I think this is an incredible idea and would love for it to win. My biggest concern with this pivot is the odds of the loans defaulting and philanthropy and people potentially losing billions of dollars. But if USD bonds default, it’s likely that the US is going through a very bad time, and the USD (instead of GLO) that was otherwise held would potentially do very poorly too. Is there any sort of research on the odds of these bonds collapsing, and how does that relate to the yield?
A smaller concern is that crypto has had major hacks that stole millions to billions (I unfortunately was part of one of those hacks), and I would like the GLO team to think and assess the risk of that happening to them.
And if the “In theory GLO sounds great but it’s absurdly ambitious and unlikely to succeed” is a negative feedback point, I strongly disagree with that. With your two million seed donation and the potential being 2900 billion a year in UBI, any odds that are above 0% are worth that initial investment. At EAG London it was emphasized many times we should be pursuing bigger ambitions, yet I continue to hear from people with the most ambitious ideas that they are told to be realistic. You can always make the idea smaller, but it’s hard to make an unambitious idea ambitious. If you get this feedback it means you’re on the right track!
We’ve also been thinking that we need a comprehensive assessment of bond returns, and yes, that will need to take into account their probability of default. Speaking to US bonds in particular, apparently, the Treasury did default on some of its bills in 1979 due to ‘technical errors,’ and a few times, the US changed the terms of its obligations post facto. (Others dispute this characterization.) But either way, the fact that these events are really rare is reflected in bonds’ relatively low yield, compared to, e.g. the S&P.
Our general plan for security is to open source everything and hire auditors to take a close look. We’ll have more to say on this when we launch.
That does help a lot to know that the risk has been very low but does exist. Open source for security sounds like a good idea, but I’m non-technical so I might be wrong. At least the transparency of that is something that I value a lot.
I’d still be interested to know if you would only invest in US bonds. With China likely eclipsing the US in our lifetime, and these things not always going down without a literal fight, that might make US bonds more risky than the market currently thinks, meriting a more diverse bond backing.
Absolutely, on my short-term agenda is a research piece comparing the returns to different countries’ historical bond returns. I’m thinking of limiting it to just OECD countries (or some other criteria of developed-ness?), and that would also function as a basis for figuring out which countries’ bonds would be a good bet.
I think this is an incredible idea and would love for it to win. My biggest concern with this pivot is the odds of the loans defaulting and philanthropy and people potentially losing billions of dollars. But if USD bonds default, it’s likely that the US is going through a very bad time, and the USD (instead of GLO) that was otherwise held would potentially do very poorly too. Is there any sort of research on the odds of these bonds collapsing, and how does that relate to the yield?
A smaller concern is that crypto has had major hacks that stole millions to billions (I unfortunately was part of one of those hacks), and I would like the GLO team to think and assess the risk of that happening to them.
And if the “In theory GLO sounds great but it’s absurdly ambitious and unlikely to succeed” is a negative feedback point, I strongly disagree with that. With your two million seed donation and the potential being 2900 billion a year in UBI, any odds that are above 0% are worth that initial investment. At EAG London it was emphasized many times we should be pursuing bigger ambitions, yet I continue to hear from people with the most ambitious ideas that they are told to be realistic. You can always make the idea smaller, but it’s hard to make an unambitious idea ambitious. If you get this feedback it means you’re on the right track!
👋
We’ve also been thinking that we need a comprehensive assessment of bond returns, and yes, that will need to take into account their probability of default. Speaking to US bonds in particular, apparently, the Treasury did default on some of its bills in 1979 due to ‘technical errors,’ and a few times, the US changed the terms of its obligations post facto. (Others dispute this characterization.) But either way, the fact that these events are really rare is reflected in bonds’ relatively low yield, compared to, e.g. the S&P.
Our general plan for security is to open source everything and hire auditors to take a close look. We’ll have more to say on this when we launch.
Hope that helps!
That does help a lot to know that the risk has been very low but does exist. Open source for security sounds like a good idea, but I’m non-technical so I might be wrong. At least the transparency of that is something that I value a lot.
I’d still be interested to know if you would only invest in US bonds. With China likely eclipsing the US in our lifetime, and these things not always going down without a literal fight, that might make US bonds more risky than the market currently thinks, meriting a more diverse bond backing.
Absolutely, on my short-term agenda is a research piece comparing the returns to different countries’ historical bond returns. I’m thinking of limiting it to just OECD countries (or some other criteria of developed-ness?), and that would also function as a basis for figuring out which countries’ bonds would be a good bet.