Premise: Incentives drive all human behavior. The corollary: How to destroy a country: A vast social security and support system that serves as a magnet for those who would rather not work. An open immigration policy that does not screen immigrants to determine their ability and willingness to provide for themselves and their families. An open immigration policy that does not screen for political and/or religious ideologies that are a threat to the country. Economic incentives large enough to incentivize immigrants on the state dole to have large numbers of children, but insufficient for educated and economically productive mothers to be able to quit to raise a family. The declining fertility of the most educated and productive women due to their delay to begin a family as a result of their desire and/or need to advance their careers, among other reasons, to live a life they deem consistent with their educational achievements and/or to repay their student debts. Amnesty programs that give citizenship and voting power to illegal immigrants without consideration of their economic productivity or their threat to the country due to their religious or political ideologies. The changing demographics and increased population due to the above factors. The state responding to protests by increasing social support. The continued failure to punish and hold accountable violent and looting rioters. Government managed by a massive and growing unelected bureaucracy. Government fraud, waste, and abuse contributed to ballooning budgets. Anti-business legislation that makes it difficult for businesses to compete in a global marketplace being disrupted by AI, including restrictions on firing even poorly performing employees. Overly burdensome, globally uncompetitive, corporate taxation. Continuous increases in personal taxes to raise funds to provide for the rapidly growing welfare state. The substantial majority of the tax burden levied on a small percentage of the population. A growing percentage of the electorate paying no taxes and receiving welfare. The introduction or threat of a wealth tax including the taxation of unrealized gains, i.e., taxes on paper wealth. The flight of the most productive business builders and highest taxpayers to lower tax countries with lesser security concerns. A growing percentage of the electorate voting for candidates that support increased welfare and laws favorable to, and/or that match the cultural and ideological needs and desires of a growing unproductive immigrant population. The rapid rise in anti-semitism and inadequate efforts to address this hatred. Increased borrowing by the state to fund the growing social burden. Higher sovereign interest rates due to all of the above. The resulting need to reduce expenditures to make the math work. Increasingly violent protests that make life less livable for the productive and law abiding citizens leading to their accelerated departure. And so on…

The presumption that the Fed raising short-term rates reduces inflation is predicated on the belief that higher rates reduce demand and investment. But what if higher rates don’t reduce demand and investment because the demand for intelligence and energy is unaffected by higher rates because winning the race for super intelligence has a near infinite ROI and the demand for compute will remain incalculable. Why won’t higher rates at this unique moment in history therefore lead to more inflation as interest costs are embedded in everything? And the problem is compounded as the more the Fed raises rates, the more inflation we will have and the more the Fed will need to raise rates further and so on. But what if the old models don’t apply to the current paradigm and the Fed is wrong? I think the Fed might have just made a mistake. Am I right or am I wrong?