There’s A New Railroad Across America... And It Won’t Run On Coal

It Isn’t Different This Time, But It Will Be Bigger Than Our Entire Economy

Inside today’s Daily Journal…

• Essay: There’s A New Railroad Across America…

• Big tech leans into leverage

• China tells banks: back off U.S. Treasuries

• A Fed-Treasury get together

• Chart Of The Day… Caterpillar

• Today’s Mailbag

It isn’t different this time.

Over the next five years, you’re going to hear – again and again – that nothing like artificial intelligence (AI”), robotics, and automation have ever happened before. But of course it has. The world has been transformed in unimaginable ways many, many times.

The printing press was probably the single most transformative invention of all time. The railroads reordered time and space across entire continents. Electrification eliminated almost all physical labor and, like God himself, brought the light into the darkness. The combination of semiconductor computing, solid state memory, and photonics (aka, the internet) rivals the printing press (and perhaps supplants it) as the most important invention of all time.

Never forget: wealth accrues to optimists. Luddites decried all these changes. Lots of publishers got rich selling scared people newspapers, pamphlets, and books about how these innovations meant the end of the world (ask me how I know…)

So, yes, it has happened before. And no, it doesn’t mean the end of the world.

In fact, we have a very good road map of what’s about to happen.

I expect the coming automation revolution (the combination of AI and robotics) will rival the build-out of the U.S. railroad networks as the largest and most valuable capital investment of all time.

Investors haven’t yet figured out how much capital will be required to automate the world. But it’s far, far more than most people can imagine. Amara’s Law describes how humans inevitably react to bona-fide technological revolutions:

Let’s consider the railroads.

Between 1860 and 1910, roughly $20 billion was invested in building out America’s railroad networks… that was 400% of the entire national GDP in 1860. In other words, the capital investment into the railroad network was four times bigger than the country’s entire GDP when the major capital spending began.

If you were to scale that to today, we should expect to see $120 trillion invested into achieving full economic automation over the next 50 years.

The markets went sideways last week when, during quarterly earnings announcements, Big Tech companies (Google, Microsoft, Amazon, Tesla, Meta) committed almost $700 billion for 2026 on data centers, chips, and robotics integration. This is up more than 50% from just last year. But… consider the numbers above.

It will not be long before more than $2 trillion a year is being invested. And our entire economy will be transformed.

The “keystone” to this revolution won’t only be Nvidia chips. These changes will require an unprecedented amount of new, always-on power supply.

Today it’s very difficult to imagine how enough energy will be produced, but it will come from new sources that aren’t feasible today.

How do I know? The railroads.