The Abundance Trap
Friday May 8th, 2026 - Issue # 132
(Any views expressed below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Morning folks,
What a crazy week for markets. The animal spirits are out in full force again, and they are totally being driven by AI.
Investors are out there buying all-time highs like we’re in the 5th inning of what could be the biggest bubble of their lives. Even PTJ came out this week all hopped up after the Milken Conference buying AI names. In the interview above, he says he can see this lasting another 1–2 years. Galaxy Digital CEO Mike Novogratz, one of PTJ’s friends, said this week that he expects by the end of the year the stock market to be much higher than it is today and that it will take crypto with it.
I’ve been somewhat sidelined after doing pretty well in a few AI names last year and only really holding my BTC position. That changed late last week as I remembered that this is the fourth turning and fiat currency is being debased as global debt is skyrocketing.
This all feeds pretty well into the topic de jour…
There’s a strange feeling across the developed world right now that almost everyone is getting poorer, even if they can’t quite explain why. People are working, earning, saving, investing, doing all the things they were told to do, and yet the good life keeps getting pushed further and further away. The house is more expensive, groceries are more expensive, taxes are higher, government is bigger, debt is exploding, and even vacations have become completely insane (I’m looking at honeymoon options right now and holy shi*). Everyone feels this in their own way, and we chalk it up as “inflation,” which makes it sound like some temporary inconvenience that shows up for a few months and then politely disappears. I think the better word is debasement. Permanent and exponential debasement that we’re going to have to go through until we reach this AI utopia, a life-of-abundance zone that the accelerationists all tell us is coming.
I actually think we do get there, but it doesn’t look or feel as nice as it sounds, and the path to get there is going to be very uncomfortable.
Firstly, I have to say it would’ve been so fitting to have this guy Rick as Fed Chair. The sunglass tan line, open shirt — the opposite of buttoned up, literally. But he was actually a front-runner, and I agree with what he says here. I think he’s a smart guy worth listening to. What he’s saying is that we’re going to go through a very rough transition that will likely last years, where an enormous amount of workers are displaced during this productivity boom.
It really feels like this is the last chance for the people at the top to grab as much money as they possibly can before everyone else fully understands what is happening. I think that’s probably why politics feels so unstable right now. One side looks at the system and says, “The rich are taking everything, burn it down.” The other side looks at the traditional path and sees no hope, so they become nihilistic and start swinging for the fences. Speculation, resentment, populism, socialism, meme stocks, online casinos, sports betting, zero-day options — they all feel like different symptoms of the same disease. People know the old ladder is broken, so they are either trying to tear it down or make one insane leap to the top.
Prediction markets…while they may be an amazing source of information, they are also just another form of gambling.
The layoffs ensue…
It’s clearly started and it’s only going to get worse.
I can’t even imagine being in university right now or even being a recent grad. What areas could you possibly focus on that you’re confident will not be smoked by AI? Brutal.
It’s pretty clear to me that if the AI race continues at this pace and we do not hit some sort of capacity threshold (energy, chips, regulation, etc.), governments are going to have to implement some form of UBI (universal basic income). I’ve discussed this in past notes, but I think the powers that be realize their options have narrowed in this fight. In fact, I’m not even sure it’s really a fight anymore. I think for them it probably feels like they have their foot on the gas with blindfolds on and their only hope is that AI becomes a productivity miracle, the next industrial revolution +++, and that growth becomes so strong that it can offset the fiat bazooka that is coming to bandaid a real revolution.
That is the abundance trap. We may be heading toward a world that becomes far more productive, far more automated, and far more abundant, but the transition will probably be messy as hell. The people who own scarce assets and the companies powering the boom may get much richer, while the people relying on wages, savings, and melting currencies are forced to run faster just to stay in the same place. That doesn’t mean AI is bad. I actually think AI is going to be one of the greatest productivity unlocks in history. But it does mean the next however many years could be extremely confusing, where the economy gets richer on paper while millions of people feel poorer in real life.
We are in the mid-to-late stages of the fourth turning, or at the end of a big debt cycle if you are a Ray Dalio follower, and these transitions are never smooth. Historically, they usually come with some combination of inflation, social unrest, political realignment, debt restructuring, and regime change. This time, the transition is being accelerated by AI, record debt, and a global shift from the old US-led unipolar system into a multipolar world where countries still need to trade with each other but increasingly do not trust each other, do not want to rely on each other’s banks, do not want to hold each other’s promises, and do not want their national wealth trapped inside financial rails that can be frozen, sanctioned, or turned off by someone else. For most of our lives, the answer to global settlement was simple: use dollars. That worked when the US dollar system was viewed as neutral enough, liquid enough, and powerful enough for everyone to tolerate, but the more fragmented the world becomes, the more that system starts to look less like neutral plumbing and more like a geopolitical weapon.
And that creates one of the most important questions of the next decade: how does the world settle trade when nobody fully trusts each other anymore?
I’m going to leave it there for this week because that question deserves its own note. The AI boom, the layoffs, the debt spiral, the growing political unrest, the rise of UBI-style thinking, and the debasement of fiat currencies are all part of the same story. We are speeding toward a world that may be far more productive and abundant, but also far more unstable on the way there and after. The people who own scarce assets will probably do very well. The people relying on wages and melting currencies are going to have a much harder time. And as the world becomes more fragmented, the question of what countries, institutions, and individuals use to store and settle value becomes much more important.
Historically, the answer was gold. But gold does not work in this environment.
Next week, I want to write about why Bitcoin may be the neutral settlement asset for the world we are going into.
Because if trust is in dire straits, the world needs something that does not require trust at all.