Latest Writings

• Posted 4 months ago

  The Fisherman and the Businessman
  

  This is a story that has resonated with many over the years, myself included. It invites us to reflect on our relationship with time, success, and contentment. In a world that often emphasizes constant growth and achievement, this tale reminds us of the value in appreciating the present moment and finding joy in life's simple pleasures. Importantly, the story doesn't suggest that ambition or progress is inherently negative. Rather, it encourages us to maintain perspective as we pursue our goals. It's about striking a balance – achieving and growing while not losing sight of what truly matters in life and not losing the forest for the trees. Yesterday is history, tomorrow is a mystery, and today is a gift––that is why it is called the present. A wealthy businessman was vacationing in a small coastal village. As he walked along the pier, he noticed a small fishing boat docking. Inside was a lone fisherman with several large fish. Impressed, the businessman asked, "How long did it take you to catch those?" "Not long," the fisherman replied with a smile. "Why don't you stay out longer and catch more?" the businessman inquired. The fisherman explained, "This is enough to support my family's needs." Curious, the businessman asked, "But what do you do with the rest of your time?" "I sleep late, fish a little, play with my children, take naps with my wife, and in the evenings, I stroll into the village to drink wine and play music with my friends. I have a full and busy life," the fisherman answered contentedly. The businessman scoffed. "I have a business degree and could help you. You should fish for longer hours. With the extra money, you could buy a bigger boat. With the proceeds from the bigger boat, you could then buy several boats. Eventually, you would have a fleet of fishing boats." He continued enthusiastically, "Instead of selling your catch to a middleman, you would sell directly to the processor and later open your own cannery. You would control the product, processing, and distribution. You'd need to move from this village to the city, and eventually to a big financial center to run your expanding enterprise." The fisherman asked, "But how long will this all take?" "15-20 years," replied the businessman. "And then what?" the fisherman pressed. The businessman laughed. "That's the best part. When the time is right, you would sell your company and become very rich. You would make millions!" "Millions?" asked the fisherman. "Then what?" The businessman said, "Then you would retire. You could move to a small coastal village where you would sleep late, fish a little, play with your kids, take naps with your wife, and spend your evenings drinking wine and playing music with your friends." The fisherman smiled at the businessman and said, "Isn't that what I'm doing right now?"
  Upvote

  Loading...

  Views

  Loading...

  Tweet

• Posted 5 months ago

  Periodic Melodies
  

  Eric Weinstein and Terrence Howard recently appeared on the Joe Rogan Experience podcast, discussing various topics including the flower of life, platonic solids, and the academic peer review process. Open App https://www.youtube.com/embed/nrOaFxNex7U During the conversation, Eric shared a video from his friend, Stanley Jordan, who has mapped musical tones to the periodic table of elements. https://www.youtube.com/embed/GnMEOD4zZDc Inspired by this innovative approach, I created a web-based version of this concept. The idea is to assign musical frequencies to elements based on their ionization energies. Here's how it works: Normalization of Ionization Energy: $$ E_{norm} = \frac{E_i - E_{min}}{E_{max} - E_{min}} $$ Where $E_i$ is the ionization energy of an element, $E_{min}$ and $E_{max}$ are the minimum and maximum ionization energies. Frequency Mapping: $$ f = f_{low} + E_{norm} \cdot (f_{high} - f_{low}) $$ Where $f_{low}$ and $f_{high}$ are the lower and upper frequency bounds. Quantization: $$ semitones = round(12 \cdot \log_2(\frac{f}{440})) + chromatic + 12 \cdot octave $$ $$ f_{quantized} = 440 \cdot 2^{\frac{semitones}{12}} $$ In simple terms, quantization adjusts the calculated frequency to the nearest musical note. Assigning Musical Tones to Periodic Table: visualization from gavinmai.com If you're interested, you can explore the interactive version at gavinmai.com/periodic-melodies. I welcome any feedback or suggestions for future features. Please use the feedback form on the website to share your thoughts.
  Upvote

  Loading...

  Views

  Loading...

  Tweet

• Posted 5 months ago

  advice for young adults
  

  Many years ago when I was in my teens, I faced excruciating anxiety about the future. Not knowing who I was, what to do, what the purpose of life was. Now that I am older, I still face anxiety at times, but have realized that this is natural and human. The important thing is to not let fear dictate your actions and move forward in spite of your fears. At the time, I crossed paths with Andres Amador((https://bio.site/andresamadorarts)) via email and he gave some excellent advice that I wanted to re-share in the hopes that it helps you, dear friend. Question: What do I do with my life? The short answer is that you need to be true to yourself. The problem, especially for someone so young, is that the figuring out of who we are is a lifelong journey. Honestly, its only been recently, in the past 5 years or less perhaps, that I have able to stand in the solidity of who I feel myself to be (and I'm 42!). I feel that when someone leaves high school they should have to leave the country for a year minimum of service/exploration. We can't know who we are when we only have our own context to gauge ourselves from. Experiences are crucial to learning who we are, to learning our preferences and our tendencies, our inclinations, our traps. We place such a burden on our youth to figure out their lives when they have not yet truly lived. It leads to a stress in the moment and at worst to a defining and narrowing of ourselves that can have lifelong impact- at its most limiting when we define our options based on perceived financial reward and go in a direction that is truly unsatisfying. The positive is that we are always in control of who we express ourselves as- never forget that. It allows one to have a more relaxed approach to seemingly heavy decisions- there is always the potential to shift course (although it could be easier to shift earlier than later...). I am expecting my first child in about 2 months. So I might look at this question as one directed towards that person in your position. How would I advise my own child, someone I have an intimately connected desire to 'succeed' (by which I mean 'find a path of sustainable happiness'), someone for whom I cannot have a dispassionate, quixotic response? I think I would be starting much earlier in life to inculcate the awareness of their internal pullings, to recognize and appreciate the movement of their heart. From that place, were they to choose to go directly to college, or to an apprenticeship, or to travel, or to work, I would trust that they were acting according to the internal guidance system that is uniquely theirs and that will always move them towards greater expansion of their being. It is an abstract concept, but here is my actual answer to all questions that arise in our lives: 'what has my light shining brighter?' Whether its about where to live or what to eat or who to associate with or what work to do, this question is appropriate as a gauge to the aspect of our experience that has a far deeper impact on us than any other (such as financial, rationality, etc). Here's a way to engage the question- when contemplating the options, which one has your body feeling most easeful, which has your heart running more quickly, which has you feeling scared in a nervous excited way? In contrast, which has you feeling tense, sapped of energy, or anxious? Life is not 'supposed' to 'look' any particular 'way'. Each of us is on our own journey of realizing our own unique potential. There is no roadmap for any of us, and that is the scary part- stepping off the trail and into the wilderness to chart our own path. There is no guarantee. Of course, there is no guarantee in life for anything at all. Doing something for the security it offers is perhaps the worst mistake we can make for not only are we giving up our more expanded potential, but we may not arrive at what we are aiming for, which makes the effort even less worthwhile. This is not to say that efforting towards something is not worthwhile- but that efforting without that internal motivation is not worthwhile. Only you can feel this, only you can understand this (even when you can't actually, understand it). You can't look to others for the cues to what it should be and thats where it can be hard at your age with parental and later societal pressures to 'be something'. Follow your heart the best you can from wherever you find yourself. Life is a continuous unfolding, with our understanding of ourself in constant evolution, which will have you coming to different conclusions at different times in the journey. The only constant is the question I posed- 'what has your light shining brightest?' Follow that and no matter what, you will feel happiest about the journey, even as 'mistakes' are made (which is a necessary part of living). And remember- it is never too late to redefine ourselves and to shift course. I wish you well on your journey, its an amazing and exciting one even as its scary. Blessings ~Andres
  Upvote

  Loading...

  Views

  Loading...

  Tweet

• Posted 5 months ago

  Money: The Hidden Backbone of Civilization
  

  Money seems simple: coins, bills, numbers in a bank account. But this simplicity is deceptive. Money is an invention as profound as language. It enables strangers to cooperate at scale. Without it, we'd be limited to small tribes and barter. With it, we've built global civilizations. But money isn't static. It evolves. From cowrie shells to cryptocurrencies, its forms reflect and shape societies. Today, we primarily use fiat currencies - money backed by government decree. This system, however, has deep-seated issues. Fiat is prone to manipulation, inflation, and instability. Central banks can print at will, diluting value. Governments impose controls, restricting freedom. In the US, the dollar has lost over 96% of its purchasing power since 1913((https://www.in2013dollars.com/us/inflation/2024?endYear=1913&amount=1)). In extreme cases, like Venezuela, hyperinflation has wiped out savings overnight((https://theconversation.com/what-caused-hyperinflation-in-venezuela-a-rare-blend-of-public-ineptitude-and-private-enterprise-102483)). These aren't bugs; they're features of state-controlled money. The solution isn't tweaking the system. It's reimagining it. We need alternatives to fiat. Currencies free from state control, subject to market forces. Uncensorable and internet-native. This isn't just an economic argument - it's about the future of human cooperation. To understand where money is going, we need to understand where it's been. It's the story of how we've organized society for thousands of years - and how we might reshape it. Let's trace that story. Rough timeline of the evolution of money Money wasn't invented. It was discovered, like fire or the wheel. Early humans didn't wake up one day and decide to create a complex financial system. They were just trying to solve a simple problem: how do I trade my extra fish for some berries when the berry guy doesn't want fish? This is the "double coincidence of wants" problem. It's a mouthful but it just means that barter is really inefficient. Imagine if you had to find someone who wanted exactly what you were selling, and as selling exactly what you wanted, every time you needed to buy something. You'd spend all day trading and no time actually doing anything useful. So people started using intermediate goods. Shells((https://nmaahc.si.edu/cowrie-shells-and-trade-power)), salt((https://www.sciencedirect.com/science/article/abs/pii/S0278416521000106)), grain((https://www.atlantafed.org/about/tours/story-of-money/03-value-in-use-exchange/grains-as-money)) - anything that was relatively scarce and widely accepted. This was the birth of commodity money and it changed everything. Suddenly you could trade with anyone, anytime. Civilization exploded. Commodity money in the form of grain Form of Money Pros Cons Seashells Lightweight and durable Limited to coastal areas, potential for duplication with similar shells Salt Essential for diet and food preservation Bulky and susceptible to environmental degradation (e.g., humidity) Grain Fundamental for sustenance, storable Susceptible to spoilage and requires significant space for storage Metal Universally valued, highly durable Heavy and costly to mine and refine But shells were too common, salt was hard to store and grain spoiled. You'd want something that doesn't rot, is easy to carry, and isn't as common as dirt. Metals fit the bill perfectly. Gold and silver were the superstars of metal money. They were rare, pretty, and hard to fake. But here's the weird part, they weren't actually useful for much. Early humans couldn't eat gold or build houses with it. Yet it became incredibly valuable. Metal coins were a huge leap forward. But they had problems too. Try carrying enough gold to buy a house. This issue came to a head in 11th century China. The Song Dynasty was booming, but they were running out of copper for coins. Their solution? Paper money. They called it "Jiaozi" (交子). Coinage during Song Dynasty((By Jean-Michel Moullec from Vern sur Seiche (35, Bretagne), France - S593_SongSud_XiaoZong_Chunxi_H17304_1ar85, CC BY 2.0)) Jiaozi Paper Money((https://www.thevintagenews.com/2017/05/18/the-first-chinese-paper-money-jiaozi-was-stamped-with-six-different-inks-and-multiple-banknote-seals/)) Jiaozi became the defacto way to finance everything, from war (shocker, I know) against the Jin Dynasty((https://www.cambriainstitute.com/journals/advb19v1n1y2010f55.pdf)), general commerce, and savings. This shift from metal to paper wasn't just a change in material. It was a change in thinking. Money was becoming more abstract. More about trust and less about inherent value. Even though Jiaozi were redeemable for the underlying copper, most people did not redeem them because it was more convenient to use the paper money for transactions. Over time, due to budget deficits, greed and war, the Song Dynasty debased their paper money, resulting in only 20% of all Jiaozi being backed by copper((http://chinaknowledge.de/History/Terms/jiaozi.html)). This contributed to financial instability and eventually the fall of the Song Dynasty. Inflation is like making everyone's pizza slice smaller. You still have a slice, but it fills you up less. In the 17th century, European countries like Sweden and England caught on to the paper money idea. By the 19th and early 20th centuries, much of the world's wealth was stored as paper money, backed by gold and silver. This worked for a while. But then came the Great Depression in the 1930s. Suddenly everyone wanted their gold back. It was like a massive bank run, but for an entire country, and subsequently, the world. The gold standard limited monetary policy flexibility. In 1933, FDR, in a move that would make any libertarian's head explode, banned private gold ownership and confiscated gold in order to increase the money supply. Executive Order 61026 After World War II, the world decided to play a new game called Bretton Woods. The rules were simple: the U.S. dollar is as good as gold, and you can trade your dollars for gold anytime. The exchange rate? $35 per ounce. It was like a global pawn shop, with America as the pawnbroker. Gold standard redemption rate was $35 / 1oz 24K gold This agreement marked the beginning of the transition away from the gold standard, as it limited gold redemption to foreign governments and central banks, eventually leading to the complete weaning off the gold standard in 1971. Just like the Song Dynasty, the U.S. started spending like a sailor on shore leave. Vietnam War, Great Society programs - the dollar printing presses were working overtime. By 1966, foreign banks held more dollars than the U.S. had gold. It was like writing checks your gold vault couldn't cash. "In 1966, foreign central banks and governments held over 14 billion U.S. dollars. The United States had $13.2 billion in gold reserves, but only $3.2 billion of that was available to cover foreign dollar holdings. The rest was needed to cover domestic holdings" ((https://www.imf.org/external/np/exr/center/mm/eng/sc_sub_3.htm)) Diminishing gold reserves pre Nixon Shock((Jared Schneidman Illustrations)) In 1971, Nixon looked at the numbers and basically said, "We're out of gold, folks. But don't worry, the dollar is still good. Trust us." And just like that, the last link between money and anything tangible was severed. "Fiat money (noun) /ˈfiːæt ˈmʌni/: money that a government has declared to be legal tender, although it has no intrinsic value and is not backed by reserves" ~Oxford Dictionary https://www.youtube.com/embed/rcnhF09QN78?start=6 So how well has fiat money worked since 1971? Let's look at the data. Dramatic Rise in Cumulative Inflation in the U.S. Since 1971((https://wtfhappenedin1971.com/wp-content/uploads/2020/07/cummulative-inflation.jpg)) Cumulative Inflation since 1872((https://www.advisorperspectives.com/dshort/updates/2024/06/12/inflation-cpi-since-1872)) U.S. Consumer Price Index Surge Post-1971 Highlighted((https://wtfhappenedin1971.com/wp-content/uploads/2020/06/img_0681_arrow-1.jpg)) Exponential Growth of U.S. National Debt Post-1971((https://wtfhappenedin1971.com/wp-content/uploads/2020/06/eifme9yu0ae8xnz.jpg)) Timeline of Hyperinflation Globally, with Intensified Episodes After 1971((https://wtfhappenedin1971.com/wp-content/uploads/2020/01/do5g42luuae65cp_1.jpg)) Fiat money has fundamentally altered our economic landscape. Since 1971, we've seen persistent inflation with fewer deflationary periods. This shift wasn't arbitrary - it was impossible under the gold standard, which tethered the money supply to a finite resource. Inflation isn't inherently problematic. It's a tool, like any other in economics. Excessive inflation erodes purchasing power and can spiral into hyperinflation. Conversely, deflation can trigger a contraction in spending, potentially leading to economic stagnation. The Great Depression illustrates this danger. As prices fell, consumers delayed purchases, expecting further price drops. This created a feedback loop of reduced spending and falling prices, exacerbating the economic downturn. Great Depression Unemployment and Deflation of CPI - Federal Reserve Bank SF((https://www.frbsf.org/research-and-insights/publications/economic-letter/2009/03/risk-deflation/)) Recovery came through expansionary monetary policy - lower interest rates and an increased money supply. This approach demonstrates both the power and the responsibility that comes with fiat currency. The key is balance. Fiat money gives central banks more control, but it also demands more nuanced management. The challenge lies in maintaining stable prices and economic growth without succumbing to the temptations of excessive money creation. Aspect Pros Cons Economic Stability Provides long-term price stability Limits government response to economic crises Inflation Control Reduces risk of hyperinflation due to fixed money supply Can cause deflation if gold supply doesn't match economic growth Credibility Enhances confidence in currency with tangible backing Limited flexibility in monetary policy, making it hard to address short-term fluctuations Aspect Pros Cons Economic Flexibility Enables control of money supply for stability and growth Can cause inflation if not managed properly Monetary Policy Allows dynamic policies like interest rate adjustments and quantitative easing Can mask underlying economic issues, delaying necessary reforms Cost-Efficiency Cheaper to produce and maintain than commodity-based money Excessive printing can devalue currency, leading to crises The Federal Reserve operates under a dual mandate: maximize employment maintain price stability This seemingly simple directive belies the complex economic balancing act it requires. Sweet spot for inflation x unemployment according to Federal Bank of Chicago((https://www.chicagofed.org/publications/speeches/2016/10-11-2016-conducting-monetary-policy-in-an-evolving-environment-sydney)) To achieve these goals, the Fed employs four primary tools: Open Market Operations (OMO) Discount Rate adjustments Reserve Requirements Quantitative Easing (QE) These tools allow the Fed to influence the money supply and interest rates, thereby affecting economic conditions. The most frequently used tool, OMO, involves buying or selling government securities to expand or contract the money supply. Federal Reserve Expansionary Open Market Operation((Theory and Applications of Economics, https://2012books.lardbucket.org/pdfs/theory-and-applications-of-economics.pdf)) When the Federal Reserve conducts an expansionary open-market operation, it purchases bonds (a) or, equivalently, supplies more credit (b). The price of bonds increases, or, equivalently, the interest rate decreases((https://2012books.lardbucket.org/pdfs/theory-and-applications-of-economics.pdf)) The Quantity Theory of Money underpins much of the Fed's strategy. It posits that money supply should grow in tandem with GDP to maintain price stability. This theory explains why the Fed often increases money supply during periods of economic growth. Assuming the economy (T) grows faster than money velocity (V) growth, for prices to remain stable (P), money supply (M) must grow according to the quantity theory of money However, the Fed's actions have broader implications beyond their intended effects. While unemployment has remained relatively stable over recent decades, income inequality has risen sharply. This disparity is partly due to the uneven effects of inflation and monetary policy on different economic strata. Unemployment Rate Over Time The wealthy, with their ability to invest in inflation-resistant assets like businesses and equities, have seen their wealth grow disproportionately. Meanwhile, those relying primarily on wages have struggled to keep pace with inflation. This phenomenon, known as the Cantillon Effect((https://www.adamsmith.org/blog/the-cantillion-effect)), highlights a critical issue in our current monetary system. Those closest to the source of money creation - banks, large corporations, and wealthy individuals - benefit from a brief arbitrage window before increased money supply is reflected in prices. Data from 2016 Federal Reserve Survey of Consumer Finances((https://www.federalreserve.gov/econres/scfindex.htm)), visualized by ((https://www.visualcapitalist.com/chart-assets-make-wealth/)) The result is a growing wealth gap that began accelerating after the shift to fiat currency in 1971. This trend raises important questions about the long-term sustainability and fairness of our current monetary policy approach. In essence, while the Federal Reserve's tools are effective for managing short-term economic fluctuations, they may be contributing to long-term structural inequalities. This paradox represents one of the most significant challenges in modern economic policy. Wages Stagnation Since 1971 Price Inflation of Campbell's Soup $1 in 1971 is worth $7.75((https://www.in2013dollars.com/us/inflation/1971?amount=1)) as of June 2024. Since Covid-19, the US has almost doubled the entire money supply in just a period of a couple years. The downstream effects of this are yet to be fully realized, but expect prices to continue to rise and confidence in the US Dollar to wane. This is already evident in many global superpowers like China, Russia((https://www.investopedia.com/terms/b/brics.asp)) and the UAE to start divesting its interest in holding US Dollar instruments or using it as a medium of exchange((https://www.fxstreet.com/analysis/the-petrodollar-is-dead-and-thats-a-big-deal-202406141938)). Once the trust is lost, it is very difficult to regain. And in a world of fiat money, where the fundamental value of currencies are subject to a floating exchange rate, loss of trust can be a slippery slope. The shift to fiat currency created a vacuum in intrinsic value that the US filled ingeniously with the petrodollar system. By agreeing with Saudi Arabia to price oil in dollars, the US effectively created global demand for its currency. This move transformed oil demand into dollar demand, securing the dollar's position as the world's reserve currency. Oil market is bigger than all raw metals combined (Infomine, EIA, World Gold Council, Johnson Matthey, Cameco, Benchmark Minerals), visualized by Visual Capitalist((https://visualcapitalist.com)) Since oil began trading exclusively in dollars, the U.S. has enjoyed exorbitant privilege. But this privilege has had unexpected consequences. Consider manufacturing. We often attribute the shift of production to Asia to "globalization." But that's only part of the story. The strong dollar, a direct result of the Petrodollar system, has made U.S. labor expensive relative to other countries. This isn't just about t-shirts and toys. Even high-tech industries like semiconductor manufacturing have largely moved offshore. We've outsourced not just production, but expertise. It's easy to see this as a natural evolution of global trade. But imagine a world where the Chinese Renminbi was stronger than the dollar. We might see Chinese companies outsourcing to cheaper American labor. The current arrangement isn't inevitable; it's a direct result of our monetary system. This is the Cantillon effect writ large. The benefits of new money creation aren't distributed evenly. They concentrate around the source - in this case, the U.S. financial system. But the long-term effects ripple out in ways we're only beginning to understand. The irony is that this "strength" may be weakening us. By hollowing out our manufacturing base and concentrating on financial services, we've become more vulnerable. We're rich on paper, but increasingly dependent on other nations for essential goods and skills. Those closest to the creation of US Dollars have benefitted the most "The dominance of the US dollar can be measured by the percentage of central bank reserves in dollars, which is 62%, and the by the percentage of transactions in Forex markets, which is 85%. That means that of all Forex transactions, 85% of the trades involve US dollars combined with another currency." ~Seeking Alpha((https://seekingalpha.com/article/4223468-decline-and-fall-of-petrodollar)) The latest data from the IMF shows the global foreign exchange currency reserve. Generally, the US Dollar is performing strongly but more and more currencies are being stored in foreign central banks, signaling a desire to diversify exposure against just the US Dollar. Global foreign exchange currency reserve visualization from gavinmai.com((https://gavinmai.com/currency-dominance?ref=evolution-of-money-blog)) Despite the increasing diversification of global reserves, the US Dollar is expected to remain the most liquid and sought-after global reserve currency. It will continue to be used for pricing crude oil in the near term, as most other currencies have more localized demand. For example, Russia may price crude oil in Rupees for India, but then faces the challenge of reinvesting those Rupees outside of India((https://www.politico.eu/article/india-has-russia-kremlin-over-crude-oil-barrel/)). The US dollar's dominance isn't eternal. While it remains the most liquid global currency, cracks are appearing. Countries are diversifying their reserves, and the petrodollar system faces an existential threat from renewable energy. If nuclear fusion((https://www.helionenergy.com/)) becomes internationally viable, it could topple the oil market and, by extension, the dollar's supremacy. But there's a deeper issue at play: the monopoly on money itself. Money is perhaps the most important product in the world. It's the foundation of every economy, the lifeblood of commerce. Yet it's also the only product with a government-enforced monopoly. Imagine if the government decided who made your shoes, or your smartphone. We'd consider that absurd. But when it comes to money, we accept it without question. The Federal Reserve, our money manufacturer, operates in a closed loop. Its governors serve 14-year terms, insulated from public opinion. Regional bank presidents serve 5-year terms. This system, designed for stability, also resists change and innovation. In any other industry, a subpar product faces competition. If your shoes are uncomfortable, you buy a different brand. If your phone is slow, you switch to a competitor. This competition drives innovation and improvement. But with money, we're stuck with what we're given. The usual argument for this monopoly is that money is too important to leave to the market. But isn't that backwards? Shouldn't the most important things be the ones we most need to get right? Historically, governments monopolized money because they alone could enforce its use and protect its value. But technology is changing this equation. The internet has created a global, digital economy. Fintech companies like Stripe and neobanks like Revolut are reimagining financial services. Cryptocurrencies are challenging the very concept of state-issued money. Yet despite these advances, our financial system still struggles with forex issues, remittance fees, and time lags. It's as if we're running a 21st-century economy on 20th-century infrastructure. We take it for granted that money is issued by governments. But this arrangement isn't inevitable. It's a product of history, not necessity. Consider the separation of church and state. Once, the idea seemed impossible. Today, it's the norm in most developed countries. We may be approaching a similar inflection point with money. The reasons for separating money and state parallel those for separating church and state: Freedom of choice Reduction of conflict Focus on core responsibilities With money, this could mean freedom to choose your currency, fewer currency wars, and governments focused on governance rather than monetary policy. This shift would require a truly digital economy supporting multiple currencies. Paradoxically, this diversity might lead to a new global standard - not imposed by fiat, but chosen by consensus. In the short term, the U.S. dollar will likely remain dominant. But as money and state separate, we'll see experimentation with new monetary policies. Private actors may build on the dollar's digital infrastructure, much as the dollar was once built on gold. Blockchain technology isn't just another fintech innovation. It's a fundamental reimagining of what money can be. For the first time in history, we have a form of money that solves two critical problems without central control: Provable scarcity Prevention of double-spending These might sound like technical details, but they're the core issues that have always required trusted third parties in our financial systems. Traditional databases, even with ACID compliance, can't solve these problems without centralized control. Blockchain does. It creates a global, immutable ledger through consensus algorithms like proof-of-work or proof-of-stake. This isn't just theory. It's happening now. People are downloading wallet software, buying cryptocurrencies, even adding them to national treasuries((https://bitcoin.gob.sv/)). We're watching the birth of a global, digital-native monetary system. El Salvador's National Bitcoin Treasury via bitcoin.gob.sv Adoption will likely follow a familiar pattern: it starts with enthusiasts, then speculators, then mainstream users as the infrastructure improves. We saw this with the internet, and we're seeing it now with crypto. The implications are profound. Cryptocurrencies could become full substitutes for bank accounts and cash. They remove the need for trusted intermediaries in transactions. This eliminates chargeback fraud for merchants but also means users must be extra cautious with security. New solutions are emerging, like multi-signature wallets that require multiple approvals for transactions. These developments are making crypto more user-friendly and secure. For merchants, the appeal is clear: no more interchange fees that eat 1.5% - 2.5% of every card transaction. In a world of thin margins, this is significant. The crypto ecosystem is diverse: Bitcoin: "Digital gold" with fixed supply and immutable monetary policy. Stablecoins (e.g., USDC): Pegged to fiat, bridging traditional and crypto finance. Ethereum: Powers smart contracts and dApps, with a flexible monetary policy. CBDCs: Central banks' digital currencies, not true crypto but a response to it. Governance Tokens: Enable community decision-making in crypto projects. This diversity isn't just about new money forms. It's the first technological foundation for separating money and state. Like the separation of church and state enabled religious innovation, this could spark monetary innovation. Blockchain provides a public infrastructure for creating and experimenting with money, free from centralized control. It's not about which coin will dominate next month, but which monetary systems best serve human needs over time. The beauty is in the optionality. We don't need to decide now. The market can experiment and evolve. This might take years or centuries, but as long as this infrastructure exists, we can create better money. This doesn't mean all cryptocurrencies are equal or problem-free. Scams, manipulation, and volatility are real issues. Regulation will play a role. But the core innovation - a global, permissionless value transfer system - is here to stay. It's the foundation for a more open, efficient, and inclusive financial system. Elon Musk has famously said: "The thing we call money is just an information system for labor allocation" ~Elon Musk((https://x.com/elonmusk/status/1349977642708168704)) It's a provocative idea, but what happens when labor itself becomes obsolete? As we edge closer to artificial general intelligence (AGI), we're forced to confront this question. If AI can perform most economically valuable tasks, what becomes of our economic systems? Price changes in consumer goods and services in the United States((https://ourworldindata.org/grapher/price-changes-consumer-goods-services-united-states)) Look at price trends over the past few decades. Goods with decreasing human involvement - computers, TVs - have become cheaper. Services still reliant on human labor - education, healthcare, housing - have grown more expensive. It's tempting to extrapolate this trend and imagine a world where AI has made everything dirt cheap. But let's pump the brakes. We've been predicting the imminent arrival of AGI for decades. It's always just around the corner, yet somehow never quite here. Self-driving cars, for instance, have been "almost ready" for years. The challenges of generalizing AI beyond narrow tasks are significant and often underestimated. Even if we achieve AGI, the transition won't be instant or smooth. Some fields will resist automation longer than others. And new, unforeseen types of labor may emerge. That said, let's indulge in some speculation. Imagine a far future where AI and robotics have indeed automated most current forms of labor. Energy is cheap and abundant. Manufacturing is handled by self-replicating machines. What role does money play in such a world? https://www.youtube.com/embed/cpraXaw7dyc One possibility is that it becomes largely obsolete. In a world of true abundance, where anything can be produced at negligible cost, traditional economic constructs might break down. We might indeed return to something like a barter system, not out of necessity but as a way to exchange goods and services that have personal or social value rather than economic value. But here's the rub: scarcity might not disappear; it might just shift. Even in a world of material abundance, there could be scarcity of attention, of unique experiences, of social status. Money, or something like it, might evolve to mediate these new forms of scarcity. Moreover, the transition to this hypothetical post-scarcity world would likely be long and uneven. Money would continue to play a crucial role during this period, even as its nature and function evolve. The truth is, we don't know what a post-AGI economy looks like. Our current economic models simply aren't built to handle a world without scarcity. It's like asking a fish to imagine life on land((This topic deserves a longer discussion, one that is beyond the scope of this essay)). What we can say is this: money, like all human tools, evolves to meet the needs of the society that uses it. As our world changes, so too will our systems of value exchange. The form this takes may be as foreign to us as cryptocurrency would be to a medieval merchant. The only certainty is change itself. Our task is not to predict the future, but to build systems flexible enough to adapt to whatever comes. In the realm of money and economics, that means fostering innovation while maintaining stability - a balancing act that will only become more crucial as we venture into uncharted technological territory. Thank you to Kent Makishima, Kyle Armour, Miles Albert, Sam Trautwein, York Yu for reading drafts and feedback.
  Upvote

  Loading...

  Views

  Loading...

  Tweet

• Posted about 2 years ago

  Hello world
  Hello World. 你好世界. Hola Mundo
  Upvote

  Loading...

  Views

  Loading...

  Tweet