582 sats \ 8 replies \ @Undisciplined 4 Oct 2023 \ parent \ on: Lyn Alden book club part I bitcoin
Even in economics, you can go a long way before encountering any serious treatment of money. In fact, you can easily go clear through the vast majority of PhD programs without ever discussing what money is. The only exceptions I know of are Chicago and George Mason.
Generally, money is just magically introduced as a unit of account into models that really don't have any monetary dynamics. Most econ programs will have electives on economic history or history of economic thought that get into serious discussions of money.
As someone who has been in the finance industry for almost ten years, I have observed that my colleagues struggle to define what money actually is. Even when I ask pointed questions on various finance-related topics such as the value of stable currency, the historical gold standard, the concept of legal tender, rehypothecation, or the Bretton Woods agreement, their responses are often incomplete or nonexistent.
In my experience, finance professionals tend to focus solely on what they have been taught in school and what will benefit their career advancement rather than broadening their knowledge base. While I can emphasise their reasoning, it perplexes me that they do not prioritise a more comprehensive approach to learning.
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I too am empathetic about the plight of the nascent finance bro.
If you go to a psychology department and pluck a random grad student out of it and say: what is love? you would surely get an answer, but it would not an especially sophisticated answer, given its centrality to human endeavor You could walk away shaking your head, saying: wtf, this is literally a force in human affairs that people will die if they don't have sorted out for the first x years of their life, and if they somehow don't die, they will be hopelessly fucked up for their remaining years. And it's not bc the students are stupid, or unambitious, or incurious -- at least, they need not be. It's because they're there to study one topic in grotesque depth and then somehow get a job later operating in a dying paradigm.
Money isn't exactly the same as love (hopefully) but it doesn't surprise me that some of the same dynamics play out. Or you could say the same for many of us wrt physics, for example. What could be more foundational than the actual building blocks of reality? And yet how many of us could solve the simplest problems in that domain?
In fact, the biggest consequence of all this, to me, is to look around in bafflement and wonder, and a little shame, at how little I know about the key forces in the world.
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I was actually thinking that a decent analogy would be to physics and how you might never really learn much about QCD, for instance, depending on your specialty.
The difference wrt to economists and money is that even most monetary economists don't understand money. What they've learned are a bunch of bogus models about central bank policy; most of which are literally useless at describing an economy with more than one type of capital good. To them, money is nothing more than a convenient denominator for relative exchange rates between goods. The past three centuries of monetary theory may as well not even exist.
Edit: I misread your post and thought you had training in physics. My point was that most physicists don't spend much time learning about the subatomic particles that make up almost all matter, despite that obviously being pretty fundamental for everything else.
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Interesting. I was under the impression that finance people had a better handle on some of the econ concepts, but maybe money isn't one of them.
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I'm quite surprised and still figuring out if I'm asking the right questions.
Fresh graduates may possess more knowledge, and as you progress in the industry, you either leave because you realise it's not worth it or continue to work in the same environment/echo chamber and advance your career.
I feel the same is true with politics; many people think they are doing good work and their new financial/political policy will improve people's lives.
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I've heard that from other places, too. Seems weird, although when I steelman it, I guess I can sort of get it. I have a PhD in a different field and I can think of a zillion really fundamental things that you don't get exposed to unless you insist on it. There's just too much to cover, and those foundational things are ... foundational. Considered to be so basic as to not need examination, I suppose.
One of the byproducts of going down the btc rabbit hole, for me, was encountering so many super fascinating takes on money and its origins and the psychology of it. Bitcoiners don't often get exposed to these through the normal channels. For instance, here's probably my favorite book on money topics, which I've never heard anyone even mention. (Though in fairness, no one mentions it outside of btc, either.)
If you just go one field over, it's like a whole other universe of things to discover.
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Even I've never heard of that book. What's your favorite thing about it?
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Spang writes about how the French aristocracy made what amounts to an annuity on the lives of a bundle of young French women -- you invested your money, then got a payout over time in proportion to how many of them stayed alive. The world's most bizarre financial product.
(I'm probably describing this badly bc I don't know a lot about these arcane financial instruments, and it's been years since I read the book.)
But basically, it opened my eyes to just how elaborate financial engineering gets. Indirectly, it's a nice counterpart to btc, where there is no magical 'yield' and you can understand exactly how the monetary elements works. But also unsettling a bit -- if people want these things and there's an appetite (as there has been, historically), then will they find some way to get them, e.g., all the fintech / defi stuff?
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