In the Blind Spot (Offline crypto, inflation, models)

Economics, finance, markets etc…

• Palantir eyes the NHS.
• The new energy order.
• Hungary is applying fuel price controls to foreign registered vehicles.
• Electricty cuts hit Sri Lanka.
• The helium shortage is hitting the leisure industry.
• Senators are having secret meetings about semiconductors.
• The EU has banned the sale of new combustion engines from 2035 onwards.
  

  Fairly sure there is a massive blind spot in this policy.

Matters metaphysical:

• Is the pope about to resign?

Crypto:

• Off-line crypto is a thing.
  

  When I first heard many years ago that crypto millionaires were keeping their private keys in deposit boxes in bank vaults, I did think to myself the market was coming full circle and reinventing banking. Then when stablecoins became a thing, I thought to myself it would only be a matter of time until crypto reverted to full goldsmith banking and the issuance of bearer notes backed by a central digital reserves.

  I did, however, struggle with how the tech might solve for the duality of being able to reliably transfer a digital bearer asset physically (because the recipient can be sure the note is endowed with digital value) or to transfer the embedded value digitally. If the note had to be scanned before exchange to ensure the embedded value had not been spent, this would create too much of a friction for users. The people behind off-line bitcoin, however, have solved this problem by making sure that the only way you can digitally transfer the crypto value, is by physically breaking the note.

  This is a wonderfully low-tech analogue solution to a high-tech digital problem that harks back to the days of coupon-bearing bonds. Mother nature is doing the hard work once again. And I have to say, I think this may be a real game changer for bitcoin — especially in terms of cost of transaction. Even more importantly, having a physical cash unit backed by bitcoin that can be issued by anyone who has the inclination (and funds) to print out the notes has the potential to re-establish neutral money.

  The question regulators will soon be asking, however, is who in the world has the inclination to fund such print runs? The answer, I suspect, are those who already have to pay x amount on the dollar to get their otherwise immobilised cash mobilised. You see the problem we may be introducing.

  The other question worth asking, however, is whether the likes of De La Rue, one of the world’s most established money printers, will get in on the offline crypto printing game. Or might governments themselves be inclined to adopt such technology? If they’re serious about creating public digital cash goods, they should. It’s clever. It is also somewhat evocative of what Rohan Grey and his network are trying to popularise with their Ecash Act.

Inflation nation:

• Larry Summers is an inflation truther?
• Even the ECB’s most dire forecast may have been too optimistic.
• Joe Biden’s policies are doing the opposite of helping inflation, argues Niall Ferguson.
• Why do economists pretend they can forecast the future?
  

  I took part in a panel event at the “How the light gets in” festival in Hay-on-Wye in Wales this past Sunday with former liberal democrat leader Vince Cable and Oxford academic Rana Mitter. The debating point was “Should we give up on the idea that Economics is a science and instead see predictions as politically motivated or exercises in wish fulfilment?”Vince, who is a trained economist, made a number of interesting points that are worth repeating. I had, for example, not appreciated that Vince previously worked as an economist for Royal Dutch Shell. It was during his time there, he noted, that he learned the importance of “scenario planning” around extreme tail risks. This is very different to the art of mere economic forecasting, and is in some ways more useful.In a year when so many institutional forecasts have gotten things so wrong, I thought this was an important point from Vince. Scenario planning for worst and best case scenarios can make a lot more sense. It’s also less likely to be politically impacted.

  My response to the central question was that economic forecasting had indeed become an exercise in wish fulfilment. I also argued that there’s no doubt that since 2008 and Covid the whole affair has become politicised. Much of that politicisation, I further argued, was the result of diminishing central bank independence due to QE  policy and government pressure to focus on other objectives such as climate targets.

  Vince, however, was critical of the likes of Mark Carney, and central banks in general, pushing for climate-related interventions or targets. He said this was no place for central banks.

  I meanwhile blamed a lot of the recent forecasting failures on groupthink and the fear of telling people what they didn’t want to hear, as well as interdisciplinary silos and knowledge gaps. One of the most egregious, I noted, was the Bank of England taking commodity futures curves as a given in their forecasting models.

  Last and not least, when asked how we could make better models, I did wonder out loud if controlled simulations in gaming universes in the metaverse might have a role to play in economic forecasting one day.

Democracy in crisis:

• Regarding climate change challenges, Vince Cable argued at the same panel referred to above that it made sense for those being displaced by adverse weather events to move to the West. While he acknowledged the policy was unlikely to be a vote winner, it made sense because Western demographics are narrowing and we need the extra people. I asked Vince if that meant democracy was incompatible with anti-climate change action. Vince said very possibly yes.

Media matters:

• For unknown reasons access to The Blind Spot’s Youtube channel has been suspended by Youtube. It’s weird because the channel itself is still up and live. I just can’t access it. Which is annoying, as the pilot episode of The Blind Spot podcast is all set and ready to be posted. This will have to wait until I get my channel back now.
• Why we shouldn’t cancel Amber Heard.
• What is going on with journalists?

WW3 Watch:

• The problem with adjudicating war crimes during an active war is that the other side can do it too.
• How Elon’s space satellites changed the war on the ground in Ukraine.

From the “Fake News” zone:

• The Virology Journal tackles the topic of adverse vaccine effects.
• Why are healthy young people dying suddenly and unexpectedly from a mysterious syndrome?
• The FT reports on China’s permanent zero-Covid regime, noting the policy comes “despite the economic and human toll on the world’s most populous country.”
  

  Is it just me who can’t take the double standards on the reporting of Chinese lockdowns? Is it just me who hasn’t been lobotomised with respect to how the media rallied in support of our own lockdowns? Is it just me who remembers being ambushed on Twitter when arguing zero policy in places like Australia was mad? The memory hole is deep with Covid. So deep. I’m not advocating for Chinese lockdowns. No way. But I never advocated for European lockdowns either.

Mulder and Scully:

• China detects fast radio burst 3bn light years away.
• I have done a few guest appearances on Paul Dabrowa’s new Lifebiohack podcast to help him kick start his series. Here’s the second part of our interview with independent investigative journalist Ross Coulthart who has been looking into the unidentified aerial phenomenon. I have zero expertise in this field, but I found it an interesting conversation. All I will say is that given the increasingly serious treatment of the topic by US officials, it’s worth keeping an eye on.