Glossary

Plain-language definitions of the technical terms used across the project.

Circular core (strongly-connected component, SCC): A set of firms where money can flow from each to every other and back. Mathematically it is the formal definition of 'circular'; here it is the group of AI firms funding one another.
Vendor financing: When a seller funds its own customer so the customer can buy from it (e.g., a chipmaker investing in a startup that then buys its chips). It can inflate apparent demand.
Cancelable edge: A funding/contract link that either party can terminate on short notice. The model separates the core that survives only via cancelable deals (e.g., SpaceX) from the robust core.
Backwardation / contango: Backwardation = you pay more for a commodity now than for delivery later (a sign of physical tightness). Contango = the opposite (ample supply / storage demand).
Registered vs eligible (COMEX): Registered metal is available for delivery against futures; eligible metal is in the vault but not pledged for delivery. A high paper-claims-to-registered ratio signals fragility.
Owners' Equivalent Rent (OER): The CPI's estimate of what a homeowner would pay to rent their own home. It is ~¼ of CPI, is imputed from surveys (not home prices), and lags the market.
ALNRI / ZORI / New Tenant Rent Index: Market-rent gauges (Apartment List, Zillow, and BLS's own new-lease index) that track rents on new leases. They lead the official CPI shelter measure by ~1 year.
Equity method: An accounting rule where an investor books its share of an investee's profit or loss. Microsoft books ~27% of OpenAI's losses this way.
Remaining Performance Obligations (RPO): Contracted future revenue not yet delivered — a backlog. Oracle's ~$523B RPO is largely promised cloud capacity for OpenAI/Stargate.
Birth-death model: A statistical model the BLS uses to estimate jobs at newly formed businesses. When it over-estimates, payrolls are revised down later (it drove ~half the 2024-25 downward revisions).
Benchmark revision (QCEW): An annual correction of the monthly jobs estimates to near-complete tax records. The 2025 correction cut ~911,000 jobs.
U-3 vs U-6: U-3 is the headline unemployment rate; U-6 also counts discouraged and involuntarily part-time workers, so it is higher and captures more underemployment.
CPI vs PCE: Two inflation gauges with different weights; PCE (the Fed's target) usually reads ~0.3-0.4 pp below CPI.
Hedonic adjustment: A method that lowers measured prices to account for quality improvements (e.g., a faster computer at the same price counts as a price cut).
TIPS / COLA: TIPS are Treasury bonds whose payments rise with CPI; COLA is the CPI-linked annual increase in Social Security. Both make a lower measured CPI cheaper for the government.
Formal verification (Z3 / TLA+ / Alloy): Software that mathematically proves whether statements are possible (SAT) or impossible (UNSAT). Used here to prove the core's circularity and capital dependence rather than assert them.
HTM vs AFS: How banks classify bonds: Held-to-Maturity (losses hidden until sold) vs Available-for-Sale (losses shown). Rising rates created large hidden HTM losses.
Private credit: Non-bank lending (e.g., Apollo, Blackstone, PIMCO). It became the marginal lender for AI data centers when banks pulled back.
Special-purpose vehicle (SPV): A separate legal entity used to move assets or debt off a company's main balance sheet — the structure at the heart of the Enron collapse, reused in AI-infra finance.
PQC / CRQC / harvest-now-decrypt-later: Post-Quantum Cryptography defends against a Cryptographically-Relevant Quantum Computer; HNDL is adversaries storing encrypted data now to decrypt once such a computer exists.
CALEA: The US law requiring telecom carriers to build wiretap access for law enforcement. China's Salt Typhoon breached exactly this system.
Spoofing: Placing and rapidly canceling orders to move a price. JPMorgan paid ~$920M to settle spoofing of metals and Treasury futures.
Stablecoin: A crypto token pegged to a currency (e.g., USD1). New US rules route stablecoin reserves into Treasuries, creating forced demand for government debt.
Evidence grading: Each non-proven claim is labeled fact, contested, weak, or unsupported, and kept out of the formal proofs. Intent is never inferred from mere association.
Financial vs structural edge: Graph links are split into capital/credit/compute flows (financial) and governance/legal/security/ownership relationships (structural). The proven core rests only on the financial layer.
Cross-sectional analysis: Comparing many things at one moment (e.g., every credit-rating bucket today) rather than one thing over time. Used here to measure how spread-apart segments are, which are rich/cheap, and how much they move together.
Common factor / PC1 share: The fraction of a group's joint variation explained by a single shared driver (the first principal component). A high share means the segments move as one — so spreading money across them does NOT diversify. US credit ≈ 91%.
Relative value (z-score): How far a price/yield sits from its own recent average, in standard deviations. Positive = unusually wide/cheap; negative = unusually tight/rich. A standard desk tool for spotting mispricing.
Useful life / depreciation: The number of years a company spreads an asset's cost over. It is an estimate, not a price; choosing a longer life lowers each year's expense and raises reported profit, deferring the cost into the future.
Duration mismatch: When an asset's economic life is shorter than the debt or lease that financed it (e.g., ~3-year GPUs funded by 15-year leases). The asset can be worthless while the loan is still owed.
Proof-of-personhood: A credential meant to prove an account is a real, unique human (e.g., Worldcoin's iris scan), pitched as a defense against AI bots — and a route to a global biometric identity layer.
Digital Public Infrastructure (DPI): Government-built 'rails' for identity, payments, and data (e.g., India's Aadhaar/UPI). Promoted globally by the World Bank/UN/G20; the foundation a digital-ID + programmable-money stack runs on.
Programmable money / CBDC: A central-bank digital currency whose rules can be coded in — limiting when, where, or how it is spent. The BIS has stated this gives the issuer 'absolute control … and the technology to enforce that.'
Supply-chain worm / token theft: Malware that steals a developer's access tokens and uses them to publish poisoned software others trust (e.g., the Shai-Hulud npm worm). The prize is the trust attached to an identity, not a password.