The Demoralization is just Beginning
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A gold standard means that when the economy gets overheated it pops, then contracts and you get deflation. This makes crashes last longer and harder. It requires greater fiscal discipline to overcome.
The problem with the USA "empire" is that for a trading empire to work you need a plan, and stick to it.
China has been quietly debt trapping a whole bunch of nations that have strategic things they need. They have been investing in infra and leasing it back to the host country. That takes planning, money vision and time. Something neither the president or congress have the ability to do.
The USA in the 40/50s played a blinder, neatly using war debt and the martial plan to usurp the exhausted british empire's trading power. The dollar became the global reserve and all of the new global institutions were setup and housed in the USA.
And a dictatorship. Democracy does not fit very well with long term plans, unless you either make huge efforts to ensure everyone gets their fair share (see Scandinavia) or you have a good plan for people being rich with not too much effort (see Switzerland and other tax havens).
Concerning the USA, the divide between the extra rich and the general poor is nowadays too large to have a functioning country.
Suffice it to say that the debacle presents circumstantial evidence that "rich with not too much effort" might encourage dangerously laissez faire behavior.
Say again? If we're talking strictly about the United States as per the article that inspired this post, the U.S. is a case study of a prosperous, remarkably stable democracy steadily increasing its prosperity, wealth, influence and power while also for the vast majority of its history investing for the long term and in vital infrastructure. This process hasn't been constant or evenly incremental but it has been there for (now) literally centuries.
The same could be said of Britain and many other developed countries on shorter but still reasonably long scales. On the other hand when you look at dictatorships in the wider scope of the modern era, the vast majority of them either invest explosively only to fail catastrophically at some point before reverting to some other variant of government, or countries that see their biggest failures happen during periods of dictatorship, and their major socioeconomic successes happen during periods of something at least approaching democracy and openness.
There are exceptions to the above tendencies in favor of democracy, but China can't yet be called such. It has had only 80 years under its present dictatorship (preceded by decades of warlord rule, weakness and chaos) and of those only the last 40 have been ones of relatively stable growth, investment in major projects AND concurrent increases in prosperity. Under Mao it invested in certain major projects, but at nearly cataclysmic social, economic and human cost. Hardly a model, in those days, of dictatorship being applied to patient, wise planning.
>Concerning the USA, the divide between the extra rich and the general poor is nowadays too large to have a functioning country.
Really? Feel like sharing the mechanism by which these claims of overly severe wealth inequality will make the US collapse any time soon?
Note also that as another comment above this mentions, the U.S has had more or less similar levels of said inequality for the last 100 years.... in which it functioned as a stable, relatively peaceful, democratic, increasingly prosperous society in which overall standards of living in absolute terms have gone up enormously.
I don't think that there is a fixed asset that could be suitable as a proper peg.
Pegging currency to gold or silver gives it the illusion of being of a fixed value, that can't be gamed or changed. However history says otherwise. Its continuously mined, and there are industrial uses so Gold and silver's actual value will still fluctuate.
plus whilst tradeable gold is normally stored in vaults, there is still a boat load of "free" gold that can move around and cause monetary problems. Its a side plot of one of the James Bond books.
You also have to remember that even if there is a physical backed standard, banks still need to lend, which means that in practice it'll still be a fiat currency, just not centrally controlled.
oil is fairly difficult / expensive to transport and store, certainly at volume.
That's precisely the solution. The current state of the hollowed-out US economy is because of the zirp enabling a hollowed-out financialized economy riding on bloated stock prices and valuations. That is where that 'capital' came from. And like in every case of printing money, the bill eventually came due.
> A gold standard means that when the economy gets overheated it pops, then contracts and you get deflation
That can be fixed with other measures and regulations than enabling a scammy free cash economy that causes only hollowed-out bloat.
Banking systems being somewhat unstable and prone to credit crises is actually an entirely different problem, and unrelated to how the expansion is being regulated.
This is nice for the King because he benefits from the seigniorage. (But also potentially fatal, as he gives in to temptation to print too much and then some more, leading to hyper-inflation and the guillotine.)
Fiat money can be combined with fractional reserve banking. Now the monetary authorities can create extra money to overcome banking crises. Notice that society has a trade-off to make. Perhaps high reserves, so that the banks do not create much money, in which case the King/President will have to print extra fiat currency. Perhaps low reserves, and a small base of fiat currency. Now the banks create most of the money in circulation and get to charge interest on it, as an kind of on going seigniorage.
Which is best for the country? One off seigniorage accruing to the national treasury (due to printing), or the recurring seigniorage of interest paid to the banks on the money created by the fractional reserve system? There is something to be said for fractional reserve banking, as a kind of automatic stabilizer. If the economy contracts, there is a credit squeeze and the money supply contracts. Pick the reserve ratios and minimum lending rates correctly and it contracts the correct amount for price stability. And this works in reverse, expanding the money supply as the economy recovers, avoiding needless restrictions on growth due to deflation.
Experience shows that reserve ratios are too low, leading to economic instability. Why do we ignore this experience? Follow the money, low reserve ratios are profitable for bankers. We could have have a much more stable economic system with a two part strategy of 25% reserves and the monetary contraction implied by raising reserve rate being countered by printing the right amount of money.
I think there's some truth to this.
And if you're willing to accept it for what it is, ask yourself about your own supply of money, what it is and where it comes from.
What are the current limitations if not gold any more?
And it hasn't been gold in quite some time, not just theoretically for a while.
How has that "unlimited" money supply worked out ever since?
Is there any other bottleneck somewhere that maybe is holding back that limitless supply of money from ending up in your pocket worse than if it was gold, which we know has always been so hard to come by that most people have never had significant amounts whatsoever since the beginning of time?
It works very well when your currency is the world's reserve currency. You get way more latitude for printing money with much lower inflation vs some isolated economy win no deep reservoirs of unused currency in "reserves".
If the US loses the status of being the dominant reserve currency, the link between money supply and inflation will become much stronger. The USD is currently backed by the US hegemony , of which foreign policy is a big part of.
Inflation on one side, employment rates on the other. It's literally in most central banks' headline policy goals.
> How has that "unlimited" money supply worked out ever since?
Pretty well, seeing how it's largely coincided with unprecedented growth in living standards and helped us avoid what could have been a repeat of the 1930s due to Covid's impact on economies, among other things.
Judging that it's been 100 years since the last depression, pretty well.
People really think humanity operates on some kind of fixed physical properties, when everything we rely on in modern society is not real. Borders are not real, the value we place on a human life is not real, the stocks and bonds arn't real.
They're all relative relationships with historical and future promises, reliant upon the trust we place in the means of proof and veracity, all of which are entirely human figments.
Nerds trying to fix problems that nerds seem to have created a wind on will go nowhere.
This not a problem of fixed economies of precious metals. This is entirely about what form of governance can tackle climate change, and the zeit geist has determined fascism everywhere, zombie apocolypse where huamnity needs to be as brutal as possible will win.
Europe is now the "heros" of the zombie apcolypses interacting with the "evil" humans who want to brutalize everyone into either submission or death.
Kenyesian economics, through inflationism and fiscal policy, has been trying to solve this problem since the New Deal. When they actually make any progress on that front, why don't you let me know?
Inflation sucks but deflation is a death spiral. There is some more nuance, but most economists would agree that deflation is a lot scarier in general than inflation due to its feedback loop.
Moreover, the reason why we keep getting rampant inflation is more due to neoliberalism and neoconservative economic/fiscal policy rather than modern monetary theory and Keynesian monetary policy. If anything, these monetary policies have massively reduced the amount of inflation we have been feeling for the past several years.
Isn't this a good thing? Otherwise, what incentive is there for financial discipline?
> The problem with the USA "empire" is that for a trading empire to work you need a plan, and stick to it.
Have stuck with it for over 75 years. Not too shabby. Also why is empire in quotes?
> China has been quietly debt trapping a whole bunch of nations that have strategic things they need.
I know the US and Europe has for centuries. Which ones has china "debt trapped"? Or are we sticking to the propaganda that china helping develop other nations is "debt trapping".
> Something neither the president or congress have the ability to do.
Neither the president nor congress sets the "plan" for the US. Do you really think trump gets to decide geopolitics? Do you really think congress decides the direction of the nation? Or do you think they listen to the elites who fund and control them? One has to be extraordinarly naive to think that a superpower with nukes is run by the masses.
The president and congress sells the plan decided by the powerful to the masses. It's why they exist. They don't plan or decide anything. Most of their time is spent raising money for elections. When do you think trump or congress has the time to develop any expertise in anything.
Getting reelected because you managed to not tank the currency and economy.
there isn't one. Banks need to lend as much cash as possible to make as much money as possible. A gold standard doesn't stop that, it just means that bailing out customers of those banks much much harder. hence why the FTC was setup. Its a rich history and well worth looking into
> I know the US and Europe has for centuries.
Not really, the last "european" style colonial system died in 1989 with the collapse of the USSR. Sure France does the whole "we'll administer your currency for a huge fee", bu that only works because they are ex colonies. Invading another country and turning it into a puppet state is much more costly than people think (see Syria, Georgia, Iraq, Afghanistan)
What china is doing is far more clever, far more effective, much less bloody and extremely profitable. just build a road, port, rail line, factory, mine. charge the host country a fee, bish bash bosh, massive growth for the host and china.
> Do you really think trump gets to decide geopolitics?
I mean he's not far away from deposing a president, and he's allowing another country to ethnically cleanse another(Biden did that too). Biden crashed russia's economy, Trump will un-crash it and let it re-arm to invade another country.
That sounds like geopolitics to me.
-there is more to an economy than manufacturing. Using manufacturing metrics to rate an economy is like scoring a soccer game based on how far your players run: in some contexts correlated with “winning” but in others it’s not. -gold is not a good currency or basis for monetary policy. -these ideas only sound self consistent without economic context.
But solution point 1 — brain drain the rest of the world — is an absolutely first rate policy. The fact that the US requires newly-minted PhDs educated here to get a different visa or leave is absolutely self-defeating. We should be welcoming skilled immigration from everywhere.
For my money, you’re better off reading Krugman, Brad Delong, and (my personal favorite) Michael Pettis. I’ll read Geohot when it’s about engineering or self driving cars.
That’s a pretty good analogy for what GDP is counting, actually.
But I think the larger point is that manufacturing is grounded in something real. It’s a measure of how many tanks and fighter jets you can make, no matter how much they cost to make.
The graph that shocked me tho was the electricity production, I didn't realize US was so flat but it rings true, I know there's a 2 year wait-list to even have your energy production considered to be hooked up to the grid, but I assumed there was some at least some throughput, now we're taking about onsite mini nukes while China is building.
Manufacturing plastic one use sponge bob toys are also real. Real and not particularly useful and perhaps not what most people imagine when they vastly overstate the importance of manufacturing to an economy.
Now jets and planes and military supplies is a real issue. But Manufacturing in general isn't how many tanks and fighter jets you can make at best it correlated.
Hmm
> you’re better off reading Krugman
It used to be kind of a meme to make fun on how wrong Krugman was but now it's kind of like beating a dead horse.
https://foreignpolicy.com/2019/10/22/economists-globalizatio...
https://www.theguardian.com/commentisfree/2018/jan/10/paul-k...
In particular, Krugman was the flag bearer of "countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt". (paraphrasing) This was incredibly wrong. It ended up in sky high debt and now interests on it are non-zero. And most of the added money ended up in the top 10% making inequality much, much worse.
Krugman actually generally felt it went too far, and was not a proponent of it.
There is some similarity to his making fun of people worried about “bond vigilantes,” iirc. But I don’t think your characterization of his positions is accurate.
As soon as you get inflation, keeping interest rates low would make it worse, but raising them explodes the interest rate on the debt. And your other alternative to paying the high interest is to print the money to pay the debt, which also worsens inflation. So taking on that much debt is just a bomb that goes off as soon as inflation becomes non-trivial, and on top of that, is a thing that generally causes inflation.
To understand how people like that succeed, realize that there is always a market for someone who will tell you what you want to hear.
How do you define "actually study" here, and what makes you think the author didn't study the topic at all?
Its totally fine if you disagree with the author's view or have additional information that they missed or didn't consider.
Writing it off as coming from someone who didn't "actually study" the topic is unnecessarily dismissive.
Because this is George Hotz who is arrogant and enamoured by his own intelligence.
He famously derided Twitter's engineering team as being incompetent and that he could easily rewrite it. He lasted at Twitter for a month, delivered nothing and then resigned.
If you want a center-right take on economics, go to someone like Tyler Cowen. There are also plenty of economists who argue in favor of onshoring some manufacturing under a security/defense as public good argument.
Now we’re told it’s too complicated to understand, leave it to the experts in Washington. If we put restraints on their ability to create money bad things will happen.
Separate money and state!
That said, this isn't all "gold" either in my opinion. Money is still tied to productivity. At least it works as long as people believe debts can be repaid. If they wouldn't, there would be runaway inflation.
It is more sensible to back that debt with productivity or "economic potential" instead of gold, but the idea isn't that far off as people generally say it is. In general it still is more loosely tied to real productivity though and that is a problem. The solution isn't to return to gold backing though.
And there is a development of poor economic ideas, like that creating debt is always good on a national economic level. You should never neglect to mention that this new debt would require something like a hegemonic military position to underline the "securities" of said debt.
And when market changes drastically(extra gold, or lot of removed supply). The value also swings a lot. Possibly even more than with other currencies.
Some level of floating currency is clearly most reasonable solution. But just how is still very open question.
Not a crypto shill but proof of work isn't so terrible, particularly something ASIC resistant. Energy isn't such a bad thing to peg your currency to (lot more flexible than gold). But nonetheless you still end up with a lot of weird distortions.
The legacy of ZIRP, and the effects of decoupling the financial and real world, are going to be felt for years to come.
Not really. Most developed economies are basically 70% Baumol's cost disease[1]. The 20% of the American GDP that goes to healthcare, half of the military budget that goes into salaries, public services, the police isn't billed on productivity. Those are non-tradeable services whose compensation inflates with growth in the productivity gaining sectors of the economy.
That's why you can go not to a wealthy Tier 1 city in China, but to a Tier 2 or 3 city and it has better public services despite having like 10% of the per capita budget of a US city. Most compensation is.. fake. If you want to know what an economy does look at the stuff they make.
A lot of folks say China is decades in the future, this is not my belief. They are ahead in some major areas for sure but in other areas they are still a developing nation. China just does it's own thing and doesn't concern itself too much with the whims and concerns of the west.
One thing was abundantly clear however, China does not suffer from financially engineered Baumols disease. It was incredibly refreshing to spend time in a "functioning" society. Housing abundance, cheap EVs / public transport, great services, lively small businesses etc (no abandoned high streets).
If I were to guess this is probably because productivity growth so far has been able to keep up with the expansion of money supply. Where as the west tried to print itself out of structural deflation with a decade of ZIRP/QE. How do you avoid deflation in an aging society? Is it even avoidable? I guess we'll find out [2].
1. https://www.scmp.com/economy/china-economy/article/3133397/c...
2. https://www.wsj.com/world/china/china-xi-debt-economic-plan-...
Let's say that some new use for copper is discovered, that drastically increases the demand for copper. The cost of existing items that use copper is going to go up, even if those items are no more productive than they used to be, because the new items are now in high demand.
You can see this effect in real life with GPUs; it's much more expensive to buy a gaming graphics card today than it was a decade ago, because GPUs are in high demand for other applications.
So, increasing the productivity of labor in some sector is going to do the same thing supply and demand does to anything else -- the cost of labor goes up, but not as much as the productivity in that sector, and the producers of labor will enjoy higher demand.
The way I see it, if the markets led by PhD and Noble laureates fails, people start looking for alternatives. Since the "establishment" has been proven useless, the door is open for "anyone" to chime in. The reality is that the economist at the top do not want to see the deficiencies because they have their salaries on the line.
Ironically, that has created a populist backlash that has vaulted even worse economic ideas into power.
Anyone read "Capitalism in the 21st Century"? It's long and dense, but it does make some excellent, well-supported points about the structure of an economy that explains the current situation very well with historical antecedents.
This won't do it justice, but: inequality always increases, by definition, if the returns on capital outstrip the overall growth in the economy. (Think through that if it's not obvious; it's literally a mathematical truth.) The book argues that history is a series of long, slow accretions of wealth, with increasing inequality, until some shock (usually a violent revolution) overthrows the old system, resets inequality, and the cycle starts again. The latter half of the 20th century, for the US, was one notable exception: growth outstripped returns to capital, so the benefits of that growth were widely shared: inequality decreased. That trend ended in the ~1980s, and the widening inequality gap has fueled unrest.
And the book points out that we've seen this show before. I think we're in the "history repeating itself as farce" phase, though.
They were always run by politicians, oligarchs, capitalists and interest groups.
hows that going? economists have been giving advice to policymakers for decades, and we have a widening gap between the haves and the have nots, society increasingly in debt, etc.
Maybe economists have it wrong.
To be clear, I am talking about the ones who get the limelight, no all of them, in general.
Exactly advice.
Which is then promptly ignored because the rich are a uber-powerful voting bloc.
Not everyone with a brain just wants more money. Some want to do interesting research that doesn't have a short term commercialisation strategy.
My entire family was killed in my previous country for daring to speak up against the leader at the time. It has something that has shook me to my core. Now, even to this day, I cannot find another country besides the US who not only respects freedom of speech, but encourages it among its residents. I will not move to another country no matter how drastic it gets.
I also lived better in Sweden when I was a PhD student, than I would have if I went to Washington and took an H1B job for 100k. I think the cutoff would be at somewhere soon above 120k. Maybe at 130k-140k, I would be able to live in Washington approximately as well as I could live in Sweden as a PhD student, but it would substantially more stressful. Maybe 130-140k isn't much to long-term Googlers, but I think this is closer to salaries that people actually pay for H1Bs than these 500k+ salaries.
The built environment in the US doesn't really correspond to the nominal prices, so in a way, America is only interesting economically if you're planning to go back home.
Even better, let them keep their visa and if they revoke their citizenship, we'll relocate their entire family if they come from a repressive regime.
Brain-draining the world is really the key to cementing American Hegemony in a post-Cold War world. Additionally, we should be funding basic research at historic levels and incentivizing, via the tax code, corporations to productize and apply this basic research. We should be expanding the frontier of knowledge without regard to its immediate application.
One of the keys. Others are the USD as the defacto world reserve currency, the ability to project military might anywhere, and the US's ability to keep other countries from growing their militaries too much (making the other items in this list easier to manage). The US is quickly throwing all this away though.
Why should we want that instead of an orderly, well-governed democracy? Do you think people in Sweden or Denmark are upset their countries aren't hegemons?
And what would that do to the country? Do you really think that, say, the top 5% of India and China (100 million people) would do better maintaining a democracy than median Iowans? That's a real bet that your assumptions about how society works actually reflect reality.
The microeconomists know a bunch and have some powerful mathematical tools. I have some confidence in those studying trade and cities. But comparing and measuring countries is messy and hard.
And I totally agree we should lure other countries’ brains here. The return on investment for a STEM degree is about 3 times the stock market index and we should get as much as we can.
Not really, no. If China cut off the US, for any reason, who gets hurt more? Who has a bigger house of cards to collapse? Who will have a harder time rebuilding?
If the next leader is bolder than Xi, and is of the same kind that once killed tens of millions of people, losing an arm and a leg to behead an enemy might be a viable strategy.
There’s a logical fallacy in your rebuttal.
China gets hurt more. They are an export economy. US will face some temporary pain, sure, but other countries build stuff as well. Meanwhile what does China do with all the materials piling up, millions out of jobs and a half a trillion dollar hole in their economy?
Yes, water it cheap. But you die if you can't access it for just a couple of weeks - this is a risk based approach. And this is something traditional economists do not look at too much.
At what quantile of an R1 does graduate education become something other than a visa scam? What domestic student is going to toil for years for poverty-level wages? The further pursuance of policies that are turning research institutions into immigration scams is a bad idea.
Do you want entire swathes of the country to have no exposure to higher education personnel?
Questioning establishment dogma is largely forbidden, no matter what your establishment is, so it's absolutely worth considering outsider assessments.
Wars test base assumptions. It seems obvious that in a war, ability to take things out of the ground, turn them into bullets/drones/etc, and then get them to the front line is what matters, not what the stock market says, and not claims made with the backing of a military (such as how much the US dollar is worth, or who owns what IP).
I don't necessarily agree with his conclusions, although I understand where they come from.
And what would that be? "Services"? The author tried to explain how that is basically a scam.
And, getting back to our present, hobbes-ian world, services won't help you put tanks on the ground and airplanes in the air in the event of a grand war, you need a pretty solid manufacturing base to back it up, you need to be the "arsenal of democracy".
I don't agree with all of his premises or conclusions either, but I believe he's exactly right about the financial engineering and outsized rewards that frequently accrue to non-productive activity in general.
I see the manufacturing fall-off he notes as a proxy for that. It's not the only evidence, but it's one piece.
Neoclassical economists have been selling themselves as “scientists” (think physicists) for decades and their theories are cited as reasons for economic policies in the USA.
One of these days I’ll write a post on it. But one of the areas they get wrong repeatedly is on the minimum wage.
Neoclassical economists would argue that increasing minimum wage ultimately hurts the people it’s trying to help. For example, by increasing minimum wage you would see a decrease in businesses and/or number of jobs available. In neoclassical theory and “Econ 101”, they would chalk it up to supply and demand.
However, this has been disproven in regions or states where the minimum wage has well exceeded the federal minimum wage. Take Seattle, WA for example where min wage is ~$20/hr. Local restaurant industry didn’t collapse. Region itself didn’t collapse. Sure jobs or businesses closed (Subway franchises, lol), but were eventually replaced by ones that could compete. Likely local businesses. And since all businesses pay the same wage to remain competitive, workers get more money in their pockets. This leads to increased spending by those same people.
There’s a ton of other factors as well but it’s well beyond commenting here.
If they did, we'd have had a land value tax for a century by now...
Regarding Pettis, I still haven't decided whether I agree with (and understand) his worldview.
https://www.bitsaboutmoney.com
And subscribe to Bloomberg's Matt Levine's "Money Stuff" newsletter and podcast:
I think the ideas are interesting and worthy of discussion. If you want an actual credentialed economist talking about similar issues — here’s one: https://www.yanisvaroufakis.eu/2025/02/21/donald-trumps-econ...
But you need to recognise that there is an “orthodoxy” and challenges to that. You aren’t going to hear the questioning of the status quo without looking outside the “establishment”. Here’s a taste (note that Yanis is old school left as far as politics goes)
“Faced with President Trump’s economic moves, his centrist critics oscillate between desperation and a touching faith that his tariff frenzy will fizzle out. They assume that Trump will huff and puff until reality exposes the emptiness of his economic rationale. They have not been paying attention: Trump’s tariff fixation is part of a global economic plan that is solid — albeit inherently risky.”
Just looking at the map in this article, and whatever source this comes from (some people don't seem to bother sharing sources) - it seems not accurate. (e.g. why is Greenland a different color than Denmark...)
It's not like anyone designed it, or has any control over it. Some people are in position to make adjustments, nudge some aspect of it towards a desired goal or away from undesirable one, but there's only so much they can do - it's all strongly path-dependent.
Put another way, the shape of the economy is just an exercise of descending down the gradient. Any individual or group has very little control over this, and major changes to the economy basically only happen when war or technological inventions reshape the entire gradient.
--
[0] - https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
You can argue dollars can also buy 'IP', but IP is virtual and only as good as the police and military enforcement of its regulation.
You can argue dollars buy oil, but once again only because of military enforcement of the imposed rules of not to trade in other currency.
In the end an empire based on massive consumption of the world's resources in return for not much else besides the threat of 'take this paper or we bomb you' will not hold.
As for the brain-drain. This was/is still a huge thing. But it hinges on the desirability of attracting the right brains. If you abandon meritocracy as the US has been speed-running, why would a capable person want to go/stay there? Seems like the attraction incentives are there more for the subpar performer in the 'modern' US.
From my experiences over the decades, the Venn diagram that includes both and have worthwhile understanding is a small minority of either group, and even smaller when you consider the total of those outside the set as the mainstream.
When this showed up on HN, there were no comments for quite a while.
I had casually heard of Hotz as a recognized hacker, interestingly one who was respected for figuring things out that other people could not. But with no real familiarity, I couldn't recall what he had hacked or where he had worked. Maybe I had retained the impression that he started out quite young.
And then he comes out with this.
Last time I heard of him, I knew he was smart, I just didn't remember why any more.
This time it's different.
Something must have escalated.
All I could think of now was "How did he get to be so smart?"
That would have been my entire comment, which I didn't post because I thought it was not very substantial, and I was wondering if there would be any comments anyway. No interest was being shown at all.
Study takes many forms and some people can figure things out better than others.
No one person can solve all the problems, or even recognize them, and when you start looking from fundamental principles you can end up so far off the mainstream that there is overwhelming misunderstanding that can not be overcome. Any mainstream can look so sensible across-the-board because the experts are standing on the shoulders of those who came before, and some of these are lifetimes of intense study. It can add up to more than one person can usually do in a single lifetime themself.
But if the foundation is wrong to begin with, or turns out that way later, it can be like a pro-cheerleader pyramid where the top rallying cry comes from someone who can still not see out of the pit of their own making, not actually elevated above the crowd like it appears. What could be incorrect about all the shoulders they are balancing on and the adoring crowd of high-dollar ticketholders to boot?
One thing's for sure and I don't think it's the title by accident.
"The Demoralization is just Beginning"
I've seen this movie before.
He doesn't even try to discuss this main point at all. People are nowhere near ready for that, look at the comments, many from quite educated positions pooh-poohing him from different directions.
All anyone can do in a short blogpost like this is throw out a little evidence and people can decide for themselves how demoralizing it already is, or how it might turn out.
Which is what people are doing, as righteously as they can, bless their hearts.
So my advice to Hotz at this point is keep doing what you are doing, and illegitimi non carborundum.
No different than the comment that popped into mind at first, now just a little more substantial than a quick drive-by.
He gives away the game at the end when he decries socialism (because of course he does, it's practically a Free Space on the "Highly Intelligent Engineer has Opinions on Things" BINGO card) and fingerpoints at Europe, despite China having Communism on some scale yet is also somehow what we should be emulating for growth? It reveals the naivety of his position, assuming he's making the argument in good faith.
But getting back to his action plans (which are, generally, not bad), I totally agree that a good step forward is reforming immigration to promote movement of people provided they're willing to contribute to society. He couches his standards in nebulous vagaries like "production" and "productivity", but the core concept is sound, even if his rationalizations leave a lot to be desired. We should be courting smarter and harder workers with pathways to Citizenship, not highly exploitable visas like H1Bs or the various farmworker visas, and we should be holding companies' feet to the fire in ensuring imported talent stays here, on American wages, in American living standards. I've been screaming the same to my EU friends of late, stating that now is the best time since Operation Paperclip for a foreign power to import brilliant talent from a failing state.
On the topic of the EU, something I'd like to challenge is this popular (with laissez-faire Capitalists and Libertarians) narrative that the EU is somehow failing because it hasn't exploded with growth like the USA or China. From what I've seen, Europe has been remarkably stable on the whole (with pockets of success and failure, a la the United States) precisely because it built up modern infrastructure when it could, maintained a diversified economy, and didn't give in to scams or grifts - like the ones he cites in the American economy as artificially inflating the economic numbers to create the appearance of growth where none has really occurred. If we had real growth, like China, we'd have the same amenities - high speed rail, modern freeways, high levels of infrastructure replacement and improvements, and a burgeoning middle class. China built these things as part of its rapid industrialization over the past century, whereas we squandered our post-war advantage on corporate subsidies and hawkish conflicts abroad for decades. If anything, I'd argue that the EU may very well be a model of a sustainable economy of sorts, provided there's not some crisis boiling beneath the surface that could cause a collapse; the people there generally have everything they need, and healthy regulations minimize the risk of exploitative or anti-consumer practices.
But I digress. The TL;DR is that he has valid points, but man does he undermine his argument with the same tired tripe at the end exposing his ignorance on the subject.
Keynesian economists and now mmt advocates are the reason that most of the productivity gains of the last hundred years have ended up in the hands of a few hundred people while most struggle.
I'd say it's high time to stop listening to these people who are nothing more than useful idiots of the elites.
Obama thought the idea was intriguing and mentioned it multiple times to his advisors. It never went anywhere though.
Brain draining the rest of the world is one of the main reasons for America’s success. It is due to America being a nation of immigrants that we can do this.
Anyhow consider me demoralized, i cant picture anything the US could do in the next decade to turn the ship around from the fuck-it-all perestroika we've adopted as federal policy. (Speaking of turning the ship around, I'm looking forward to my 8 day east bound crossing from NYC to Southampton at the end of the month. The ship is capable of doing it in 5 days but the demand isn't there to pay the extra cost to run the turbines at full steam.)
Some EU countries offer scholarships to attract good foreign undergrads and grad students to their universities. The whole point is that they stay afterwards, and they try really hard to keep them. It's been proven to be quite economically profitable, see e.g. [1]. I've never understood what's the point of attracting good students if you don't want to keep them later on, unless you have overcapacity and sell education services. But that would not make sense for top universities where there is a fierce competition for spots.
[1] https://www.dtu.dk/english/newsarchive/2022/11/udenlandske-s...
Seems like you understand the point after all :)
US tertiary education is the perfect export good: Like other intellectual property, it's almost infinitely fungible, and parents from all over the world will part with staggering amounts of money for it.
The quality is definitely high, but the markup compared to other countries' universities is something else.
No random nation based limits like the US somehow has.
US schools attract international students because most will pay full tuition, subsidizing costs for local students.
Another reason would be to generate goodwill and potential future business relations for your country. Can be pretty valuable for your export-oriented businesses.
Exporting knowledge, culture and contacts
> Obama thought the idea was intriguing and mentioned it multiple times to his advisors. It never went anywhere though.
This sounds like OPT on an F-1 visa. If the OPT employer likes you, then they sponsor your H-1B application, and with your masters+ degree from an American institution, you get two shots in the lottery. (And if there's a recession, the caps might not get hit anyway). Kind of a drag because you'll probably need to get a masters degree, but it'll help your immigration file later if you want to try for permanent residency, or if you give up and pick a new host country.
Not true. America was successful regardless of immigration. For example, for much of the 20th century, the US banned immigration from most of the world. Look up the history of US immigration bans. It's quite enlightening
> It is due to America being a nation of immigrants that we can do this.
America is not and never has been a nation of immigrants. At no time in US history has immigrants represented anywhere close to the majority of the US population. America was always a nation of native born americans. Not immigrants.
> Due to its history the United States can be described as an immigration country.
Being a nation of immigrants does not mean the majority of the population are migrants at any given point in time. You need to consider how many waves of migration have arrived in the USA one after another, not all at once.
These two hot takes at the top of the essay really undermines everything else the author might say in the article and brings into question how serious and critical their thinking is.
Several comments here against the article talk about the Chinese economy problems and this article in this morning’s BBC is a pretty good summary of the dynamics and the problems, notwithstanding manufacturing prowess, China is facing: https://www.bbc.com/news/articles/c8x4vj8rj9wo
Does it though... If anything, the numbers prove him right:
> Several comments here against the article talk about the Chinese economy problems and this article in this morning’s BBC is a pretty good summary of the dynamics and the problems
They have been predicting 'a hard landing' for the Chinese economy every year for 15 years now. What the economic press publishes in Angloamerican countries about China is just external lobbying to scare China into opening up its market to financial speculation. Without any success. Naturally so, as everyone saw what it led to in the West in 2008.
If you think DOGE is a legitimate source of determining fake jobs you are mislead and not worth listening to.
It’s wrong in so many ways, that it actively reverses reality.
I believe the core payload is the idea that America was already fading, and that it was in decline agains China / Asia.
My suspicion is the goal is to kill the idea of dynamism, feed off of the malaise people are feeling.
The intellectual payload is simply a barb for the emotional payload to be distributed.
But does anyone think through to the end-game of that? That when you drain the most smart/productive people away from every other country, all those countries become less wealthy and more dysfunctional, leading to societal decline, poverty, resentment, radicalisation, war, etc?
Aside from anything else, the other countries become less able to trade on good terms, and thus less able to buy US products/services. And so it becomes a self-defeating policy long-term.
Good economists (and to be honest I don't know of many these days) know that there are no free lunches. We need to put as much effort into helping every other country develop and thrive - and by doing that we'll create many more customers for the products/services produced in our own countries, and everyone can end up richer.
After writing this I wonder even if the economic and political dysfunction we're seeing in so much of the world as actually the inevitable consequence of decades of brain-draining, rather than an indication of the need for more of it.
I know of more than one example where someone has been “brain-drained” to the states, who has subsequently moved back to start a successful business. Sometimes leveraging gained contacts directly, sometimes leveraging the newfound experience and knowledge.
Whether this works out this way depends on how open the world (or at least the respective countries between each other) is when it comes to movement of people, money, and trade.
this was the logic in letting eg China into the WTO and allowing them to become such a big trading partner. turns out, this doesn't necessarily result in liberalization (see Germany's experience with Russia for another example).
we should only be seeking to shift trade from repressive regimes to democracies, not working with everyone equally.
There is a Kurzgezat video a couple of years back [1] that does understand this. They did the same argument that you are making here. Heck, the prisoners dilemma is about how cooperating is the most viable strategy for global benefits. The world isn't really a zero sum game. We get a tons of energy thanks to our star that is usually the thing that most closed systems desperately look for.
Reality is that remittances and the skills that emigrants eventually bring back to their home country far exceeds any negative effects. Policymakers know this which is why they don't deter this from happening. In many countries they actively encourage it, such as is Philippines.
When economists talk about "no free lunch" they are specifically talking about abnormal profits. They are not talking about the fact that voluntary decisions of private actors can lead to positive sum outcomes in utility.
Societal decline, poverty, resentment etc.: why should functional people bear the burden of it? Brain drain happens for reasons beyond the simple need to earn more money, it also happens because dealing with those dysfunctional people is extremely draining at several levels. On a larger scale when putting smart people together - be it at a country level or even at a company level, one achieves things that are not normally not possible, which is a net benefit for the world at large even if it creates some populations that are dysfunctional.
My average IQ (or below) take is that this “brain drain” narrative where absolutely everything collapses—societal decline, war, resentment, aah basically the Apocalypse—because the smart people leave is just the belief here because people put 50% or more of their professional identity into believing they have a high IQ.
(Economists have pointed out that US growth is slower because SF is so expensive, young smart people cannot agglomerate there and learn tech faster.)
Before you can even invest the immense time and effort needed to build that kind of environment, you need the will of the people, and in most of the world you don't have that.
Many impressive economists believe there are policies that could massively improve the worlds economy, but that implementating these policies is a coordination problem / hard to overcome lobbying / politically intractable, etc...
Radical Markets is great book on exactly this topic.
This is a ridiculous premise.
Specifically: there is not much of a home grown consumer economy; they have driven growth too heavily on exports and infrastructure build, leading to a massive overhang in building, a housing bubble that is teetering dangerously close to unwinding, and a major shortage of domestic consumer demand.
The Chinese people should be richer; the fact that they export a lot is a symptom of the failure to build up the household sector so domestic demand partly balances investment.
Again, read Michael Pettis’s “China Financial Markets” blog at the Carnegie Endowment:
An interesting thing is that they likely cannot, outside of some exceptional circumstances--which might include the current clownish situation. Lots of countries would like to be among leading economies. But they don't have enough capital, cannot get it on really favorable terms, don't have the know-how, cannot have effective protectionism to start up (blocked by international rules and retaliations).
You can attract foreign capital and corporations, but it's much harder to tie their people and wealth to you permanently. There is a term 'middle income trap' for example. The impressive thing about PRC is how they've had enough power leverage and ability to play into turn-of-Millennium Western establishment's mentality to really push ahead. But there are many countries that couldn't.
Is industrial capacity important? Sure. Is it the top of the value chain? No.
"Brain drain" is what we had been doing for the past 80 years or so. It worked great. We're specifically driving people away now.
"Gold standard" is an idea every sane economist rejected decades ago.
I don't think any sane economists have ever "rejected" the gold standard, it is known to work. Pretty much any empire ever founded was built on a gold standard. The US jumped away from it because they were going to go bankrupt and picked a system that put the pain off until a later date. Now, 50 years later, they appear to have lost the title of the world's major superpower.
It is relatively unusual for effective economic ideas to gain any traction in politics. It seems to be partially random whether a specific policy gets a tick or a cross when an economist is asked about it.
Really? For at least 20 years, if not quite a bit longer, the US has made it obnoxiously difficult for foreign students studying US universities to travel or to remain in the US after graduation.
Oh boy... Bitcoin in many ways is idealized gold (unlike the real one, its supply is actually limited), yet there is no shortage of scams around it.
On the contrary, a gold standard would remove one of the most essential tools modern governments have: That of monetary policy. That sounds like a good idea if and only if there's an extreme shortage of trust in the government and institutions, and even then it's only the lesser of two evils (the other being inflation) and comes at a high price.
But it's our scam. The Fed isn't only diluting Americans' money; USD is a world currency, and the US tries to keep it that way by whatever means. So we kinda benefit from that.
Central planning suffers from several issues, primarily due to insufficient ability to model the economy in a way that can reliably make valid predictions, but also due to being a single point of failure due to either incompetence or capture.
Speculation bubbles seem to be the main cause of economic collapses prior to centralized currency. Could we perhaps address that in a more targeted way, rather than jumping straight to handing government control of money?
Side note: Government controlling money not being necessary and furthermore not even being the American historical norm may be surprising to many readers. I would encourage you to look that up, it’s quite interesting.
Umm, yes. Doesn’t that make this a perfect moment to do such? I can’t recall any other point during my life my trust in the US government was this low.
Maybe games are truly software that isn't tied to anything physical. I can't think of much else, though. Can you?
I say this as a person who is very bearish about America.
> The sun never set on the British empire. Now they put you in jail for memes.
I’m pretty sure they put people in jail for the equivalent of memes during the imperial days, no? The king couldn’t put you away for speaking against him?
Some people really need to go out, sit at random bars, and talk to people. They would get a better pulse check on society than 24/7 Twitter shitposting.
(See also: his attempt at self-driving, and his "internship" at x/twitter under Elon)
There are no principles in British politics, there is only pragmatism. Every policy must solve a real-world problem. The current Labour government will remove the hereditary peers from the House of Lords, because they only show up to vote in their own personal interest, and that reform has widespread support and will pass. Harriet Harman has put forward a bill that will also remove the Lords Spiritual, and that will pass, because no one has a problem with what the bishops say and do in Parliament.
Parliament gained control over taxation and the treasury in the seventeenth century - this was the major cause of the Second English Civil War. Later in that century, freedom of the press was established, but there were still consequences for libel and defamation. With the accession of King George I, Parliament gained control over the king, by appointing one who couldn't speak English. Everything that is not illegal is permitted, and the only speech that is restricted is that that is widely considered objectionable. Getting along with one's neighbours is an integral part of living in a society, regardless of one's beliefs on 'personal autonomy' and 'self-reliance'.
No one has been gaoled for posting memes, but people have been gaoled for threatening and abusing behaviour, and for inciting violence during rioting across the country. It just so happens that this has been done by posting memes, but if it had been done by using a megaphone to whip up a protest into a riot, the consequences would have been the same.
America's obsession with free speech is a problem, because it's used to justify retrograde opinions. The two political parties in the US are still debating broadly the same economic and political philosophies that held sway in Britain at the time of the War of Independence. Both political parties treat it as a religion, holding to these dusty old ideas rather than solving real-world problems experienced by real-world people. But every time someone proposes this, someone else yells 'Tyranny!', and the ghost of King Charles I laughs.
With one foot planted firmly in the past, and the other striding determinedly forward, the United States of America is truly a nation going in circles.
This is an interesting thought. I don’t like mining too much, as it has a lot of negative externalities. But the comparison of the two industries and how money is created is something to think about
So we can set some conversion rate to get things started with the correct kind of corresponding amounts. Great. But - over time, both the amount of commodity available and held, and the amount of money the economy needs will shift. Can we expect the conversion rate to stay the same then? Again, the answer is no.
That's why pegs to commodities (i.e. gold backed currency) or other currencies always fail eventually - they can start off fine but will always drift away and you either have increasingly large inflation or deflation when things don't match up (which ironically is exactly what the proponents of commodity-backing claim it prevents, but the history is pretty clear).
It doesn't matter then about whether the mining industry is 'real' and if the financial industry is 'artificial', as interesting as the argument is. Practically gold-backing always tends to fail, so it's a moot point.
There's not a single tower or factory or mine or business I would imagine that has been financed via dome form of debt coming from elsewhere, because if we're waiting for raw cash to build things we'd be missing out of most business opportunities and the entire economy would slow.
He has strong opinions on economics, but doesn't understand it. His points about economics are partially true but either subtly incorrect or interpreted incorrectly.
When the public gives (or random bloggers give) give a damn about economics, it's a sign the economy isn't working. Of course they don't have useful solutions - they're not economists - but that feels a little beside the point: you don't have to be a plumber to recognize that your house is full of sewage. And since no one can be an expert in everything, life demands the ability to identify and call attention to problems you cannot personally solve.
An article like this is the equivalent of your roommate going "oh, damn, the living room is full of sewage, we better do something about that!" Of course you'll vigorously agree at first, because you're talking about the problem (which is clear to everyone). But then your roommate suggests fixing it by dropping dynamite down the drain - i.e., talking about the solution - and you're a lot more likely to disagree.
No one who understands modern economics wants to bring back the gold standard.
Seems like geohot should stick to jail breaking iPhones and mocking programmers and CTF challenges… and maybe read a few more books and attend some lectures if he wants to continue deepening his understanding of economics and political science.
Success in one domain should not imply competence in another.
Leading with a Curtis Yarvin citation as supporting material
> Protectionist America is a boring place and not somewhere I want to be. It kicks the can further down the road of poverty, basically embraces socialism, is stagnant, is stale, is a museum…
But the killer is the gold standard. The author seems to be confusing this with fractional reserve banking. Interestingly, they're anti-crypto, which is kinda odd because most gold bugs became crypto bros.
China's foreign policy is very different. China invests in creating infrastructure in countries to help make them future customers for Chinese products. US foreign policy is simply to loot the Global South and to use foreign aid as a form of economic imperialism.
It looks to me like the countries in the pie charts are ones with protectionism (e.g., China), while you are seem to be implicitly advocating for the opposite...
1) Brain drain the world. Work visas for every person who can produce more than they consume. I’m talking doubling the US population, bringing in all the factory workers, farmers, miners, engineers, literally anyone who produces value. Can we raise the average IQ of America to be higher than China?
2) Back the dollar by gold (not socially constructed crypto), and bring major crackdowns to finance to tie it to real world value. Trading is not a job. Passive income is not a thing. Instead, go produce something real and exchange it for gold.”
The first step has been in existence for decades in the US. Also, it is not sustainable potentially destabilizes other countries. The second step may have some merit, but I seriously doubt it will turn things around by itself.
China has largely built domination over the US and manufacturing by a combination of the hollowing out of US manufacturing and other capabilities due to short term profit goals of US companies and unfair trading practices, primarily due to imbalanced environmental policies, labor policy, and currency manipulation by China.
Many free traders lambast protectionist policies, but protectionist policies are largely what made China what it is today.
The United States is shifting toward a zero-trust model. All deals and agreements must be based on tangible incentives and benefits. It will be an interesting era.
Never a truer word spoken. Making money by moving money around. It shouldn't exist. It shouldn't be possible or at least should come with severe limitations that make it not possible to live off as a vocation. When person A 'wins', person B 'loses'.
It is a specific skill set that some humans have, but it's not one that should be valued because it gives nothing back to society. In fact, it's a net negative.
Only if one assumes that capital markets are zero-sum. They clearly are not.
What you presumably are referring to when you talk about "moving money around" is purchase of an asset such as a stock or a bond. Rather than moving it around, you are making capital available to some entity in exchange for the expected (but not guaranteed) return on investment. Such transactions are mutually beneficial.
Companies need capital to operate so they sell equity to willing investors in exchange for it. This is what makes growth rates seen over last century possible.
That said, they are not fair in that only those with capital can participate. If one is living hand-to-mouth, one cannot afford to participate. Would be ideal if we could find a way to level the playing field and equalize access
Then the government did an exit scam, passing a law that the gold trade in statements on the certificates are void. You can still spend one of these bills today though. For $20.
Why should anyone expect any government to indefinitely honor gold certificates?
The only currency that can avoid being devalued by a single government, is a currency no single government can control.
Based??
> Back the dollar by gold
Oh haha lol
No bud, gold isn't money.
It would require US to start building a metric shitton of housing though, and fast. Otherwise you just get what Canada got, or worse.
Gold standard? That's batshit insane. Like Karl Marx tier of bad fucking ideas on how to change the way economics work.
Very good point and one that not a lot of people understand.
There is also a tipping point at which governments will look elsewhere for a reserve and trading currency. Yes, today the USD is king, but that's in part because China's efforts to make the RMB a reserve and trade currency are half-hearted as they conflict with its efforts to retain an iron control over its currency exchange rate.
If the USD loses its preeminant status as _the_ global currency, the US is in very deep trouble.
This plays into the Middle East in ways that many people don't realize. The Gulf countries only sell their oil for USD (in exchange for protection from the US). The US has a very big stake in that continuing to be the case. Now granted, they are less important than they used to be because of fracking, but still a major player. (Some people say the invasion of Iraq was because Sadaam threatened to start selling oil for EUR instead of USD. I don't know if that's true or not, but it's definitely a plausible reason.)
> America really is at a fork in the road. In one world, they abandon all hopes of being an empire, becoming a regional power with highly protectionist economics. This happened before, and it’s called Europe. I know it’s hard to believe now, but Europe used to be the seat of power for the whole world. The sun never set on the British empire. Now they put you in jail for memes
It's simply a disgusting take. Full of ego and lacking any empathy for people inside and outside the USA because he is too busy thinking in zero sum caveman terms.
This type of mindset is the one that justifies all military interventions because "there must be a world superpower and it must be us".
Everything with respect to real estate is a scheme to get government subsidy. If you go to a modern Courtyard or Hampton Inn, you’re sleeping in a tax shelter that rents beds
I don’t have time for these random words that blogs invent which makes sense if you followed the author for the past thirty entries but not if you just found this one random article.
Demoralize who? Because I can’t imagine the average citizen wanting to get on board with your nakedly imperialist plan.
The thing about cheering for “your country” doing well in terms of geopolitics is that you are either a completely misguided tool since the geopolitical interests have nothing to do with the interests of the average citizen. Or you are so wealthy and powerful that they do. In which case the average citizen has no common interests with you.
You can absolutely forget competing with China under these circumstances, their system is starting to look better than the US will after another 1416 days of this.
He is not far off from the truth that a lot of the American economy is phony with wrong incentives. I submitted an article recently that makes the same argument, about e.g. the 2008 crisis "we used to sell mortgages to so we can build houses, not build houses so we can sell mortgages".
But his solutions fall on their face. The contradiction you mention is not the only one - his wrong way involves "protectionist economy" which is actually exactly what is happening right now.
It's also a bit funny the current backlash against globalization I'm the US government is led by the people that profited the most from it. That right there tells you their intentions are not noble.
[1] https://www.amazon.com/Audible-Kaput-End-German-Miracle/dp/B...
I'm going to nitpick on this line a bit, but bring it back to his core argument at the end. And I'm going to nitpick because in part, lines like this raise my hackles, but also because I think lines like this undercut his own argument:
This type of modern conservatism (which is what this take from George is, and is very tied to a new type of non-religious social conservatism) has lost the plot when it comes to basic justice. Threats in person to people are just plain old crimes. But package them in a funny picture online and it's free reign. Free speech absolutists (not sure that's what George is, but just using this as a broad label) have pretty convenient takes when it comes to the basic rule of law. Often those takes are pretty circumstantial, in some cases they're more than happy to deem speech threatening, but in the vast majority of threatening speech people actually experience, not so much. And remember, if the law is arbitrarily applied, it makes people less interested in a democracy, but they don't seem bothered by that.
Nor do they seem too bothered about the tens of thousands of people who suffer legitimate threats online daily. The social media companies know who those people are, down to what they had for breakfast that day. If we actually dared to, you know, enforce laws around threatening people our jails would be overflowing.
I agree to a very minor degree: you can google "jailed for memes" and find some questionable choices, but to use your voice for those handfuls of situations when literally thousands upon thousands of people are legitimately threatened each day online? I think I can guess what your true intents are: its to further a brutal status quo so you continue feeling good. It doesn't help his argument that the sentence before this line bemoans the end of empire.
And the frustrating thing is that one of his recommendations is kind of good: end the funny money system of business (not sure I agree with the how of the gold standard, but I'd have to defer to others there). But George just undercuts his argument with lines like this about memes, because if you pick it apart it just means he's advocating for the funny money version of enforcing the law. Ah, so George you're not against funny money in principle, it's more like "Funny money for me, but not for thee."
It even infected the tech sector and turned it from something that actually produces value to a casino that bets on 'potential' balloons to profit from bloated, overvalued stocks and valuations. Why produce anything when you can just make gobs of cash by shoveling the infinite amount of free cash that is entering the economy anyway...
All of this was at the cost of the physical goods and services. Now that the dollar has tangible competition, the entire scam is coming crashing down.
Why? You could also invest in better schools and education in the US. A smarter population would also be good for democracy, because they would vote smarter. But I guess it is too late now. Dictators don‘t need a smart population, they need a dump one, so they can do whatever they want.
My VERY TLDR of his political world view is that he thinks the current world politics are f'ed to an extremely serious degree, so much so that we are in "lets get rid of democracy" land, and I think he wants a technocratic authoritarian strongman/"hero" to enforce some sort of libertarian paradise.
Its those controversial, obfuscated, and wacky ideas mixed with a healthy tech focus that leads to an entertaining read.
I think this is the central hole in the argument that the US is stagnant. The money that investors give you has to come from somewhere! Particularly in venture capital, you only get returns if you produce value.
Nevertheless, I do agree with a lot of the points here.
Money is detached from real output. Especially true in a zero interest rate environment like we had until recently.
There is no reinvestment when rent-seeking activities and financialization take place. Wealth is accumulated but not reinvested for greater growth.
> in venture capital you only get returns if you produce value
Is that so?
Fort Knox is the funniest example. For the financial theather it doesn't matter if there is any physical gold.
To meet global demand, the issuer must supply enough currency, potentially weakening its own economy, but restricting supply would harm international trade and finance
1. Hyperfinancialization was a huge mistake (e.g. a house should not be an investment)
2. ZIRP was a huge mistake: revenue matters, the current SP500 P/E ratio is insane. [1]
3. Manufacturing matters if you want to keep the blue collar people engaged economically. It's bewildering how US Democrats turned their back on their political base, the proletariat.
[1] https://www.currentmarketvaluation.com/models/price-earnings...
Now, what he gets wrong. China is also doing hyperfinancialization, just slightly different. Their housing market is crazy with tofu constructions and mostly empty cities. And they got already the Evergrande collapse. China also over-invests to take over markets, for example BYD is kind of a gigantic ponzi scheme [2].
[2] BYD’s Financial Time Bomb: A Replica of Evergrande's Collapse in the Making https://www.youtube.com/watch?v=QHpTWsBRIQs
As many other people said, Trump is making a huge mistake on tariffs. He should be putting tariffs on the completed products but not on the supply chain. Block subsidized EVs but not the small parts for industry and make Europe do the same. This would prick the Chinese manufacturing bubble.
And about importing talent, the system needs an overhaul. The H1B system is completely rigged and most of it brings cheap consultants for jobs easily sourced locally. Improve local competition. But bring the high earners. Make H1B for say 300k and up salaries for a minimum 5 year contract. And they should have a very strict English test, I'm fed up with people who don't bother to learn basic English because they live in bubbles of their country (and I'm foreign).
Also, and this is probably controversial, make some Singapore-style limits on who immigrants can live with and marry, forcing very different cultures assimilate. No more ghettos of very different cultures fighting each other. See how that's turning up in Europe. Before you call me a n*zi, Soviets did something like that, too.
The progressive option would be to deeply question "what lies beyond trade?" and to search for answers beyond the conventional regulated/unregulated spectrum, answers that are compatible in some degree with our starting place but allow broad movement. We know what trade is and does, but the economies it produces are no match for the hivemind efficacy of an ants or beavers. The frameworks of trade are negotiated around maintenance of fiefdoms, and economic activity is regularly blocked because the power structure will push against it and normalize "we can't have that here".
At the same time, we know that power needs checks and balances, and the capitalist mode of power creates some checks on power through its use of trade. That is what has kept it ahead of command economies.
What I find appealing about continuing down a crypto-oriented route is that it's a data structure with a balance sheet as a frontend. The frontend can change - it is a thing that can be experimented with. Valorizing the numbers on the balance sheet as gold-equivalent has always been an adaptive, "this is the only way we know how to do things" kind of social construction. If we can construct a different kind of game to play, the motives can shift.
Seems like the current choice is to be highly protectionist, not sure if it means becoming a regional power.
So, to put it in terms of the Hitchhiker's Guide to the Galaxy, they want to drain the rest of the world of everybody but hairdressers and marketing experts?
Hm.
You can critic America for failing to transition away from the manufacturing economy or how awfully bad they are at utilizing government to drive innovation or extra market value (look at the dogshit railway infrastructure) but pointing to manufacturer graph and doing soy face ain't it.
social being determines social consciousness, but social consciousness often lags behind social being.
when the empire was falling, its citizens still indulged in the eternal victories of the past. by the time they realized the empire's glory was irretrievable, it was usually already fallen.
this lagging may cause some consequences.
for instance, overconfident imperial citizens may try to contain rivals and prevent the empire's fall through various ways, tariffs, sanctions, or wars, the worst case
imperial citizens think a lot when they see this:
> In addition, we had and have military bases in Japan. This is not the same situation.
imperial policymakers may be rational, or may not be
But I could not fancy this imaginary community to scale up to even millions
It’s like a publicly funded version of YC’s call for startups. The difference is in the public sector the answer to “how do you make money” doesn’t have to be sell to a business/sell to consumers/run ads.
The gold one - seems infeasible at this stage.
Then I realized this was a post from geohot and felt very foolish the 15 minutes I spent thinking through his argument. Why is this so upvoted!
Even with the democrats it was the same thing. People who jump the border were the only sucesfull immigrants. Those trying the legal pathways are waiting for decades to get into the country. Now the message is again clear, be ultra rich and invest 5M to gain entry.
When this VC pyramid scheme collapses, we'll look back at this as a time where the economy and startups were once devoid from reality.
I want to know more details about that US vs China trade map. I've seen it before, and first off, it's not "primary trading partners" as the author said, it's the larger of the two. Like a country that trades 95% with its neighbors, 3% with China, 2% with US is red on that map. And idk if this is $ value traded in either direction or what.
let's do it!
starve these commies to death, 'a few months' later they'll enter a brighter future without communism!
I think this guy may need to travel the world a bit more. A lot of companies here are shiite, but you really need to understand what the competition actually looks like under the hood. And I'm not just talking about Chinese government efforts to crank out more commodities, which has been a Communist metric of success since Mao Zedong's time.
I should hope so! Imperialist ambitions are what Russia is still doing, but most other nations have realized that war isn’t profitable. Fighting a war to conquer factories will likely result in owning rubble.
This article has a more convincing description of how it works in modern times: https://acoup.blog/2023/07/07/collections-the-status-quo-coa...
We need a paradigm shift from what we call neoclassical economics and neoliberal economic theory. The author sort of hints at it but goes off the rails with his conclusions, but this country was built on a _strong_ middle class. Purchasing power of the middle class has been decimated/stagnated.
Public companies no longer invest in the wellbeing of their employees (ie, increasing wages) or invest back into the company to improve efficiency and remain competitive. Instead we see massive amounts of that profit generated by labor invested into short term _stock manipulation_ via stock buybacks.
The endless thirst for paper growth and infinite profitability is ultimately not sustainable. The end result of this rapacious capitalism is what we see today:
- 40 year wage stagnation of middle class and minimal chance of upward mobility for poor
- loss of collective bargaining and via non-existent unions or decrease in participation
- loss of safety nets such as pensions
- increased cost of living due to corporations endless need for paper growth
(list can go on, but I’m typing on a phone)
Ah yes, the US, famously under a socialist regime currently.
(I'm not trying to say Trump's current plans have any merit - which seem to be without any strategic foresight or planning).
And Europe used that power to do some incredibly inhumane and shitty things, while enriching a tiny number of sociopaths. I had hoped we had improved as a species since then, but I don't think we have.