Podcast notes – Tyler Cowen on Lunar Society with Dwarkesh Patel – “Existence of sex is most pessimistic thing there is”

Guest: Tyler
Host: Dwarkesh

Went to India for 6th time, read 100s of books, but traveling there is a deeper and different kind of knowledge
Prefer traveling over reading

What is Conquest’s law (note to self)

Doesn’t see left v right (eg, left wing, leftist politics) as consistent and historical categories

Doesn’t buy that famous / successful people in the past were more abused or had harder childhoods – lots of selection bias, historical bias

Disappointed at how geographically clustered “talent” is – today it’s places like London, NYC, etc
These talent clusters have been such for a long time – seems like an enduring effect
Talent comes from many different areas, but always migrates to these clusters – how good are these clusters at producing talent, versus attracting them?
Problem for SF – may be a more temporary cluster, not much historical persistence

Why did Renaissance blossom in Florence and Venice but not Milan? Hard to understand

High status thing to do is feign humility

Well-dressed 20 year olds (eg, suit / business) are too conformist for what he’s looking for

Nootropics – don’t personally like it, but does seem to work for some people

Doesn’t drink coffee

Believes 15-17 year olds among most neglected talented people – high schools should invite real local experts to talk to them

The best moral instruction (in classrooms) are teachers being good people

“Context is that which is scarce”
Kids learn a lot of context in school – even if they can’t memorize as many explicit facts – it’s the residual, it’s what matters

“Super talented are best at spotting other super talented individuals”
There are exceptions, not a science, but there’s some art / intuition to it

Will sometimes chew out certain people, try to light a fire under them

Not an EA (effective altruism) person, but like libertarianism it will continue for quite a long time
Need more religions – in the meantime EA will do

Emergent Ventures – applicants are remarkably bi-modal distribution – pretty clear who makes it vs doesn’t make it
Believes a lot of foundations give out too many big grants, not enough small grants – small grants are under-rated

Believes mental stamina / energy can increase significantly (eg, 30%) – but some people are gifted super stamina

Lots of geniuses can’t get out of bed in the morning – they’re stuck and you should write them off

Top level athletic performance is very cognitively intense – this is under-rated – you have to be really smart to practice, lead a team, outsmart competition, “very g-loaded”

“Whoever is the top gardener [in the world] – I suspect I would be super impressed by”

Should be more bullish on immigrants from Africa – hard to get out, so it’s a positive sign

US not into demographic decline yet – maybe so in Japan

Doesn’t worry as much about woke ideology – “if that keeps you down…I’m not so impressed by you”
“Europe isn’t woke enough in a lot of eyes… chauvinist, old fashioned”
Europe is less egalitarian (than America) – Paris is the extreme by status; too few dimensions of status competition

YC more like scalable business school now – could be stale in good sense like Harvard is stale

Novelists can blossom much later, very discrete act – won’t really know until you do it – makes it harder to predict talent

Existential risk matters more than almost anyone thinks – but the things we do to eliminate them are more typical than most EA believers think – also over worry about certain types of risks, “not epistemically modest enough”, eg, AGI alignment

After a modern nuclear war – humanity permanently set back, medieval living standards, feudalism, more violence – no reason to assume you just bounce back, more problems will appear after – crop failures, climate change, disease

“Existence of sex is most pessimistic thing there is” – can’t just stand still or you will die / be defeated – thus sex as requirement to force genetic diversity

Growing up, read a lot of sports and chess biographies

Has blogged for 20 years – importance of constancy – like a public biography

If only had 5 years to live, would focus more on Emergent Ventures – institution building and talent spotting

Most talented people have unique philosophies / worldviews – eg, Peter Thiel (on Gerard, one heretic belief) – need unique way of looking at the world, protects you from other peoples’ idiocy

Doesn’t bet as much on single ideas unlike, eg, Jordan Peterson – rationale is he wants to stay as broadly relevant for as long as possible

Leading by example is number one way we teach – specifically referring to his students at GMU (?)

Bloggers – as people who write publicly on regular basis – have been around for centuries – will survive a long time
Substack encourages posts that are too long, too whiny, too focused on a few topics

The more that progress advances, the easier it is to destroy things, easier to destroy than create – to square his short-term optimism with his long-term pessimism

Fukuyama has changed views often – one of his views is that rest of history is how we’ll manipulate biology
“Are you long the market or short the market?” – one of Tyler’s favorite forcing questions

And this is what Stable Diffusion thinks is a “lunar society, podcast interview, two people”:

Podcast notes – Atom 2.0 with Zaki Manian and Sam Hart on Blockcrunch – “Pluralism is the way of Cosmos”

Guests: Zaki, Sam
Host: Jason Choi

Kyle Samani tweet: Solana = fat protocol thesis, while Cosmos = appchain thesis

Zaki – Cosmos origin is pluralistic view, a language / set of components to build a network of blockchains

Sam – architecture gives you a lot of control as an app designer, a next-gen platform, very customizable

2019 – Cosmos Hub launches, go to market – first production PoS; Binance uses SDK to build Binance chain; Akash, Kava launch

2020 – IBC ready and launches; then Osmosis launches; a giant forest of blockchains begins to grow

2021 – protocol controlled value / liquidity, MEV, shared security – can incorporate these primitives into ATOM and build a great value accrual story

Jason: initially didn’t think people would pay for Polkadot’s parachains (DOT), and that Cosmos ATOM didn’t have a great value accrual story

New monetary policy
-Existing target is 2/3 of tokens staked (when issuance rate changes)
-Now introducing liquid staking – remove the adaptive issuance model
Extra initial issuance to kickstart process, but lower tail emissions – lots of community debate about this
-ATOM should capture real revenue

Will not nominate a single liquid staking protocol as the default – let the market choose among staking solutions

“Pluralism is the way of Cosmos”

Interchain security
-Appchains can rely on Cosmos validators to secure their own chain (similar to rollups on Ethereum)
ATOM validators will also validate consumer chains (the appchains)
-Help align communities between appchains and ATOM holders

Interchain scheduler
-buy / sell NFT for block space at a specified future time
marketplace for block space futures
-protocol can guarantee delivery of these NFTs

What reason for an app chain to integrate scheduler?
-it’s purely elective, no requirement for use
-eg, for Osmosis, gives them way to consolidate management of multi-chain MEV

Cosmos new chains will ask, how to align with builders / community
-right now it’s only info sharing
-but there’s demand for economic integration

Interchain allocator
-tool for Cosmos hub to hold and delegate assets
-new governance features to allocate funds across community

Cosmos shared security philosophy
-Cosmos rejects random committee based security – eg, sharding, Polkadot, Near
-converging on shared security that’s robust – mesh security, interchain security (different use cases for each)

Cosmos chains are generally all heading toward economic and political integration

Jason – Atom 2.0 – creating a more unified economy and more value flow back to $Atom

Timelines
1. Liquid staking developed by Iqlusion – ready to be merged into Cosmos SDK
2. Interchain security – live by January / Q1 2023
3. Allocator – R&D for 3 months, still a lot of open questions
4. Governance – groups module has been written

Podcast notes – Raoul Pal on the American Dream with Robert Breedlove – “It’s an everything bubble”

Host: Robert Breedlove
Guest: Raoul Pal

Start with peak of British Empire
Late 1800s, British start series of wars with Germany (the rising power)
Shooting of archduke Franz Ferdinand —> WW1

After WW1, power vacuum, collapse of Ottoman Empire, the bloodiest global war in history (20M deaths)
Treaty of Versailles – UK, US, Germany, and France – negotiated peace terms
Demand large war repatriation payment from Germany – half a trillion in today’s USD

Germany tries to pay in the 1920s, fail, decide to debase currency —> hyperinflation —> German collapse —> rise of Hitler

Then WW2 happens
70M people die – 3.5x more than WW1
Leads to largest baby boom in history – global population grew by 30%

Transition from British to American dominance
UN, Nato, EU – super infrastructure, centralization of power – all built around America / Pax Americana
New Deal – financial repression + large fiscal stimulus – created 1950s and 1960s boom (golden age, rising real wages, rising living standards)

1960s-70s – baby boomers enter workforce; Massive increase in workforce
Consumption and prices explode
It’s a demographic phenomena, not a monetary one

In 1970s, Nixon move away from gold standard
Wages stopped rising in real terms – since 1975, have only risen 0.3% / year
Asset prices and GDP rise, but real wages and living standards don’t —> Poor / lower classes gets angry —> Populism

In 1980s, Reagan + Thatcher
Thatcher – council houses (cheap / free housing for low income) – genius political move
But turned all of poor into debtors – now they’re slaves
Reagan does same, but for credit
Massive de-regulation for credit, financialization explodes: 401k, housing

Process accelerates, more retail borrowing, more asset price growth, but real wages still not growing
Leads to liberalization of Wall Street, power of free market

Politicians don’t think explicitly about currency debasement – they kinda delude themselves – it’s about incentives

1987 – Alan Greenspan cut rates to stabilize economy, becomes tool for Central Bankers, believe they can control business cycle

1990 – Berlin Wall falls, Communism falls, China opens and begins to reform

1996 – change from GATT to WTO – globalize and liberalize markets, reduce tariffs
Now American worker is competing against global worker
Baby boomers now facing debt burden, rise of tech, global labor competition

1998 – lots of leverage in emerging markets, first Thailand, Asian currencies crash against USD; too much USD lent to these countries
Good for American influence

Late 90s – growing financial speculation especially in housing and stocks
Banks making record margins, then LTCM blows up
Greenspan cuts rates, world stabilizes – now people think “Central Banks have got your back”
Start of largest stock market bubble in recorded history (2000s crash)

Rates cut again
Housing begins to boom
Leads to 2008 crash

Labor force participation rate begins to fall in 2000s – exactly maps velocity of money; similar to birth-death rate
When you retire, you spend less
When your population is growing less, there’s less economy activity

Hyper-financialized system
Weakest balance sheets are households, backstopped by banks

QE starts – it’s printing money but “magic sleight of hand”
In debt crisis, collateral can’t go to zero
Didn’t think it would debase currency, most people didn’t notice
Fed is papering in cracks of demographics – all trying to offset an aging population

Debasement is making us poorer – eg, S&P 500 prices aren’t rising when divided by money supply
It’s an “everything bubble” – everything follows the Central Bank balance sheet – same with many developed countries

Only 2 asset classes have outperformed (money supply growth) since 2008 – bitcoin, and Nasdaq (tech) – when incorporating this money printing / QE

Rise of the Internet
People are angry – “people realize they weren’t going anywhere”
Facebook is perfect place to divide everybody
Rising education costs, healthcare costs

2010s – 4th turning
Transition of power from one demographic (the boomers) to another (the millennials and younger)
After 2008 housing bubble, new bubble is corporate debt bubble – especially since rates are low
Could have fixed things as late as late 90s, Asian financial crisis – last unforced error – but now it’s too late

2020 – Pandemic
Fed + government = fiscal stimulus, no defaults
Fed even buys corporate bonds
“Horror story but it worked” – world saved (for now)
Asset prices go up, but not when accounting for money printing
Now they’re (Central Banks + govs) incentivized to do even more

China’s GDP will collapse with shrinking population
Japan has same

Financial repression = inflation > bond yields

Bonds = GDP growth + inflation

“No one knows who the hell owns what in an overly levered financial system”
At the top (eg, the DTCC) – assets aren’t segregated (between government / Central Banks and private holdings) – thus a collapse means everyone’s assets are at risk

2008 – Satoshi whitepaper – function of all the money printing, financialization, debasement
Debasement hides reality
Bitcoin changes the equation – ubiquitous global scarcity – the migration begins to a parallel financial system
People don’t trust financial intermediaries anymore

What you’ll see
-Ongoing gradual debasement (of fiat)
-Ongoing gradual migration (to bitcoin and crypto)

Corporate cash
What can you do with it: share buybacks, M&A, real estate
But only earn 3% on that cash while assets rising 15% / year
So next year you can buy ~12% less

Population is reducing everywhere – self balancing mechanism of humanity, can’t afford to have kids
Peak around 9.5-10B people globally
Robots will replace humans

Where this is going
-Bitcoin
-Online nation states
-Metaverse – everyone will live in different worlds

RB: Real world is becoming a video game

Next 15-20 years will be very hard transition – currency debasement, gov debt, demographic shift, rise of crypto

CBDCs – will let governments fiscally stimulate in more targeted ways
Programmable money – all govs will do it
How do you stop people revolting – you have to give them money
Redirect from capital to wages
86M millennials are pissed at what’s happening – and are more progressive – will force progressive policies
Big 4th turning – everyone shifts Left

If deflationary world – what happens?
You’ll stop spending as much – velocity of money could go to zero if you’re not careful
In long run, crypto price growth could settle around eg, demographics / GDP growth – but what happens from here to there?
Could in theory stop allocating capital to everything else (eg, real estate, stocks, bonds)

Digital ID will become important – right now we’re being exploited (eg, Facebook, Google, Twitter) – that revenue should go to you, could become basis for UBI

Everything digital goes to 0 in costs of production – electricity costs will go to zero
Positive shock – what happens?
Lower population, more robots, energy costs trending to zero – everyone is rich?
Where does the power go? Who owns the AI & robots? If world run by AI, can it be distributed?

Podcast notes – Vitalik Buterin talking post-merge on Epicenter: “Core devs want role to be as technical as possible”

Podcast notes – Vitalik Buterin (After the ETH Merge) – Epicenter

Host: Friederike
Guest: Vitalik

50% of blocks are OFAC compliant – “it’s a concern…but important not to overstate it”
Means non compliant transactions have to wait 2 blocks instead of one (on average)
Near-term solution – MEV boost will have transaction inclusion lists added – similar to what MEV-Geth (?) did before
Social slashing is a meme that’s gone too far – shouldn’t hard fork to delete censoring validators
“Optimistic that things will improve quite a bit”

Should validators have agency?
General idea is to make validators as dumb as possible – just run code – maximally dumb pipe-y – more predictable and easier to run a validator
Argument for making validators smarter / opinionated – could serve as second line of defense

Doesn’t trust threshold encryption – requires 50% honesty assumption
Suspicious of honesty majority assumptions – should have paths to recovery if dishonest majorities occur

MEV smoothing – Justin Drake’s fave idea – treat non optimal bid acceptance as invalid / non availability condition

How much of a problem is MEV?
Many kinds of MEV – some is a problem, some isn’t
One class of problem – outright exploitation (eg, Uniswap ETH-USDC, sandwich attack)
Some MEV is unavoidable / benign – eg, arbitrage if prices change during block confirmation, keeps prices synchronized
Don’t want proposers to need to update software to keep pace with MEV algorithms
Can’t count on dapps to mitigate MEV – “always gonna be dumb devs somewhere”
There are MEV minimizing architectures – eg, off chain order matching before sending to Uniswap / onchain DEX

Some (eg, Paradigm) argue MEV inevitable – and thus building solutions to capture MEV in somewhat decentralized way is necessary (eg, Flashbots)
Flashbots has prevented centralization of layer under them (the stakers) – but has turned into centralization vector itself

The Surge – danksharding requires trusted setup, should we worry about it?
Low probability (1 of 1000s?), but important to move away from trusted setup over time
Other approaches have too many tradeoffs
KZG now, roadmap for removing it as better snark tech catches up

Phase 1 – Proto danksharding – could be early to mid next year
Phase 2 – go to 16mb, split up data load – will be gradual nodes transition

Core development bandwidth limited, prefer solutions that are more distributed / third party
Examples: Account abstraction strategy – 4337; Rollups
Danksharding – benefit is split off development effort, core devs have simpler problem / less work, rest of work is on community, can get something out much faster

Concept of in-protocol fees going to specific dev teams – has been discussed before and rejected – trying to minimize governance
Core devs want role to be as technical as possible, avoid social value judgments
If can go back 8 years, pre-mine 3M ETH for long-term fund for soul-bound governance, maybe — but need to live with ecosystem as it is today

Centralized chokepoints in L2? Sequencers are centralized
Decentralizing sequencer is very important – multiple approaches and tools, balance complicated constraints (security, legal)
-In-protocol auction to buy up sequencer rights for future slots
-In-protocol proposer mechanism

$3B in hacks in 2022 alone – how do we protect normies?
Defi hacks have been in applications he doesn’t use and would never endorse using
Some in community have more aggressive ideas of what they wanna do onchain and will overshoot
“Best we can do is slowly expand frontier of what can be done safely over time”
Uniswap safe for long time, MakerDao, better DAO governance contracts – this safe space will grow
“Do better job of communicating difference between safe zone and crazy zone”

What must we get right in 2023?
“I’d still say scalability…there’s a limited time window”
If we don’t solve by next bull market, overwhelming chance that forms of scaling that sacrifice trustlessness will dominate, will be hard to come back from it

Podcast notes – Brent Johnson on the Dollar Milkshake – Bitcoin Layer with Nik Bhatia

Brent Johnson – DLJ, then Credit Suisse, then wealth management
Started Santiago Capital – manage money for individuals
His website: SantiagoCapital.com

Coined the term Dollar Milkshake Theory
-framework for global sovereign debt currency crisis
-name comes a scene in There Will Be Blood
-US dollar and capital markets have advantages rest of world (ROW) doesn’t have
-US will drain ROW’s milkshake of dollars and capital

Dollar will become too strong for global system to function appropriately – lead to a crash, restructuring / new system (eg, new Plaza Accord)

Jim Grant: “return free risk” (when rates were zero)

US Treasuries outlook
-if rates drop, dollar will fall, Treasuries rise
-if rates continue higher, dollar will continue to strengthen
-if govt bonds are rejected globally, US Treasuries will be demanded more than other countries’ bonds

Milkshake Theory is a relative thesis – US assets / Treasuries / currency will outperform

Thinks there will be more QE eventually
In perfect scenario – whole world will return to QE, sovereign bonds globally will be rejected, all excess liquidity flows back to US, into stocks / real estate / USD assets, get a big melt-up
USD in this scenario will still rise – but underperform USD assets (eg, stocks)

Oil runs the world
-Oil mostly priced and traded in USD
-If oil rises 20% and USD rises 20% versus your currency, that’s 40% increase in energy costs!
-If crisis where every country for themselves, US more energy self sufficient than others
-Maybe Russia is stronger position
-Because of US energy self sufficiency, we’re exporting fewer USD to ROW to buy their oil, less supply of ex-US dollars

ROW still trades with each other but primarily denominated in USD
Huge amounts of USD credit between them – France-Singapore, Europe-Turkey, etc

Whole system is game of musical chairs
Chairs = base money (currency, bank reserves)
Credit = people walking around in the game
If more credit, new people enter the game, but same # of chairs
As US tightens monetary policy, not creating new money, taking chairs out of game, system becomes even more levered
Eurodollar market can’t add more chairs, only more people
Music could stop at any moment

Triffin’s Dilemma
A country currency that functions as global reserve currency – eventually situation where domestic needs conflict with int’l needs

Vicious loop
Other countries need to print more of their own money to buy USD / buy energy, and this causes further currency weakening vs USD
A few commodity producing country currencies have held up well – eg, Russian ruble, Brazilian real

Fed won’t stop while US equity is still rallying, unemployment low
Keep going until prices come down, wages come down, some jobs are lost
“Wouldn’t surprise me if it slows down” – dollar would then drop 10, 15%
Over next 2-3 years, dollar will continue to rise
Expects Powell continue to raise more than most expect

Europe already buying periphery bonds; UK with pension fund crisis
Japan doing YCC
Ex-US currencies down dramatically
Nothing ROW can do to make USD go lower that wouldn’t hurt themselves more

China’s gold-backed yuan – silly idea tbh
BRICS launching basket of currencies – not reality
If these things were done, would be even less USD in circulation – would worsen the short-term credit problem, Eurodollar market would lose a ton of assets

If the world moves to new system – process would be violent, may involve military conflict

US has weaponized dollar – doing it on purpose – Putin is doing same thing by requiring Russian energy buyers to pay in ruble

More free market price discovery in US Treasury market today than any other treasury market

Japan outlook
-can’t let rates rise – YCC will flood system with yen, and yen will lose value
-in 2013 and 2015, when yen weakened, led to Chinese yuan weakening
-because yuan and yen are competitive currencies, both exporting nations, yuan must devalue to maintain competition for exports
-think yen will go a lot lower – now around 147 – thinks yen will go to 200 or higher (!)
-will put enormous pressure on Chinese yuan – pull inflationary pressures into their economy to keep export markets strong
-yen could still rally 5-10% in bursts
-yen is big signal