficiency, that’s exactly what he did. Right as Elon was cancelling spending plans, Trump was building a new one: the One Big Beautiful Bill Act, which would prove to be one of the largest government expenditures in American history. The bill both reduced revenues and increased spending, loading up our government with an additional $850 billion in expected interest payments, and adding an estimated $4.2 trillion to our national debt over the next decade. There is literally no bill less efficient than this, which begs the obvious question: What was DOGE even for?

Take Your Pick

So far we’ve reviewed three major policy decisions, each of which were quintessentially BNFL, but let’s be clear, there have been plenty more. For example:

• Promising (threatening) to “take” Greenland, thus ruining our relationships with NATO allies, only to get distracted and ultimately reverse the decision on the global stage.

• Pressuring the Fed Chair to cut rates (and threatening to fire him), which eventually raised yields as investors priced in the danger of an un-independent Federal Reserve, only to walk back his comments and let Powell play out the rest of his term.

• Pursuing greater energy independence with “Drill, Baby, Drill” policies, which actually just meant gutting clean energy programs, which backfired when we spiked oil prices with yet another war in the Middle East making us even more in need of renewable energy than we already were.

Like the ballroom, each policy starts with a grand vision that could feasibly be framed as a net positive for society but is soon followed by a cynical fit of destruction. Then, once it’s time to actually build the thing, the circumstances suddenly change and it’s no longer possible. The strategy amounts to annihilation. It’s “move fast and break things,” minus the innovation.

Two Interpretations

There are two ways to interpret the BNFL strategy. One reading is that he’s simply in over his head. After all, it’s easier to break things than to make things. To build anything worthwhile, you have to invest time and effort, you have to achieve a consensus, you have to pay attention to detail, and the President has no interest in any of these things.

There’s also a darker interpretation, however, and although I don’t necessarily believe it, I think it would be unwise to rule it out. That reading is the following: Maybe he genuinely only wants to destroy things. Maybe this systematic pattern of destruction is actually by design, and his promises to build things anew are in fact lies designed to conceal his thirst for destruction. That would make him a psychopath, sure, and psychopaths are rare. At the same time, though, the probability that a series of policies would all lead to the same destructive end by accident is … equally rare. Again, I’m not saying I believe this interpretation. I’m just saying it’s possible.

Artemis

I’ve struggled to write this, as every time I try to type my mind returns to Artemis II. More specifically, it returns to the mission’s recent image of Earth, which will go down as one of the most iconic images ever.

The image is a reminder that to build anything worthwhile takes time. It took nearly a decade of planning to send these astronauts into space. The astronauts themselves prepared for this specific mission for more than three years. The operation didn’t just involve them, but the coordinated efforts of tens of thousands of people. Nothing this hard could ever get done without collaboration and planning.

In a way, it’s the opposite of BNFL. Build now, fix … forever. A stark contrast to the image with which this post began.

See you next week,
Ed

Before we dive in, a quick refresher: Last Monday morning, Trump announced he was engaging in talks with Iran. Fifteen minutes before his announcement, however, we saw gigantic spikes in trading volumes across multiple different markets. At 6:49am, more than a half a billion dollars in oil futures changed hands. Within minutes, $1.5 billion worth of S&P futures were traded as well. Over in the prediction markets, one trader made nearly $1 million betting on the war with 93% accuracy. Multiple other traders were flagged for making what appeared to be insider trades.

We’re left with two conclusions: Either 1) multiple traders got extraordinarily lucky with their extraordinarily risky bets that they all made at the same time, or 2) multiple traders knew what was about to happen. Those who believe the former are beyond saving.

Most are outraged by what happened. But what’s missing in their response is an understanding of the greater context. This was not an isolated incident. It wasn’t even one of a couple of incidents. This was part of a larger chain of corruption that has become so standardized in this administration that we can only conclude it’s by design. It’s the kind of corruption that requires not just our ire, but coordinated resistance. We will get to next steps in a moment, but let’s first make sure we’re all on the same page and review some of the other recent scandals that have gotten (purposefully) buried in the news cycle.

E Pluribus Unum

One major scandal you might have forgotten about happened last spring, when more than a dozen government officials made unusually well-timed stock sales right before the President initiated one of the most market-roiling events in U.S. history: Liberation Day. This alone would have been cause for concern, but it was only the beginning.

A few days later, Trump made his first TACO, pausing the tariffs and thus yanking the markets right back up. But just a few minutes before he signalled that move, we saw another huge spike in S&P options trading, with some trades skyrocketing more than 2,000% in a single hour. It was one of the largest jumps in U.S. stock market history, and a handful of people were somehow able to predict it perfectly.

Before that, there was the crypto saga. Just days before his inauguration, Trump launched a meme coin that briefly hit a $27 billion market cap – 80% of which was controlled by Trump-affiliated companies. Suspiciously, 58 anonymous wallets made over a billion dollars dumping the coin, while more than 810,000 investors lost $2 billion combined. Melania’s coin was even worse: Twenty-four wallets bought tokens minutes before she even announced it and then flipped them for a collective $100 million. By the end of the year both coins had cratered, but the insiders were long gone.

We must also mention prediction markets, the new ground-zero for insider trading. There was the anonymous Polymarket account that bet $32,000 that Maduro would be ousted just hours before Trump announced his operation on Venezuela, for example. That account ended up making $400,000. There was also the account that made an unusually good bet on the timing of Ayatollah Khamenei’s death right before an airstrike killed him. That one returned more than half a million dollars. These are just two examples but there are more.

We could also discuss the tens of thousands of dollars the new DHS Secretary made buying oil and defense stocks right before the Venezuela invasion. Or last night’s report that Pete Hegseth’s broker tried to buy him defense stocks right before the Iran attack. Or the millions Trump’s children invested in military drone companies, also before the Iran attack. Or the billions Trump’s son-in-law Jared Kushner raised from Gulf State funds right before Trump revealed that he was the one who determined we should go to war. Insider trading is now a standard feature of this administration. You don’t even have to look hard to find it.

In Bed With The Cops

You might be thinking, “Isn’t all of this illegal?” The answer is yes. You might also be thinking, “Won’t they be prosecuted?” The answer to that question is no, because the most essential piece of Trump’s corruption strategy has been to corrupt the very law enforcement agencies whose job is to stop him. In the case of insider trading, that agency is the SEC.

After Trump took office, SEC enforcement actions on public companies declined by 30%, one of the largest drops ever. It also settled only $800 million worth of cases, the lowest number ever in years of administration change. Trump himself canceled or halted almost 160 enforcement actions in just one year, and white-collar crime prosecutions were cut in half. This was all by design.

Trump’s efforts form part of a long-running attempt to degrade the SEC. Both parties are responsible for this — or, to be more accurate, the Supreme Court is responsible for this. The SEC lost its might right after the Citizens United decision in 2010, which unleashed billionaires’ ability to buy our representatives and control U.S. legislation, hence why the agency is no longer interested in prosecuting financial crimes.

But here’s where Trump’s corruption has (again) gone above and beyond. Two weeks ago, after just six months on the job, the SEC’s enforcement director, Margaret Ryan, resigned. Why? At first it was unclear, as her resignation letter and public comments were unusually reserved. But soon, the truth came to light. Reuters reported that Ms. Ryan had expressed interest in bringing charges against many of Trump’s closest associates, including his family. Soon enough she was reportedly in trouble with her bosses, at which point she mysteriously quit.

A similar event took place over at the Department of Justice’s antitrust division just weeks before. Gail Slater, who was tasked with cracking down on monopolization, had run into multiple power struggles with top Trump officials who wanted to be more lenient on enforcement. (Or, to be more accurate, to not enforce at all.) Two of her deputies were eventually fired for “insubordination,” and it wasn’t long before Ms. Slater was ousted herself.

Gotham

Superhero fans have quite literally seen this movie before. The entire premise of Batman is that the cops can no longer be trusted as they are in bed with the criminals, so the city of Gotham needs Batman, the masked vigilante to enforce the law on the citizens’ behalf.

The previous sentence sounds a lot like America. In fact, America becomes more like Gotham everyday. Our politicians are increasingly bought; our law enforcement, increasingly compromised. Some would argue we’re in need of a Batman, but that’s a little too comic-book for me. I would argue we need a Harvey Dent, Gotham’s hard-nosed district attorney who was willing to prosecute the powerful no matter the political cost. Right now we have … no one. Which brings me to my next point.

Advice To Dems

The single best platform Democrats could run this cycle is the following: Promise to put every Trump-associated insider trader behind bars. If that sounds radical to you, it isn’t. Tracking down and prosecuting insider-traders isn’t that complicated of a task, and it’s literally the SEC’s job. In addition, this could be one of the most politically popular movements in recent memory. Roughly nine in ten Democrats and Republicans believe insider trading in Washington is a problem that must be addressed with a trading ban.

Whichever candidate promises to put the insider traders in jail will probably win. At that point, they’ll have the chance to do something even braver: actually put them in jail. This would be a good move, not because it’s politically popular but because it’s simply the right thing to do. Billions of dollars have been made off of insider connections to the President — but the more honest way to put it is that billions of dollars have been stolen by insiders connected to the President. The corruption in our government is reaching a level that is simply untenable, and an easy win for any political candidate would be to promise to put an end to it.

Atlanta

I’m writing this on a flight from Atlanta. I flew down on Saturday to see my grandmother who recently suffered a stroke. Technically, she experienced “cerebral amyloid angiopathy,” a build-up of abnormal proteins in the brain that ultimately cause it to bleed internally. She lost her ability to move and speak, and was in hospital for several days until my mother and uncle made the difficult decision to bring her home for a more peaceful end.

As I entered her house I encountered childhood memories: Helping her water the plants in the garden, hunting for easter eggs in the park, eating Life cereal (my favorite) every morning. When I went in to see her she immediately lit up. “Hello!” she said. I sat down and held her hand and asked her how she was doing. She tried to respond but she couldn’t get the words out. So we sat there, holding each other, while my sister read her poetry.

The afternoon light was falling neatly at the foot of her bed and the birds were chattering politely. Her eyes were closed, but she held my hand firmly. It wasn’t long before I had to leave again. But for a brief moment, none of this mattered.

See you next week,

Ed

The time for shock and outrage is over. Not because it’s unwarranted, but because it’s too late. The bombs have been dropped, the conflict is underway, and our President cannot be bargained with. It’s time we accept our new normal and start preparing for the future as there’s no going back.

Our future probably holds a few things: more violence, more polarization, and more instability among them. You could start scenario-planning for this future, or you could determine it’s so uncertain that scenario-planning is pointless. Both would be reasonable perspectives. But there’s one aspect of this war that you’d be foolish not to plan for. In fact, it’s a future I’d argue you must plan for. Not because it’s lethal, nuclear, or poisonous, but because it’s certain. That future is quite simple: Everything in your life is about to get way more expensive.

It Starts With Oil

As you probably know, the price of crude oil is going haywire. That is because 20% of the world’s supply is shipped through the Strait of Hormuz, which Iran all but entirely controls. These are the very basic facts you’d think our leadership had strongly considered before they decided to start dropping bombs on them. I guess not.

As you also probably know, the substance that fuels your car is a refined product derived from crude oil called gasoline. They’re not exactly the same thing, but they’re pretty close to the same thing. That’s why higher oil prices result in higher gasoline prices almost immediately, and why the price of gas in America has risen more than 30% since the war began.

I don’t know how much this is impacting your life specifically. But I do know how much it’s impacting Americans’ lives on average. For every dollar increase at the pump, the typical household has to spend an extra $530 per year. Americans are collectively spending $300 million more per day on gasoline today than they were before the war. For low-income families this is extremely painful, as they already spend roughly a fifth of their income on energy costs.

If you drive a truck, you’ve noticed diesel prices are soaring too — up 40%. Diesel isn’t the same as gasoline. It’s thicker, heavier, and more powerful, but it’s still a derivative of crude, which is why prices have also exploded. Regular car drivers may think these differences are irrelevant to them — they’re not. Let me explain.

Domino Effect

As the cost of diesel rises, the cost of trucking products around the country rises too. Diesel accounts for roughly a quarter of trucking companies’ per-mile operating costs, second only to driver wages. This is a big deal, as trucks move over 70% of goods by weight around the nation. But it’s not just trucks, it’s ships too. Fuel accounts for more than half the cost of shipping, which is why freight prices have risen roughly 30%. Baked into that number are insurance premiums too, which (for vessels traveling through the Gulf) have already risen by about 50%. War with Iran presents a unique blend of problems that make it a lot more difficult to deliver products to people.

Another domino that’s fallen is fertilizer. Gulf states account for roughly 30% of the world’s ammonia and half of the world’s urea, two substances critical for fertilizer production. U.S. urea and ammonia prices are up 21% and 41% respectively, which has resulted in a 25% surge in the price of fertilizer. This hasn’t affected you yet, but it will. Fertilizer costs account for about a third of the cost to grow crops. As with tariffs, every additional input cost will eventually be passed onto the consumer. This is especially concerning when you consider how bad food inflation had already gotten before we struck Iran.

I’m not done yet. Oil is also a primary input for plastic, PVC, and other industrial substances. It’s also critical for producing things like steel, aluminum, and cement. Lots of these materials also get shipped through the Strait of Hormuz. The result: Construction material prices have risen as much as 30%. These price increases will add more fuel to the dumpster-fire that is the U.S. housing crisis. You might remember when lumber prices tripled after Covid. What you might not recall is how those price increases pushed housing costs up by roughly $35,000. The median U.S. home now costs $405,000, about 9 times median income, the most expensive in American history. How much worse will these numbers get when the price of literally every input goes up?

No Place To Hide

When times get really tough, the best thing you can do is ask for help. In the case of inflation, that means trading with other nations. This was the U.K.’s revelation during the 19th century and Japan’s after World War II — like many economies throughout history, they realized trade was cheaper.

This time round, we don’t have that option. For one, we’ve already significantly damaged our relationships with trade partners via arbitrary tariffs and military threats. More importantly, however, prices have gone up even higher everywhere else. Across Asia, gas prices have increased as much as 60%. In Europe, the price of liquid natural gas (on which they’re heavily reliant) has risen over 70%. That’s because their supply chains are even more dependent on the Strait of Hormuz than ours. In other words, we can’t trade our way out of this mess. No one’s coming to save us.

Time To Get Worried

The Federal Reserve’s “dual mandate” is to 1) maximize employment, and 2) stabilize prices. As it stands, unemployment isn’t a huge problem — but it’s becoming one. We lost 92,000 jobs last month, and as Jerome Powell said last week, net job creation in the private sector in the past six months was “effectively zero.” Meanwhile, inflation is still a problem (we’re still way off the Fed’s target), and it’s about to become even more of a problem for the reasons we just discussed.

This puts the Fed in a tough spot. Do you keep cutting rates to spur employment but risk more inflation? Or do you stop cutting rates to bring down prices but risk losing more jobs and suppressing economic growth? At the start of the year, the expectation was that the Fed would choose the former. The inflation picture wasn’t ideal, but rates had been high for a while and the employment trend was starting to get concerning. This formed the basis of the 2026 bull-market thesis: Yes, the AI bubble was scary, and yes, tariffs were concerning, but ultimately stocks perform well when rates get cut.

Now that we’ve bombed Iran, however, everything’s changed. Prices are surging again, which means the Fed’s other problem (inflation) is a lot bigger again. This should theoretically call the entire rate-cutting cycle into question, and in fact, according to prediction markets, it already has: In the 25 days since the war began, the probability that the Fed won’t cut rates at all has risen from 14% to 31%. Meanwhile, the chances of rate hikes this year are shooting up.

I’m transported back in time to 2022. It was my first year out of college, and I was just starting up with Scott. Covid had already taken senior year from me, and now, because of messed up supply chains, I had to pay $15 for a carton of eggs. The Fed had no choice — it had to raise rates. Fortunately for me the rate hikes worked, and inflation came way down. But not before it brought something else down with it: the U.S. stock market, which fell nearly 25% that year, its worst year since the financial crisis.

Not There Yet

I’m not saying it’s Covid again, but the dynamics are unmistakably similar. A violent force inserts itself into global supply chains, prices immediately rocket through the roof, governments tell us it’ll soon be over (but we all know it won’t), central bankers start to accept the gravity of the situation, they start to tighten policy and ratchet up rates (despite investor protests), market optimism starts to get sucked out of the room, stocks start to fall lower, and lower, and lower still, growth screeches to a halt and then inverts, until we’re forced to contend with what our situation has probably become: a recession.

To be clear, we’re not there yet. GDP growth is still positive (though a lot less positive than we initially thought), unemployment is still relatively low (though rising quickly), and inflation isn’t nearly as bad as it was after Covid. But let’s also acknowledge where we’re headed. Every day this war goes on, American households lose more purchasing power. Grocery bills, airline tickets, shipping costs, and credit card statements are rising by the billions. We’re literally getting poorer by the day.

As Trump looks to the polls, he will soon realize the gravity of his error. But this isn’t Liberation Day, this is war. Unlike tariffs, you can’t take murder back.

See you next week,

Ed

There are many angles from which we can investigate this war. Last week we discussed America’s long history of regime change. (TLDR: very unsuccessful.) We also discussed the price of oil, and the impacts it will have on U.S. inflation. (Hint: bad.) But there’s one angle we’ve yet to fully examine, which might help us understand how we got ourselves into this mess, and why it will likely continue.

That angle is the following: Who’s getting rich off of this war?

Financial Audit: Iran Edition

First, a quick financial audit. Based on what the Pentagon has told us, it’s estimated we’ve spent nearly $22 billion on Operation Epic Fury so far. To put that in perspective, that’s enough money to cover Medicaid for 2.7 million Americans, or feed 2.4 million families for a year, or cover a year of tuition for 1.8 million students. Keep in mind, we’re only 18 days in. Consider what the Iran bill might look like in six months, or even six years.

As with every business expenditure, the Iran war has its accounts payable and its accounts receivable. The spenders in this transaction are obvious: us. American taxpayers will bear the financial burden of this war, either directly through taxes or through deficit spending for which younger Americans will disproportionately pay the price. We’re also set to pay hundreds of billions in higher food and energy costs, but that’s a conversation for another time.

Then there’s the people who’ll make money. These individuals are slightly trickier to identify, as the downstream impacts are (purposely) opaque. There are the defense companies who, as we discussed this morning with Liz Hoffman, are set to net $200 billion in nationally-syndicated investment from Trump over the next three years. There are also the investment bankers whom Trump has assembled to underwrite these deals. But there are plenty of others, many of whom were in the rooms where the decision to go to war was made.

So without further ado, let’s go through some of the biggest winners of the Iran war.

Eric & Don Jr.

We’ll start with the President’s sons, Eric Trump and Don Jr. The Trump brothers are the new backers of a tactical drone company called Powerus, which “builds and scales autonomous drone systems for military and commercial use in high-risk environments.” Eric Trump also recently invested in an Israeli drone company, which is known in the defense community for its “low cost per kill” drone munitions. Both of these investments will likely outperform due to 1) our newly-waged war, 2) the Pentagon’s new ”drone dominance” program, which will issue $1.1 billion in procurement contracts to drone companies, and 3) the fact that the defense department is among their biggest clients.

Finding hot government contractors before anyone else is, of course, the Trump brothers’ bread and butter. That’s why they also created the New America Acquisition I Corp., an investment vehicle whose stated goal is to identify companies “well-positioned to benefit from federal or state-level incentives, such as grants, tax credits, government contracts or preferential procurement programs.”

The Trump brothers continue to make a fortune through monetizing their relationship to the President. It started with crypto but has now devolved into frontrunning bloodshed with early investments in advanced weapons manufacturers. This is a level of corruption unlike anything we’ve seen — not just in terms of scale but also shamelessness, as the Trump brothers have made almost no efforts to cover it up. Think of this as the Trump family’s Hunter Biden laptop, only this one’s a million times worse.

Jared Kushner

Jared Kushner has essentially bet his career on the elimination of Iran — a risky wager, but one made less risky because of his connection to the president. Over the past several years, Kushner has raised billions of dollars from Middle Eastern sovereign wealth funds with the central goal of reconstructing the Gulf. His vision requires establishing a cohort of economic cooperation among the major Gulf players (Saudi Arabia, Qatar, the UAE) and Israel — a feat that cannot materialize if Iran continues to call for Israel’s destruction.

As such, Kushner’s investment firm, Affinity Partners, has begun deploying its $5 billion AUM into strategic Gulf assets such as Shlomo Group, an Israeli conglomerate with large holdings in, yes, defense. His firm is also a large investor in Phoenix Holdings, one of Israel’s largest asset management companies. Jared is even working on plans to put data centers in Gaza.

None of this would necessarily be problematic if it weren’t for the fact that Kushner appears to be one of the people who decided we should go to war. Last week, Trump admitted this. He said the reason he believed Iran was an imminent threat was because Jared Kushner told him so. Keep in mind, Kushner has no formal position in the White House. However he is married to the President’s daughter, which (apparently) makes him qualified to advise our government on global warfare. Taken in concert with his multi-billion-dollar bet on reconstructing the Middle East, it’s hard to see this as anything other than an act of historic corruption.

The Witkoffs

Another key winner is Steve Witkoff, the real estate developer who was appointed as U.S. special envoy to the Middle East by Trump. After winning the position, Steve handed control of his investment firm, The Witkoff Group, to his son, Alex Witkoff, who proceeded to strike multiple real estate deals with entities in the Middle East. He even bragged about it as he pitched more investors at home. The father-to-son handoff was also a cunning workaround to government ethics laws, which require officials to fully divest of any assets that may benefit from state policies. This is fast becoming a popular tactic in Washington. Commerce Secretary Howard Lutnick, for example, recently employed a similar strategy for his firm Cantor Fitzgerald before his sons reportedly began buying up tariff refund claims.

As Alex Witkoff expanded his family’s real estate network in the Middle East, his brother Zach was busy establishing the Trumps’ other family business: crypto. In 2024, Zach teamed up with Eric Trump to form World Liberty Financial. Together they generated billions of dollars in crypto earnings alongside “projects” such as Trump Coin and Melania Coin. I’ve put “projects” in quotes because, as I explained on The Bulwark, we need to start calling these operations out for what they really are: theft. Don’t take it from me — take it from the hundreds of thousands of victims who lost billions of dollars to their own President.

It keeps going. It was later revealed that Zach and Eric had sold 49% of their crypto firm last year to the United Arab Emirates for $500 million. I.e. the same people with whom their dad had been presidentially appointed to broker diplomatic relations. The corruption runs deep, and it goes in a circle.

Share

Defense Tech Investors

Startups are getting in on the action too. Palmer Luckey, the founder of defense tech company Anduril, hosted multiple fundraisers for the Trump campaign, including a roundtable at Newport Beach that cost attendees $100,000 a pop. Since then the company has won multiple significant defense contracts, including agreements to help build the Golden Dome, integrate autonomous surveillance at the border, and of course, build drones. Anduril’s valuation has more than quadrupled since Trump took office. Meanwhile, shares in defense tech company Palantir (whose founder was one of Trump’s top backers) have risen nearly 15% since the Iran war began and have almost doubled since the start of the President’s second term.

Prediction Markets Bettors

This post wouldn’t be complete if we didn’t mention the numerous individuals who made millions betting on the Iran war via prediction markets. More than half a billion dollars were traded on the timing of these strikes, and one account netted more than half a million. At first I thought this person might just be a smart trader, until I learned their first trade was placed roughly one hour before the news broke publicly. In other words, they definitely knew something.

Next question: Who is this person? Answer: We don’t know, as the trades are anonymous. This forces us to consider the possibility that this person is either in the administration, or at least associated with it. This is made even more possible when you remember that both of the largest prediction markets platforms are actively advised and backed by members of the Trump family. Which also means that if there was foul play, we shouldn’t expect anyone to be held accountable any time soon.

How Deep Does It Go?

The more you dig into this war, the more corruption you find. What’s especially appalling, however, is that I’ve barely done any digging. Most of my observations are simply a function of reading headlines and noticing names. For example, it’s impossible not to acknowledge Witkoff’s conflicts of interest when his title is literally “special envoy to the Middle East” and his son is publicly brokering deals in the region. It’s also hard not to believe that Jared Kushner is steering U.S. war policy when the President literally told us.

All of this forces us to conclude we’re only scratching the surface. If the tip of this iceberg is already iceberg-sized, how big is the rest of the iceberg? This is where investigative journalism is supposed to come in. Unfortunately for us though, the majority of our news outlets are in the process of being bought out by the President and his operators. Once again, we know this because Trump told us.

We’re in a tough spot. The guy who previously said going into the Middle East was the “worst decision ever made” has now launched us into another Middle East war without receiving any congressional approval, and after accidentally blowing up a children’s school (and saying he didn’t), we are now beginning to learn that the reason any of this is happening might be to make a handful of friends and family members richer than they already are.

The previous sentence should be enough to make every American’s stomach turn. But then again, America voted for this. As Ken Levine once wrote: “We all make choices, but in the end, our choices make us.”

See you next week,

Ed

— Albert Einstein

Ten days ago, the U.S. launched a massive military strike on Iran. While the administration didn’t articulate its ultimate objectives, President Trump made clear that regime change is probably one of them. This view is also supported by the fact that we took out the nation’s supreme leader, Ayatollah Ali Khamenei, too. In sum, we’re at war with Iran.

For those familiar with American history, this is nothing new. Since 1900, the U.S. has conducted nearly thirty formally authorized regime changes — a third of the world’s total. This does not include many of the more than sixty covert regime changes that were attempted during the Cold War and the more than forty mostly-covert attempts that were tested in Latin America. Americans are familiar with regime change, as we’ve done it a lot.

Have we been successful? The answer isn’t complicated: no. Out of the 28 regime changes we’ve been responsible for, only three have ever led to a lasting democracy. The rest have resulted in dictatorships and authoritarian regimes, many of which destabilized their regions ever further. By the way, this is a global trend: More than 80% of regime changes imposed by any nation have ultimately resulted in a dictatorship. In other words, the odds that regime change in Iran will lead to democracy are (significantly) worse than a coin flip.

In addition to not working, regime changes lead to more violence. Roughly a third of them have been followed by civil war. Even when a nation successfully installs a new leader, he or she ends up violently removed from office half of the time. This all sounds shocking until you think it through logically: If your own nation’s leader were forcibly removed or assassinated by a foreign entity, do you believe things wouldn’t get violent?

The empirical record on regime change is robust and definitive: It doesn’t work. And yet here we are, trying it again, and expecting different results. The definition of insanity.

Lessons Unlearned

The great irony is that the guy going to war is the same guy who built his career on not going to war. Indeed, Trump’s contention wasn’t just that we shouldn’t go to war, but that we shouldn’t go to war in the Middle East. In 2016, he told us he was “totally against the war in Iraq,” calling it a “big, fat mistake.” He later repeated it was the “worst decision ever made.”

Trump’s message wasn’t just popular — it was also correct. The Iraq war, which Defense Secretary Rumsfeld originally estimated would cost $60 billion and last six weeks, ended up costing $3 trillion and lasting eight years. It also killed roughly 4,500 American troops and almost 200,000 Iraqi civilians. Afghanistan was no different, spanning two decades, costing $2 trillion, and killing nearly a quarter of a million people. In both cases, the strategic outcome was essentially the same: We achieved nothing.

How did the anti-war President become pro-war? Did he change his mind? Was he lying before? The answer isn’t clear, though I’m inclined to believe his position is similar to those of deficit spending, big tech, crypto, and more: He never really had one. And so, ultimately, he landed wherever the wind (money?) blew him.

Are You Sure?

Markets have been temperamental in recent days, but in the immediate aftermath of the strikes, they made their perspective on Iran very clear: not worried at all. While oil prices initially climbed, they didn’t rise as much as many had expected. Meanwhile, gold and treasuries — the safe haven assets that usually rise during military conflicts — actually sold off, and the S&P 500 (the same S&P that had just lost a trillion dollars to a sci-fi blog post) somehow rallied. Last week I asked legendary investor Steve Eisman how the war had changed his investment strategy, if at all. His answer: “Not by a single dollar.”

I couldn’t understand it. While it’s true that wars generally have less impact on markets than you’d think, how could investors be so certain that this would have, essentially, no impact? When I pressed experts on this, I received different flavors of the same answers: that it’s a big deal for Iran, but not really for everyone else. “Why?” I asked. Because supposedly 1) the war is “contained,” 2) it will soon be over, and 3) America can put a stop to it whenever it wants.

That’s when I started to get frustrated. In what world has any of the above been true? Since when has America ever launched a “quick” and “contained” war in the Middle East? Investors seemed unusually optimistic about this whole Iran thing.

What Could Go Wrong

Over the weekend, markets started to get on my wavelength. Stock prices fell; oil prices surged. Perhaps reality was setting in? But then Trump declared the war “complete, pretty much,” and prices normalized again. At that point it became clear to me that the market was genuinely uninterested in entertaining what could go wrong in Iran. They were very happy to ask that question when it came to AI, but for whatever reason, not this.

So, I’ve decided to do it for them. Here’s a list of everything that could go wrong in Iran.

1) Nuclear escalation: If history is any guide, the war in Iran is far from over. That means spending hundreds of billions of more dollars and sacrificing thousands of more lives. I’m not saying this will lead to a nuclear event, but it might. In fact, according to Polymarket, the probability of a nuclear detonation before year’s end (as of last week) was 24%. We could argue that the Polymarket bettors are stupid and misinformed, but that would be quite the reversal from our previous position, which was that the prediction markets are smarter than the experts. In sum: Nuclear warfare is on the table.

2) Non-nuclear escalation: Even if we don’t drop nukes, we could keep dropping bombs — and there’s a very real possibility that other nations could get roped in. China, for example, depends on the Strait of Hormuz for oil more than anyone else. What if they decide to support Iran? Alternatively, what if Russia decides to capitalize on our distractions and launch an offensive on NATO? Or if China does the same, but with Taiwan?

3) Oil crisis: This is the most obvious externality and is already happening. Oil prices have breached $100 per barrel and could easily go higher if Israel and Iran continue to trade blows. This will massively destabilize the U.S. economy, as each $10 increase in per barrel prices results in a 25 cent increase per gallon at the pump. At $108 per barrel, U.S. inflation will rise by nearly a percentage point. If the Fed then decides to raise rates, we will have a potentially stagflationary crisis on our hands as we battle the double-whammy of rising prices and low growth.

4) Cyber warfare: The two oceans that protect us from gunfire offer no reprieve in the world of cyber. Now that we fight battles with autonomous drone networks, it could be argued cyberattacks are worse than bombs. Two days after striking Iran last year, Israel experienced a 700% increase in cyberattacks. Iran has a secret weapon and they’ve demonstrated they’re willing to use it.

5) Refugee crisis: Say we keep bombing their civilians — any thoughts on how many will leave? A 2023 survey found that 93% of the 90 million people who live in Iran have considered emigrating. That was before we blew up their cities, so what’s the number now: a hundred percent? If we were worried about Europe’s refugee crisis (and the right-wing populism it has provoked), we should be a lot more worried now, as a nation larger than Germany might be about to move in.

6) Sovereign investment meltdown: I’m not personally worried about this, but the VCs might be. America’s investment infrastructure has become increasingly dependent on the sovereign wealth of the Gulf states. Last year they poured $70 billion into U.S. companies, the highest ever. They’re also responsible for investments in Anthropic and xAI, and the $2 trillion in “future investment” Trump keeps talking about. If we’re the reason their houses, hotels, and desalination plants are on fire, do we think they’ll keep giving us money?

Lessons From Einstein

I began this post with an Einstein quote that (spoiler) he never actually said. I have no idea how or why it was attributed to Einstein, but it’s still a great quote. We humans do have a tendency to make the same mistakes over and over, and it’s nice to have an adage that calls this behavior out for what it is: insane.

There is, however, another (real) Einstein quote that is also relevant. I stumbled upon it in my friend (role model) Andrew Ross Sorkin’s latest book, 1929. The quote was used to describe our love-hate relationship with financial bubbles, but it could also describe our addiction to foreign wars.

“The ordinary human being does not live long enough to draw any substantial benefit from his own experience. And no one, it seems, can benefit by the experiences of others. Being both a father and teacher, I know we can teach our children nothing … Each must learn its lesson anew.”

— Albert Einstein

Here’s to learning this lesson anew.

See you next week,

Ed

Yet while war rages on, so does everything else. Our tariff policy is still in limbo. ICE killings are still unaccounted for. AI advancement plows ahead. The significance of our new problem threatens to cut short what little progress we made on our old problems. (Some would argue this was by design.) But there’s no problem that wants to be forgotten more desperately than the one I’m about to dissect.

We’ll talk about Iran another time. Today, I want to give you my full and honest perspective on Jeffrey Epstein — a problem far larger than many care to admit, the solution for which too many choose to ignore.

Across The Pond

Two weeks ago, Andrew Mountbatten-Windsor was arrested at his home on the royal Sandringham Estate over his connections to Jeffrey Epstein. It was the first time a senior British royal had been arrested in nearly four hundred years. (The last was Charles I in 1647.) He was released eleven hours later, but not before reporters captured what will go down as one of the most important images in British history.

The image is important for three reasons.

1) It represents a new era of justice in the U.K. — one where wealth and royalty do not make you immune to the rule of law. (For a nation whose rulers have long exempted themselves from the bounds of any earthly authority, that’s a big deal.)

2) It is humiliating. This may seem a trivial point. But when you consider what little justice has been served to the victims of Jeffrey Epstein, the mere look of panic in the eyes of one of his closest associates (a look he likely witnessed in many women over the years) is no small triumph.

And 3) Sometimes all it takes to inspire justice is an image. Indeed, this is the entire point of a perp walk. Images of Ivan Boesky entering a courtroom were what led to the 1980s Wall Street crackdown. Images of Harvey Weinstein in handcuffs helped spur on the #MeToo movement. An image may not seem like much, but it can often be the catalyst that leads to change.

That’s why I was pleased to see that just four days after the image was taken, the chain reaction began. Lord Mandelson, the former British envoy to Washington, was arrested at his London home in connection to Epstein. Also last month, former Norwegian Prime Minister Thorbjørn Jagland was charged with “gross corruption” over his ties to Epstein. Justice is making its way across Europe, and it appears no amount of royal blood will be enough to stop it.

Meanwhile in America, justice is nowhere to be found. Seven years after Epstein’s mysterious death, we are ruled by his close associate who has installed into our “justice department” an army of tactically inept sycophants who’ve displayed greater interest in industrial indices and ice hockey games than the most pervasive sexual abuse scandal in the history of our country. Beers chugged: 1. Epstein arrests: 0.

American Royalty

America may not have a monarchy, but it does have royals. They don’t wear crowns and cloaks like the British — they wear Brunello Cucinelli sweaters and Loro Piana slippers. They also use different titles, not “prince” or “viscount,” but “executive chairman” and “philanthropist.” Unlike in Britain these royals technically earned their privileges, but the privileges are roughly the same: tax exemptions, legislative authority, judicial powers, sovereign immunity, and special protections from the law.

While Europe has sought to unwind these privileges (see above: Andrew), America has doubled down on them. What began with tax cuts for the wealthy has led to total and absolute political capture by the billionaire regime. The more money they poured into politics, the more they tilted the scales of privilege in their direction. More tax cuts and more exemptions, not just for them, but also for their children. As a result, the top 19 households now own nearly 2% of all wealth in America — up almost 20x in the past 40 years. Meanwhile the bottom 50% of Americans own 3%. America is one of the most unequal Western societies since Revolutionary France.

For years we thought the only common denominator among these individuals was being rich and powerful. But we soon discovered another: Jeffrey Epstein. Epstein was the common bond that united American royals on both sides of the aisle — people such as: the current U.S. President, a former U.S. President, the current Commerce Secretary, the former Senate majority leader, the founder of America’s fourth-most valuable company, the former President of Harvard, America’s foremost law professor, and many of America’s wealthiest businessmen. The files, which were supposed to bring justice to Epstein’s victims, soon devolved into a Who’s Who for the rich and famous. As I tweeted recently: If you’re not in the Epstein Files, who even are you?

The Line

The conspiracy theorists weren’t right, but they weren’t wrong either. There was no “elite cabal” that met in the basements of pizza restaurants to speak in code and abuse minors. But there was an elite cabal that met in living rooms — and while they didn’t speak in code, they did abuse minors.

Did all of them abuse minors? No. At the same time, however, we don’t really know. The line between “mentioned in the files” vs. “complicit in sexual abuse” is a critical distinction that the Department of Justice appears determined to leave blurry. Some argue this blurriness unfairly implicates those who were simply mentioned in the files. I take the opposite view: It unfairly protects those who abused minors.

Wherever the line is drawn, one thing is clear. Every associate of Epstein was interested in him for the same reason. It didn’t matter who the women were, how old they were, or where they came from. It also didn’t matter if you were married, because part of the deal was your wife would never find out. The offering, which they all bought, was a harem of nameless, faceless, powerless young women, and in some cases children, whom they could use and abuse as much as they desired with no consequences or retribution. It was the kind of offering that money can’t buy today — the kind of offering that, for most of history, has only been available to tyrants.

But this was Epstein’s genius. He understood that most of his island companions already knew how it felt to live like a king. What they didn’t know, however, was how it felt to corrupt like a king, to molest like a king, to abuse like a king. These were the few monarchical privileges that had not yet been accessed by any American royal. And for just a couple of embarrassing emails and a guilty conscience, you too could experience them.

We Trusted You

Since the DoJ intentionally refuses to delineate between those whose names appeared once in an email vs. those who visited the island vs. those who abused children, we are forced to make delineations of our own. For the purposes of this post, I am delineating between those who hung out with Jeffrey Epstein multiple times vs. those who didn’t. That doesn’t mean they abused children, but it does mean they were likely attracted to Epstein for the reasons we just discussed. Those who fit this description we’ll call members of the “Epstein Club.”

As of March 2026, the Epstein Club has a collective net worth of roughly $400 billion. That number is greater than the market caps of Coca-Cola, Shell, Disney, Lockheed Martin, and Comcast. It’s also equal to the value of every NFL and NBA team, combined. (BTW, if we’d included Larry Page and Elon Musk in the club, who according to the files didn’t hang out with Epstein but tried to, that number would be $1.5 trillion.)

If the list were a bunch of names we’d never heard of, this story would be different. But it isn’t a list of random names — it’s a list of very specific names. Names we’ve seen on buildings and billboards. Names we’ve seen in board seats, and articles, and conferences, and fellowships, and endowments. Names we’ve seen literally everywhere. Not because we necessarily cared about these names, but because society told us we should.

Most of us went along with it. We assumed, for example, that because Bill Gates was the founder of Microsoft, and because he delivered the Harvard commencement address, and because he was the headline speaker at TED, he was the kind of person we should aspire to be. In any other timeline I might have questioned what kind of man would amass hundreds of billions of dollars. But the world told me over and over that he was awesome, so I assumed he was.

Which brings us to the great insult of the Epstein Club: Not only did these individuals enjoy the privilege of being wealthy, they also enjoyed the privilege of being revered. With every scholarship they donated and every honorary degree they received, they assumed a mantle of righteousness to which we obliged. 3.6 million of us listened to Bill Gates’s commencement address, in which he instructed young Americans on how to live our lives. Now that we know what we know, can we get a refund?

What To Do

For the hundreds of women and girls who were sexually abused, the path toward justice is obvious: Their abusers must be punished with the full force of the law. But for the millions of Americans who were lied to for decades about who these people really are (to be clear, a much lesser crime), the path is less obvious. How do you rectify the fact that many of our nation’s heroes were secretly subjugating women for years? How do you “make right” that the people who sold themselves as role models were degenerates all along? Can we “take back” the credibility we gave them? Can we “undo” the privileges we provided? I mean this genuinely: What are we supposed to do?

As it stands, we’re doing nothing. That’s why you feel sick to your stomach every time you read an Epstein headline. It’s not just that so many women were abused, it’s that you know nothing’s being done about it. You also know the perpetrators know this too. You know that somewhere on some distant archipelago, a very f*cked up and perverted billionaire is breathing a huge sigh of relief.

Perp Walk

There’s a solution to the Epstein problem, and it’s called a perp walk. It doesn’t matter what we get them for, but someone very rich and very famous needs to be seen in handcuffs. It could be Gates, it could be Dershowitz, it could be Clinton, it could be Summers, I don’t really care. I also don’t care if their lawyers negotiate them out of doing time. All I ask is that we see that image. All I want is a perp walk.

This image would do for America what Prince Andrew’s perp walk did for Britain. It would resolve, at least in part, many of the resentments and traumas that continue to boil within us. It would lighten the rage of the millions of women who were themselves abused. Or the millions of women who were told by men at fancy conferences how we’re “finally equal,” only to be harassed and exploited in the shadows of privacy. It would redress the outrage of the millions of Americans who looked up to these people, who read their books, collected their quotes, and listened to their interviews. It would do what justice is supposed to do: acknowledge and reconcile.

Without a perp walk, we will continue unresolved. According to recent polls, most Americans have lost trust in our nation’s leaders because of the Epstein files. Most Americans also say the files showed that “powerful people in the U.S. are rarely held accountable for their actions.” The mannerly language of these polling questions understate how angry Americans really feel.

One day we’ll look back and realize just how rotten this Epstein scandal really was. And, as with every great injustice of years past, we will ask ourselves that same, age-old question: Why didn’t we do anything?

See you next week,

Ed

Share

I should probably write about tariffs, but seeing as it’s 2AM and I’m severely jetlagged, I’ve decided to do something different. This week I’m discussing a more ethereal topic that’s been floating around my head lately. It’s more philosophical/sociological, and it has nothing to do with markets. That topic is language — specifically, how it’s used and misused, and how it’s changed in our digital age.

Something Big Is Happening

First, some context: Last week on Prof G Markets we discussed the viral AI blog post, Something Big Is Happening, that took the internet by storm. I was struck not by what the blog said — rather, how it was received. The post received nearly 85 million views on X (formerly known as Twitter), roughly the same amount of American web traffic that the New York Times attracts in a week. By Wednesday night, as the retweets flooded in, I knew I had to cover it. Whether I liked the post or not didn’t matter. Everyone was talking about it.

But then as I was prepping for the episode, something occurred to me: Is everyone talking about it? Or is everyone on X talking about it? After all, that’s where the blog was blowing up. How many people are actually on X? Better yet, how many people consistently use it? I turned to Pew Research, where I learned only a fifth of Americans ever use the platform. This implies the number of Americans who check it consistently is dramatically smaller. I started to run the math in my head and realized something important: The blog post I thought everyone was talking about is probably unknown to 90% of my audience.

This raised more important questions: If the audience doesn’t know anything about this blog, should I not cover it on my show? Or should I cross my fingers and hope that they do? I split the difference: I did talk about it but gave the audience all of the context, assuming they knew nothing. That turned out to be a good assumption. I received multiple messages and comments from listeners telling me they hadn’t heard of this blog post until they tuned into the show.

That was when I realized why working in media is uniquely difficult in 2026. You see, the number-one job of any media-person — podcasters, journalists, commentators, you name it — is quite simple: It’s to keep up with the conversation. It doesn’t really matter what the conversation is. All that matters is that you identify “the conversation” and … keep up with it. Pretty simple.

In the digital era, however, things are different. Because while AI blog posts are exploding on Twitter, lonely monkeys are taking off on TikTok. While Gen Z “looksmaxxers” are dominating Kick, bearded game-show hosts are taking over YouTube. Over on cable, the focus is Washington — and on one side, it’s about ICE; on the other, it’s about wokeness. There are now infinite venues for infinite conversations, and in every comment section, there are infinite sub-conversations. Which means that “keeping up with the conversation” is now an impossible task for one crucial reason: We’re all having different conversations.

We’re New Here

Some will say this is nothing new — that different people have talked about different things throughout history. Yes and no. Different people have always discussed different things, but throughout the history of media, there has always existed one centralized conversation.

Back in 1517, for example, Martin Luther nailed his 95 theses to the door of Castle Church, which became the ubiquitous conversation in Europe, ultimately leading to the Protestant Reformation. Two hundred and fifty years later in America, Thomas Paine wrote Common Sense, a piece so widely distributed and talked about, it put the word “viral” to shame and eventually led to the American Revolution. Even as recently as sixty years ago, television was a single, centralized medium offering only three major networks. Ninety-six percent of U.S. households watched TV, which meant 96% of U.S. households also watched Walter Cronkite. They all watched the moon landing, and they all watched the JFK assassination. In each of these periods there of course existed “different” conversations, but the conversation was always singular.

Digital media has presented us a very different picture. The internet has segregated itself into a series of walled gardens where the complexion and content of the conversation is very different depending on where you are. If you’re on Truth Social, for example, you’re in the company of a specific set of people (Republicans) having a specific set of conversations (bashing Democrats). On Bluesky it’s the opposite: mostly Democrats, bashing Republicans.

Political affiliation is the most obvious demographic difference dividing our conversations, but there are plenty of others too. For example, gender. I’ve heard people say TikTok is a more female app. Indeed, at least in America, two-thirds of people who regularly get their news from TikTok are women, compared to a third who are men. Age is another important factor. Facebook, for example, is a much older venue, used by more 50-64 year olds than 18-29 year olds. On Snapchat, the reverse is true: Nearly 60% of Gen Zers use the platform, and among Gen Xers, that number is 13%.

The implication is simple: The more we’ve divided ourselves online, the more different our conversations have become. And unlike years previous, in which disparate communities were brought together by home TVs, churches, community centers, and even campfires, we no longer have a central location where we all get together and talk — where we all have … the same conversation.

Different Places, Different Rules

As with nations, every platform has different rules. On X, for example, you can post as much hate speech as you want, and on Youtube you can’t. This makes for very different types of conversations — one significantly more racist than the other. In addition, the formatting rules change how we speak. On LinkedIn, for example, longer, more thoughtful posts are rewarded. On Threads, quick one-liners. On Instagram, memes. Point being: Different rules make for very different conversations — and in many cases, different languages.

However there is one common denominator across all platforms, which is that rage sells. One study found derogatory out-group language was “the strongest predictor of social media engagement.” Another found that content using moral-emotional words (shame, evil, etc.) increases the likelihood of a retweet by approximately 20% per word used. While I maintain that the internet has made our conversations more disparate than ever, I’d be remiss not to mention it’s made them a lot angrier too.

Back To Me

If digital communities were like physical communities — if we all “lived” in just one platform — then perhaps the online experience wouldn’t be so disorienting. Trouble is, we don’t. We spend some of our time on Instagram, some of it on YouTube, some of it on TikTok, and indeed, some of it in the real world. As a result, we are forced to juggle multiple different conversations and multiple different languages at the same time, which we were not designed to do. Humans were supposed to live in one community, where everyone knows the same people and everyone speaks the same language.

Which brings me back to Something Big Is Happening, the blog post that sent me down this rabbit hole in the first place. The feeling I felt prepping for that episode is a feeling I’d bet most Americans feel every single day. I call it “Multi-Platform Paralysis” (trademark). It goes something like this: You see a story or a clip or a meme on a certain social media platform. You want to talk about it with someone, but you’re not sure who. Eventually you see the opportunity, but then the paralysis kicks in and you ask yourself: Am I the only person here who knows about this? If I talk about it, will anyone understand?

There’s a meme for this feeling — it’s called “They Don’t Know”. It’s a guy standing alone at a party, while everyone else is dancing. There’s something he wants to share but can’t. “They don’t know I’m a PhD student,” for example. Or: “They don’t know I work in tech.” Or: “They don’t know I’m mildly popular on Twitter.” (That one hits.) It’s a feeling that the conversations you’re having aren’t the conversations everyone else is having.

The more I think about multi-platform paralysis, the more I think it might be the source of our nation’s dysfunction. Americans are more polarized today than ever before. Nearly half of Republicans and Democrats view members of the other party as “dishonest,” “unintelligent,” “immoral,” even “lazy.” Meanwhile 80% of Americans say the country is “greatly divided on the most important values.” Could it be that we simply don’t know how to talk to each other anymore? Could it be that talking to someone different from yourself is literally like speaking in a foreign language?

The platforms that were supposed to connect us have ironically made us more disconnected than ever before. Each new website prescribes a different vernacular. Each new app, a different dialect. As we port our conversations from platform to platform, from online to physical and from physical to online, words and meaning are invariably lost in translation. And with each misunderstanding, our dissonance grows. We exist in one country, on one stretch of land, but in a funny way, the internet has torn us apart. How do you talk to someone when you speak different languages?

See you next week,

Ed

Two trillion dollars in market value has been erased. AI researchers have issued public resignations, warning of “world peril”. A blog post comparing AI to Covid racked up nearly 100 million views. AI search interest is going parabolic.

The arms race continues. Big Tech plans to spend $660 billion on AI this year. That’s five times more than America spent on the interstate highway system as a percentage of GDP. It’s also ten times what we spent on the Apollo Moon Program and the International Space Station combined. AI is fast on its way to becoming the largest project in the history of capitalism.

As AI outgrows our initial optimism, the era of tough questions has begun. How will it be financed? What will it do to the energy supply? How will chip production keep up? Who will be the winners? Who will be the losers? These are all relevant. But there is one far more important question that no one seems to be asking — a question that could fundamentally transform the trajectory of this technology:

How many people actually want it?

Dumb Questions, Big Answers

I understand this is kind of a dumb question. In my experience, however, I’ve found the dumbest questions often lead to the most significant answers.

Here’s the data. Less than a third of Americans trust AI. Less than half of Americans have a favorable view of AI. Half of Americans say they’re more concerned about AI than excited (the highest in the world). Less than a quarter say they enjoy using AI (one of the lowest in the world). Three quarters of Americans think AI is going to reduce the overall number of jobs. More than half think it’s going to negatively affect our ability to do things on our own. 77% think it poses a “threat to humanity.”

The data isn’t telling us no one wants AI — rather, it’s far more unpopular than most people assume. More Americans dislike AI than like it. This is substantially different from, say, the internet revolution, which was broadly popular. In 1999, nearly two thirds of Americans said they liked the technology, and among internet users, that number was nearly 80%.

This is the part where you tell me that doesn’t matter: So what if people don’t want AI? That won’t do anything to stop it. This is where we disagree. There are multiple roadblocks ahead for AI — financial and technological constraints among them — but none greater than its own lack of popularity.

Ground Zero

To build AI you need data centers, the engine of large language models. More than 3,000 data center construction projects are currently underway in America.

Every data center requires lots of physical stuff: GPU chips, CPU chips, memory chips, copper wires, cooling units, etc. The prices of all of these items are soaring right now. But they also need lots of nonphysical stuff. Things like permits, licenses, and local government approvals. These elements are just as critical as chips. More importantly, they’re getting scarcer.

Across 24 states, 142 activist groups have organized to block the construction and expansion of data centers. This is happening everywhere, from Arizona to Michigan to Virginia. In just two years, grassroots protestors have blocked $64 billion worth of data centers.

The reasoning is simple: Data centers take more than they provide. A typical data center employs only a hundred people, which is roughly a third of the number of people that work at an average Walmart. Meanwhile, they consume vast amounts of energy and water, which sends local electric and utility bills through the roof. For residents, a data center is basically a giant robot that makes locals poorer and Californians richer.

As local communities realize they don’t like AI and the data centers that power it, local governments are following suit. More than fifty bills have been proposed in Virginia to crack down on data centers. In Georgia, lawmakers have suggested banning data centers altogether. It doesn’t stop there.

The Next Political Firestorm

A sea change is happening in Washington right now. Not on ICE, or tariffs, or Bad Bunny, but AI. Elected leaders across both sides of the aisle are starting to speak up — not in support of AI, but in spite of it.

My aha-moment occurred a couple weeks ago, when Governor Ron DeSantis delivered a powerful attack on the burgeoning AI ecosystem. “I don’t think there’s very many people that want to have higher energy bills,” he said, “just so some chatbot can corrupt some 13-year-old kid online.” More importantly, his comments echoed those of a quite different politician: Bernie Sanders, who recently called for a nationwide moratorium on all data center construction (not dissimilar to what’s happening in Georgia).

I later read an article in The Atlantic that featured an AI discussion with MAGA mastermind Steve Bannon. “Let’s just be blunt,” he said. “We’re in a situation where people on the spectrum that are not, quite frankly, total adults … are making decisions for the species. Once we hit this inflection point, there’s no coming back. That’s why it’s got to be stopped, and we may have to take extreme measures.” After that I watched a congressional address from AOC, who had similar complaints.

There are now few issues more bipartisan than AI. In fact, of the elected officials who’ve taken positions against AI data centers, 55% are Republicans and 45% are Democrats — a near-even split. The implication is quite obvious. AI is fast becoming the number-one political issue in America. Leaders must now choose where they’ll stand, and if they’re looking for votes, they’ll stand in its way.

Subhuman

There might be no funnier instantiation of AI acrimony, however, than JD Vance, whose poll numbers are tanking, especially among young people. There are many reasons for this, but the most interesting reason is his close association with Big Tech and AI.

Don’t take it from me — take it from Nick Fuentes, the far-right white-nationalist streamer who’s become the de facto leader of Gen Z Republicans across America. His view (oft repeated to his hundreds of thousands of fans) is that Vance is a puppet of Peter Thiel, that he was installed by Silicon Valley to do Big Tech’s bidding and execute the AI agenda from inside Washington. It’s hard to call this position wrong: Vance’s Senate campaign was largely funded by Thiel, and so far, he’s been the glue between Silicon Valley and the administration.

Vance’s AI connections are beginning to discolor his reputation. His likability among young people is roughly three times lower than that of people over 65. A recent poll found most young men (the same young men who swung to Trump) now prefer Newsom over Vance. POLITICO ran a focus group of young men, which also confirmed this. A few weeks ago, The Daily Wire’s Michael Knowles was visibly shaken when Gen-Z’s viral “looksmaxxing” star, Clavicular, explained why he prefers Newsom to Vance. His view: “Because JD Vance is subhuman, and Gavin Newsom mogs.”

All About Popular

Popularity is one of those things most tech and finance people don’t fully understand. They tend to view it as an afterthought — either because it seems dumb, or because they never cracked it themselves. But the reality is that popularity is one of the most powerful forces on our planet. You could have the most advanced product in the world — it means nothing if it isn’t popular.

According to estimates, AI’s total addressable market will reach $3.5 trillion by 2033. This is a financial projection based on things like model capability, compute capacity, training speed, etc. What’s missing in that analysis, however, is the softer, high-school stuff: the question of how popular AI actually is, and how many people actually like it. This is the kind of thing Wall Street neglects to build into their financial models, a grave error.

Let’s say the trend continues, and AI gets even more unpopular. Let’s say the anti-data center movement grows even larger. Political backlash becomes even fiercer. The share of Americans who like AI goes from less than half to, say … a fifth. What will that do to the total addressable market? What will it do to future cash flows? Might it eliminate billions of dollars in revenue? Hundreds of billions? Trillions?

These are the questions Wall Street needs to answer. I don’t know what the number is, but I do know it’s higher than you think it is.

V-Day

I’m writing this on Valentine’s Day. For most of my life I’ve had a boyish dislike for Valentine’s Day. Then my girlfriend and I got together and I came to love it. Tonight we’re going out for our favorite food (sushi) at an omakase restaurant (Noz 17).

When we sit down I’ll be thinking of Same Same, the new Hell’s Kitchen wine bar that bills itself as the world’s first “AI companion” cafe. Designed for people in virtual relationships, each table is fitted with a single seat and a phone stand. The idea is to give people in AI relationships another outlet: Instead of chatting with your AI girlfriend at home, you get to take her out to drinks.

I’ve never visited but I can picture it. A row of sad and empty men, chatting deliriously with a small box of electrical wire posing as a woman. With each lifeless AI compliment, another spark of electricity in a distant data center in Wisconsin. With each prompt, another dollar in the pocket of a guy in California. Misery incarnate. Hell in a wine bar. As I think about it, I will ask myself the same question many others around the nation are asking:

Does anyone want this?

See you next week,

Ed

All the biggest names went into freefall: Shopify, Atlassian, Salesforce, Adobe, the list goes on. The software industry lost roughly 14% of its value in just one week. Year-to-date, that number is currently about 20%.

Why has this happened? Because of AI. A few weeks ago Anthropic released a new AI tool, Claude Cowork. Then (last week) they released new plug-ins for specific domains: legal work, sales, finance, marketing, etc. OpenAI soon released a similar tool.

Investors soon asked themselves an important question: Isn’t this what every legacy software company does? After that: Did AI just kill software? And finally, their conclusion: Sell everything.

Déjà Vu

We’ve seen this movie before. In 2022 an AI tool called ChatGPT took the internet by storm. Investors asked themselves an important question: Isn’t this what Google does? Within months Wall Street decided search was dead. Google lost as much as 40% of its value that year.

Before that, a social media app called TikTok arrived. Investors asked themselves: Isn’t this what Meta does? As soon as Meta reported a drop in users, $230 billion in market value was lost, the largest 24-hour selloff in stock market history. Meta went on to lose as much as 70% of its value.

More recently, a Chinese AI model called DeepSeek went viral. Investors asked themselves: Isn’t this what OpenAI does? OpenAI was not publicly traded, so selling wasn’t visible. However, fears reverberated into the public markets. Nvidia lost 30% of its value in the following months.

Since each of these market-rupturing events, Nvidia, Meta, and Google have risen 55%, 270%, 630%, from their lows respectively. DeepSeek was not the domestic AI killer investors thought it was. After TikTok, Meta took notes from and launched its own version, Reels, which now boasts an active user base of 2 billion people. After ChatGPT, Google doubled down on AI and eventually launched Gemini, the fastest growing competitor to ChatGPT. Google is now considered the undisputed heavyweight champion of AI.

The pattern here is simple. A transformative technology arrives. Investors indiscriminately decide it’s “over.” They’re not wrong about the technology, but they overestimate its impact. They panic sell, assuming the game is zero-sum. Valuations tank. All of a sudden America’s greatest companies are 50% off. Meanwhile, they continue to deploy armies of talent and capital to sharpen their focus and neutralize the competition. Earnings grow even larger and valuations rip back up again. A couple years later we look back at the chart and think to ourselves: WTF were we thinking? That is, all of us who sold.

There’s Panicking, And Then There’s This

I believe what happened last week in software is no different. It wasn’t a correction, but a full-blown crisis. To paint you a picture: The Relative Strength Index is a formula that captures buying and selling pressure. An RSI score of 30 means a stock is oversold. Last week, software stocks hit an average RSI of 18. I’m not usually one for technical analysis, but in this case it describes well what we saw: armageddon.

On the one hand, concerns are fair. Will AI disrupt software? Yes. Will it put pressure on margins? Certainly. Will SaaS companies have to rethink their distribution? No doubt.

On the other hand, that’s not what markets told us last week. Markets told us software is over — no matter who you are or what you sell. That position is far more questionable. And while I was initially open to hearing it out, I’ve concluded that it doesn’t come from a place of reason but a place of fear. In other words: it’s irrational.

Reality Check

First off, nothing is stopping software companies from integrating AI. The ChatGPT vs. Google story is the perfect example. Just because OpenAI had a more exciting product did not mean Google was dead. Google simply enhanced their existing product with AI features (Google Search is now America’s primary AI interface) and then built an AI chatbot of their own. If SaaS companies were simply dismissing AI, then the bears might have a point, but they aren’t. Software companies are embracing AI across the board.

Secondly, investors are underestimating what a gigantic pain in the ass it is to cancel an enterprise SaaS contract. In more businessy terms: The switching costs are high. The average software sales process can take over half a year to nail down and must be approved by ten different decision-makers. The process is arduous because the contracts are long. And this says nothing of the financial costs associated. The typical Salesforce contact, for example, cannot be canceled for free — the enterprise must pay 100% of the remaining contract value. In other words, switching your software provider as an enterprise is a very big deal. If you’re going to do it, you better have an extremely compelling reason as to why it’s worth it. In addition, all the other executives at the company must agree with you. Pain. In. The. Ass.

Finally, when it comes to enterprise software, security concerns are enormous. Entering into a software agreement basically means handing over all your private data to a third-party and crossing your fingers they won’t lose, use, or abuse it. In other words, it requires trust. This is the number one priority for 80% of IT leaders. More importantly, trust cannot be vibe-coded in a day. Trust must be built over years and even decades. It requires long-standing relationships and a substantial record of success. These are things the legacy companies have and Anthropic doesn’t. Trust and security is an enormous leg-up that cannot be ignored.

Time To Buy

By Thursday afternoon I’d seen enough. Two voices spoke to me in my head. 1) Warren Buffett, who told me to be greedy when others are fearful. 2) Mark Mahaney, who told me to find the “DHQs” (Dislocated High-Quality companies). I decided it was time to buy, and gave myself two options.

Option 1: Buy the whole software basket. I looked at IGV, an ETF of all the big software names, which had gotten crushed. There might be a couple of losers in there, but the average multiple had fallen so far I felt I couldn’t really go wrong. This was the safe option.

Option 2: Stock pick. I.e. personally identify a handful of software names that I consider to be high-quality companies. This was the riskier option as I ran the risk of being wrong and picking the losers. Nevertheless, I went with option 2 as I was feeling bold.

DHQs

On Thursday morning I loaded up on three stocks: Adobe, Salesforce, and ServiceNow. After that, I bought one more: Microsoft. Note: I am not a financial advisor and this isn’t financial advice – I’m just telling you what I did. My reasoning below.

1. Adobe: Adobe is currently trading at a price-to-earnings multiple of 16, which is less than half its five-year average. It is also nearly half of the average P/E multiple of the S&P. It’s extremely cheap. The consensus is that AI will make it irrelevant, but this disregards two key facts. 1) Adobe is already heavily integrating AI. In fact, its AI features are already generating more than $5 billion in annual recurring revenue, which is more than half of Anthropic’s ARR. 2) Its moat is enormous. More than 98% of Fortune 500s use Adobe, and like other software solutions, the product is so deeply integrated across the entire creative workflow that it becomes very difficult to switch solutions. It’s so pervasive that most digital creative roles list Adobe proficiency as a job requirement. An additional tailwind is short-form video. Adobe Premiere Pro is the industry standard for video editing, and most media companies (including ours) are dramatically scaling their short-form video budgets as the medium continues to explode. I discuss this further on the January 29 episode of Prof G Markets.

2. Salesforce: Salesforce is another AI-enabled company that has been written off as dead. Meanwhile, ARR from its AI agent offering quadrupled last quarter and the company continues to be ranked the number one most-trusted CRM in the industry. It’s down more than 40% in the past year, its price-to-earnings multiple is now below the S&P average, and its price-to-cash-flow multiple is about half of its 5-year average. Even if Claude has a more interesting product, I do not believe that will outweigh the immense switching costs — and certainly not in the time it will likely take for Salesforce to build comparable products of its own.

3. ServiceNow: ServiceNow has gotten battered this year — down about 30% in 2026. The consensus is that growth is coming to an end. Meanwhile, its fundamentals tell the opposite story: Subscription revenue grew 21% last quarter, and overall revenue grew 20%. As for its AI capabilities, ServiceNow is more than capable. In fact, the company is on track to generate $1 billion in revenue from its AI products this year. It has also signed multi-year partnerships with OpenAI and Anthropic — more evidence that the AI revolution is not a zero-sum game. I believe OpenAI and Anthropic will grow significantly this year, and so will ServiceNow.

4. Microsoft: If you listened to yesterday’s pod, you’ll notice I didn’t mention Microsoft. That’s because I hadn’t bought at the time of recording. My original view was I didn’t need Microsoft because my exposure was already significant. (MSFT makes up 5% of the S&P.) Upon reflection, however, I decided the valuation was too cheap to ignore. At the time, Microsoft was trading at just 25 times earnings, the lowest of the Mag 7. This is relatively absurd for the reasons I highlighted above, and especially absurd for another key reason: Microsoft owns nearly a third of OpenAI. Even if Microsoft were to have its lunch eaten (I doubt it), the company is contractually entitled to reimbursement. Few companies are better positioned in AI than Microsoft. Current prices do not reflect this.

Efficient-Market Hypothesis

For the most part, I believe in the efficient-market hypothesis — the notion that markets reflect all available information and are smarter than any one individual. I have immense respect for the predictive powers of markets (especially after they correctly predicted 93% of the Golden Globe winners). I don’t purport to be smarter than them.

However, I also believe that every now and then, something extraordinary happens — a political event, a natural disaster, a global pandemic, or indeed, the arrival of a transformative technology. In these instances, I believe the markets can lose their heads. And when that happens, for a brief moment in time, the efficient-market hypothesis goes out the window.

I hereby run the risk of being wrong and losing money. But that’s what it means to be an investor. Plus, if you don’t take a risk every once in a while, well … where’s the fun in that?

Until next week,

Ed

The implication is that no one has time to think critically about anything anymore. Not least the issues that actually matter. We’ve been reduced to reactionaries. If you don’t believe me, watch any news show.

Today, however, I invite you to think critically with me about an issue that does matter. Specifically: What AI will (or won’t) do to jobs in America. If this sounds “boring” to you, resist that feeling. That’s Trump desensitizing your brain from matters of import. As we shall discuss, the AI-jobs debate is profoundly significant, and our nation’s misunderstanding of it, even more so.

They Took Our Jobs

Buried among last week’s disturbing headlines were five major layoff announcements. UPS decided to lay off 30,000 people. Amazon decided to lay off 16,000. Dow Chemical, 4,500. Pinterest, nearly 1,000. OpenAI said they’re “dramatically slowing” hiring.

The critical question: Was it because of AI? In the days following, we started to get answers. Dow Chemical: Yes. Pinterest: Yes. OpenAI: Yes. Amazon: Basically, yes. Perhaps your conclusion is that you don’t believe them. Perhaps you think they’re just saying it’s AI because they think shareholders will like that story. And yet the fact remains: Tens of thousands of people were laid off, and AI was the excuse.

The next critical question: Is this a broader trend? Answer: Yes. A recent report found AI was responsible for 5% of layoffs last year. If that doesn’t sound significant to you, consider the fact that more than 1.2 million job cuts were announced last year, the highest number since the pandemic. Consider also that we’re only a couple of years into AI.

Next critical question: Should we expect this to continue? Answer: Yes. The canary in the coalmine is the entry-level job market, our best indication of what the future job market might look like. Right now, it’s getting rocked. Entry-level job postings have fallen 35% in the past two years. In the highly AI-enabled tech industry, postings have fallen 67%. More than two-thirds of enterprises say they’re slowing entry-level hiring. We recently asked the CEO of Goldman Sachs what his plans for headcount are. His answer: Keep it flat.

Some have pointed to the non-AI reasons for the jobs slowdown: global uncertainty, tariffs, post-pandemic pullback — all valid. But there’s one statement that’s gotten very popular lately, and which is categorically false: That AI isn’t taking jobs. The data is clear: It is. Not all jobs, but many of them. And if we’re being realistic, it’s just getting started.

What To Do?

Let’s assume with 15% probability that AI will eliminate millions of jobs. (I think that’s low but let’s be conservative.) Let’s assume we’re witnessing the arrival of the greatest labor market disruption of the 21st century. What do we do?

History is helpful, as we’ve dealt with this kind of thing before. During the Industrial Revolution, for example, we responded with child labor laws. When factories reshaped the labor market, we got the Fair Labor Standards Act — establishing the minimum wage. During the Great Depression, we created Social Security. After WWII, we passed the GI Bill. In each of these cases, the playbook was simple: Minimize economic damage with federal policy. Or in plainer English: Write laws.

Fast-forward to 2026. We face yet another critical economic juncture. This time, a technology with the power to transform our very existence. Heads turn to Washington: What do we do? Lawmakers assemble. A taskforce is established. A czar, hired. And finally, the grand strategy is revealed:

Do nothing.

Sit On Your Hands

I am not kidding. The Trump administration’s current AI policy is to do nothing. Not in a “sit back and let things run their course” kind of way, but in a “strap ourselves to the chair and tie our hands behind our backs” kind of way. The most significant AI proposal from the White House was a 10-year moratorium on state-level AI legislation, which prohibited states from writing any laws as they pertain to AI. In addition, the “AI Task Force” turned out to be an “AI Litigation Task Force,” whose job was to hunt down state-level AI proposals and terminate them. The legal standings of these orders aren’t yet clear, but the implications are tremendous.

The one subject for which the administration has developed an AI policy is the U.S.-China rivalry. Trump’s initial position was to restrict chip exports to China, and later, to ban them entirely. His view was that we shouldn’t arm the enemy. However he later reversed that position, then reversed it again, and reversed it again, to the point that it’s no longer clear what our position on China actually is. The latest news is that China bought $10 billion worth of Nvidia H200s, a chip six times more powerful than the H20 chip, which was specifically designed to be sold to China. We may have previously had an AI China policy, but it no longer exists.

Our staggering lack of policy has reached a boiling point: CEOs of AI companies are now begging for legislation. Last week, Anthropic CEO Dario Amodei wrote a 38-page essay that repeatedly called on government to do something — anything — about AI. Before that, Google CEO Sundar Pichai was forced to state the obvious: that AI is “too important not to regulate.” Even Elon is supporting AI laws.

The Libertarian Mind Virus

We find ourselves in a unique situation: The people we elected to write laws have decided they don’t want to. Not because they’re lazy (I hope), but because they believe laws are bad. Per AI & Crypto Czar David Sacks, regulation will end up “clamping down on innovation.” We all know where he’s coming from: Too much bureaucracy is bad. But it appears this argument has gotten so far out of whack that our lawmakers now actually believe that no policy is better than a policy.

I have no term for this other than the “Libertarian Mind Virus.” (If you have a better one let me know.) It is the low-IQ, simple-minded, Ayn-Randian belief that regulation and government are our biggest problems. It has manifested in various stupid iterations — from DOGE to ACA cuts to a historically unproductive government. But it appears that it may now actually be our undoing. It may actually be the reason we let AI ruin us.

Something > Nothing

It goes without saying: The solution to our AI problem isn’t to do nothing. I propose a different solution: that we do (wait for it) … something. That doesn’t mean “putting all AI on hold,” as was proposed a couple of years ago. It simply means writing policies that make the AI transition as minimally damaging to people’s lives as possible. Or, at least, trying.

Other countries are doing this — most notably, China. China has some of the most thorough and comprehensive AI legislation in the world. It’s no coincidence that their citizens are dramatically more excited (and less nervous) about AI than Americans are. They know their leaders are doing something about it.

There are plenty of policies we could experiment with. We could create a workforce reinvestment fund that would help retrain displaced employees. Brookings has suggested a residency model to upskill entry-level workers in new domains. Stanford researchers have debated expanding and improving unemployment insurance. We might even consider Universal Basic Income again. After all, what’s happening right now is precisely what Andrew Yang warned us about.

The greatest no-brainer of all, however, was proposed last week by Dario Amodei. He pointed out that, at the very least, our government must start measuring the true labor market impact of AI. The BLS collects some data, but not nearly enough. That is why we’re forced to look to third parties. It’s also why the jobs debate is so misguided — no one really knows WTF is going on because we don’t have the data.

I should hope what I’m proposing is not controversial. That instead of doing nothing, we do something, anything. It could be that all our hard work and preparation was for nought. It could be that AI was a lot less disruptive than we thought. But what’s the harm in prepping? A plan is better than no plan.

Sin City

I’m currently on a flight to Las Vegas to give a keynote. It’s an executive retreat for a large financial institution, which means there will be a lot of very smart people in the room. Naturally, self-doubt is creeping in. What can I offer that will be valuable to them? What can I say that they don’t already know? I’m scouring through my notes, searching for insight. Maybe I have none?

Then I turn back to the (lack of) policy that inspired this post, and am comforted. At the very least, I’ll give them something.

Until next week,

Ed

Why is a UK-born markets commentator who knows nothing about NFL talking about the Hail Mary? Two reasons: 1) Superbowl’s coming up (exciting), and 2) it is the perfect analogy for what’s happening in American politics right now. To be blunt, President Trump is Roger Staubach in the fourth quarter right now: He’s losing, and he’s throwing Hail Marys.

Much of this was revealed at Davos, as well as in Trump’s recent slate of proposals to address affordability. We will unpack those in a moment. But before that, let me make sure we’re all on the same page about the point we discussed last week: that Trump is losing — and losing badly.

Generational L

We’ll start with my generation (Gen Z). You may remember how young people helped Trump get re-elected. New data from CBS reveals that this trend has completely reversed. The President’s net approval rating among young people went from +10% in February to -32% today — a more than forty-percentage point decrease in less than twelve months.

Across other generations, his approval rating has also collapsed. A new New York Times/Siena poll found most Americans think Trump is doing a bad job handling immigration, the economy, the Israeli-Palestinian conflict, our relationship with other countries, and (most sharply) the cost of living. In fact, one analysis from Strength In Numbers found that Trump is the most unpopular second-term president in the history of the United States, except for Richard Nixon. Keep in mind, all of this polling was taken before what transpired in Minneapolis, and has likely gotten much worse.

Davos L

Recent events have rubbed salt in the wounds. Last week we discussed Trump’s crushing defeat to Jerome Powell, one of the few times where the President lost to a nerd. Well, last week, it happened again — only this time he lost to Mark Carney, the Prime Minister of Canada who also happens to be a central banker. Like Powell, Carney delivered a calm, data-driven address at Davos that simultaneously fired shots at the President while rallying the rest of the world against him. It was widely regarded as the best speech of the event, and possibly the best of all time. But more importantly, the White House was reportedly “livid” about it.

In addition, this humiliation was not private. This year’s Davos was unlike any other in that everyone was watching. Carney reached tens of millions of people. So did Emanuel Macron (his sunglasses sparked a $4 million stock rally), and Scott Bessent (went viral for calling Governor Newsom a “Sparkle Beach Ken”), and Howard Lutnick (made headlines after he was “heckled” at a dinner). In fact, search interest for this year’s Davos was nearly three-times higher than years previous. The bottom line: We all saw what happened.

Trump’s speech at Davos was equal parts horrific and boring. Highlights include: confusing Greenland with Iceland four times, questioning the intelligence of Somalians, and calling himself “daddy.” Many attendees left early. Jumbled among the drivel, however, he revealed something important, his true concern. “I’m sorry to do this to you,” he said. “Many of you are good friends of mine … I’m sorry,” he repeated again. Then, the entrée to a Hail Mary: “But you’ve driven up housing prices by purchasing hundreds of thousands of single-family homes.”

Act Like You Care

Trump introducing specific policies addressing affordability is unusual. Trump agreeing with Elizabeth Warren is more unusual. Trump apologizing is the most unusual. He’s doing all of this because he knows he’s losing. It’s clear that he also knows the issue on which he is especially losing: the cost of living. That is why he must now channel his inner Staubach and launch the ultimate Hail Mary: He must now pretend to care about affordability.

Some would call me cynical at this point. Why is he necessarily pretending? Isn’t it possible he actually does care? Perhaps. But let’s now examine his affordability proposals. You’ll soon see they could not possibly have come from a man who cares.

Operation Affordability

There are four main proposals: 1) a 10% interest rate cap on credit cards, 2) a new health care plan, 3) purchasing $200 billion worth of mortgage bonds, and 4) banning institutional investors from buying single-family homes.

Let’s start with #1. I’ll put it plainly: This will never happen. A 10% cap wouldn’t just “complicate” the banking business model — it would destroy it. This isn’t hyperbole: the average U.S. credit card rate is 20%. Everyone on Wall Street knows this won’t happen, and so does everyone in Washington. In fact, the idea has already been floated before, and it was not only ignored but never made it out of committee.

#2 is also unserious. In addition to lacking almost any detail, the detail that does exist is implausible bordering on satirical. Spencer Perlman, a director of health care research at Veda Partners, put it best: “We think it is intended to demonstrate that the White House is doing ‘something’ about affordability … but we believe the policies either stand little chance of being enacted by the current Congress or will have a minimal impact if enacted.”

#3: Unserious. The housing crisis is a function of prices, not rates. Purchasing $200 billion in mortgage bonds will fractionally reduce rates, thus artificially boosting demand and ultimately resulting in even higher home prices.

#4: Unserious but for different reasons. I’m not directionally against banning institutional investors from buying houses. However, institutional investors only own less than 1% of single-family homes in America, so this wouldn’t move the needle. If you really wanted to bring down housing costs, you’d increase the supply. It’s very simple: Build. More. Houses.

Every proposal shares two common traits: 1) They aren’t serious, and 2) They make enemies out of entities that are widely disliked. The interest rate cap targets the banks, the health care plan targets Big Pharma, the homebuying ban targets Blackstone and the big investment firms. Under no circumstance will these “takedowns” ever actually materialize, but that’s not the point. The point is, it all makes for a good show.

Trump is a blackbelt in this artform. During the campaign, he promised to put Main Street ahead of Wall Street, only to deregulate the banks and spur them on to their greatest year in decades. He also promised to reign in the bureaucracy and balance the budget, only to explode the deficit with the OBBBA by more than $3 trillion over the next decade. Trump’s figured out that what matters most in politics isn’t what you do, it’s what you say.

Odds Are

Will it work? Trump has a big platform, and one should never underestimate America’s hatred of large financial institutions. At the same time, however, Trump’s lying has been pretty brazen recently. Plus, the notion that the guy who reignited the affordability crisis with overnight tariffs suddenly cares about affordability might be too ironic a pill for the American people to swallow.

But he needs to do something... His approval rating continues to decline, and the midterms are just a few months away. Meanwhile, every poll shows that Democrats are set to deliver a decisive victory.

In NFL terms, there’s 24 seconds left on the clock and Trump’s down six points. His only hope is to throw a very long forward pass with a very small chance of achieving completion. His only hope is a Hail Mary. Again, will it work?

I’ll leave you with one final statistic: One in twelve Hail Mary attempts succeed. It’s possible, but I wouldn’t bet on it.

Until next week,

Ed

Spoiler alert: This is not a post about the importance of the Federal Reserve, and why threatening its independence is bad. Most people know why, and if you don’t, google what happened to Turkey when Erdogan played the same game.

I want to talk about something deeper, more primal … I want to talk about winning. Specifically: what it takes to win, and how important winning really is. The President understands this better than anyone. Winning is, arguably, the only thing he cares about. That’s why last week was a pivotal moment in American politics. Why, exactly?

Because Donald Trump lost — and even worse: He lost to a nerd.

Setting The Stage

First, let’s review why the DoJ investigated Powell in the first place. It all revolves around a building renovation. Powell decided the Fed’s nearly hundred-year-old headquarters needed a makeover, as core systems like plumbing and HVAC weren’t working. This was supposed to cost $1.9 billion. As renovations progressed, however, cost estimates grew to $2.5 billion — 30% more than planned. Jerome Powell later spoke in front of Congress to explain why, citing issues such as asbestos and lead paint.

That is the basis of the entire investigation. The administration believes that because Powell went over-budget, he must be doing something illegal. This is obviously ridiculous, and it’s a lot more ridiculous when you compare it to Trump’s own construction project (the ballroom), which has already exceeded its original budget by 100%. Point being, this happens. In fact, according to a database of more than 15,000 construction projects, just 8.5% are completed on time and within budget.

After the investigation was launched, Powell released a video explaining what happened. He claimed that the investigation had nothing to do with the renovation. Rather, it was a threat — a threat to pressure the Fed into lowering interest rates.

Usually in these situations, I feel the need to tell the “real story” or expose “the lie.” In this case, that Powell is correct, that the investigation has nothing to do with the Eccles building, and that it has everything to do with interest rates. But while I was gathering my evidence and preparing to make that argument, something incredible happened.

Fatality

Within minutes, Powell’s video was everywhere — X, YouTube, TikTok, Instagram. After 24 hours, the video had received nearly 90 million views. To put that in context, that’s 45 times higher than the average primetime viewership of Fox News. It’s also three times higher than the viewership of the most-streamed NFL game ever. Jerome Powell’s message didn’t just go viral — it went nuclear.

Even more notable was the public response. It was unanimous: Trump was in the wrong. Not only did every living former Fed chair sign a letter condemning the investigation, half a dozen Republican senators spoke out against it too. So did Jamie Dimon, the CEO of JPMorgan Chase. So did Brian Moynihan, the CEO of Bank of America. Lloyd Blankfein, the former CEO of Goldman Sachs, described it as “murder suicide.”

Most striking, however, was the response from the Reddit army. The “Wall Street Bets” subreddit is home to the memestock traders who’ve historically had it out for large financial institutions (including the Fed). Their read of the situation could not have been clearer: Jerome Powell was the hero. One of the top comments read: “We don’t deserve him. He will go down as one of the greatest Fed chairs of all time.” Another read: “My GOAT doesn’t back down.”

Across the internet, Jerome Powell exploded. From AI memes and sigma edits to good, old-fashioned press releases, users young and old sang their support for the Fed chair, praising him for his “aura.” Soon enough, a slogan had emerged: We Are Jerome Powell. By the end of the week the score was in: Trump lost, and he lost badly.

Nerd Beats Bully

This story is unique for multiple reasons. 1) It’s highly unusual for a Fed Chair to go viral like this. (Most Americans don’t care about the Fed Chair nor know what they even do.) 2) It’s highly unusual for both sides of the aisle to agree on an issue. 3) It’s highly unusual for Trump to lose on the internet. (Sorry, it is.) 4) It’s highly unusual for Trump to lose to someone like Jerome Powell.

Point #4 is the most significant. Trump didn’t lose to a billionaire, or a dictator, or a populist strongman, or a “Chad.” No, Trump lost to a quiet, old-school economist — a “nerd.” Not a rockstar-nerd (Powell is no Michael Burry), an institutional nerd. A nerd who epitomizes the old guard.

This is significant, as it is typically this type of nerd that Trump eats for breakfast. From Jeb Bush to Chuck Schumer, Trump has a knack for beating down bespectacled old white men who represent the status quo. Most of the time, the crowd loves it, because the crowd hates the status quo.

Rightly or wrongly, this hatred has been stewing for years. Public trust in the government is nearing historic lows. Trust in the Fed chair is also near historic lows. These days, being an “expert” is considered an insult. America has decided that institutions are the enemy, and so too are the people who represent them.

So if you’d told me last year that in 2026, an army of Redditors would be rallying behind the Chair of the Federal Reserve, I would not have believed you. The Fed Chair is the embodiment of the institutional class — the crown prince of the swamp. And yet, here we are.

Institutional Is the New Black

I’ve suspected this for some time, but last week was my flashing signal: We’ve reached a “top” on institutional resentment. It’s been a good run. We had DOGE, stop the steal, drain the swamp, and various other movements predicated on the distrust of American institutions. But it appears that governance by corruption and cruelty isn’t a winning ticket in the long run. This isn’t to say Americans love institutions now. Rather, they hate them a little bit less.

Jerome Powell is the poster child for this political shift. He is proof that, for the first time in years, public leaders can be both boring and beloved. In fact, a recent Gallup poll found that Jerome Powell is the most popular political figure in Washington. His approval rating is 44%, 8 points higher than Donald Trump. By the way, that poll was taken in December, before this episode unfolded. I can’t tell you what his approval rating is as of January 19th, but I can tell you it’s higher than 44%.

The political implications of an “institutional top” are tremendous. In recent years, the best way to achieve power has been to position yourself as an anti-institutional insurgent — someone with no political background and no expertise. Think RFK Jr., Pete Hegseth, and of course, the President. It appears those days might be coming to an end. The next generation of winners might look more like Powell: academics and experts who possess the stones to call bullsh*t when they see it. Nerds … who can beat bullies.

It’s possible that I’m getting ahead of myself. Perhaps I overestimate the probability of this sea change because I want it to happen. I want the nerd to beat the bully. At the same time, though, as I watch the hundredth Jerome Powell edit for the two-hundredth time, it also occurs to me: Don’t we all?

Simply Put

You’ll notice I’ve now named this newsletter. As much as “Ed’s Newsletter” was calling my name, a voice in my head told me to grow up and pick a real title. (The voice sounded like Scott?) I’ve gone with Simply Put, because that’s how I want every newsletter to be. I find there’s no better explanation than a simple one. Simplicity is not only easier on the ears, it also reflects a genuine understanding of the issue. Too many writers use complexity as cover for topics they don’t fully understand. I don’t want to give myself that option, so I’m holding myself to it in the title.

Anyway, if you’re enjoying this newsletter, I’d greatly appreciate if you shared it with a clever friend or two. Remember, I’m still a pipsqueak, so I could use all the help I can get. I also appreciate any and all feedback, so please lay it on me in the comments. Tell me why I’m right or wrong. Give me your hot takes. Tell a joke. Sh*tpost me — I don’t care. This newsletter is fun and all, but it’s not worth a damn if we don’t have a good time.

Until next week,

Ed

Thanks for reading Simply Put! Subscribe for free to receive new posts every Tuesday.

You might have heard about California’s new billionaire wealth tax. The proposal would levy a 5% tax on the wealth of California’s billionaires, raising roughly $100 billion for social services. Supporters say it’s necessary to fight inequality. Detractors say it’s a step towards communism.

If you listen to the pod, you know I think wealth inequality is the number-one problem in America. America has a lot of problems, so that’s saying something. However, I also think this tax is a bad idea. Not because it’s “communist” or “collectivist,” but because it’s poorly designed and destined for failure. In this post I’ll explain why, and offer an alternative. But first, let’s quickly review how we got here.

The Numbers

If you weren’t already aware of how bad inequality has gotten in America, here are the numbers:

The top 19 households control roughly 2% of all household wealth in America. In the past forty years that number has risen twenty-fold, and has never been higher. Zooming out, the top 1% now command roughly a third of the nation’s wealth. That number has also never been higher. Meanwhile, the bottom 50% of Americans control only 3% of household wealth, which means that 19 households have roughly as much money as 65 million households. This is an unprecedented gap, usually more characteristic of third-world nations.

Beyond net worth, the disparity is also affecting the everyday economy. The top 10% now account for roughly half of all consumer spending in America. Again, this number has never been higher. Meanwhile the top 3% make up roughly a quarter of all consumer spending. Also never been higher.

Some might argue this is fine because “the pie is bigger.” I would remind them that despite being the wealthiest nation in the world (and one of the wealthiest in history), one in 10 Americans still live below the federal poverty line — and, as Michael Green told us on the podcast, that’s probably undercutting it.

So picture this: On the one hand, Americans are buying boats so big they require the dismantling of 100-year-old bridges. On the other hand, homelessness is at record highs and 13% of children live in poverty. Raise your hand if you’re OK with this.

Get Real

I hereby remove all appeal to ethics or fairness. I will consider only what is likely. History tells us this path leads to violence, conflict, and civil war. We saw it in Germany in the 16th century. We saw it in France in the 18th century. We saw it in Russia in the 20th century. We’ve seen this movie plenty of times before and it doesn’t end well.

To avoid our fate, we must rebalance the system. The only peaceful option is taxation.

Death or Taxes

Billionaires must be taxed, full stop. I’d feel less strongly about this if billionaires already paid their fair share, but they don’t. Americans pay an average effective tax rate of 30%. Among the 400 wealthiest, it’s 24%. This is bad.

So when a California ballot initiative proposes a unilateral 5% wealth tax on billionaires, my reaction is positive because it tells me we’re getting serious. In addition, I’m not someone who finds wealth taxes crazy. Some people think it’s ridiculous to tax people on the value of assets they haven’t sold. My response: What are property taxes?

However, as I said earlier, I’m not interested in what’s fair. I’m interested in what’s likely. And regardless of your views on a billionaire wealth tax, one thing is clear: This ain’t likely.

Ain’t Gunna Happen

You may not like billionaires, but they’re more powerful than you. The reason that’s relevant is because politics is about power. Which means if you want to get anything done, you must play ball with the billionaires. This is the part where you say that’s not fair. To which I say, tough. Every good politician knows this. You don’t have to pander to billionaires, but you do have to have a conversation with them.

If you don’t … you will lose. History has shown this. Take California’s Proposition 15, which, despite widespread support, was struck down after business interests spent more than $70 million to prevent it. Or Seattle’s head tax, also struck down after a surge in corporate PAC spending and threats to pull donations. Or any legislation in the past fifteen years. It’s no coincidence that since the Citizens United ruling in 2010, political spending by billionaires has surged 160-fold to $2.6 billion. That’s a lot, but the ROI is larger.

The billionaire wealth tax is doomed precisely because of how much billionaires hate it. Multiple California billionaires have publicly disavowed it, many of whom have deep experience fighting in court. Musk’s lawyer Alex Spiro has already written he’s ready to mount an “expensive” and “vigorous constitutional challenge” if the measure advances. Multiple billionaires are already backing him. This is David vs. Goliath, only this time Goliath has a bazooka.

In addition, many wealth taxes have been tried before, and after lengthy legal battles, most of them have failed. France repealed its wealth tax in 2017. Sweden repealed its wealth tax in 2007. Finland repealed its wealth tax in 2006. Austria also repealed its wealth tax. So did Denmark and Ireland. Norway is one of the few places where a wealth tax persists. And although we must take with a grain of salt the billionaires’ commonly-made threat to leave, we must acknowledge that in Norway, that’s actually what happened.

Even if it does go through (it won’t), the proposal is flawed because it’s a one-time tax. It would generate a one-off lump sum of $100 billion, which might sound good until you annualize it across, call it, 15 years, and you’re left with $6.5 billion per year. That’s not nothing, but it’s also only 2% of California’s annual budget. We can do better.

The Solution

The reason billionaires pay proportionally less in taxes is because they rarely experience taxable events. Instead, they hold onto their assets forever (which rise in value) and they never sell. Taxes are paid when you sell your stock. If you never sell, you never trigger a taxable event.

This is a great strategy, until you want to buy something. You can’t buy a Gucci purse with Google stock (yet) — you have to pay with cash. So where do you get the cash? This is where the dirty secret comes in: Instead of selling their stock, rich people borrow against their stock (usually at an extremely low rate). Borrowing is not a taxable event. Which means they can borrow and borrow and borrow, and never pay taxes.

So here’s an idea: Make borrowing a taxable event. Let the billionaires keep their assets. But if they ever want to use those assets to fund their lifestyle, they pay a tax.

Two reasons why this is a good idea: 1) It would work. Unlike a one-time wealth tax, the borrowing tax would provide a consistent stream of tax revenue. Also, lots of it: Yale Budget Lab estimates it could generate as much as $20 billion per year. And 2) Billionaires aren’t that against it. Various billionaires across the political spectrum — from Mark Cuban to Bill Ackman — have said they’re comfortable with the idea. In fact, the day after I talked about this on Prof G Markets, billionaire Chamath Palihapitiya tweeted his support for it. (Takeaway: Chamath listens to the pod.)

There are many ways you could implement a borrowing tax. You could literally treat the loan as a realization event. You could also issue a withholding tax at the time of borrowing. You could also create a flat tax on the loan. Either way it would accomplish the main objective, which is to ensure that the billionaires pay their fair share of taxes.

You might feel skeptical that someone like Bill Ackman is OK with this. I would point out, however, that 7 in 10 Americans think billionaires need to be taxed more, and more than half think billionaires are threatening democracy. In short, billionaires are becoming very unpopular. I think Bill Ackman understands this and is willing to make a concession before things get ugly.

Back To Work

There’s something uniquely awful about going back to work after Christmas break. Some combination of lethargy, hangover, and general confusion team up to make us even more unsuitable for our jobs than we already are. This week I tried to write emails, for example, and felt like this monkey.

I’m getting there though. This week I bought a physical calendar. My girlfriend and I then plotted out the next six months. We even color-coded it. Green for joint events, blue for mine, pink for hers, etc. There are few more pointless exercises than color-coding, but for some reason I liked it this time — order out of chaos, structure out of disarray. I have no idea what will happen this year, but at least I’ll know what I’m doing next week.

Until next Tuesday,

Ed

If you enjoy the post, subscribe here to receive my new weekly newsletter (out every Tuesday)

Before we dive in, a quick thank you. This past year has been incredible. We did our first live show on the big stage at SXSW, we won a Webby, I went on TV for the first time, and I also made the prison list. The most significant milestone, however, was taking Prof G Markets daily. This was a big deal for me as I went from co-hosting with Scott to hosting on my own. I was quite anxious in the beginning, but thanks to you the show has been an enormous success. So thank you for watching and supporting — we have great things planned for 2026.

OK, enough with the mushy stuff and onto the post.

Company of the Year

This week I’m discussing my pick for 2025’s “Company of the Year.” Disclaimer: This award is not given to the “best” company, or the most profitable. Rather, it goes to the company that best captures our current moment, that summarizes “our time.” To give you a sense, here are the runners-up: Third place: Nvidia. Second place: OpenAI. It’s a vibes-based award. (AI had a big year.) Got it? And the award goes to: OnlyFans.

Yes, OnlyFans. For as much impact as AI may (or may not) have had last year, there is no company in the world that better capitalized on the specific conditions that defined our world in 2025. Specifically: a chronic case of loneliness, a chronic case of sexlessness, and a more terminally online society than ever before. These trends have been building for a while, but they came to a head in 2025. And this, as I’ll explain, is why OnlyFans had such a phenomenal year. But first, a quick refresher on what OnlyFans actually is.

Something New

For the uninitiated, OnlyFans is essentially Substack for porn. “Creators” (young women) post “content” (porn), which their “community” (young men) can access for a monthly fee.

Some say this is nothing new: Porn’s been around for a long time, so who cares? However there’s one feature that makes OnlyFans very different, and that is the chat function. For an additional fee, users can send messages and “chat” with their favorite creators privately. This is in fact the most important piece of the business: Private chat fees make up 70% of OnlyFans’ total revenue. In this way, OnlyFans isn’t just monetizing porn — it’s also monetizing loneliness. It’s offering a sense of personal companionship that regular porn doesn’t provide.

Some would argue this, too, is nothing new. Phone sex operators, for example, are similar, and they existed long before the internet. But this is where scale comes in. To understand how unique OnlyFans is, you must understand how big it is. To give you a sense:

• 378 million: That’s how many people use OnlyFans. That’s more than the population of the United States.

• $7.2 billion: That’s how much money was spent on OnlyFans in 2025. That’s more than the GDP of Andorra.

• $43 million: That’s how much money the top OnlyFans creator makes per year. That’s more than what top NBA players make, including last year’s MVP, Shai Gilgeous-Alexander.

Few adult platforms — let alone platforms — have achieved this level of success. In fact, OnlyFans is now one of the most revenue-efficient companies in the world, generating ten times more revenue per employee than Nvidia. We’ve seen many big-name brands in the adult industry like Playboy, Hustler, Pornhub, but nothing like this.

Beyond being a new type of business, I further posit that OnlyFans could not exist at any time other than now. This is what makes it Company of the Year. The pretext to its dominance is an environment so deeply and disturbingly specific to 2025.

A Really Big TAM

One of the most important forces in business is TAM, or total addressable market: how large the customer base is. If you’re a company that sells chocolate bars, it helps if a lot of people want chocolate bars. Similarly, if you’re a company that monetizes loneliness, it helps to have a lot of lonely people out there.

Many years ago, lonely people existed but weren’t nearly as frequent. In 1990, 3% of Americans reported having no close friends whatsoever. Since then, that number has quadrupled. Now, 12% of Americans say they have zero friends. This problem is particularly pronounced among young people, who are now spending nearly 50% more time alone than the average young person did just 15 years ago. In other words, OnlyFans’ TAM has very recently gotten very massive. And due to the youngness of this market, it’s only getting bigger.

The other key ingredient for OnlyFans is sex, or lack thereof. To put it bluntly, OnlyFans’ target customers are probably not getting much action, and fortunately for the company, there are now lots of these people.

Share

What we have here is a business uniquely positioned for success in a lonely and sexless world. I’ve thought before that OnlyFans might be a blip, a brief moment in internet history. As these trends accelerate, however, it becomes more obvious that OnlyFans is here to stay. It not only represents our current moment but defines it — a viscerally candid reflection of our new parasocial age.

OnlyFans FY 2025

In 2025, the OnlyFans business jumped to lightspeed. People spent more than $7 billion, 70% of that being chat revenue. The business has gotten so big that many OnlyFans creators are now outsourcing their chat operations to third parties as they cannot handle the volume of messages they’re receiving themselves. This has created an entire ecosystem of “chatting agencies” and contractors, many of them based out of India or Pakistan. The depressing irony is that the guy spending thousands of dollars to chat with a young woman isn’t even chatting with a young woman. He’s likely speaking with another guy in Islamabad.

We can also break down the numbers by country, where we find the United States is the number one spender, shelling out $2.6 billion in 2025. In other words, Americans now spend more on OnlyFans than they spend on socks or toothpaste.

I discussed these numbers on the podcast, and received some backlash that I should have shown per capita spending instead. My response: No I shouldn’t have. My point isn’t that America is more or less addicted than another nation. My point is that everyone is addicted, including America. The sheer scale of the spending helps to demonstrate this point. I am nevertheless happy to oblige and have included the population-adjusted data below. On a per capita basis America drops to seventh-most spendiest, with the Finns rising to number-one. More proof that this is a problem everywhere.

These trends will only accelerate in 2026. Aside from a promising social media ban in Australia, we’ve seen little evidence that governments are taking the loneliness crisis seriously. Apathy towards the problem is particularly pronounced in the U.S., where tech companies are repeatedly let off the hook for brazenly monopolistic behavior, and where subjecting young people to chronic depressive and addictive behaviors has thus far gone unpunished. The more amenable the conditions, the more these businesses thrive. OnlyFans is one of these businesses, and this year’s forecast is bright and sunny.

Why Pay At All

The most curious thing about OnlyFans is that people pay at all. If porn is already available across the internet for free, why don’t men just use that? Again, the key to OnlyFans is the chat feature. Unlike PornHub, which provides the illusion of sex, OnlyFans provides the illusion of companionship. It makes men think they are engaging in a real relationship with a real person.

For people who have relationships, that might seem a silly thing to pay for. But that’s the point: More and more people don’t. As such, intimate relationships are now becoming something of a luxury — a luxury worth spending $7.2 billion on.

If that depresses you, it’s supposed to. There’s nothing uplifting or positive about OnlyFans. Some would argue the platform “empowers creators.” But keep in mind the top 0.1% of creators capture 76% of the total revenue, so only a tiny handful of people (including the owner) are getting rich. Meanwhile the downsides (addiction, isolation, and loneliness) are too large to ignore. Like many great businesses, OnlyFans is very bad for society. Let no amount of PR distract you from this truth.

What To Do

The question becomes what do we do about it. I am writing this from the cabin of a New York-bound flight from Japan, and we are about to land. I therefore don’t have time to answer this question, but my quick-and-dirty solution would be age-gating. We’ve already seen its political popularity (see above: Australia), and it’s likely that nipping these screen-induced behaviors in the bud will result in better outcomes long-term. Again, quick and dirty.

Going forward in 2026, a major goal of this Substack will be to answer the loneliness question more thoroughly. Loneliness continues to be one of the most powerful forces in our world today. It is fundamentally transforming business, culture, politics, and markets in ways we could not have imagined. For the past couple of years, I’ve tried to spread awareness of the issue, but we are now entering the solutions-phase of the cycle. It’s now time we fix it.

So here’s to 2026, and solutions. I should hope that a year from now my “Company of the Year” will look very different. We’ll see. But for now, the seat-belt sign is on, and I need to buckle up.

See you next week,

Ed

Subscribe now

Leave a comment