Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.
Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
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”:
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
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 (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
