An Economic Inflection Point

Welcome to This Week’s Leyendecker View

Real wisdom is not the knowledge of everything but the knowledge of which things in life are necessary, which are less necessary, and which are completely unnecessary to know.
–Jean-Jacques Rousseau

FAVORITE READS OF THE WEEK

China builds. America blocks.
Why China is kicking our tail.

AI is creating new mental disorders
But should that stop “progress”?

The failure of anti-austerity government
Economist Kenneth Rogoff sounds off.

FAVORITE PODCASTS OF THE WEEK

AI isn’t the new electricity
Shane Parish interviews Benedict Evans.

Following the Constitution, full stop
Bari Weiss interviews Supreme Court Justice Amy Coney Barrett.

THINKING OUT LOUD

An Economic Inflection Point
The pain before the gain

Critics rightly highlight the short-term economic pain triggered by Trump’s sweeping policies—tariffs, federal spending cuts, government job cuts, institutional upheaval. Yet the headlines miss the more urgent and long-term threat: the relentless rise of our federal debt, unsustainable spending and the looming danger of escalating interest costs.

In this light, last week’s underwhelming jobs report from the Bureau of Labor Statistics (BLS) is more than a sign of weakness. It’s a signal that meaningful, albeit painful, fiscal adjustments may already be taking effect. And they may be essential.

The US has been kicking the can of debt correction down the road for decades. Entitlement spending has been rising unabated for generations. Discretionary government budgets are always growing. Borrowing continues unchecked.

Out-of-control debt may eventually cause interest rates to rise. The more debt we need to sell, the higher the interest rate buyers may demand. In no time, we could find that our interest burden eclipses the costs of key spending areas, which can quickly spiral into a collapse of essential services and programs.

Government debt is not just a US problem. Many countries around the world have been borrowing and borrowing with little discipline. As highlighted in an article he authored, famed economist Kenneth Rogoff criticizes government anti-austerity measures as a means to, once again, kick the can down the road. Now sovereign borrowing costs are surging around the world. As more countries have to compete for buyers of their ballooning debt, will overall interest rates rise?

With our massive fiscal challenges in mind, let’s reconsider Trump’s policies and their consequences, right down to the weak jobs report. Temporary pain in the form of economic ambiguity amid shifting trade policies, a shrinking job market and suppressed investment, while not fun, are a far easier pill to swallow than a tsunami of debt that cannot find buyers and all-out economic collapse. By disrupting immediate growth, Trump’s policies may break through policy morass, compelling lawmakers and markets to confront fiscal reality head-on.

This seems not too dissimilar from what happened in Argentina after Javier Milei was elected president in December 2023. After he took his chainsaw to government bloat and regulation, the country quickly went into recession. But just a few months later, Argentina posted 7.6% GDP growth in Q2 2025.

Despite Argentina’s success, Milei has had to contend with backlash from the legacy political system. As discussed in my essay, “The Fall of Bureaucratic Bumbling,” legacy politicians and bureaucrats will always want back on the gravy train, no matter the fiscal or sovereign consequences. What, you think bureaucrats understand economics?

Mainstream narratives often ignore the debt issue and the possibility of a debt-interest rates death spiral. Trump, faulted for many things, has at least reoriented the conversation toward fiscal boundaries. Yes, job losses hurt. Institutions are under strain. But what if some short-term pain is the price we must pay for policies that seek to reset our economy in the name of long-term stability? Consider the alternative: an economy that buckles under the weight of crushing debt and interest costs.

Pain may indeed need to precede gain. The critical question is whether the hardship is endured now with agency and intent or imposed later by markets, interest burdens and financial collapse that spins out of our control.

Let’s hope we can follow in Argentina’s footsteps. If we do, brace for yet more bureaucratic backlash. There is no perfect path, just tradeoffs. Let’s hope Trump’s gambit yields big rewards for the long term.

THE RANDOMS

I’m wondering if all the city and state governments that have been practicing acronym policy like BLM, ESG, DEI and LGTBQ+ are going to end up with DOA or SOL results.

A recession may already be here. If so, an economic restructuring is already underway. We have too many consumption choices. We have too much debt. We have too much luxury. It’s time to trim the fat.

Does the IPO of buy-now/pay-later fintech company Klarna tell us their investors want to get some of their cash out before a consumer recession becomes obvious?

Huh. Have you noticed that Greta Thunberg is no longer worried about climate change? Odd for a person famous for her rabid certainty that Earth would be burning right about now.

For most of us who haven’t been paying attention, South Korea has become one kick-ass nation. Their movies have won Academy Awards, their automobiles are everywhere and many of their musicians are head-and-shoulders above the West. Do your own research.

Maybe the most important thing we can do is to convince people to be happier with what they have and less unhappy with what they don’t have. If people were happier, we would have fewer social problems and higher productivity.

No, that point is not socialism. Socialism tells people they need the government to make them happy.

Are we living in a modern Louis XVI period? Is the look-at-me luxury economy about to fall out of favor? If so, might we want to study what eventually happened to Louis XVI and France?

ECONOMIC NEWS

Economy

Inflation is back on the rise
Did a rolling recession just end?
Health care costs about to explode
Is a US debt crisis coming?
Lumber prices, a leading economic indicator

Labor

Hiring growth lowered substantially
A different jobs report perspective
Job hopping is out, job hugging is in

BUSINESS

Finance

Pension funds cut back on private credit
Private credit is showing troubling signs
An anti-crypto film that may never be seen

Real Estate

The regional housing markets in decline
Apartment vacancy rate keeps rising
Mortgage rates at 11-month low

Tech

Is Oracle the next Nvidia?
Is Meta evil?
Are more social media bans coming?
Apple releases a blockbuster, or dud?
Starlink grabs more spectrum

AI

AI boom is leaving consultants behind
AI giants want to control the classroom
OpenAI to start making their own chips

Energy Transition

Peak hydrocarbons is a crumbling myth
Gasoline prices are very cheap
An oil glut is growing
Is commercial fusion almost here?

THE NATION

The Washing-Tone

Trump cracks down on pharma ads
MAHA lays out its strategy
Trump threatens cities to toe the line
SCOTUS backs Trump on ICE
Trump hands US car makers billions

Tariffs

China snubs US farmers
Mexico about to push tariffs on China
New toilet manufacturing plant in Georgia

Social Trends

High school students are getting dumber
Americans losing faith in capitalism
Easy big money and addiction
Sewing is cool again

GEOPOLITICS

Global

Australia’s economic sentiment drops
Brazil’s politics are in turmoil
Japan needs a reboot
The happiest place on earth

Europe

The French protest losing their free stuff
UK, canary in the coal mine of too much debt?
Wealth taxes making Norway poorer
France needs a restructuring

Ukraine

NATO shoots down Russian drones
US demands Europe stop supporting Russia
Russia keeps hammering Ukraine
Putin hopes Ukraine cries uncle first
Putin rejects Western security forces in Ukraine

Middle East

Israel to hunt enemies everywhere
Iran agrees to nuclear inspections
Israel attacks Hamas in Qatar
Houthis hit Israel with drones
Six killed in Jerusalem terrorist attack

China

The US-China submarine arms race
China exports to Africa soar
China Central Bank is big on gold

War Creep

Here comes US Department of War
Japan and Australia cozy up
Czechs go big on defense spending
UK gets Norwegian warship contract

MAKING A BETTER YOU

Mind
Get more quiet time.

12 habits that will make you smarter
Billionaires suggest these books
The value of service to others

Body
Get more outside time.

How healthy are apples?
Bath or shower, which is better?
The truth about reading before bed

FUN STUFF

Let your hair down, baby! Even if you’re all alone.

The Extraordinary

New Arctic sea lane is open
Fall foliage prediction map
The mega rich can’t bail us out

Music That Found Us

“Everybody Laughs,” go, David Byrne, GO!
Hania Rani’s “On Giacometti,” lovely.
Two Lanes, nice piano work.

Worth a Watch

Knives Out is back!
David Duchovny shines, Reverse the Curse.
Is This Thing On?, Will Arnett and Bradley Cooper.

The Yum Yums

The best classic diners in every state
Going nuts with coconut
Cheddar-tomato-bacon grilled cheese

PARTING THOUGHTS

The smartest person in the room, I’ve learned, is usually the person who knows how to tap into the intelligence of every person in the room.
–Astronaut Scott Kelly

IN CASE YOU MISSED IT

Headhunter’s Secrets: Eating Crow
September 10, 2025

Our Resilient Economy
September 5, 2025

The Fall of Bureaucratic Bumbling
August 29, 2025