🧵: The US will not be able to reshore, rebuild its grid, & will lose the AI race & great power competition v. China unless US skilled trades & engineers receive positive real wage growth v. essentials like housing, healthcare, college, etc. The US will lose if👇continues. 1/

2/ And I'm not talking about the 2-3% official CPI rate that even former US Treasury Secretary Larry Summers noted in early 2024 is total bullsh*t:

3/ For all the talk of US operating at "warp speed" to reshore & rebuild the grid, the labor to do so isn't there now & won't be there unless labor wages rise faster than shelter, healthcare, food, & education inflation. That's just common sense (which is not so common anymore.)

4/ The US needs to subsidize and backstop trade wages like it has backstopped and subsidized the bond market and TBTF banks for the past 30 years & the way it has begun to backstop & subsidize critical minerals.

5/ The problem? The UST market, and bond market more broadly. A sharp acceleration in wage growth that the US needs to reshore and rebuild its industrial base, grid, and AI would quickly send interest rates up to levels whereby Federal interest expense (already $1.5T annually 👇) would quickly move toward 40% of Federal receipts, triggering a debt spiral in the US & globally.

6/ IMO the best chances the US has to not fail at reshoring the US industrial base & grid, & not losing to China? 1. Fed YCC of a big % of the UST market to cap yields. 2. After gold has risen sufficiently high enough ($20k+), Treasury revalues gold & buys down US debt/GDP.

7/ Policymakers need to make a choice, soon: The real value of the bond market (& USD) or depend on China for our manufactured goods and grid. The longer they delay in choosing, the more likely it becomes the 2nd option will be chosen for us because it will be too late.

8/ Investors are fond of saying "It's never different this time"; the choice US policymakers face is the same one Lord Acton spoke of long ago: "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.' /end