Also, @Joel Becker, at this point you have called my thinking “pretty tortured” twice (in comments to the original post) and “4D-chess” here. Especially the first phrase seems—at least to me—more like solider mindset than scout mindset, in that I don’t see how you’d make a discussion more truth-seeking, or enlighten anyone when using words like that.
I try to ask both “what does Joel know that I don’t” and “what do I know that Joel doesn’t, and how can I help him understand that”. This post is my attempt at engaging in that way. In contrast, I don’t see your comments offering much new evidence (e.g., in the comments to the original post you make comments such as “Traders are not dumb. At least, the small number of traders necessary to move the market are not dumb”—which you should realize that I am well aware of. I am making my argument without that assumption, so you are only arguing against a straw man. So I will try to offer my explanation one more time, in the hopes that it could lead to a productive debate.
Let’s use a physical analogy for financial markets—say, a horse race track. People take their money there, store it for some time, and take out a different amount of money when they leave, depending on the quality of their bets. If interest rates are ruled by capital supply, then making a bet on interest rates is akin to betting on how large volumes people will bet tomorrow. So if you believe that the horse race track is going to burn down tomorrow, you can of course go to the horse race track and place the bet “Trading volumes in 2 days are going to be really low”—and if you’re right about the fire, you’re likely also right about the trading volumes. But in the meantime, the horse race track burned down, and no one is left to pay out your winnings. Now of course, you can find someone who’s willing to buy you out of the bet before things burn down, if you convince them that it is a safe way to profit. You can tell everyone about the forest fire you observed nearby, and how in 24h that’s going to reach the horse track, and burn it to the ground. And people can believe your evidence. But that’s not going to get anyone to buy you out of the bet you made, since they realize that they will be left holding the burned bag—unless they can find an even bigger fool to sell to. So the only way you can profit from your knowledge of the impeding fire, is to pull all of your bets, so you don’t have cash inside the building when it burns down. And that’s going to decrease the volumes on the market a little bit, but it is a tiny fraction of the total, since there are many bettors on the horse track. Now this analogy isn’t perfect, but my point stands—the equilibrium you’re hypothesizing, doesn’t exist. If you’re hypothesizing a capital supply-side response to short AI timelines, that can only happen if a large fraction of consumers decide to decrease their savings rates, and that would likely require so overwhelming evidence for near-term AI, it would no longer be a leading indicator. (as stated in the earlier comment, I think the capital demand-side argument has more merit, however).
Okay, I have attempted to clarify my thinking on multiple occasions now. In contrast, my experience is that you seem reluctant to engage with my actual arguments, offer few new pieces of evidence, and describe my thinking in quite disparaging terms, which adds up to a poor basis for further discussion. I don’t think this is your intention, so please take this for what it is—an attempt at well-meaning feedback, and encouragement to revisit how you engage on this topic. Until I see this good-faith effort I will consider this argument closed for now.
Jakob, I sincerely apologize for my unhelpful (or at the very least unelightening) phrases that have come across as soldier mindset/rude.
I was commenting as I would on the unshared google doc of a friend asking for feedback. But perhaps this way of going about things is too curt for a public forum. Again, I’m sorry.
(I will probably reply on the substance later; currently too busy. I think there’s a decent chance that I will agree with you that, in addition to being rude and craply communicated and coming across as soldier mindset, my previous comments reflected sloppy thinking.)
Also, @Joel Becker, at this point you have called my thinking “pretty tortured” twice (in comments to the original post) and “4D-chess” here. Especially the first phrase seems—at least to me—more like solider mindset than scout mindset, in that I don’t see how you’d make a discussion more truth-seeking, or enlighten anyone when using words like that.
I try to ask both “what does Joel know that I don’t” and “what do I know that Joel doesn’t, and how can I help him understand that”. This post is my attempt at engaging in that way. In contrast, I don’t see your comments offering much new evidence (e.g., in the comments to the original post you make comments such as “Traders are not dumb. At least, the small number of traders necessary to move the market are not dumb”—which you should realize that I am well aware of. I am making my argument without that assumption, so you are only arguing against a straw man. So I will try to offer my explanation one more time, in the hopes that it could lead to a productive debate.
Let’s use a physical analogy for financial markets—say, a horse race track. People take their money there, store it for some time, and take out a different amount of money when they leave, depending on the quality of their bets. If interest rates are ruled by capital supply, then making a bet on interest rates is akin to betting on how large volumes people will bet tomorrow. So if you believe that the horse race track is going to burn down tomorrow, you can of course go to the horse race track and place the bet “Trading volumes in 2 days are going to be really low”—and if you’re right about the fire, you’re likely also right about the trading volumes. But in the meantime, the horse race track burned down, and no one is left to pay out your winnings. Now of course, you can find someone who’s willing to buy you out of the bet before things burn down, if you convince them that it is a safe way to profit. You can tell everyone about the forest fire you observed nearby, and how in 24h that’s going to reach the horse track, and burn it to the ground. And people can believe your evidence. But that’s not going to get anyone to buy you out of the bet you made, since they realize that they will be left holding the burned bag—unless they can find an even bigger fool to sell to. So the only way you can profit from your knowledge of the impeding fire, is to pull all of your bets, so you don’t have cash inside the building when it burns down. And that’s going to decrease the volumes on the market a little bit, but it is a tiny fraction of the total, since there are many bettors on the horse track. Now this analogy isn’t perfect, but my point stands—the equilibrium you’re hypothesizing, doesn’t exist. If you’re hypothesizing a capital supply-side response to short AI timelines, that can only happen if a large fraction of consumers decide to decrease their savings rates, and that would likely require so overwhelming evidence for near-term AI, it would no longer be a leading indicator. (as stated in the earlier comment, I think the capital demand-side argument has more merit, however).
Okay, I have attempted to clarify my thinking on multiple occasions now. In contrast, my experience is that you seem reluctant to engage with my actual arguments, offer few new pieces of evidence, and describe my thinking in quite disparaging terms, which adds up to a poor basis for further discussion. I don’t think this is your intention, so please take this for what it is—an attempt at well-meaning feedback, and encouragement to revisit how you engage on this topic. Until I see this good-faith effort I will consider this argument closed for now.
Jakob, I sincerely apologize for my unhelpful (or at the very least unelightening) phrases that have come across as soldier mindset/rude.
I was commenting as I would on the unshared google doc of a friend asking for feedback. But perhaps this way of going about things is too curt for a public forum. Again, I’m sorry.
(I will probably reply on the substance later; currently too busy. I think there’s a decent chance that I will agree with you that, in addition to being rude and craply communicated and coming across as soldier mindset, my previous comments reflected sloppy thinking.)
Thank you Joel! I appreciate it