As we enter the 21st century we are seeing a significant body of quantum mechanics, chemistry, biology, and interdisciplinary research having wide impacts on society.

In my Homo Techno #6 post I talked about how the 4th/5th industrial revolutions are currently taking effect. The characteristic that sets apart these industrial revolutions is the significant increase in communication, accessibility, and collaboration through digital tools.

This productivity boost benefits all areas of research & development. Nowadays, new discoveries/technologies seem to appear every week! A lot of these technologies are also highly synergistic.

Deep Tech (or Hard Tech)

Definition: a classification of organization, or more typically a startup company, with the expressed objective of providing technological solutions based on substantial scientific or engineering challenges.

Key Characteristics

• Requiring lengthy R&D & large capital investment prior to commercialization.

• Technical risk, while market risk is significantly lower due to clear potential value of solution to society.

• Underlying problem being solved generate valuable IP.

Origins & History

• The term has already been used for decades by major defense & telecommunications R&D divisions: Raytheon, Lockheed Martin, Bell Labs.

• Increasingly used by companies in the venture capital ecosystem.

• Investment activities are concentrated in the United States and China that totaled for about 81% of global private investments in deep tech from 2015 through 2018 with approximately $32.8 billion and $14.6 billion invested in each country, respectively.

• European countries are also active in deep tech investing. According to the Financial Times, in 2017 the total funding towards deep tech companies reached around €3 billion across 600 deals.

Common Fields of Application

• Agriculture

• Life sciences

• Chemistry

• Aerospace

• Sustainable energy

• Computing & cloud infrastructure

“The rapid hard-tech emergence” (June 12, 2021)

“Affordable robotics, AI-driven sensor fusion, uninterrupted connectivity and supermaterials are merging into the technology stack to unlock massive new tranches of value for customers.“

“The last three decades have been defined by “software eating the world,” and it’s been feasting on the lowest hanging fruit. But our screen-based, server-based digital world is increasingly limited to marginal gains in niche markets. As our friends at Ubiquity Ventures say, it’s time for “software beyond the screen.”

Learn from Tesla: Take big shots at big industries

New doors open for B2B sales

Tooling hard-tech companies is easier and cheaper

Ph.D.s are the future icons

Data Science

This is my personal path of career specialization so I will be expanding upon data science topics more in the future! Data science covers a lot of different topics and the exact job specification can vary widely from company to company, but it is essentially being able to, often visually, communicate business decisions based off statistical and economic analysis.

Deep Learning

Robotics

3D Printing

“Illustrations of the seven types of 3D printing technologies.“

Photonics/Electronics

Edge Computing

Quantum Computing

Quantum Cybersecurity

Advanced Materials Science

Augmented Reality/Virtual Reality

And More…

I will be covering additional Deep Tech topics in upcoming posts.

• AI tools

  • How do neural nets work?

  • Advanced generative AI

  • Superintelligence

• Biotech

  • Biosecurity

  • Biopolymers & biomanufacturing

  • Biocomputing

• Legacy industry

  • Techno-agriculture

  • Freshwater scarcity & permaculture

  • Black-water management & hydrothermal carbonization

Technological Convergence

There are countless more examples of technological convergence. Frankly it is impossible to keep up with all the newest developments!

You could think of each individual technology as a node and the connections between them to be convergent technologies. As the quantity of technologies increases the connections increase exponentially, meaning that mathematically the rate of innovation will accelerate in a feedback loop.

Deflationary Economics

The Polymerist

Product Development Is Deflationary

If you’ve ever gone through a product development process in chemicals, then you have likely been to customers to ask what they want (voice of the customer). The number 1 thing they often say is, “Price.” No one wants to pay more for the stuff they are buying. Ideally, they want better value for the same price or similar value for equivalent prices with…

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3 years ago · 8 likes · 1 comment · Tony Maiorana

Further Readings

“Visualizing The Simple Reason Why America Will Drown In Deflation“

• How do we solve aging workforces worldwide?

• Can population growth be sustained in developed nations?

• Where are migrants moving?

Topics Covered

1. Developed Demographics

2. Value Creation

3. Human Capital Flight

Globalization Series

Developed Demographics

Value Creation

Value can be a subjective thing. This is a huge topic that I will delve into in another post, however for practical purposes let’s say that value is generated in the form of ideas. The expression below is a common economic model in which the stock of knowledge (A) can be proportional to output (Y).

We saw in Part I that manufacturing and trade hubs generate value through production and exchange of consumer goods. Here we will talk about areas of the world where innovation/knowledge generate immense value.

Innovation Hubs

A large portion of the consumer goods we enjoy today originate from special areas in the world. The iPhone is still a dominant smartphone and it all started in San Francisco Bay. Silicon Valley is the birthplace of the modern tech industry.

Nowadays the hardware for almost all tech companies is made overseas in Asia, while the software and designs are made domestically.

Shenzhen is another area of interest. It could be considered the global capital of hardware. One interesting thing is that Shenzen is a special economic zone. This is essentially a government designated zone with advantages for businesses and foreign investment to foster economic productivity.

Special Economic Zones

Financial Hubs

Billionaire Cities

“Elon Musk Is Planning a Texas Utopia—His Own Town” (WSJ, March 9, 2023)

Crown Prince Mohammed bin Salman Al Saud (MBS)

Marc Lore - American entrepreneur billionaire

Human Capital Flight

Generally, the trend is that people are moving to city centers no matter their nation or culture. Another thing to note is that immigration is becoming more popular. I would speculate that this is due to globalization (increased international awareness/opportunity) and overall rise in incomes/standards of living (financial resources available). We can reasonably assume that people are opportunistic and will always generally seek the greatest outcome for themselves or their family.

Both low and high income earners are finding it advantageous to immigrate. Low income workers make far more in developed countries, and often will send it back home with favourable exchange rates. An interesting trend is that high income workers are congregating in specific regions of the world: US/Canada, Swiss, Israel, Dubai, Singapore, Australia/New Zealand. It is easy to understand why these locations are attractive; all of them are, or contain, cities that rank among the top in the world for quality of life or technology/business opportunity.

Things like consumer, business, and investor confidence must be diligently built to create prosperity. Unfortunately, it is hard for new areas to generate this reputation and this is why we are seeing concentrated areas of capital. This uphill climb is the reason why many African American businessmen are investing in African companies/infra to foster future investment.

As I covered in my State of Superpowers 2023 post, America will remain dominate due to inherent geography and plethora of domestic industry. Another reason to add to this list is that everyone in the world wants to move to America. It is the home of the largest companies in the world, the richest consumer market, and cutting edge innovation. The immigration statistics do not lie and it appears this will remain true for the foreseeable future.

• Will free trade persist?

• Why does technology matter to national security?

• Are factories coming back to the US?

• Will Mexico become the biggest producer for the US(the biggest consumer)?

Topics Covered

1. Protectionism

2. US CHIPS & Science Act

3. Domestic Manufacturing

4. New Trade Blocs

Globalization Series

Protectionism

Free Flow of Information

If protectionism keeps rising we may see nations head towards an autarky. This is a complex topic and depends on the economic context of a nation. For example, the US is in a massive trade deficit and prioritizing domestic manufacturing may help bolster output. However, net exporting countries would not benefit from this strategy. There are arguments that nationalizing supply chains would lead to better economic security, but then we may lose some comparative advantage gains.

Security Blocs

Trade Blocs

Trade Wars

Sanctions

US CHIPS & Science Act

On Aug 9, 2022 President Joe Biden signed the US CHIPS & Science Act ushering in a new era of innovation for the US economy. The new fiscal spending aims to ensure American dominance in technology and particularly targets China as the their adversary. Biden even went as far as to threaten any American tech worker in China to return or face their citizenship being revoked.

It is clear that this technological war is heating up. In the current state of things it appears China will be taking a sizeable blow from this US policy, but I am sure competition will endure.

The US-China Tech War

Something to keep in mind is that technology is being more important in military operations. This is a large part of the reason why the US is taking such drastic action to maintain their technological superiority. Everything from fighter jets to missiles and vital communications systems require semiconductors, software, and more.

Another big part of the reasoning is dominance over AI technology. Already we are seeing it being implemented in military systems.

Palantir

Anduril

Lastly, we also have to consider quantum computing technology. Once this becomes remotely functional our modern standards of encryption will basically go out the window. AES-256 is used to secure all financial transactions and this is light work for a quantum computer. We will have to figure out quantum encryption to combat this.

Domestic Manufacturing

There was a time when China was not the manufacturing powerhouse it is today. Companies like IBM and Intel had numerous factories across the US. As the times changed various parts of the manufacturing process moved abroad.

After the wake of the US CHIPS & Science Act we are now seeing a resurgence in US manufacturing. TSMC is building a factory in Arizona, and many other manufacturers are following suit. This trend has been developing for some time now, most likely due to national security concerns over supply chain reliability and technological theft.

USMCA

The new NAFTA deal is called the USMCA. Trade blocs can cause political tensions over whether each trading partner is getting their fair share of the benefit.

One thing that is clear is that Mexico will become a huge manufacturing partner for the US.

Tesla has announced that their next Gigafactory will be in Monterrey, Mexico.

So why is it advantageous to manufacture in Mexico? Well to start there is a thriving labor force with rising education rates. In fact, a lot of the working American population consists of Mexican immigrants. Second, they are geographically convenient as we can trade across our land borders and adjacent ports. Last, they are aligned with Western political and security interests. I will be covering this topic in more depth in a future post!

Indian Manufacturing?

• What is the current state of globalization?

• How did we get here?

• Why should a nation participate in trade?

• Will China remain the manufacturing hub of the world?

Topics Covered

1. Globalization

2. Freight Shipping

3. Why Trade?

4. Manufacturing Hubs

Globalization

Freight Shipping

So why are container ships so popular? It all comes down to cost, location, time sensitivity, and total volume/weight. Overseas trade obviously has to occur mostly by container ship. Trade over land can occur by many methods from rail to truck to cargo aboard domestic flights. The most economical option is definitely rail, but there are comparative benefits and disadvantages.

Autonomous Semi-Trailer Trucks

Currently semi-trailer trucks are quite costly relative to rail, but this may soon change with the increase in electric commercial vehicles such as the Tesla Semi. Tesla happens to have autonomous driving technology and the spillover into the commercial sector will eventually make cargo transportation an afterthought. Now despite this optimistic take, Tesla Semi is running into quite a few issues given it is the first prototype of an electric semi-truck. However, I am sure the kinks will slowly be ironed out and competitors will emerge.

We can see below that the market for cargo by rail and truck are decently interchangeable. As always, lowering the cost of transportation is a multiple fold benefit to the economy.

The Rail Industry & Future Concepts

The rail industry is a staple of many economies, but the centuries old industry is now dilapidated due to poor maintenance, antiquated infrastructure, and monopolization.

One important area that the US falls behind in is passenger rail. They do not have high speed commuter trains like Japan or the Eurozone. Moving people is just as important as cargo. Human capital and capital are both essential parts to an economy. High speed rail can lower costs increasing mobility for domestic travel over flights.

Many will hype up the concept of the “Hyperloop” and in theory this should be a better version of a train. However, in practice this may not be as efficient as traditional rail for a few reasons.

Why Trade?

Nations have different comparative advantages and this can be utilized to boost efficiency across the global economy. To understand how this works economically we must understand absolute vs comparative advantage.

Think of absolute advantage as a nation like China where labor used to be very cheap and the immense population serves to make producing large amounts of a good incredibly cheap.

On the other hand, think of comparative advantage as a specialized manufacturing within a nation. A great example is Taiwan which has a +50% dominance over semiconductor manufacturing. This is an extremely high end technology that other nations may not be able produce efficiently.

Now you may ask yourself, okay what if my nation does not have a vast working population or specialized in some high end manufacturing? Well there are other opportunities to make money such as arbitrage. In real life trade is not as simple as you make it cheap and we trade what I can make. There are a list of roadblocks involved from tariffs to regulations to market preferences. Many make money by exploiting this fact and the price differences caused by these market controls and discrepancies.

From both economic and geopolitical perspectives sometimes it is pragmatic to use market controls such as tariffs. Absolute advantage will eventually lead to trade deficits and this has carryover effects in the greater economy. Overall, trade is an incredibly complex thing that carries far more economic implications.

The direct channel would be something like DTC (direct to consumer) brands or farm to table restaurants/farmers markets. The other structures involve middlemen who will always take a cut, making a profit for themselves.

Manufacturing Hubs

So now that we know how and why people trade, how do these traded goods get produced in the first place? Why is it produced in these specific places to begin with? Once again, these are complex economic questions but generally involve factors such as availability of raw and/or rare materials, education level of laborers, and geographic positioning.

Over the past several decades we have seen a phenomenon of the “Four Asian Tigers.” (Hong Kong, Taiwan, Singapore, and South Korea) These nations went from essentially nothing to the technological and economic giants they are today. How did they get so insanely rich so fast? The answer is trade and export-led industrialization.

Hong Kong and Singapore are host to some of the biggest shipping routes in the world. The total amount of trade that occurs in their borders is multiples of their GDP.

Taiwan’s strategy was to go all in on semiconductor foundries. South Korea adopted a similar strategy going all in on technology and we see the modern titans that are Samsung, LG, Hyundai, and SK Telecom. These 2 nations account for about 70% of global semiconductor manufacturing volume. I will be covering these 2 countries and their opportune futures in future posts!

Japan, although not a “Asian Tiger,” also went through it’s own export-led industrialization. Similarly going all-in on technology, however they seem to have speedrun techno-capitalism and things are looking stagnant nowadays. I will be writing more about Japan in future posts so stay tuned!

In contrast, China is the obvious Asian economic giant, but they did not achieve their economic prosperity through the same means as the previous examples. The biggest strength for China was low cost laborers and this led to factories that produce just about any low to mid-range skill good.

The Double Edge

Just as manufacturing and trade can bring prosperity, it can do the exact opposite just as aggressively. Areas that used to once prosper from plentiful demand for their goods or resources are now desolate and abandoned. When the Ford factory moved out of Detroit the once beautiful city declined rapidly.

Agriculture Hubs

A lot of the food we consume nowadays comes from far away places. This is because food is resource intensive requiring large amounts of fertile land and raw resources such as water or fertilizer. Some places just have a huge comparative advantage for these specific things.

Personally I think shipping perishable items half way across the world is generally a waste of our resources. I do enjoy my occasional exotic tropical fruit, but maybe in the future it can be sourced locally; I am very excited about how technology could impact agriculture in the upcoming decades. I have seen examples of aquaponic (fish-hydroponic closed loop system) farms producing 30x more yield per acre, 90% less water, and zero-waste composting. If we are able to aggressively scale this technology there would be no need to import food for any nation. The greenhouse system utilized could essentially enable any crop to be cultivated across wider ranges of climates. I will talk more about this exciting prospect this fall where I address topics about modern cities, food supply, and everything else citizens need!

Global Supply Chains

In current times, semiconductor supply chains span the globe and are heavily reliant on China for end stage assembly. As we enter a new era of globalization we may see China lose this role. In the following Part II & III of this post I will be discussing the next leading contender for manufacturing, as well as explaining why China is losing its dominant manufacturing position.

Many may not realize that similarly complex global supply chains enable cheap food and clothing in Western countries.

• Will the US and allies continue to dominate the globe?

• How strong is the opposition?
  (BRICS: Brazil, Russia, India, China, South Africa)

• What does the future hold for Europe?

• Which team will India, the most populous nation, choose?

• What other smaller countries possess growing power?

Superpower

Definition: a state with a dominant position characterized by its extensive ability to exert influence or project power on a global scale.

These are some common ways of measuring a nation’s standing, but it definitely does not tell the full picture. There are many other factors to consider from the average annual growth of these statistics over recent decades to qualitative attributes such as work ethic/culture.

USA

Key Takeaways

• Every ~50 year economic regime changes

• Notable presidents (landslide elections & preceding societal unrest)

  • Andrew Jackson: gold & silver standards + central bank limitations

  • Rutherford B. Hayes: gold/fiat standards

  • Franklin D. Roosevelt: The New Deal
    → social work/programs & increased gov spending

  • Ronald Reagan: Reaganomics (1980s)
    → cut taxes & decreased gov spending

  • We are due in 10 years time
    → Technocracy coming?

Soft Power

Hard Power

US military technology is honestly mind-boggling, which is no surprise given national security is no laughing matter to the Pentagon.

Whether you like it or not the US has been the world superpower since 1945. I would argue they are the lesser evil compared to many other modern and historical empires.

It is important to understand that the US will continue to be incredibly powerful due to inherent geographic advantages and highly diversified domestic industries. Moreover, the “American dream” seems to have not died quite yet as the immigration statistics do not lie, and the amount of millionaires moving to the US every year is similarly staggering. This “brain drain” to the US is an interesting phenomenon I will discuss in another future post!

This video also mentions why China’s current demographic/economic growth slowdown will be not be catastrophic, rather slow and unimpressive.

China

“Saudi Arabia takes step to join China-led security bloc, as ties with Beijing strengthen” (Mar 29, 2023)

“China completes first yuan-settled LNG trade” (Mar 28, 2023)

New US-China/Russia Cold War?

The “Quad”
(Quadrilateral Security Dialogue)

Initiated in 2007 by Japanese Prime Minister Shinzo Abe. Revived during 2017 ASEAN Summit in Manila, Philippines.

Quad Plus meetings were held in 2021: additional representatives from South Korea, New Zealand, and Vietnam.

AUKUS
(Aus/UK/US Trilateral Security Pact)

Announced on 15 Sept 2021. Under the pact, the US/UK are assisting Australia in acquiring nuclear submarines.

CHIPS Act

I will be further elaborating on US protectionist policy in an another post addressing globalization, supply chains, and protectionism.

“China urges Japan not to back U.S. chip export restrictions as Washington tries to rally allies” (Apr 3, 2023)

“The CHIPS and Science Act: Here’s what’s in it” (McKinsey, Oct 4, 2022)

EU

UK

NATO (North Atlantic Treaty Organization)

India

India to drop US dollar in cross-border trade (Apr 2, 2023)

Russia

“Japan Breaks With U.S. Allies, Buys Russian Oil at Prices Above Cap“ (Apr 2, 2023)

Potential Powers

Brazil
(Union of South American Nations)

Brazil & China Sign Agreement To Drop US Dollar And Use RMB Yuan – Real In Bilateral Trade (Mar 31, 2023)

Uncharted Territories

Can Brazil Become a Superpower?

Welcome to this week’s free Uncharted Territories article. Here are the premium articles you might have missed this month: Is the Amazon Rainforest in danger? How? Why? Can it disappear? Is there really a loneliness epidemic? How to gain an advantage by incorporating information immediately…

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3 years ago · 83 likes · 48 comments · Tomas Pueyo

Indonesia
(Association of Southeast Asian Nations)

“Indonesia's quiet rise as an Asian superpower”

Nigeria
(African Union)

Democracy

Direct vs Representative Democracy

Liberty

Uncharted Territories

Freedom Will Always Win

The Free World fears China’s rise. It will soon be the largest economy in the world. People witness the speed of Chinese construction with awe…

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4 years ago · 72 likes · 110 comments · Tomas Pueyo

“Diversity of approach beats efficiency of monolithic view” - Jordan Peterson

Pure Democracy vs. Republics

Autocracy

Definition: a country, state, or society governed by one person with absolute power.

Populism

Definition: a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups.

I don’t think Trump is an authoritarian as he has left his presidential term with some professionalism, but he is definitely a populist.

Voting Systems

Electoral College

Ranked Choice Voting

Mixed Electoral Systems

First Past The Post

Voter Participation Rates

Lobbying

Feudalism

When we moved from hunter-gatherer societies to pastoralist/agricultural societies populations grew much larger. The system that was devised to rule over these large population was feudalism. Kings at the top would essentially have the ultimate say over anything anywhere. This top hierarchical position would be maintained within the family keeping the society locked in place.

It is believed that the first complex civilization originated in Mesopotamia. These civilizations have a long history of rulers. This system would remain in place for millennia until very recently in human history.

Feudalism kept the majority of citizens in a repressed state where value was extracted to the top. No promise of ‘trickle down’ economics here. Eventually this led to peasant revolts due to sustained poverty and economic tipping points.

Technocrat Manifesto

The Business Cycle & Revolutions

[TL;DR Money makes the world go round] The Business Cycle…

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4 years ago · 1 like · Jae

For example, tsarist (long history of autocracy) Russia began to cautiously abolish serfdom (forced labor peasant) in the 18th century, but the early 20th century saw massive peasant revolts that destroyed this entire system. Overall, world history is rife with peasant revolts and locked class systems are not seen in the majority of the world. Some countries remain to be culturally stuck in their feudal pasts, whether it be Russian tsarism or the Indian caste system, but they still maintain a governance of a flawed democracy, or at the very least an autocracy.

Communism

Karl Marx’s writings are some of the most revolutionary thought experiments on governance and human existence. However, many ideas are different on paper versus when applied in reality. In reality we see that communist states tend to collect power at the very top among a group of deep-seated corrupt state members. The idea of nationalizing all industries can appear to “increase efficiency” but bureaucracy in large government always lead to less efficiency. In my opinion, the real practice of communism is just a new form of feudalism. Those at the top are not selected by the people and the state will keep its regime locked in place just like a king.

The collapse of the Soviet Union is the biggest affirmation that anti-capitalist / super centralized governments simply do not work.

“The Cold War Didn't Have to End. Gorbachev Made It Happen”

China: The Cultural Revolution & Chinese Communist Party

China’s government is still called the “Chinese Communist Party,” but nowadays it is basically a single-party oligarchy with a capitalist economic model heavily reliant on global trade.

Socialism

Despite the glaring flaws of communism, the political philosophy has its own intellectual merits. Also, it has birthed the likes of socialism and communalism.

Communalism

The core tenets of communism are not inherently flawed, however it relies on the assumption that all parties involved can be trusted. As you grow further from your family to community and country there is a greater chance of a bad actor(s) that can exploit the system. This is why I agree with this saying below:

“I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist. If that saying doesn’t convince you of the fatuousness of left vs. right labels, nothing will.”

- Nassim N. Taleb, Skin in the Game

Capitalism

Open markets and property rights are the 2 quintessential elements of capitalism. Capitalism has it flaws, but we have also seen the most explosive growth in human history from competitive and entrepreneurial markets.

Meritocracies

Meritocracy is often criticized as blaming poor people for being poor. However, greater skill must be rewarded with greater compensation. Otherwise, what incentivizes surgeons or engineers to endure their rigorous education and day to day work; surely it cannot be out of the goodness of their hearts. With all that being said, inequality still exists due to lack of opportunity for many across capitalist nations. There is nuance to this discussion.

Social Mobility

Capitalism offers a lot more social mobility than other political system. However, this does not mean all capitalistic countries have full potential mobility.

Late Stage Capitalism

It is certain that capitalism or free markets has proven itself to decrease absolute poverty and increase standards of living. Those who are rich have generally proven themselves to be good custodians of capital. Obviously there are exceptions and that where proper justice systems comes into play. With all of these benefits of capitalism there still seems to be looming problems in many matured capitalist economies.

OECD

Organisation for Economic Co-operation & Development

• Committed to democracy & the market economy

Wealth Inequality

Equal access to opportunity is one challenge in fighting wealth inequality. There are also other factors such as corruption, nepotism, and quality of education.

Degradation of Values

“Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.” - G. Michael Hopf, Those Who Remain

“Diversity, Inclusion, and Equity (DIE) and the Death of Meritocracy” (Dr. Gad Saad Mar 13, 2021)

Steps back to rationality

1. Pluralism: accepting all differences

2. Tolerance

3. Humility: humbleness

4. Patience

Pathways for Late Stage Capitalism

There is discussion of whether privatization is always the answer over nationalization for industries. In some exceptions, such as healthcare, lobbying groups exert influence on politicians to unethically increase profits. The solution could lie in more rigorous regulation and government intervention. There are far more details to discuss and I will be breaking this down in upcoming posts.

Libertarianism

• Seek to maximize autonomy & political freedom

• Minimize the state’s encroachment on & violations of individual liberties

• Emphasizing rule of law, pluralism, cosmopolitanism (1 world 1 people), cooperation, civil & political rights, bodily autonomy, free association/trade, freedom of expression/choice/movement, individualism & voluntary association

Decentralization

This may be the key to a more libertarian civilization.

Network States

I will be covering this topic in great depth with a series of posts later this year.

Digital currency simulated economies: prove real economic models

Inflation

Inflation seem to be in a declining trend, but we must consider the lag effect for inflation indices. The CPI (consumer price index) is released around 2 weeks after the end of each month, but the Federal Reserve relies on the PCE (personal consumption expenditures price index) which is released around 4 weeks after the end of each month. Moreover, it takes time for central banks to fully conclude on the effect of their monetary policy as it can take up a year to multiple years to determine the full impact on inflation.

Inflation is also made up of different components in the economy. One huge component that is often volatile is energy prices (oil prices). Oil prices and supply are very complex topics that rely heavily on geopolitics. In 2023 we may see persistent fluctuations due to tensions between Eastern and Western countries.

Monetary Theory

Milton Friedman: 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy

“Taxation without representation”

Stagflation

Inflationary & Deflationary Spirals

Paul Volker

“Jerome Powell Isn’t Paul Volcker, And This Isn’t 1982” (Aug 19, 2022)

The Reserve Currency

The Gold Standard

Nixon Shock

“Nixon Shock, the Reserve Currency Curse, and a Pending Currency Crisis” (Sept 30, 2019)

Petrodollars

China’s Ambitions

“Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales” (March 15, 2022)

The Current World Order

The G7

US, Japan, Germany, France, UK, Italy, Canada

BRICS

Brazil, Russia, India, China, South Africa

Unemployment

GDP

Interest Rates

Debt

Defaults

As interest rates rise the amount owing on your debt such as a mortgage or car loan will increase, given it is a variable rate. This can lead to people being unable to make their payments, especially if interest rates rise quickly.

The 2008 mortgage crisis was a result of many debts being unable to be paid. An over-leveraged housing market led to the debt bubble collapsing taking out a few banks, leading to mass unemployment, and damaging the economy. However, the economy survived due to government measures where the biggest banks were given bailouts. This is despite the problem lying in the CDOs (collateralized debt obligations) and MBS (mortgage backed securities) that the banks themselves fabricated. These big banks were simply “too big to fail” as their demise would lead to catastrophic economic damage.

Quantitative Easing

These bailouts were done in the form of QE. QE has been extensively used in the 21st century and is a relatively new form of monetary policy. Economics is a rapidly developing discipline and policymakers are playing an educated guessing. QE’s long term consequences will still have to be observed. One thing is for certain, the USD is being devalued at aggressive rates.

This is where the US reserve currency role particularly comes in hand. The Federal Reserve can always print more USD and bail the US economy out of a default crisis. This of course has other consequences like devaluing currency, and in the long run the reputation of US foreign investment will fall. All forms of debt are devalued as the USD loses purchasing power. However, the US economy can go on relatively unscathed to a point.

Opinions

Jerome Powell

This is the one guy you need to listen to. His decisions determine the course of the US central bank and therefore the US economy: the world’s largest economy by nominal GDP and one which all other nation’s economies rely on.

FOMC (Federal Open Market Commitee) Schedule 2023:

March 15-16

May 3-4

June 14-15

July 26-27

Sept 20-21

Nov 1-2

Dec 13-14

Link to meetings

https://www.youtube.com/@federalreserve/streams

Bill Gross

Warren Buffett

Bear markets, inflation & interest rates

Missing the forest for the trees

→ 3 simple variables for a company: management, future economics of the business & industry, and the current price

Jumping over 7 foot bars

→ Difficult predictions of the market are usually disastrous.
→ Simple ideas = exceptional results

Shrinking your universe of possibilities

→ Opportunities are restricted in niches
→ One spot does not yield all the fish

Staying active all the time

→ You have an unlimited number of strikes
→ Wait for the ‘fat pitch’

Diversifying too much

→ “If you really know businesses, you probably should know 6 of them. I mean if you can identify 6 wonderful businesses that is all the diversification you need and you’re gonna make a lot of money, and I guarantee you going into a 7th one rather than your 1st one is gonna be a terrible mistake…”

Confirmation bias

→ Have opposing views to compare & contrast

Following the herd

→ The broad consensus of investors is almost always wrong

Error of omission

Definition: a mistake that consists of not doing something you should have done

Charlie Munger

“I’ve had my Berkshire stock decline by 50% 3 times and it doesn’t bother me that much.“

“Success and failure. Treat those 2 imposters just the same… you just roll with, sometimes its going for you, some against. It’s all part of the same game.“

“…we’ve had this since the dawn of capitalism. We’ve had crazy bubbles.“

“You don’t need all this damn diversification. You’re lucky if you have 4 assets.”

“If you have 1 or 2 (buying) opportunities a year. That’s plenty.”

“We want to buy something that’s intrinsically a very good business. Meaning that an idiot could run it and it would do alright. And then we we want that business that an idiot could run with a wonderful person running it… and now we do make some exceptions but not many… if it won’t stand a little mismanagement it’s not much of a business…”

Ray Dalio

“Now an interest rate that is high enough to deal with inflation, is too high of an interest rate for the debtor, and the dominos are falling in a very very classic way.“

Michael Burry

Cathie Wood

She has been pointing out over the last half of 2022 that commodity prices are starting to decline and level out. This gives us early indicators that inflation is starting to peak and decline, but we will have to watch more indicators over time to confidently determine this.

Elon Musk

“We have some insight into where prices are headed over time, and the interesting thing we’re seeing now is that now most of our commodities, more than half, the prices are trending down… which suggests we are past peak inflation. Now making macroeconomic prognostications is a recipe for disaster, but my guess is that we are past peak inflation and we will have a relatively mild recession, just guessing here, but you know a mild recession for 18 months would be my best guess right now.”

Link to his answer

https://www.youtube.com/live/49e7LrxS3FQ?feature=share&t=2725

Macro Twitter

Personal Remarks

The value investor will tell you that recessions don’t matter and that is generally true.

“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”
(Peter Lynch - legendary investor)

The long term trend is that stocks always go up. What matters is that you spend time in the market through DCA (dollar-cost averaging). The value investor mindset has some fundamentals.

1. Long term mindset: 10+ years

2. Emotional composure

3. Patience

Buffett gives some great advice at his shareholder meetings on keeping things simple yet effective.

1. Over-diversification exists

2. Pick 3 growing & dominating industries

   1. examples: renewable energy economy, semiconductors, mRNA

He continues to say that this strategy will beat most indices or mutual funds. I have some additional points that could build on these fundamentals.

1. Pick the monopoly and/or most likely to succeed

2. Momentum trading is not a bad thing

   1. example: sell 10% after a big price jump. buy a bit after a big price dump.

3. Taking advantage of option contract selling

   1. Sell covered calls & cash secured puts for extra ROI
      (financial derivatives trading is extremely complex. I will be covering this in a paid post eventually)

4. Don’t have complete faith in the US economy

   1. Bitcoin has a valid investment thesis

   2. Precious metals are a good minor allocation

I will be revealing my current top 6 companies and a comprehensive investment thesis of each in a paid post later this year. There will be detailed price analysis/targets and growth projections along with a full excel spreadsheet breaking all of this down.

Further Readings

Timothy Leary - American Psychologist & Psychedelics Activist

At Harvard university he conducted controversial experiments where he partook in psychedelic trips with students. Considered by many to be the father of the 1960s US psychedelics movement. Some may argue that his methods were too extreme and that he pushed psychedelics in too aggressive of a fashion. Eventually he was ostracized by public opinion influenced by the failed War on Drugs and antagonization of his anti-establishment views. Ultimately, his message was to advocate for the therapeutic use of psychedelics and cautioned listeners to think for themselves, to wake up from their conventions, and question authority.

Think Big

The War on Drugs, Human Nature & Social Policy

[TL;DR It is futile to criminalize drug use] The Failure of the War on Drugs Prohibition In January 1920 US Congress passed the National Prohibition Act setting forward a short but significant period in US history. Bootlegging alcohol became so profitable it birthed deadly mobsters like the infamous Al Capone. By 1933, only 13 years later, it was repealed …

Read more

4 years ago · 1 like · 1 comment · Jae

Information Warfare

Media Narratives

“You Are The Content You Consume”

Implicit Messaging

Lies By Omission

Social Engineering

How to Protect Yourself

Even by reading this post you are gaining knowledge about disinformation, thereby protecting yourself by knowing the threats and mechanisms.

Psychological Operations (PsyOps)

Constructive Ambiguity

Cambridge Analytica

Modern Western Living

De Beers Group

Precious Gemstones

Synthetic Counterparts

Chemically speaking these synthetic gemstones are virtually identical. In fact, they would likely contain fewer impurities since it is not subject to nature. In China, these “precious” gemstones are manufactured at an alarming scale, and therefore cost virtually nothing relative to the price of natural gemstones. Don’t be fooled, diamonds are not rare nor should they cost as much as they do.

Precious Metals

“Aluminum Was Once One of the Most Expensive Metals in the World”

“Aluminum’s Strange Joruney From Precious Metal to Beer Can”

Noble Metals

Industry Use & Resulting Scarcity

What does this all mean? It mean’s there is a fixed supply of precious metals, unlike “precious” gemstones, and we are rapidly increasing our usage of these materials in a wide variety of industries. Tech is especially resource intensive and it is only becoming more all encompassing in our modern lifestyles. My piece of advice is to invest a portion of your wealth into gold, platinum, and possibly palladium as a means of wealth preservation. This asset class will undoubtedly beat many others, gold especially because its the “gold standard”, due to its inherent scarcity and high industrial demand.

Asteroid Mining

Now all of this about precious metals goes out the window if a technology such as asteroid mining becomes feasible. Which is very likely given SpaceX Starship will bring the cost/kg down well under $100, given everything goes to plan.

The Impact of the Internet

Whether the internet is good or bad is a controversial topic. I would personally say it is rather just a tool. A tool that amplifies ideas, more than ever before, and increases accessibility for virtue or evil.

Positive Amplification

1. Philosophers

2. Innovators

3. Activists

Neutral Amplification

1. Hobbyists

2. Nerds/Geeks

3. Entertainers

Negative Amplification

1. Trolls

2. Conspirators

3. Racists

Benefits

1. Mass proliferation/accessibility

2. Instantaneous communication

3. Rapid adoption & scaling

Pitfalls

1. Echo chamber effect

2. Disinformation/widespread & subliminal propaganda

3. Mass surveillance

Satellite Internet

Starlink

“Starlink is better than its satellite competition but not as fast as landline internet”

With time Starlink’s capability will only improve, especially when Starship is functional: which can carry and deploy the V2 Starlink satellites. These larger satellites can communicate among each other using lasers and enable higher bandwidth/connectivity.

Web Access/Freedom of Speech

Autodidactism

“Entrepreneur’s mind. Athlete’s Body. Artist’s Soul.”
- James Clear (author of Atomic Habits)

“Jack of all trades is a master of none, but oftentimes better than a master of one.”

Nowadays virtually anyone has the ability to make millions online with no formal education. The plethora of resources is honestly overwhelming. Here are the most visited websites in the world.

Aside from this there are many small niche websites that may cater to your hobby, interests, aspirations, and more. Many examples come to mind like Grailed, Substack, Strava, iHerb, GitHub, ChatGPT, and Etsy.

I will write about cybersecurity, data ownership, and privacy rights in another post this year. I believe it is important to understand how to traverse the web just as you would not trek in the jungle with no equipment or preparation.

Bonus Content

The Business Cycle

“The Economics of Social Unrest” (International Monetary Fund)

The History of Revolutions

“Economic and Material Causes of Revolt” (Khan Academy)

The American Revolution (1765 - 1791)

The French Revolution (1789 - 1799)

The Haitian Revolution (1791 - 1804)

The Arab Spring (2010 - 2012)

“How economic hardship fuelled the Arab Spring 10 years ago” (Al Jazeera)

Sri Lanka Uprising (2022)

2022 & Beyond

As we enter a contractionary period in the global economy will we see more democratic uprisings across the world? Only time will tell, but we can clearly see throughout history how economic hardships push people to their brink. You push someone too far and they will bite back, it is basic animal nature.

Further Readings

“Economic consequences of revolutions: Evidence from the 1789 French Revolution”

The Failure of the War on Drugs

Prohibition

In January 1920 US Congress passed the National Prohibition Act setting forward a short but significant period in US history. Bootlegging alcohol became so profitable it birthed deadly mobsters like the infamous Al Capone. By 1933, only 13 years later, it was repealed by President Franklin Roosevelt who had the wisdom to see that it would prove pointless.

Nixon Era

On October 27, 1970 US Congress passed the Comprehensive Drug Abuse Prevention and Control Act. This act categorized substances based on their “medicinal use” and “addiction potential”. President Nixon declared drug abuse was “public enemy number one”.

“The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar left and black people. You understand what I'm saying? We knew we couldn't make it illegal to be either against the war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did.”

- John Ehrlichman (Counsel & assistant for Domestic Affairs under President Nixon)

In 1973 the DEA (Drug Enforcement Administration) was created.

Reagan Era

In 1984 Ronald Reagan signed the Comprehensive Criminal Control Act.

"he led Congress in criminalizing drug users, especially African American drug users, by concentrating and stiffening penalties for the possession of the crystalline rock form of cocaine, known as ‘crack’, rather than the crystallized methamphetamine that White House officials recognized was as much of a problem among low-income white Americans" - Elizabeth Hinton (US Historian)

Bush Sr Era

In 1982 Vice President George H. W. Bush began pushing the involvement of the CIA & US military in drug interdiction. In 1988 the National Narcotics Leadership Act established the ONDCP (Office of National Drug Control Policy). This office would go on to become the National Youth Anti-Drug Media Campaign.

The Inherent Problem

Substance abuse is a symptom not a crime and is even natural to an extent. The next chapter will discuss how ingrained psychoactive substances are in anthropological history. Nonetheless, real addiction can occur and should be treated as any other serious disease. The criminals are not the drug users and self supplying smaller distributors. The real criminals are the major drug distributors almost always associated with cartels and larger mafias. When there are such huge profit potentials it attracts the greediest of humans.

When societies treat drug abuse and addiction as a serious disease we see completely different outcomes. The classic argument of carrot and stick is the fundamental question in this case. Some countries like Portugal have decriminalized all drug use and have many government programs to help addicts access the resources they need. Resources like safe injection sites, drug testing, and rehabilitation which all treat the users as patients not criminals.

The History of Drugs

“…there was a sudden doubling of the human brain 200,000 years ago. From an evolutionary point of view, that’s an extraordinary expansion. And there is no explanation for this sudden increase inthe human brian.” - Paul Stamets (psilocybin mycologist)

“Hallucinogenic drugs and plants in psychotherapy and shamanism”
- R Metzner

Regulatory Philosophy

As we can see from anthropological history the desire for drugs is ever-present. We can attribute this to different reasons such as an innate biological desire for altered perception and for humans maybe escapism.

I think it would be common sense to not fight reality. However, many politicians even to this day seem to disagree.

In my opinion the truth always prevails, fight reality and you will lose; it is a question of when, not if. Black markets exist because an unmet demand is being serviced. No matter the negative externality of a vice, in my opinion it is better to focus on rehabilitative efforts. Progressive allocation of resources in social care rather than policing could be the answer. This approach takes a collaborative humanistic mindset versus a divisive and polarizing mindset of criminalization. I always like to tackle the roots of problems. On the extreme end of things, regulated alternatives to commonly abused substances make help take the power away from organized crime such as cartels. One modern example could be methadone, a pharmaceutical drug used to help opioid addicts wean off of addictions.

Adoption

Scaling