Lessons from James J Hill
lessons-from-james-j-hill
MartyBent
Founder of @TFTC, co-host of Rabbit Hole Recap, Managing Partner at Ten31
5 min read
Marty's Bent
Earlier this week I re-watched this mini-doc on James J Hill and how he succeeded during the railroad boom despite refusing government subsidies that were plentiful at the time. He focused on efficient capital allocation and investing in civilization.
Part of his success was derived from how simply he set the goals for his company.
"We must operate:
- the fastest locomotives,
- to pull the longest trains,
- with maximum tonnage,
- over the straightest tracks,
- using the least change in elevation,
- with minimal maintenance costs."
Every capital allocation decision he made focused on achieving these goals.
It's hard not to think about the AI boom and all of the government investment going into the sector these days after watching this.
How many opportunists are circling their wagons to feed from the government trough at the moment? How efficiently is that easy money going to be allocated? Who in AI and the booming energy infrastructure industry budding around it is taking the hard but lucrative path that James J Hill took during the railroad boom?
This is something to pay attention in the years to come. There is a lot of attention on the AI names right now, particularly the big names like OpenAI, Anthropic, Google, NVIDIA and Microsoft. Keep an eye on who sticks their hands out for government handouts and who keeps to themselves and builds without the help of government.
This goes for the energy infrastructure companies too. The Trump administration seems to be leaning into industrial policy in the same way that the politicians of James J Hill's time were in an attempt to build out the American rail system. Those who took subsidies and grants cut corners and built unfinished rails that proved to be a waste of precious capital. Central planning never works, and I find it hard to believe it will work in this context.
To bring about the AI future everyone sees coming, it will be incumbent upon creative and efficient entrepreneurs to create the cost effective solutions that produce high quality end products.
The Federal Reserve Has Significant Room for Further Money Printing
The conventional wisdom among bitcoin advocates is that the Federal Reserve is approaching its limits, but Matthew Mežinskis presented compelling data suggesting otherwise. He pointed out that the Fed currently holds only 16% of US debt on its balance sheet, well below the 28.3% peak reached during the 2021 monetary expansion. This represents over 12 percentage points of additional capacity for balance sheet expansion without entering uncharted territory.
This means the Fed has over 12 percentage points of capacity to expand its balance sheet without reaching unprecedented levels. - Matthew Mežinskis
Furthermore, Mežinskis highlighted the declining foreign ownership of US debt, which has dropped from 35% to approximately 22%. This shift creates even more room for domestic monetary expansion through Federal Reserve purchases. While this analysis doesn't change the fundamental case for Bitcoin, it suggests the current fiat system may have more runway than many anticipate, potentially extending the timeline for widespread monetary system transition.
Check out the full podcast here for more on BitBonds, stablecoins as yield curve control, and the coming AI economic transition.
Headlines of the Day
Senator Lummis Hints at US Government Bitcoin Purchase Plans
BlackRock CEO Fink Admits He Was Wrong About Bitcoin
UK Officially Recognizes Cryptocurrency as Property
Merrill Lynch Recommends Bitcoin Exposure for Clients
Harvard's Bitcoin Investment Faces Media Criticism
Bank of America Suggests Digital Assets Allocation
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Final thought...
Feed me the polar vortex.
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