Larry Fink runs BlackRock (BLK), the world's biggest money manager. On Thursday, Oct. 15 he took the Journal's opinion page to make a case. The AI boom isn't the bubble he worries about. His worry is that it soaks up everyone else's capital. When that happens, families buying homes and small businesses pay more to borrow.
His starting point is the federal debt. It's now a record $40 trillion. The economy, he says, needs to grow faster than 3% a year. That is how a country pays what it owes its people without piling on more debt. He thinks AI makes that kind of growth possible. He also thinks it's easy to picture a handful of companies worth $10 trillion each.
Then comes the catch. Governments across the developed world are running huge deficits. Private companies, many of them in tech, want huge sums at the same time. Add the trillions needed for power, housing and factories. Fink calls it the “biggest competition for capital I have seen in 50 years in finance.” When too many borrowers chase too few dollars, the price of money goes up for everyone. The giants with the deepest pockets win that contest. Everyone else waits in line.
His three asks
First, turn computing infrastructure into securities, the way mortgages became bonds. Fink started out as a mortgage trader, so he knows that playbook. Second, build the power plants and the grid, and train electricians, welders and technicians. He notes most of those jobs don't need a four-year degree. Third, and he calls it the most important, America needs more investors. “Roughly 4 in 10 Americans own no stock at all,” he writes. For much of the past half-century, in his telling, capital has grown faster than wages. People who owned assets pulled ahead of people who only had a paycheck.
A fair note. Fink sells the funds he'd like more people to buy. That doesn't make him wrong. It does mean the argument is his, and we read it that way.
Our read
This is Investments/Risk · IN04, with a Fixed Income · IN02 thread running through it. We read the op-ed as one more reason long interest rates may stay high for a while. Too many borrowers, not enough savers. That's why the safe money in our books sits in Treasury bills and floating-rate paper, and why we hold almost no long bonds. BlackRock itself is held at weight in 2 books; nothing added. The big tech names Fink describes are held at weight too, and we didn't add a share this week. Nothing in the piece changes that.
Here's where this touches your own plan. Fink's 4-in-10 number is about paychecks that never turn into ownership. For a teacher, that often happens quietly inside a 403(b). The money goes in every month, then sits in a fixed account or a money market fund because that was the default box. This week, log in and look at where your new contributions actually land. If the line says 'stable value' or 'cash' and you're 20 years from retiring, that's the thing to talk about. You check the roof before the rainy season starts. It's a ten-minute look, and we're glad to walk through it with you at a review.