Houston is the best and the worst of American post-World War II dynamism. It’s diverse, with amazing food and ugly urban sprawl. This is the city that put a man on the moon, a city where, due to a lack of zoning laws, roller coasters sit in people’s backyards.
Chicago is Houston’s big brother; Houston at the turn of the 20th century. It’s understated, with great architecture. It’s clean2, but with a dark underbelly3. Extremely segregated. It’s the true modernist city, a testament to man conquering nature: where we reversed the flow of a river and constructed the tallest building in the world.
Las Vegas, like it or not, has a soul. Houston and Chicago as well.4 LA is soulless.
And when I say Los Angeles, I mean all of Southern California. The people who live in San Diego or Orange County will tell you that it’s not the same as LA. But it is. All of Southern California — from Oxnard to the Mexican border — has a uniform culture.
In Los Angeles, you find yourself in a perfect city full of beautiful people that exist to be seen. And while everything is very nice, the whole place feels somehow…empty. It’s a metaphorical Potemkin village.
To exist in Los Angeles is to gaze into the abyss. Here in the oppressive sun, surrounded by solipsistic individuals, you contemplate, as Meursault did, the “gentle indifference of the world” to your own mortality.
“Almighty God, I am sorry I am now an atheist, but have You read Nietzsche?”
— John Fante, Ask the Dust
Coming from the Midwest, I’d always been told that Californians lacked substance. Shallow people with botox and fake personalities. People you could go hiking or surfing with, but who wouldn’t have a beer with you afterwards.
And there’s a bit of that. But at the same time, why not just head to the beach and chill? While you’re trying to connect over a beer, the Angelino is out there trying to catch one more wave. In New York, the activity is drinking and storytelling. While this creates great conversationalists, it also encourages a lot of complaining. In LA, the sun is shining, the swell is stoke…why ruin the good vibes?
Los Angeles is absurd. This is exemplified by its economic aspirations and values. In Silicon Valley, people may dream of starting a generational company, in New York, of reaching the top of the food chain in finance or fashion. In Southern California, everyone rich is in the entertainment business (self-explanatory), works in real estate, or owns a home improvement business. They sell nice houses to one another so that they can afford their own nice houses. The economy is turtles all the way down.5
On my first day in Long Beach, I saw a man driving a classic Oldsmobile 442 convertible, top down, belting out Centerfold with his pet boxer in the passenger seat and his trophy wife in the back. I’m not sure exactly what this story means, but it epitomizes LA.
LA is lifted trucks and lowriders. It’s Bukowski drinking, it’s Arturo Bandini yearning for Camilla, it’s everything wrong and everything right about the American Dream. It’s blonde women with fake tits in skintight dresses on dates with men in board shorts with white socks and Vans. It’s the everyman in his $100,000 Ford Raptor hauling a surfboard in the undented truck bed.
Ironically, this shallowness in LA forces you to confront the depths of yourself and your place in the world. In LA you can’t fool yourself; the curtain is drawn back. LA is hell: it leads to a violent, forced confrontation with oblivion.
LA asks you: What’s the point of being in the rat race? Here, she whispers, “You can be free.” Sit in your car for an hour in the In’N’Out drive-thru line. Spend all day inside; fuck the perfect weather. Surf from sunup to sundown, subsisting solely on a diet of sunshine and açaí bowls.
So I can’t decide if I hate Southern California and everything that it ostentatiously does not stand for, or love it because it is the only place I’ve been that has mainlined existentialism into my veins.
I can’t wait to go back.
There’s even an argument to be made for New Orleans, with its Creole culture, the vibrant mix of French, Spanish, African, and Caribbean that manifests in food, music, and religion. This delightful jumble culminates in Mardi Gras, a Hajj that all college spring breakers should take part in. ↩
Everyone who visits from New York says this, to which every Chicagoan replies that it’s due to the city’s alley system. ↩
Let’s say you’re a solidly upper-middle class American who wants to do some good in the world. The most straightforward (and perhaps highest-leverage) way to affect change is to donate to cost-effective, evidence-backed charities like those endorsed by GiveWell.
Beyond that, there are a few simple tax games that you can play in order to direct money that would have otherwise gone to Uncle Sam to charities.1
Time Your Donations
The 2023 IRS standard deduction for individuals is $13,850. If you are planning to donate below the standard deduction, consider timing your donations to exceed the standard deduction in at least one year.
In a simplified example, assume you:
Earn $100,000 per year
Donate $10,000 per year
Have an effective tax rate of 25%
You can either:
Donate $10,000 each year (Scenario A)
Donate $20,000 in Year 1 and $0 in Year 2 (Scenario B)
Over a two year period, you can donate the same amount of money but time your donations slightly differently in order to keep an extra $1,537.50 for yourself. Obviously, you can then donate those funds as well if you’d like to maximize your impact.3
If you have assets (stock, crypto, etc.) that have appreciated in value, you can donate those assets directly to charity. This allows you to avoid paying capital gains taxes on the appreciation, while still getting a tax deduction for the full value of the asset.
You would like to donate $10,000 to charity
You have stock that you bought for $5,000 that is now worth $10,000
You have a long-term capital gains tax rate of 15%
If you sell the stock, you will pay $750 in capital gains taxes, leaving you with $9,250 for personal consumption (or to donate). If you donate the stock directly, you will pay $0 in capital gains taxes and receive a $10,000 tax deduction. By donating the stock directly, you effectively take $750 that would have gone to the government and redirect it to the charity of your choice.
Note that this only works for assets that you’ve held for over a year (i.e., assets that are subject to long-term capital gains). If you’ve held the assets for less than a year, you can only deduct the cost basis.
This is the 80/20 solution for people who want to squeeze out a little more impact from their donations. If you want to go further, research donor-advised funds and other advanced ways to optimize your giving, but that’s beyond the scope of this post.
I’m not a lawyer, so this is not legal advice. I’m also no ethicist, but I’ll still argue that this is more ethical than giving money to the government, as it will be used to do more good in the world. Also, as a former president once said, not paying taxes makes you smart; the government would have squandered the money anyways. ↩
Note that this doesn’t take into account the time value of money. If you keep the funds early on and invest them, you may grow the money and be able to make more of an impact down the road. On the other hand, it also doesn’t take into account the time value of suffering. People are suffering in the world right now and I would argue that mitigating this immediately is more impactful than mitigating it in a year’s time. I’m not sure how to model these two competing forces (or if I even should). ↩
“But he felt a deep foreboding that despite all the good around him and perhaps even somewhere within it there still resided something morbid.”
– Fyodor Dostoevsky
Over the past two weeks, I’ve reached the same conclusion of many individuals and the collective consciousness we call the stock market: We are likely in the beginning stages of a financial crisis that could rival the Great Depression.
The Fed printed a ton of money over the past few years, after a decade of historically low interest rates.
Much of that money flowed into startups and tech companies, who parked it at Silicon Valley Bank.
Silicon Valley Bank, sitting on a huge pile of cash, put it into “safe” investments: US Treasuries and agency mortgage-backed securities.1
Silicon Valley Bank invested this money into long-term bonds. The risk management team at Silicon Valley Bank…wasn’t great, as it appears to have not taken into account duration risk.
The Fed raised interest rates from ~0% to ~5% in the span of a year.
The investments that Silicon Valley Bank made were then underwater.2
Customers realized this and started to withdraw their funds, triggering a full-on bank run.
Arrivederci Silicon Valley Bank. Bonjuorno FDIC.
This happened extremely quickly. On March 9, 2023, Silicon Valley Bank depositors attempted to withdraw $42 billion. The bank run was triggered by triggered by Silicon Valley Bank’s extremely online customer set: startup founders and venture capitalists. For all of their talk of being contrarian, there may be no more interconnected and lemming-like group than VCs.
The narrative in some camps is already that tech companies and VCs are the baddies. This is the exact same thing we saw in the ’08 Financial Crisis: the vilification of the financial industry. We need a scapegoat.
But this can happen to any bank.
Reflexivity: Or, the Financial Industry Is Our Economy
“I live in a society, which is sufficient information for you to know that I’m structurally levered long to the stability of the banking system, much like you are.”
We are all dependent on our financial system. As software eats the world, our work becomes increasingly interconnected. A couple of regional banks failing may not matter to you — unless you realize that your payroll provider used one of those banks, so your paycheck won’t come through this week. Or you’re a small business owner, and someone you’ve invoiced has all of their funds tied up in a failed bank. Oops! Better write off that line item in your accounts receivable.
Back in the halcyon days of 2020 and 2021, as the COVID money printer went brrr, many people took out loans to buy houses at a 2% interest rate. Yes, banks have risk management departments. They can conduct all sorts of financial voodoo — hedge their exposure with swaps, slice and dice the loans into derivatives and sell them to another institution, etc. But those loans now yield less than Treasuries and the underlying asset value has declined significantly. And at the end of the day they are stuck on someone’s balance sheet.
So this sort of thing matters to Joe Sixpack, whether or not he is aware of it. And in 2023 (contrasted with 2008) we are increasingly online and interconnected. One bad earnings report can trigger a run on the bank. Perception drives reality and reality drives perception in a recursive loop. Our entire economy is just a colossal, scaly ouroboros.
Every Finance 101 class should be renamed “History of Finance”. A modern finance class should demonstrate that we are not rational actors in an efficient market, but that sentiment drives financial fundamentals reflexively. As I’ve written previously,
Reflexivity is the idea that our perception of circumstances influences reality, which then further impacts our perception of reality, in a self-reinforcing loop. Specifically, in a financial market, prices are a reflection of traders’ expectations. Those prices then influence traders’ expectations, and so on.
In financial markets and our economy, as in quantum physics, there is an observer effect. This is how we experience a bifurcated existence — we simultaneously have the best job market of the past 50 years and are worried about structural unemployment and hyperinflation.4
So the Fed can try to pump more money into the economy, but our economy is already a Saturnalia feast approaching the winter solstice. Maybe we can stuff a few more oysters down our gullet, but it’s only a matter of time before we need to visit the vomitorium.
This reflexivity is not limited to financial markets. Soros was a philosopher before he was a trader.
Things have gotten…weird over the past several years. At first, I thought this was a result of my transition to adulthood,5 and all of this was a part of understanding the complexity of the modern world. But now I’m not so sure.
Others have noticed this:
A forced wind-down of Credit Suisse, a run on US regional banks, the arrest of a former US President, the launch of GPT-4 … I was in the trenches in 2008, and I never felt like system-shattering events were advancing so quickly and (w/exception of GPT-4) on so little substance.
Here’s one more for those more conspiratorially-inclined. Recent rate hikes might be an attempt by the Fed to get people to buy Treasuries directly as opposed to keeping their money in banks. This could lead to the government issuing a CBDC and all of the potential spying and censorship inherent in this product.
Far-fetched? A few years ago I would have told you there is no way the people of the U.S. would allow this, given the distrust of government that comprises a large part of the American psyche. But now, I’m not so sure. We’ve already given up any sense of privacy when it comes to financial transactions.
Harari tells us that everything we call life, our entire societal fabric, is made up of shared myths and beliefs. These concepts — democracy, capitalism, religion — lose their power when we stop believing in them.
An acceleration in societal unraveling has been occurring since arguably the 2016 election6, but COVID in particular led to the cracking of many of our shared myths. Globalization as a force for good. Institutional trust. The stock market reflecting the health of an economy. Reliance on experts to tell the truth. Scientific knowledge.
Yet all of these phenomena are symptoms, not the affliction. We live in the apotheosis of postmodernism, an age where our collective consciousness has become conscious of itself and is throwing off the yoke of the postwar liberal world order.
It doesn’t matter what happens. It matters how we react — and these reactions are filtered through the lens of tribal association.
“Can you believe the Blue Tribe thinks that voter fraud isn’t a huge problem? Really?”
“Wow, glad I don’t associate with anyone in the Red Tribe. They don’t trust science.”
“I’m going to write a 5,000 word blog post to better solidify my place in the Gray Tribe hierarchy.”7
We see this play out in every current event. Within a few days of the Silicon Valley Bank crisis, Congress was rushing to control the narrative.
Nihilism as the Defining Philosophy of Our Time
So what can one do? The inevitable consequence of a world that lacks cause-and-effect rules, where the effect drives the cause — perhaps even a rational response to that world — is a collective shrug. And that’s what we’ve done. Nihilism is the defining philosophy of our times.
Nihilism is voting for a billionaire with populist rhetoric because no other politician will deign to lend validity to your problems.
Nihilism is making an 100x return buying shitcoins or trading SPACs and then losing it all.
Nihilism is becoming aware that LLMs — not in the future, but now — are smarter than you and will soon take your job.
Nihilism is understanding that hypergrowth tech companies are largely kayfabe. DoorDash, Uber, and the like may not make any money, but that was never the point. They just needed to convince a few VCs of the narrative of growth.
Nihilism is opting out of our democratic experiment because all politicians do is accumulate money and power while tilting at windmills with the gusto of Don Quixote.
Nihilism is comprehending all of this, predicting non-negligible odds of some sort of societal upheaval, buying Bitcoin, and then realizing that nuclear powers, not code, enforce property rights. Bullets and food will be the true medium of exchange if the world’s largest nuclear power and issuer of its reserve currency actually fails.
All of these are examples of the same phenomenon. Societal and economic forces have built up inside a pressure cooker that is now boiling over.
Nihilism has been a theme underpinning my writing, from Gamestop mania to war in Ukraine. Our mindset is perhaps best explored by the (outstanding) movie Vengeance.
Great monologue, massive spoilers for the film
Everything means everything…so nothing means anything.
I’m falling victim to this exact same mindset — at least in a small way — with this blog post. I need to be relevant. I need to have a unique take. I need to create something that will outlive me. I need to prove how smart I am through some onanistic intellectual exercise, when I should be spending time building a company, connecting with the people in my life, or just…surfing.
What am I even doing here?
The past few years of brrr-ing money printing and remote work boondoggle for the upper-middle class was one last hurrah before a huge economic and societal crisis. A Fourth Turning, if you will.
Last year when reviewing Strauss and Howe’s book, I was skeptical of the claims that generational cycles drive history. I wrote,
“[T]hese are bold forecasts that I suspect overfit to the training data, much more hedgehog than fox.”
But over the past year, I’ve become much more sympathetic to their cyclical views of history. What has changed my mind? The signs were there a year ago, but I’ve recently started paying more attention to:
Our pace of technological revolution, specifically with regards to AI.
The rapid deglobalization of the world in the wake of COVID, U.S.-China tensions, and Russia’s invasion of Ukraine.
More conversations I’ve had with individuals from across the political spectrum where I better understand the extent of political polarization and how everyone constructs their own reality and lives in their own filter bubble.
So if our society is currently undergoing a natural “unraveling” that will ultimately result in a society-shaping event at the scale of World War II, my bet would be on AI creating massive unemployment, which would be the necessary catalyst for a new economic paradigm.8
That said, that is just a shot in the dark. All I know is that our old myths no longer serve us. We are tearing them down and constructing new ones.
Here, people will be triggered by the phrase mortgage-backed securities. They’ll scream, “We learned nothing from the 2008 Financial Crisis!” But, as Ben Thompson says:
“Agency” is an important distinction: these weren’t the ugly subprime mortgages that were at the heart of the 2008 financial crisis; these were mortgages ultimately backed by federal mortgage programs.
“[W]hat if all this credit and liquidity creation threatens trust in the entire financial system, and leads to faster inflation, or even hyperinflation?…But note that both of the previous episodes led, in the short term, to a drop in inflation: the CPI hit 5% for the first time since the early 90s in 2008, just before the crisis. Banking crises are typically deflationary, so you can use the central bank interventions in their wake as a proxy for how deflationary they are when there isn’t a policy response. The Fed added $3.5tr to its balance sheet in the six years following the financial crisis, which was just enough to get inflation from the pre-crisis level of around 3% to the next decade’s average of 1.6%. Post-Covid, a $2.9tr in balance sheet expansion was also just enough to keep year-over-year inflation slightly above zero in the first few months of the pandemic.”
I have done a poor job of publishing my writing recently. Which is a shame, because writing is one of the highest-leverage and most impactful uses of my time. It’s a way to clarify my thinking and to learn publicly. By putting writing out into the world, I can point to a semi-permanent artifact to demonstrate my thinking and “expertise”, which leads to interesting conversations and opportunities.
That said, it’s also very time-consuming. Over the past few months, I’ve been heads down:
Building out the Data Science team at TRM Labs. Most of my time recently has been taken up with a project that I can’t say much about publicly. Suffice it to say this is something that the average person on the street has heard of, not just folks in the crypto industry.
Working towards a Master of Science in Computer Science. I’m not sure if I’ll stick with this program or not – there’s a huge opportunity cost in terms of time – but right now I’m enjoying diving into concepts at a theoretical level and honing my technical skills.
Doing a lot of reading, thinking, and writing about the most impact I can make with my career and life. A big part of this has been in-person engagement with people in the Rationality and Effective Altruism communities. In the wake of the FTX bankruptcy, it’s become a bit of a trend to criticize Effective Altruism, but I believe it is a largely misunderstood philosophy that provides a useful (though certainly non-exhaustive) framework for thinking about morality and my place in the world. More writing to come on this soon.
In any event, this blog post is a public commitment to publish here more frequently! I have many half-drafted posts that I will be releasing in the coming weeks and months.
Life isn’t fair. We’re taught this from a young age, but we still fall victim to the just-world fallacy. At some level, we continue to think that people will get what they deserve.
That successful startup founder? They got lucky, sure, but also worked hard and were smarter than the competition. And we’ll get there someday. So we tell ourselves that we’re on a journey, that it will all work out in the end. Trust Steve Jobs: You can only connect the dots looking backward.
No worries, right? Hakuna matata.
Image via Disney
The Little Agency We Have
Not so fast.
Saying things like “It’ll all work out in the end” or “Everything happens for a reason” is the secular equivalent of telling a homeless person “I’ll pray for you”. That’s nice, but what they really need is some money, or some food, or, you know, a home.
Fundamentally, this is nihilism gilded with a few upbeat, feel-good clichés. It denies our agency and responsibility for growth as a human being. Nothing matters, so I have no responsibilities to the world around me.
"Everything happens for a reason" = I neither recognize nor accept that my actions have consequences for which I am ultimately accountable
And we have so little agency to begin with! 99% of life is sheer luck: where you were born (both a specific country or city and at this point in history), your economic circumstances, your family, your genetic makeup. Perhaps 1% of the results you achieve in life can be attributed to your own decisions and hard work. So by espousing hakuna matata, we dispossess ourselves of the tiny amount of agency we do have.
No, not everything happens for a reason. Sometimes terrible things happen. Full stop. We need to pull our heads out of our asses and acknowledge this fact in order to do something about it.
Similarly, in The Lion King, only when Simba overcomes the nihilism of hakuna matata does he ascend Pride Rock to become an Überlöwe.
But I Crave Meaning
So why do we tell ourselves things like “If it’s meant to be, it’ll be”?
Here, Meursault has more to offer than Timon and Pumbaa. Timon and Pumbaa run away from life with their philosophy of nihilistic hedonism. Meursault may be apathetic, but through acknowledgement of life’s absurdity he fully engages with the world.
As if that blind rage had washed me clean, rid me of hope; for the first time, in that night alive with signs and stars, I opened myself to the gentle indifference of the world. Finding it so much like myself–so like a brother, really–I felt that I had been happy and that I was happy again.