Trust

Balaji, Dalio, Elon, and Taleb

In the interests of full transparency and because it may become relevant very soon and give reason to trust or distrust me, I wanted to let you know how I am responding to the looming financial crisis.

1. I moved about $5k into various cryptocurrencies, primarily Bitcoin, and I put the money into a CryptoWallet. I’m not an expert in this by any means and I did this through CoinBase —I also own stock in CoinBase, which was my entire crypto exposure before this— but I think I may also need to dump this into a cold storage wallet. This is about 10% of my non retirement fund assets. To not be coy, this means I keep about $50k in liquid assets sloshing around. If Bitcoin takes off sufficiently I expect the government to seize the exchanges because I would do that if I were them.

2. I am buying a few months worth of food supply, when we generally go week to week. I’m not a prepper per se but my wife is very much anti-clutter but I’m going to put my foot down because if there are any shocks I want us to be insulated. It was one thing when we didn’t have a baby but my risk appetite is very low. I also am planting a vegetable garden but I’m not really doing that for food so much as that I’ve always wanted to and we were planning to start it anyway. This is just a smart thing to do anyway but if you don’t have things set up now is the time.

3. I put some of my money into gold and other precious metals. Not a lot but some. Less than $1k. I am also just in general increasing my investments directly into chip manufacturers like NVIDIA but that’s a long term AI play. I wish I knew more about the precious metal suppliers as this seems like it will be a constraint to our new AI economy.

4. I am putting in a lot of hours at work. I’m in a sort of anti-fragile job, but still I’m putting in extra time. Nobody is safe in what is coming. I encourage you all to do the same.

What to do when smart people you respect disagree? Balaji Srinivasan sees the world in a lot of the same ways that I do. Not quite exactly the same ways, which is maddening, but he sees the Network States where I see the demand for an Algorithmic Republic based on a public Trust Record. In his mind, we are at the end of the American empire and will soon face hyper-inflation. Balaji predicted COVID with near super prescience, so you can’t just dismiss him as a madman. I’ve benefited from listening to him earlier.

Nassim Taleb on the other hand, who predicted the 2008 collapse, thinks this will all blow over. I’ve read few books as intelligent and insightful as the works of the Incerto. He also thinks Stephen Wolfram is actually as smart as Stephen Wolfram thinks he is, and I do too! Taleb thinks this will blow over because duration Risk isn’t quite the same.

Dalio has laid out a pattern of empire collapse and currency collapse going back 500 years that makes a lot of sense to me, but I also haven’t attempted to falsify it. And it sure seems like with the war in Ukraine and conflict with China is going to really stretch the resources of the US.

Oh, and OpenAI seems to have created something that if you squint is probably going to blow up a lot of jobs in the very near future.

I’m placing my bets where I see the likeliest futures. I think there’s about a 10% chance that the currency not only inflates but hyper-inflates the way Balaji predicts. I think if Bitcoin was an easier to transact off-ramp that I would place it as the likelihood. But that also seems like a highly incentivized tech problem you could solve with layering if we hit inflation that was bad enough and people compromised on the crypto future they’re willing to accept. So I’m open to being surprised here. If it does happen, the government will almost certainly shut down the exchanges and the money won’t be spendable for a while.

Nassim’s arguments about duration risk makes sense to me and if we can just hold and not panic I think we’d be okay but I’m guessing we are only a few months away from banks having to start eating two trillion dollars in commercial real estate loans going ass over tea kettle. If you think the panic is bad now, that’s twice as much panic as the losses banks have eaten on the long term treasury bonds. Nobody needs an office building anymore and a lot of the financial system rested on the assumption that people will always need that.

I do see a long term future where we move to some kind of “Relationship Economy” after AI kills some large portion of jobs that never quite come back. In fifty years, I think you’ll need a doctorate to be a waiter. I’m going back to college online in the next few months to start working on a degree in AI. It’s something I will probably be able to do disgustingly quickly and maybe help me hold some marketable value for a while.

It does seem to me that the FED is between a rock and a hard place. Can’t raise rates without blowing everything up. Can’t lower rates without hyper inflation. Can’t print to cover commercial real estate without the same. I haven’t bought a gun yet, but mostly because my father in law has told me I can have one of his if things get really, really bad. I do wish I had decided to get solar panels installed a few months ago but I don’t want to take on the cost right now. I don’t think the power will go out. I just think it will get expensive where I particularly live.

Enough doom and gloom. Well, here is the white pill. Everything will be okay in the end, and if it’s not okay it’s not the end. The world has always faced trouble and it has always moved on by the force of human courage. The best thing to do in any crisis is to be brave.

I think I might just have to start building the Forum and Index myself. Would appreciate help from anyone. I think the world needs them. Please leave a comment below or shoot me an email. Maybe we can get a standing zoom call stood up. Even if you can’t code we can probably do a lot with ChatGPT powering us.