Welcome back to our weekly mailbag edition here at Inside Wall Street with Nomi Prins.
That’s where, every Friday, we put your questions to Nomi and her team of experts.
First up this week, the conversation around infrastructure continues.
Earlier this month, Nomi showed us how to take advantage of the new $1 trillion infrastructure act out of Washington.
But reader Thomas R. isn’t keen on the idea of the government getting more of our tax dollars…
No government at any level has any money of their own and, therefore, in order to spend money on anything, they have to steal it from other people!
They do this by “borrowing” money that they have no means, or intention, of ever repaying. This gets robbed from the populace through taxation and inflation!
– Thomas R.
Nomi’s response: Hi Thomas, thank you for writing in. I share your frustration about how governments operate. I think that the infrastructure area has a lot of pieces to it, because if done, even in part, results can actually be visible or usable.
The government is well aware of how the Federal Reserve has been buying, and will continue to buy, a fair chunk of its debt. That gives it a license to keep borrowing – or yes, stealing – from our futures.
I don’t support this exaggerated Fed-government relationship. However, I also would much prefer that if the government is going to borrow from our futures or take from our present in the form of taxes, that it uses at least some of that money to invest in that future, rather than just have it go into the ether of the banking system.
We are more in debt as a country now than ever before. And it’s only going to keep getting worse. Corporations only pay 7% of our overall taxes. When we had the most real growth in this country, they paid about half. That means, people like you and me are shouldering that much more of the burden.
From my perspective, that’s not fair. But there can be opportunities to invest in such a way that some of that unfairness can be compensated. I want to find and share those.
Meanwhile, reader Jim L. wonders where all the infrastructure spending is going…
What have they done with all the money that was confiscated before? Don’t you realize this is just a bunch of failed energy companies, like Solyndra, on steroids?
What really burns is that ever since the ’70s, when the trucking weight was raised by 10%, we can’t keep a road under them. Go drive any interstate and check out the ruts in the right lanes.
– Jim L.
Nomi’s response: Hi Jim, thank you for your questions. I think the topic of government funds and infrastructure investing is a tricky one.
It’s true that governments aren’t efficient, quick, or direct with how they allocate our money. I spend a fair amount of time driving various interstates across the country. (I was just out on the 10 between California and Arizona.) And I agree with you that many leave much to be desired. So do state ones – and local ones, for that matter!
It’s totally unfair that highways haven’t improved to keep up with those higher trucking weights. It’s also true that cronyism is alive and well… And politicians and executives on both sides of the political aisle are constantly benefiting from skimming, or perhaps scooping, off the top. I’m too aware of this.
At the end of the day, we know some of the money allocated to a particular project will never make its way there. But we also know some of it will. And that has a positive impact on the companies in that area – as well as on their stock prices. So, when I look for investment opportunities, I pay attention to where the money is flowing. And I take all of the above into account.
Finally, we turn to one of Nomi’s regular contributing writers, Eoin Treacy.
Eoin’s take on nuclear energy ruffled some feathers in a recent mailbag edition. But reader Colin W. wants more…
Eoin mentions the move towards construction and use of small-scale nuclear fission reactors, which are much safer. But his reference to Generation IV reactors is not fully spelled out. Can more detail be provided, or is it needing another full feature description in a later article?
The discussion of the future of nuclear energy may also be incomplete without a discussion of fusion reactors, and the current progress being made by more than one company towards this goal. With the assistance of artificial intelligence, are we likely to see this goal met in the future?
– Colin W.
Eoin’s response: Public opinion soured on nuclear energy decades ago. That did not stop physicists from working on new designs. Weapons proliferation… the fear of meltdowns… and long-life waste by developing new designs… They took on all these problems.
Generation IV designs are newer nuclear reactors. They aim to solve these problems. And test projects already exist for most of them.
There are several types of Generation IV reactors. For example, they can be gas-cooled or lead-cooled. Gas-cooled fast reactors recycle much of their own waste in a closed system. Lead-cooled fast reactors are safer because the coolant is inert.
That means that, with these newer Generation IV reactors, there is a lot less risk of meltdowns. That’s when we compare them with conventional older reactors. Also, they are fast-neutron reactors. That means they’re more fuel-efficient and create less nuclear waste.
Experts are also proposing some of these designs for use with thorium. From time to time, thorium attracts attention. That’s because it is safer, would produce less waste, and the waste it produces is much less reactive.
But gas-cooled and lead-cooled reactors aren’t the only popular Generation IV designs. Let’s talk about two others that are also in testing: molten salt fast reactors and pebble-bed reactors.
Physicists have been working on modern molten salt fast reactors since 2005. The main appeal of these reactors is the low risk of radiation damage and leaks. Take Russia’s Molten Salt Actinide Recycler and Transmuter, for example. It aims to burn waste from existing light water reactors.
As for pebble bed reactors… Physicists in Germany shelved them in the 1980s. There was an accident in dealing with the fuel. But since then, China has taken up and improved the technology.
One of these is China’s HTR-PM reactor. It’s a gas-cooled pebble-bed reactor. It took 20 years to bring this project to fruition… And that was despite China’s aggressive build schedule. They built the original test project in 2001. The commercial-ready reactors began producing electricity in 2021.
It’s important to keep that in mind when we look at fusion technology. Which brings us to your second question.
For readers who don’t know, the idea of fusion energy has been around for decades. But we still don’t have any working fusion reactors. Fusion reactors use plasma to fuse atoms to make energy. It’s the same process that powers stars.
There has been a lot of recent excitement around fusion. But most of it focuses on the advances in superconductors.
Take the ITER fusion device, for example. Thirty-five countries are coming together to build it in France. It’s based on 40-year-old superconductor technology. And they expect it to reach first ignition at some point in the early 2030s. That’s still nearly a decade from now. This is a very expensive science experiment. The goal is to prove that the technology for a fusion reactor works.
Now, interest in fusion surged in recent years. That kicked off when a group of MIT scientists lost their funding in 2015.
The MIT Plasma Science and Fusion Center closed in 2016. Faced with losing their jobs, they quickly launched a project called SPARC, and went in search of private funding. That created a media frenzy and rescued their jobs.
With SPARC, the MIT team promise they can build a smaller, cheaper fusion reactor using modern superconductors. That allows them to create much more powerful and smaller magnets. These are essential for containing plasma inside the reactor.
Google’s AI team has also done exceptional work in modelling how plasma moves inside a fusion reactor. They are helping to solve some of the many challenges in commercializing this technology.
All the fusion start-ups, like Google’s and SPARC, are racing the ITER project to be the first to prove this kind of thing is possible. That doesn’t change the fact that fusion is a difficult problem. Even if the ITER project is successful, it would be at least another 20 years before these kinds of reactors can produce electricity and hydrogen for the global economy.
That’s why the Generation IV designs are still our best bet in nuclear. Physicists are already testing reactors for safety. This really is a “bird in the hand is worth two in the bush” scenario. Fusion is promising, but we need solutions now.
And that’s all for this week!
Do you have a question for Nomi and the team that we didn’t get to today? Send it to us at [email protected].
Senior Managing Editor, Inside Wall Street with Nomi Prins
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