pull down to refresh
359 sats \ 11 replies \ @Undisciplined 29 Nov 2023 \ on: Technological determinism and splitting the atom of cause and effect bitcoin
Tom Woods has talked about how one of the major problems fiat created was turning almost everyone into amateur stock traders. On a hard money standard, people can literally just save their money for tomorrow and have confidence its purchasing power will be preserved. Fiat made saving untenable and "saving" became a euphemism for financial speculation.
The logic makes sense, but it would be interesting to know more about this historically, e.g., when money was far sounder, but there were still abundant things to invest in, what did people do? I can imagine there being a serious confound with people getting richer in general, since richer people probably always speculated more. Maybe the difference is that now poorer people also speculate?
reply
Maybe the difference is that now poorer people also speculate?
This is his point.
a serious confound with people getting richer in general, since richer people probably always speculated
Agree. That makes it difficult to evaluate definitively, but people don't save by hiding money in their mattresses anymore. However, it also wasn't that easy to make investments for the average person back then, so maybe they would have done more speculation if it had been as easy as it is today.
reply
"The rich can always afford to speculate" reminds me of this awesome visual essay that argues risk tolerance is the cause of wealth gaps. We discussed it a wee bit here.
reply
Risk neutrality will definitely lead people to greater wealth on average, but it will also lead a larger number of people into ruin, since that's the point of risk aversion. So, we do expect rich people to be more risk neutral, because that's how you get there.
I'm not sure what the evidence looks like wrt wealth influencing a person's risk aversion. In economic models things like risk aversion and time preference are assumed to be immutable in an individual. However, that assumption is known to be sort of dumb and is generally made so that the models are tractable.
reply
There's a bunch of interesting work in being able to manipulate risk tolerance on different timescales; which is an instance of key aspects of a person's life-strategies being "configured" by early exposure to environmental features. A nice account is this book, although there are some controversies.
(In healthcare, the lingo is ACEs -- adverse childhood events. It's foundationally the same evpsych ideas, though the healthcare people are too solipsistic to connect to the larger science, as per usual.)
reply
IIRC the essay splits risk tolerance into relative and absolute risk. It argues that even if someone poor has the same risk tolerance as a rich person relative to their wealth, the poor person's absolute risk is lower than the rich person's. When iterated on in the simulation they provide, the difference in absolute risk tolerance causes a very large wealth gap.
reply
This essay is one of the best things I have seen on SN so far… sharing it with all who will listen.
reply
I think the willingness to take "risks" is the overriding factor, if you consider it risky to borrow heavily when you mimic a leveraged government that can create a borrower's paradise. You didn't need to be a genius to buy inflating assets. Debt is the key. Savers obviously got destroyed for the past 50 years.
reply
Ha -- brilliant example of evergreen stuff on SN. Thanks for the link.
I'm curious how you indexed this in your mind. Like, what was the process by which the current discussion reminded you of the older SN one? It seems like a rich interlinkage.
reply
Forced to guess, I'd say I found it via some kind of composite index where the column order is
(player names, game shape). Whatever index I have where game shape is first indexed is probably more sparse than I'd like.On the topic of brain indices ... The other day when I was trying to recall Drew Barrymore's name, I first audibly called her Hallie Barry then Happy Gilmore before arriving at Drew Barrymore. Brains must have some kind of soundex system.
reply
Similar systems were used (and perhaps still are, though the field's momentum is elsewhere) to map out the brain's semantic structures back in the day. It works both semantically and phonologically, and presumably via other associational mechanisms as well.
I'd never heard of soundex, I'm totally stealing that.
reply