Bond Villains Capture Artificial Intelligence
"We’ve seen this movie before"
With the two recent graphic novel episodes under our belt, we are pausing for an interlude. Next week we’ll to return to The Inquiry, but in researching the series, I’ve came across an interesting trendline that bears mention.
At the moment, I am away from the United States and have noticed that expat friends who returned after Thanksgiving reported being shocked by the prices. Flights were cheap, if problematic. Filling up the car with gas or electrons was no more expensive than before. But going to a grocery store, a movie, or a football game was a shock! Just try to guess the price of an all-day lift ticket at your favorite ski slope!
The same is not true in much of the rest of the world. Why is it happening to the United States? Tariffs are not the only reason. A larger cause is the cost of money itself. Let me explain.
Money is debt
Many people think the U.S. dollar, which is a global standard and the backing for many currencies and crypto stablecoins, is supported by piles of gold bars in Fort Knox. That has not been true since Richard Nixon accidentally switched the US from the gold standard 50 years ago.
I suspect, but can’t prove, that Nixon read Goldfinger in 1959 or saw the James Bond movie in 1964 and took seriously the idea that a billionaire supervillain could raid Fort Knox and haul away the gold. Fleming’s idea for Goldfinger came from conversations with a gold dealer he met while on a detox stay at an English health clinic. Nixon lacked the detox.
In August 1971, Nixon unilaterally refused to allow foreign governments to convert their dollars into U.S. gold at the fixed rate of $35 per ounce, thereby breaking the Bretton Woods gold‑exchange system and turning the dollar into pure fiat currency. In a breathtaking “move fast and break shit” exercise of executive power, Nixon was well ahead of his time.
So what is fiat currency?
Once gold convertibility ended, the dollar’s value rested on U.S. law declaring it legal tender for debts and on the government’s ability to levy taxes or tariffs that must be paid in dollars. The Federal Reserve was tasked with adjusting the money supply and interest rates to pursue domestic goals, such as controlling inflation and supporting employment.
A central bank “creates” money when it makes loans or buys assets by marking up someone’s account with new reserves or deposits; it “destroys” money when those loans are repaid, or assets are sold, and the corresponding reserves/deposits are debited and disappear. In practice, this happens both on the central bank’s balance sheet (base money = reserves and physical currency) and inside the commercial banking system (broad money = bank deposits) through a chain of lending and repayment.
Commercial banks create most of the spendable money supply by making loans. A new loan simultaneously creates a matching deposit in the borrower’s account, plus the interest on the loan, which goes to the bank and its owners, thereby increasing the money supply. While paying back the loan removes the deposit and lowers the money supply, the interest collected remains. It makes the whole system inflationary because more money is chasing the same goods, driving up prices. Adding to the money supply makes each dollar worth a little less.
The Fed likes to keep the lending rate constant enough to keep inflation around 2 percent per year, which is considered healthy economic growth. It does that by raising or lowering interest rates on its loans, which affects borrowing and the creation of new money as retail banks follow the Fed’s lead.
—Will Lockett
Data Center Mania
It is apt that Auric Goldfinger has so much in common with our current crop of billionaire supervillains. It was not long ago that Oracle, Microsoft, Google, Amazon, and Meta had amassed such mountains of cash that they were thrashing around for ways to waste it on sports franchises, stadia, Formula 1, or space rockets. Then ChatGPT hooked them. Before you could utter “Imperio Riddikulus!”, the tech giants had drained all their liquid cash and begun selling off shares (equity) to raise more. Some tried to keep the sell-off between friends through circular financing, such as among OpenAI, Nvidia, Oracle, CoreWeave, and Microsoft, but it was not nearly enough.
—Will Lockett
Morgan Stanley and J.P. Morgan say the AI industry will need 1 trillion per year for the next several years, with half of that spent building data centers and the other half on running them. Lately, the Broligarchs have turned to issuing junk bonds. Basically, a corporation or fly-by-night LLC says, “Give us your money now, and we will pay it back plus interest over time.” But the only way that investors large enough to matter will buy that junk is if they can also buy CDS as a hedge.
Hedge Zombies
Remember the Hedge Funds of the Bush years? You thought they were dead, right? Nope. Obama, who inherited that hairball, was not one to favor looking back, and in any case, the Democrats needed to curry favor with big finance the same way Republicans do. Well, not exactly the same, but the same end result. One party is just more lawless than the other.
Credit Default Swaps, or CDS, are insurance policies for holders of bonds. They are typically issued by investment banks. Watch The Big Short for a better explanation with Jenga towers, bubble baths and blackjack tables. For an annual premium of as little as 1% of the bond's face value, a bank will issue a CDS guaranteeing full payment if the bond defaults. AI finance has now transitioned from equity (cash reserves and stock) to debt financing. So great is the need that it soaked up significantly more than half of the available global venture capital in the first half of 2025.
So what do you suppose happened to CDS rates?
—Will Lockett
Those who follow these things have noted that Michael Burry, the genius savant portrayed by Christian Bale in The Big Short, shocked the market last week by short-selling 100% of his founder’s holdings in Nvidia and Palantir. That was just before Trump announced Nvidia has his permission to sell chips to China. Burry also sold his interest in Vistra, a massive energy company founded in 1882 and the designated hitter to provide datacenter power.
What did Nvidia’s bribe for Trump’s permission cost? No one is saying, but with the jump in CDS rates, CoreWeave is set to pay a billion dollars in interest on its A.I. build-out this year alone, 20% of its predicted annual revenue. A.I. companies need to issue around 2.5 times as many bonds next year as this year. This is going to flood the bond market, sending interest rates up at the same time that Trump is replacing the current Fed chair to lower them. According to Will Lockett, who closely follows Tesla, “the cost of borrowing will increase their losses, so they will need to borrow more, which will increase their losses even more, and so on until the money just runs out. The debt effectively forces them to ‘speedrun’ bankruptcy.”
—Will Lockett
With Thiel’s tech-bro David Sacks ensconced in the Executive Office Building running the White House crypto scam, and Oracle’s Larry Ellison whispering sweet nothings into the royal ear, the U.S. government may issue an advance bailout of five or ten trillion to the AI giants. Time will tell. Lockett thinks that might delay the day of reckoning but would not prevent it. Apparently, Burry thinks along similar lines.
As seen in Upper Paleolithic cave art depicting predictive rituals, shamanistic “future seeing” coevolved with Homo sapiens around 40,000 years ago. Core features like soul flight and hunting divination, nurtured for social benefit over millennia, were mostly lost to ethnic cleansing when intensive farming favored hierarchical control of lootable resources and selective breeding followed.
Nonetheless, intuitive foresight persists as a random genomic trait. It can still be found in the “second sight” (An Da Shealladh) traditions among Irish villages and Scottish Highland seers, Appalachian folk healers, Iceland’s “námusi” clusters, DIA’s Stargate Project (1977–1995), and the FBI’s Operation Grill Flame for tracking kidnappers. Burry is that kind of psychic savant; rare in our time, but not unheard of. I worry that smartphones and A.I. may erode their utility—and persistence in the genome—still further.
Meanwhile, Vladimir Putin reminded Trump’s point men on Ukraine, Steve Witkoff and Jared Kushner, that Russia controls the supply of enriched uranium fuel for all the US nuclear reactors. Putin’s nuclear fuel comments were made separately in the context of Russia-India relations, but the message was received: “We get what we want in Ukraine, and the dismantling of NATO, or you can shutter about 20 percent of your data centers and forget about using nuclear energy to power new ones.
Stay tuned, I’ll be sic’ing Jack Smith’s team on this.
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And speaking of resettling refugees, did you know? A study by Poland’s National Development Bank found that the influx of Ukrainians added between 0.5% and 2.5% to GDP growth and paid more in taxes than they received in benefits.
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#RestorationGeneration.
When humans are locked in a cage, the Earth continues to be beautiful. Therefore, the lesson for us is that human beings are not necessary. The air, soil, sky and water are still beautiful without you. So, when you step out of the cage, please remember that you are guests of the Earth, not its hosts.
We have a complete solution. We can restore whales to the ocean and bison to the plains. We can recover all the tremendous old-growth forests. We possess the knowledge and tools to rebuild savannah and wetland ecosystems. Coral reefs rebuilt with biorock build beaches faster than the seas are rising. It is not too late. All of these great works of nature are recoverable. We can have a human population sized to harmonize, not destabilize. We can have an atmosphere that heats and cools just the right amount, is easy on our lungs and sweet to our nostrils with the scent of ten thousand flowers. All of that beckons. All of that is within reach.
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