I’ve always seen personal development and learning as my real job in life. I don’t even necessarily enjoy doing these things, but ultimately they equip me with the tools to continue to survive and push back my fear of death to manageable levels. So it was wonderful to chat on this topic with my dear friend Shikshya Khatiwada, who is one of the toughest, scrappiest, most adaptable people I know, and who has never, ever stopped evolving. Here’s the link: https://youtu.be/XNYpuVNrEZc Shikshya was the project lead on the very first engagement of my career. That was a strange time in my life. I was fresh out of school and full of vigor to do, I don’t even know, fuckin something. It was at this time that I was tasked with building out an AI practice for the North American branch of a financial services management consulting firm of around a thousand people. I didn’t know shit about finance or consulting and barely knew anything about AI. In retrospect I think I overachieved spectacularly when it came to finance, consulting and AI. But I failed when it came to leadership. I attracted a crew around me and I was not able to effectively utilize them, or develop their potential, or communicate my intentions, and their faith slipped away bit by bit. My career continued to zip along but I was back to going it alone. I failed these people that believed in me. Fast forward five years, three failed startups and a career change to crypto, and I’m sitting in a coffee shop in Beijing. And I feel like I’m finally ready to lead like. Five people. Another four years and I’m leading teams of significantly more than five people, and also I’m a parent now. Every day, multiple times a day, I pick up an unproductive ball of lard and shove some nutrition in his mouth, just so he can poop it out later. And the surprising part is how natural it seems. I find myself feeling like a parent all the time. I’ll chew someone out for not responding to a production issue quickly enough and the whole time I’m thinking about the exceptional project manager this person could be, if only they keep delivering what I'm asking of them, which is to continue to learn and develop and evolve. I don’t believe in praise for doing your job (that’s a whole other can of worms) but sometimes all I want to do is stop and tell them how much I appreciate them trying to be who we need them to be, and how much I believe in them. I think a big reason is, I don't feel like my baby is my first child. My wife had a miscarriage the first time around and as far as I’m concerned, my first child died when she was six weeks old. With her died an entire lifetime I was going to spend with her. Because of that I no longer take a single moment I get with the ones I love for granted. And I no longer fear death as much because I think that, when I die, she’ll be waiting for me, she’ll ask what took me so long, and she’ll tell me about herself and we’ll have all the time in the world. And if she’s not there that’s OK too, because I’ll be dead and I don’t want to exist in a world where I never, ever get to meet her. Best, Maomao

A few weeks back, I was in SF and just missed Amit Pradhan, with whom I recorded a podcast on how to live in the future over a year ago. You can check it out here: https://youtu.be/SL82mmGnWEI I did manage to catch up with Jason Kende, and had a fascinating conversation with a brilliant friend of his. She told me how she had spent some time a few years ago to project how the world might change over the next 50 years in order to map out her own decisions. She really focused on the inevitability of the singularity, in this case defined as the emergence of exponentially superintelligent AI, the eventual creation of two classes of people based on their proximity to neural uplink technology, and the need to stay ahead of the curve. As some of you may remember, I went through a phase right before graduating college where I was unhealthily obsessed with AI safety. I was consumed with fear from ideas like the paperclip problem, where a superintelligent AI misinterprets a command to make more paperclips and turns the entire universe into paperclips. It was all I could talk about for at least a few years and was probably super annoying. To be fair, it did lead to a career in AI before my bright future devolved into crypto degeneracy, so it wasn’t all for nothing. As Jason’s friend continued to describe the future she saw, I was struck by the similarity with my thinking then, and I found that even though I agreed with the general direction of what she was saying, I didn’t have the same reverence for AI any more. I think a big reason is that AI doesn’t actually exist. What I mean by this is that our definition of artificial intelligence has continuously shifted throughout the years. Twenty years ago Deep Blue beat Kasparov in chess and clearly heralded the pending triumph of machines over mankind, although in retrospect all they did was throw a bunch of computing power to work through the potential moves, and really nothing special. It had long fallen out of the limelight when Watson won Jeopardy. But these days it’s clear Watson was nothing but some hilariously overfitted NLP models hooked up to a search engine, and therefore barely worth mentioning. These days I suppose self-driving cars or Dota bots are the cutting edge of AI. One of these days someone will look back at these projects and realize these computer scientists were just hand-crafting deep learning subsystems in a reinforcement learning framework, and so were able to conjure some entertaining sideshows but fell well short of real AI and are merely a technical novelty.  My point is that what people consider real AI will always be the next shiny technobauble, because AI is just a reflection of the latest attempt to overcome our inadequacies. If there’s one thing AI has always done well, it’s highlighting how feeble we are, and how utterly alone. I think everything that needs to be said about AI was already captured in the Jewish stories about the golem. They generally start with some person making a creature out of clay and bringing it to life with the word of God, or a shem. The golem would start off doing household chores and would inevitably run amok, at which point the creator would panic and remove the shem from the golem and cause it to fall to pieces. This 16th century story has all the elements for any piece of fiction about AI ever made. Now, I do agree that we’re heading in the direction of a violent stratification of society. In fact we’re probably already there. But notwithstanding the outstanding work being done by groups like DeepMind or OpenAI, these days I’m no longer particularly worried that artificial intelligence will be the death of us all, because omnicidal, out-of-control paperclip machines already exist – they’re called corporations. In today’s society, if a corporation can spend 1 dollar to gain 1.01 dollars in revenue, it’s not just considered bad form to not do so, it’s a breach of fiduciary duty and requ

Empathy is something that’s always fascinated me. As a professional communicator and one of the most interesting people I know, I felt Noah Klein would have a lot to say on the topic, and I wasn’t disappointed. Here it is: https://youtu.be/BGu2LT1pLbQ I became interested in empathy around the same time I got hooked on AI. It takes a lot of empathy to work with machine learning based AIs. That might sound weird, but think about it this way. Training an ML model is like teaching a child, in that you can show them how it’s done, but you can’t guarantee they’ll listen to you. If your model isn’t producing what you want, you need to examine what you’re telling it (the data) and how it learns (the algorithm), just like you would a child. Through your conversation with the model, it starts to reflect your understanding of the world, and it comes alive.  I think that is part of the allure of AI, is that it talks back to us when we’re so utterly alone. Yes, there are plenty of humans out there, but they’re all human. We’re cut from the same cloth. Humanity is basically a superorganism that’s talking to itself. We can try communicating with our pets, but the conversation rarely goes beyond “I like you a lot” and “More food please”.  In a way, AI research is a search for the rest of God’s children.  At the time, what I wanted to do was create an AI that could generate empathy. I felt that was a path to solve loneliness. I still want to do this at some point. Like we talk about in the podcast, I don’t think we can make an AI that can really understand us, in the same way we can’t really understand another human being, because we haven’t gone through the exact same experiences. But we can emphasize.  There’s a lot of things that Noah and I don’t agree on. At the same time I know he’s had experiences that mirror my own. He’s had ones that are foreign to me too, and that’s what makes the conversation so interesting. I think we need a lot more empathy in our lives. How? Here’s Noah’s advice: “Talk? Listen? It’s not hard.”

Some time ago, a friend told me about a heart-rending experience she had, where she lost her best friend and the love of her life. I could feel the hurt and sadness pouring out of her, more than I had ever seen up close, and I told her I wished I could feel what she was feeling. Before I could finish, she snapped back that no, I never, NEVER wanted to feel any of it. That she knew I was trying to emphasize, but it wasn’t helpful and what she had been through was something no one should ever experience. Later on, I was devastated by a catastrophe of my own, and I felt that finally I was going through the same thing as her. Maybe more, maybe less. It’s meaningless to compare sadness. And I didn’t wish it on anyone. It took a long time to work through it and forgive myself. I know that most people out there have been hurt deeply in their own way, and have had to learn to process that trauma. I feel that from the Obama administration, and probably earlier, millions of people have learned to process their trauma by tracing it back to systemic issues in the society we live in. I think this is what we call being “woke”. After this, when you’re hurt in the same, familiar ways, now there’s a direction to shape and channel the pain, and it becomes anger at the system. There are well-established groups and tactics for turning that anger into action, and that’s when people begin organizing and marching and protesting. I’m not sure what I can add to this, other that I understand the pain people have gone through and are still going through, and the burning purpose that comes from finding a way to turn it down. I hope everyone who’s fighting for what they believe in can still find happiness along the way, and if they’re going out, that they come home safe.  What I can talk a little bit about is financial markets, and that brings me to the conversation I had with Barry James. Barry has been nurturing and fighting for grassroots movements for decades, and is a constant source of both lived experience and sincere optimism. Here’s the link: https://www.youtube.com/watch?v=UJNjdSp2PZU One thing we keep coming back to is the parallels between the 2008 financial crisis, and the everything crisis that we’re in today. In particular, Barry has honed in on a single problem: in the UK, most of the funds meant for lending to small businesses have been blocked up at commercial banks, who have distributed a tiny fraction in the form of loans.  Barry’s solution is textbook crowdfunding and fintech thinking. To oversimplify, the funds would be disbursed directly by the Bank of England. Data would be aggregated and sent to accredited assessors who would make a yes or no decision. The funds would be paid into a prepaid card. The result is huge capacity for assessing credit risk and rapid distribution of funds. Obviously there’s a lot more to be figured out. To me, there are two big questions. First of all, do we want central banks to be this influential? Of course, given the Fed’s Main Street Lending Program, which is basically Barry’s proposal except with lending criteria that is both less flexible and more byzantine, this may be a moot point. Paul Schulte makes a great point that with a price-to-book ratio of 1 and minimal return-on-capital (not to mention restrictive regulatory regimes that make applying for a loan look like onboarding to a new video-sharing app), many banks are already close to being utilities anyway. Second, is it really a good thing that we’re keeping these businesses alive? That fact is that we are facing both a demand and a supply shock. It follows that we won’t need as many businesses in the lean times as before. This could be why the banks aren’t making loans. Already, 43% of small businesses are skeptical they will ever repay the loan. Maybe keeping them alive is delaying the recovery by disrupting Joseph Schump

Financial infrastructure is an obtuse and arcane subject, and I’m always grateful to talk things through with a specialist like Robert Greene. Central Bank Digital Currencies (CBDCs) are a topic we’ve discussed at length before, but it seems recent events have really pushed them to the forefront. I do want to emphasize the views below are mine and not necessarily Robert’s – check out the video to learn more: https://www.youtube.com/watch?v=qjADjlJd90Q. CBDCs have always been mystifying to me. Let’s be honest, almost no one has any idea what a CDBC really is. The various schemes that have been thrown around vary widely in both function and specificity. Libra has shifted significantly since it was announced and has given up on its original goal of a multi-asset backed global currency, opting for the much simpler design of digital versions of existing currencies. It reminds me a lot of my favorite definition of AI: “AI is what computers do in movies.” In that same vein, it feels like CBDCs are what blockchains do in the dreams of central bankers.  Again, my words, not Robert’s.  Still, let’s give CBDCs a fair shake and try to put together something that might work. In the video, we do some improv speculative fiction and poke at a model where CBDCs are basically a consumer bank account at the Fed. So it’s a dollar, there’s no interest, all your KYC and payment information also sits with the Fed, and everyone gets their now ubiquitous universal basic income payments via CBDC. And let’s assume every central bank in the world is using this. Right away, there’s the obvious issue that banks (of the non-central variety) will be severely impacted. Traditionally, banks earn their keep by attracting deposits from customers by offering custody and interest, then getting a return on capital by lending it out. Now that everyone is keeping their money at the Fed, the deposits have stopped trickling down to normal banks. So let’s introduce another wrinkle: let’s assume this CBDC has an API that banks can plug into. A customer would see a prompt in their CBDC app that asks if they want to share their funds with Goldman Sachs Marcus, that the funds will be used to make loans, that they can expect interest of around X% per annum, and that there’s a certain element of risk. If they consent, their authorization is all that’s needed to whisk the funds away in the background from their account to Goldman Sachs, and the money starts getting put to work, along the rails of what the customer has authorized. This leaves space in the system for entities that are good at understanding and managing credit risk to live and thrive – something banks should be good at.  Immediately, the need for deposit insurance would be eliminated, because it’s impossible for the central bank to default on its own currency. The spectre of bank runs and bank defaults (including the risk of losses from highly levered derivative bets wiping out deposits from millions of retail customers) would be a thing of the past. Banks would only be able to bet as much capital as customers authorize them to use.  What about payments? What some people may not know is that payments already go through central banks. Domestically this is through some gross settlement system operated by the central bank (in the US it’s ACH), and internationally it’s through a network like SWIFT, which relies on central banks settling with each other (Faisal Khan has a great breakdown). A lot of the time, cost is padded on by non-central bank intermediaries in the form of extra fees, unfavorable exchange rates, and delayed settlement times (so your money can sit on their books for a while and earn interest). In a CBDC world, a customer sending money back home could go directly to an ECN forex broker, exchange their CBDCs at the market rate, get their foreign CBDCs immediately, and send them onwards to the recipient. The whole transaction would h

Whenever I’ve got a tricky economics problem, Navroop Sahdev is the first person I turn to. I’ve been privileged enough to get her advice on two projects in the past, and this was no exception. Here’s the link: https://www.youtube.com/watch?v=SgFrdSD9Da8 It was a wide-ranging conversation, where we unearthed one contradiction after another. We talk about the digital economy, and how much it’s going to drive things going forward. But we also talk about Tyler Cowen’s Average is Over, which predicts middle-skill, middle-income jobs will be hardest hit by advances in technology. In this scenario, the remaining jobs will be split into highly paid “haves” reaping the benefits of technology and low-paid “have nots” that fill in the gaps. Relying on future digital growth while also avoiding its polarizing effects isn’t going to be easy. To be honest, I don’t think the key lies in how we design social programs or how they’re implemented. I think the key is how we relate to each other.  A few years ago I tried to reason out what a sustainable Universal Basic Income would look like, and I concluded that putting together the money or the means to do it is hardly the issue. The real issue is that we have to collectively decide to create a more equitable society. Until that happens the core driving force to keep this running won’t be there. Navroop brought up a great term for this: we need a more empathetic civilization to keep us on track The silver lining is, events are forcing people to change today. And in the face of certain, widespread financial distress for huge amounts of people, governments are doing the unthinkable and have started just giving people money. Hopefully this is just the first step towards a society with a more equitable, meaningful part for everyone.

I recorded this with the incomparable Paul Schulte three weeks ago, right around when markets were going crazy. But I think we’re still in the same state: trepidation at what’s happening and shock at what’s being done to fix things. Paul’s one of the most experienced and erudite people I know when it comes to financial markets, especially around Asia, and it’s always enlightening to get his view on things. Here’s the link: https://www.youtube.com/watch?v=A7ToACh5Hsc We mostly talk about the market crash, and what we’re going to do about it. During the bloodbath in March, I kept feeling that absolutely no one was surprised. The last few months, I’ve kept hearing the phrase “Grey Rhino”. And that’s what this was. It was a threat we all knew was coming. When it happened, it felt like an annoying guest showing up three hours late.  What shocked me was what happened next. The Fed came out and sliced interest rates straight to zero. Besides the existing repo liquidity operations, they turned up the printers and started buying corporate bonds on the secondary market (SMCCF). Then they started buying corporate bonds directly (PMCCF). And now they’re gearing up to lend directly to SMEs (MSBLP). A few days later Congress passed a $2 trillion stimulus, signed by a Republican president, that guaranteed unconditional cash payouts to all Americans, alongside corporate bailouts (as is tradition).  Later on governments around the world started doing the same thing. I saw a tweet that summed it up like this: if you catch a questionable text from your partner and confront them, you might have a sinking feeling they’ll yell or stammer or bluster. But if they fall to their knees and start crying and begging for your forgiveness, that feeling turns to despair because whatever they’ve been doing, it’s much, much worse than you expected.  That’s what the market today feels like to me. It looks like the Fed’s “whatever it takes” measures have worked. We’re back around the market close on Black Monday I. People have started receiving checks so they can buy food and pay rent. Whether it will stay that way is anyone’s guess. And if it doesn’t, what the hell are we going to do then?

Welcome to the zeroth edition of The Fire Next Time Podcast/Newsletter. The world’s in a really weird place right now, and I want to talk about it with you and figure out where we’re going. This first video I want to share with you isn’t actually a podcast. It’s a presentation I gave in NYC at Lair East on February 11th, 2020, that was supposed to be about how our financial system was being pushed to the brink in a world drowning in artificial liquidity. I wasn’t in New York that day. Instead, I was halfway around the world in Japan, holed up away from the coronavirus. The talk itself is unfinished. I had made no slides when the day came, and when I woke up early to slam some slides out I felt like I was back in college, rushing out another essay that no one would read. Ever since I heard about the coronavirus, I felt that This Was It and my nerves were frayed from three weeks under a suffocating sense of crisis. The first half of the talk was about how fucked we were, and it slid right out of my brain onto the screen, ideas and narrative fully formed like smooth stones under the running water of my anxiety. Then I got to the second half, about what comes next. And I realized I was totally blanking here. I had some ideas jumbled in my head that felt like building blocks, but no evidence or even a coherent framework for how they fit together. I threw them out there anyway because I ran out of time, but I knew I was just scratching the surface here. So that’s what this video is about. Two months hence, a lot of the ideas here have been hashed and rehashed already. But I still think it’s worth looking at how we got here. Here’s the link: https://www.youtube.com/watch?v=EFC_vNP93z8