The Government Will Own It | Ben Hunt on World War AI

**SPEAKER_1** (0:00)
We are excited to announce the launch of a new podcast, Why Am I Reading This Now, with Ben Hunt. Stories and narratives are increasingly shaping markets, and Ben and his team at Perscient have developed a unique system for measuring how those narratives emerge, spread and change. In each episode, Ben and Matt Zeigler will examine the major issues facing investors through this narrative lens, helping listeners better understand the stories driving markets and what they could mean for the economy, policy and investment outcomes. We have included this first episode in the Excess Returns feed. To continue receiving new episodes, subscribe to the separate Why Am I Reading This Now, podcast on all major podcast platforms, or follow the show on our YouTube channel using the links in this episode description. Thank you for listening. We hope you enjoy the new show.

**Matt Zeigler** (0:35)
You're watching Excess Returns, the channel that makes complex investing ideas simple enough to actually use, or better questions lead to better decisions. This is our first official episode of Why Am I Reading This Now, where we look at the financial media, what it's actually saying, what the narratives are, and what it means for your portfolio. I'm joined by Mr. Charles Epsilon Theory Atlas himself, the narrative world heavy on his shoulders. Say hello, Ben Hunt.

**Ben Hunt** (1:00)
Hello, Ben Hunt. Great to be here, Matt. Thank you.

**Matt Zeigler** (1:04)
All right. So we're launching this because we keep talking about these themes. You've got some amazing stuff going on at Perscient, these decks that I'm getting in my inbox regularly from you guys. Chef's Kiss, check them out. That's persient.com. P-E-R-S-C-I-E-N-T. I spelled it right, right? I'll look at that. Perfect. In the Zeigler family bonus points already today. Give me a gold star.
You're updating World War AI. This is a crazy piece. When did the original come out?

**Ben Hunt** (1:32)
November. Last November.

**Matt Zeigler** (1:34)
We were but children in this AI cycle.

**Ben Hunt** (1:38)
Feels that way, doesn't it?

**Matt Zeigler** (1:39)
It sure does.

**Ben Hunt** (1:41)
I mean, it's amazing how long we've been having this really prominent, I won't even call it a debate right now, but this dominance of the AI theme for markets, politics, the world, you name it. It's, yeah, yeah, yeah, yeah. Anyway, since I wrote this note, this is called World War AI. It's got a very simple premise based on the fact that we're going to spend here in the US as much money in inflation-adjusted dollars on this AI capex and data center buildout as we did on World War II. It's crazy.
We spent, again, inflation-adjusted money about somewhere between four and five trillion dollars to fight World War II. That's what we're going to spend on this AI capex buildout. It's the same amount. Now, it's a bigger economy. It was four to five trillion dollars. Inflation-adjusted was about half the US economy in the 40s. It's only about 15 percent of the US economy today.
But this is the marginal driver of everything in our markets and our economy. So the US economy is going to grow about two percent, if you ever take a little bit in 2026 Half of that GDP growth is coming from AI CapEx.

**Matt Zeigler** (3:19)
I know you just said it twice. I must tell you to say it a third time, because I think this is a fairly shocking statistic on the size of AI CapEx contribution to GDP right now. And then why you've been telling us this is such an important government initiative.

**Ben Hunt** (3:35)
Yeah, we're part committed. I mean, so if you took away half of GDP growth, it wouldn't put us in a recession, but it would sure as hell feel like a recession. And for markets, I mean, forget about it. Forget about it. So the AI CapEx story, this is what's driven multiple for this market for the last eight months.
Let's say we're putt committed, both in terms of markets, in terms of government wanting to avoid a recession. But the other way we're really putt committed is we've been spending that this year's down payment on that $4 to $5 trillion. Because what's happened is that all these companies, they can't finance this out of cash flow. So you've got Google now. Google is negative free cash flow. Google, Google is raising equity, borrowing and selling equity.
The companies are trying to finance it themselves. First, they did it out of cash, cash flow. Now they're borrowing, selling equity. Well, who's lending to them? It's, we used to call them shadow banks. It's private equity, private credit. These are the funders of this first big stage of the AI CapEx build out.