We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.
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But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.
Here are the articles for the week ending 20 April 2025:
1. The Growing Risk to Fed Independence That Wall St Isn’t Watching (Transcript here) – Tracy Alloway, Joe Weisenthal, and Lev Menand
Lev: I think something big is happening in the federal government right now where the President is asserting unprecedented powers over parts of the government that for – in some cases – over a century have operated with a certain amount of separation from presidential day-to-day direction. That threatens to upend government policy across a range of dimensions but in one area in particular, the consequences could be felt immediately, and that is with respect to the Federal Reserve.
Joe: Certainly the firing of the two minority commissioners at the FTC, almost immediately after we recorded that episode were news, I don’t think people on Wall Street really – “Okay, something about mergers” – that’s not high on their radar. What is the connection between the FTC or that action and something that could happen with the Federal Reserve?
Lev: Let me tell you why that FTC firing was a particularly big deal. There is a supreme court case on the question of whether the President can fire commissioners on the FTC without cause, the way Trump asserted the power to do the other day, and that is the bedrock precedent that protects the Federal Reserve. It’s called Humphrey’s Executor. It was decided by the court in 1935 and it reigned in and largely reversed, or cabinet to its facts, a famous decision from 1926 called Meyers vs. The United States that President Roosevelt – FDR – had relied on to try to fire a member of the FTC and the Supreme Court in 1935 said, “Nope, you can’t do that. That case isn’t going to stand for that anymore.” We’ve built up a whole system of government around this understanding and here Trump is inviting the Supreme Court to overrule this bedrock precedent.
Tracy: Since we already went back in time to 1935 and 1926, can we go even further and talk about why we have independent agencies at all? I guess the clue is in the name “independent agencies” but they have some oversight clearly, so who is actually watching over these independent agencies and why do they exist?
Lev: All the constitutional actors oversee the independent agencies. Independent agency is a technical term of art in law to refer to an agency whose heads cannot be removed by the President at pleasure. They include any officer of the government who is not a legislative officer, a member of congress elected or a judicial officer, an appointed Article 3 Judge. All of those officers, some of them can be put into a category of they’re part of an executive agency, the head of that agency can be removed by the President at pleasure, or an independent agency, the head of the agency cannot be removed by the President at pleasure.
In that second category, independent agencies, they’re accountable to the President, to the courts, to the Congress, in all sorts of different ways. The President appoints the heads of independent agencies with the advice and consent of the Senate, the President can remove the heads of independent agencies, but generally only for cause. Sometimes those causes are specified, like neglect of duty or malfeasance in office, we could talk about that. In the Federal Reserve Act, the statute just says “cause” and a for-cause removal involves notice and a hearing, so it’s not the same thing as an at-pleasure removal. It precludes the President from removing somebody for a policy disagreement. The independent agencies are accountable to Congress in that there are hearings that are held. Officers have to go down, just like Jay Powell goes down and testify, they’re subject to Congress’s subpoena power for records, they’re implicated in all the workings of the government and their actions, like the FTC’s actions, are subject to judicial review by Article 3 judges. So they’re not independent in this sense that’s sometimes asserted that they’re a fourth branch of government, or they’re outside of the government. No, they’re just a type of government body that has a different relationship to the President from the Secretary of Defense or the White House Chief of Staff, which are positions where the President can fire or direct the actions of that officer.
These sorts of positions have been around going all the way back to the founding. With respect to monetary policy, it was a question for the first Congress and the first Secretary of the Treasury, how much direction monetary policy should be subject to day-to-day oversight or direction by the President. This issue isn’t a new issue for the United States, it’s there right at the beginning…
…Lev: What are the possible exceptions that would allow the logic of Humphrey’s Executor to maybe apply to the Fed even if it no longer applies to the FTC? The one that the Trump Administration is running with so far is that monetary policy is somehow not sovereign executive power and can be distinguished from the other stuff the Fed does, and that stuff is regulation of financial institutions. Trump put out an executive order last month, Executive Order 14215, which asserted executive power over all the independent agencies and included specific carveout language for the Fed that said “This order doesn’t apply to the Fed with respect to its monetary policy, only with respect to its regulation and supervision of financial institutions.” This is the Trump theory. There’s some other options we can get to, but I think let’s maybe think through Trump theory – does this make any sense?
There are some huge problems with this theory. It suggests that they haven’t spent a lot of time thinking about how the Fed conducts monetary policy and what the relationship is between monetary policy and the regulation of banks, because it’s really all one and the same thing. The court would be hard-pressed to say, for example, just as an initial matter, Jay Powell can’t be removed by the President with respect to what he’s doing on monetary policy but with respect to what he’s doing on bank regulation, the President could fire him for a policy disagreement. That would just fall apart pretty easily. What type of independence is really left? The president could just say “I fired him because I don’t like what he was doing on bank regulation,” and the real reason could be that he didn’t like what Jay Powell is doing on interest rates. But how would we know, because he doesn’t need to give a reason, except to say that it’s bank regulation. So there’s already a problem.
But the deeper problem is monetary policy implementation is bank regulation. In January when the Fed met, in the aftermath of that meeting, the board of governors amended Regulation D through a rulemaking published in the federal register lowering the interest paid on reserve balances to banks with reserve accounts at the Federal Reserve banks. It is a straight exercise of regulatory power, just like when the SEC writes a rule for what type of disclosure a company has to do if it’s a publicly traded company. They just don’t seem to realize this. They think that it’s like the FOMC just meets and they talk and then they announce a decision and that’s monetary policy, it’s not regulatory, it’s not adjudicatory. But actually, monetary policy implementation is all exercise of government power over the banking system.
2. Ukraine research excursion – what did I find? – Swen Lorenz
Visiting Kyiv, Ukraine’s capital, is not actually all that difficult, even under the current circumstances.
Anyone with a decent passport can head there by bus, train or car (for obvious reasons, no commercial flights are currently operated). No visa is required to enter Ukraine…
…You’ll have noticed just how vast Ukraine’s landmass is. Gleaning out of the train window to see mostly nothing, you start to understand how much space the country has relative to its population size.
You are also in for a few surprises. Who knew customs control officers in a war-torn country can be as friendly as the ones checking entrants to Ukraine?…
…Indeed, stepping out of Kyiv-Pasazhyrskyi railway station and driving across the city centre to my Airbnb apartment just off Independence Square, I couldn’t help but remember my trips to Russia in the early 2000s (or to Serbia in 2018 before that country took off for a belated round of rapid growth). There is a palpable sense that Kyiv never developed to quite the extent that other nations in the region did.
It was also striking how life went about seemingly entirely normal, at least during the day.
Kyiv gets into the Western news when it gets hit by missiles or drones, but as the saying goes, a house that isn’t on fire isn’t news.
I was also a bit lucky, as I did not have a single air raid alarm until my fourth day in town. By that time, I had learned that most people nowadays ignore these alarms…
…Kyiv does get hit by strikes, and people get hit. However, the city is about 300 km (190 miles) from the front line, it now has strong air defences, and strikes are relatively few in number relative to the size of the city. Human beings adapt, and even in a country that is at war, life has to continue somehow. Even now, companies in Kyiv are doing deals, residents refurbish homes and apartments, and some splurge on living the good life.
As I learned by speaking to a broad range of decision-makers, experts, and business leaders, Ukrainian companies and investors are currently reinvesting their profits in Ukraine – for lack of other options.
Refurbishment of real estate continues in some places, but it’s suffering from a labour shortage caused by the military mobilisation and the large number of men moving abroad. Large-scale residential development projects have mostly come to a halt…
…Before the war, foreigners could get a permanent residency in Ukraine by purchasing real estate for USD 100,000. They would subsequently pay just 5% tax on income, and there was no requirement to be physically present.
In fact, the deal still exists today. The tax rate has now gone up to 6% to help support the war, but that’s as sweet a deal as you’d be offered in most countries that want to attract new residents.
Opening bank accounts? That’s done one day, I was told.
Immediately before the war, Ukraine saw a significant influx of foreigners, and real estate was on the up. This abruptly came to an end, but I was surprised how many foreign “entrepreneur types” I encountered during my visit. There is clearly a wave of early adopters currently looking at possibilities in Ukraine.
Somewhat counterintuitively, some locals echoed a particular kind of enthusiasm.
It’d be easy to have a negative view of Ukraine’s outlook based on any number of factors. With men up to the age of 60 (!) having to fear the possibility of being sent to war, you could think that anyone who can leave would want to leave.
However, as one successful, enterprising Ukrainian stated:
“Western Europe is socialism. I lived in several countries over there, and I prefer Ukraine. More opportunity, more freedom.”
Ukraine is not for everyone – not now, and not after the shooting ends. However, as a place to live, it’s a much better proposition than I had thought…
…According to the latest figures from the United Nations High Commissioner for Refugees (UNHCR), almost 7m Ukrainian refugees currently live abroad. The exact numbers of those who stayed in the country and those who fled are difficult to pin down. Ukraine hasn’t conducted a census since 2001, and the country’s statistical service has partially stopped collecting and publishing demographic data because of war-related difficulties.
It’s clear that the answer to this question will have a significant effect on any reconstruction effort.
Experience shows that 30% of refugees return home within the first one or two years of a conflict’s end, and in some instances up to 50% if strong incentives are provided. Both a huge opportunity and a big challenge lie ahead. On the one hand, the Ukrainian economy – post-war – would benefit massively if several million returned to live and work in the country. On the other hand, the returnees would face a significant housing shortage, as 13% of the country’s housing stock reportedly got destroyed.
“When the war ends, you will not be able to buy a bucket of paint anywhere in Europe”, one of my dinner attendees told me.
3. Javier Blas on China’s Rare Earths Dominance (Transcript here) – Joe Weisenthal, Tracy Alloway, and Javier Blas
A couple of numbers. The United States imported last year in 2024, according to US government data, a grand total of… give me the theme music… $170 million of rare earth metals. Not billion – million. $170 million. I’m pretty sure that the United States imported more olive oil from probably Spain.
Tracy: I like that olive oil is your baseline value.
Javier: And how much is that? That’s the second number we are going here. How much is $170 million if you compare that to total trade between the United States and China? That is 0.03%. So it’s not a lot. And the United States could face, say, a 10x increase in the price of rare earth metals and it still will have no impact whatsoever on the American economy or the global economy.
What really drives me mad is that you are writing about rare earth metals – they are important and obviously for some very niche applications, you really need rare earth metals, but prices could go higher and those applications will just pay the price. Typically, a writer like myself, you want to sex up a bit of the story, you will say “Rare earth metals critical for the weapons industry, for missiles, and high-tech application.” Do you know where everyone of us have some rare earth metals at home? They’re used in super permanent magnets, and therefore on that absolutely critical instrument of economic warfare, which is called the vacuum cleaner.
Tracy: I will say I sympathize with editors not wanting headlines about vacuum cleaners versus military equipment and all of those important strategic things.
Javier: I just keep in mind the story, the price of rare earth metals may increase and making vacuum cleaner is a bit more expensive – I don’t know you’re going to click.
Tracy: Not to get all Judy Bloom on everyone, but rare earths, they’re not as rare as the name would imply, but walk us through where they actually come from.
Javier: A lot of them come from China. About 80%-85% of the world’s rare earth metals come from China. It’s a question of digging them out of the ground and then processing. The big difficult part is processing, because it’s very polluting and it’s a reason why all the processing has moved from everywhere else in the planet into China, because no one wanted to deal with how nasty the process is.
Here is also the other question: If you want to do rare earth metals – processing in particular – outside China, what you need is much higher prices. If anything, the problem today with rare earth metals, and if we want to develop an industry of rare earth metals outside China, is that prices are too low. We need much higher prices and then everyone will do rare earth metals. The other thing that will happen is that if the price goes to a level that incentivizes everyone taking a bit of care, a lot of engineers in the vacuum cleaning industry will find ways to do it without rare earth metals. Also, people will actually collect the vacuum cleaners and recycle the magnets for other use.
Tracy: But if rare earths are such a small component of something like a vacuum cleaner, I imagine the prices would have to go up absolutely astronomically for that even to be a consideration for a company making these things.
Javier: Most of the time the prices don’t go nearly as high. Prices are beginning to rise again now, but prices stay relatively low compared to where historically prices have been. We have had the latest headlines are about rare earth metals and export restrictions. We have some similar headlines for other category of metals that we call critical minerals, another fantastic exercise of labeling. You want to sell something, call it “critical minerals.”
People were really concerned because China was imposing some export restrictions on tungsten, bismuth, molybdenum, and indium – this sounds to me like high school chemistry. You would think, “Oh my god, what is happening with the price of all of these?” This was not announced yesterday, this was announced a couple of months ago. Prices move, and yes the price of say indium moved to $345 per kilogram. Is that a lot? Yea, it’s a 20% increase from where we were at the end of last year. But about 10 years ago, that cost, today $345, was worth $800 per kilogram. Did you notice 10 years ago that it was a crisis on the indium market and everyone was a bit worried about it? I didn’t notice…
…Javier: To me, the other very important topic in trade and oil is that oil used to be almost the largest component of the American trade deficit in goods. You go to 2008, the US trade deficit was running around $800 billion a year. Of that, nearly $400 billion was oil. Today we are in a surplus for oil…
…Javier: Let’s call it the Goldilocks, the middle ground, what the oil patch will love and mainstream will be happy, say $75 a barrel. $75 a barrel is not breaking the budget of any middle-class family or working-class family when it comes to gasoline in the United States. And $75 a barrel, the American oil industry is making money, no problem whatsoever. Whoever is complaining at $75 probably doesn’t have a very good business case. The main problem is to make everything work at $75.
Just for the sake of the argument, let’s say that the magic number is $75. You cannot get that running unless you get OPEC on board and they keep restraining production and losing market share. $75 a barrels means that the consumers are happy and they continue to consume, but also that the US shale industry continues to grow and at some point someone needs to produce less. Even if that magic number existed – and I think that $75 probably is about right – you need OPEC to play ball and accept that they’re going to lose market share forever and ever. I don’t think that they’re on that business.
4. The AI Data-Center Boom Is Coming to America’s Heartland – Jennifer Hiller
Manufacturers have passed over this patch of farmland for nearly two decades, a string of setbacks that left this one of the poorest corners of Louisiana.
A quarter of the 20,000 residents in Richland Parish live in poverty. Farm jobs dwindled when agriculture became more efficient, forcing people to move away for work. Hopes for an auto manufacturing plant later went bust.
Now, the community is hoping for a new savior: AI.
Meta Platforms scooped up 2,700 acres of farmland last year for what would be its largest-ever data center, built over flat rice fields 45 minutes west of the Mississippi River.
At 4 million square feet, or 70 football fields, Meta’s data center will cost $10 billion and sit on more acreage than Louisiana State University in Baton Rouge, which has more than 34,000 students.
Building advanced artificial-intelligence systems will take city-sized amounts of power, which has turbocharged electricity demand projections for the first time this century…
… Gregory Upton, executive director at LSU Center for Energy Studies, estimates Meta could use 15% of Louisiana’s current electricity generation.
That is worrisome to other utility customers largely because of the mismatch between the 40-year to 50-year lifespan of gas-fired power plants and Entergy’s 15-year deal with Meta. They don’t want to be on the hook for the infrastructure.
“They want to use ratepayer money to finance something that they currently only really say they want for 15 years,” said Logan Atkinson Burke of the Alliance for Affordable Energy, an advocacy group for residential customers…
…“We hear about this constantly,” Francis said, noting someone must guarantee the payments on new projects for about 30 years.
“Guess who?” Francis asked. “It’s going to be the ratepayers.”
Commissioners will consider Entergy’s request later this year, but Francis says Meta’s investment is likely worth the risk of stranded assets down the line.
5. A Positive Reframe of What Trump Might be Doing for America in the Long Term – Peter Leyden
Let’s adopt the big-picture, long-term perspective of a historian in 2100 to try to better understand what’s really going on today and what’s probably going to happen in the near future…
…If I channel that historian in 2100, he or she would probably distill the big-picture story of the key challenges facing America at the historic juncture of 2025 as roughly this:
The Pax Americana with America as the global policeman enforcing order in the international system was coming to an end. That system had a great long run of 80 years, starting at the end of World War II, but could not go on much longer.
The United States military budget in 2025 was $850 billion — more than the military spending of the next dozen countries combined — and America was saddled with chronic budget deficits that could not sustain that kind of spending.
The bureaucratic welfare state that had been the backbone of post-war society in America and throughout the West was also fiscally unsustainable and way past its prime in effectiveness. The large aging populations of these developed economies were putting mounting pressures on the budgets of entitlement programs, which were devised for the smaller numbers of elderly long ago.
The view looking forward only got worse. Going into 2025, the federal government already held more than $35 trillion in debt and it was adding another $2 trillion to the deficit that year. This chronic budget imbalance could not go on without something big changing.
Our historian in 2100 might then shift from the daunting challenges to their solutions and the political developments that led to positive change.
One big change that had already arrived by 2025 was artificial intelligence. This new general-purpose technology had reached the point where it was ready to be deployed in many new ways through the economy, society, and government. These were the early days of shifting work to intelligent machines but those who understood the potential of the technology could see how many fundamental system changes could scale up in the next 25 years.
The old systems of government of the last 80 years needed to be dismantled in order to free up resources and create the space needed to build these new 21st-century systems. (The same held true for the old systems of carbon energy needing to be dismantled to clear the way for clean energy but let’s stick to the government for now.)
The Democrats, as the party of greater government intervention, were never going to summon the political will to lead the charge on dismantling big, bureaucratic government. Government workers, and the unions that organized them, were a core constituency of the party. The Dems, whether they were bleeding-heart liberals or left-wing progressive champions of the poor, were never going to trigger the transition, knowing the trauma it would create.
For that matter, traditional Republicans over the last 40 years had not been able to summon the will to dismantle much of anything despite their small government rhetoric and worry about deficits and debt. That traditional party was also as committed as ever to beefing up the military and expanding its commitments around the world.
Donald Trump finally provided the wrecking ball — on his second try……Does that mean that Trump, the Republican Party, and the conservative movement are victorious and will now rebuild America in their image? Does that mean that the Democrats and the progressive movement are vanquished and will be sidelined for a generation or more?
The truth is arguably the opposite. When you look at what’s going on through the lens of long-ball politics, then you can see that Trump might be solving one other huge challenge that America needs solved right now.
America needs to finally end the roughly 50/50 political stalemate that has paralyzed the country for the last 25 years. We try the increasingly divergent political formulas of Blue America, then Red America, then back again, and back yet again.
We need a long-term 60/40 political coalition that can more fundamentally reinvent America over the course of the next 25 years so that it can thrive for the rest of the century.
Trump is in the process of creating that political opportunity — for the Democrats and Blue America…
…Throughout American history, populist movements have been great at dismantling and destroying things. They’ve also been horrible at building anything of lasting consequence — let alone new systems that will define the next era…
…In Trump’s case, he is an absolute master at channeling anger at existing systems and the elites who run and benefit from them. But now that he’s in power, he’s dredging up really outmoded ideas from a truly bygone era, like tariffs, as solutions to today’s problems.
Trump, his MAGA administration, and the current crop of Republicans now in Congress are not going to come up with the new systems that will reinvent America in a way that allows it to thrive in the 21st century. The odds of that happening are minuscule.
However, they almost certainly are going to create the space for some other political force, some other movement, some other set of leaders to pull that off. I expect that will come out of Blue America with new movements and a new generation of leaders looking forward with truly transformative ideas.
The political consequences for whoever dismantles America’s old systems are going to be profound, and I mean profoundly bad. The president and the party who dismantles those bureaucracies, as healthy as that process might be in the long run, will make enemies of all those who lose their jobs or benefits…
…By 2050, the general consensus was that Trump had made America great again — just not the way he had intended. Trump did dismantle the old Pax Americana and the old 20th-century bureaucratic welfare state, but he also dismantled the political efficacy of the Republican Party and conservative movement for a couple generations, too.
Trump unintentionally laid the foundation for the next era of American greatness to begin — not by looking backward to resuscitate the past, but by allowing others to look forward and reinvent a much better future.
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