It's going to perhaps sound nuts, but I'm beginning to wonder if America is actually a giant Ponzi scheme.
I've been thinking about American exceptionalism - they way it is head and shoulders above Europe and the developed world in terms of GDP growth, market returns, start up successes etc. and what might be the root of this success. And I'm starting to think that, apart from various mild genuine effects, it is also a sequence of circular self-fulfilling prophecies.
Let's say you're a sophisticated startup and you want some funding. Where do you go? US of course - it has the easiest access to capital. It does so presumably because US venture funds have an easier time raising funds. And that's presumably because of their track record of making money for investors - real, or at least perceived. They invest in these startups and they exit at a profit, because US companies have better valuations than elsewhere, so at IPO investors lap up the shares and the VCs make money. It's easy to find buyers for US stocks because they're always going up. In turn, they're going up because, well, there's lots of investors. It's much easier to raise billions for data centres and fairy dust because investors are in awe of what can be done with the money and anyway line always go up. Stocks like TSLA have valuations you couldn't justify elsewhere. Maybe because they will build robot AI rocket taxis, or maybe because the collective American Allure means valuations are just high.
The beauty of this arrangement is that the elements are entangled in a complex web of financial interdependency. If you think about these things in isolation, you wouldn't conclude there's anything unusual. US VC funding is so good because there's a lot of capital - lucky them. This thought of circularity only struck me when trying to think of the root cause - the nuclear set of elements that drive it. And I concluded any reason I can think of is eventually recursive.
I'm not saying America is just dumb luck kept together by spittle, of course there are structural advantages the US has. I'm just not sure it really is that much better an economic machine than other similar countries.
One difference to a Ponzi scheme is that you might actually hit a stable level and stay there rather than crash and burn. So it's more like a collective investment into a lottery. OpenAI might burn $400bn and achieve singularity, then proceed to own the rest of the world.
But I can't shake the feeling that a lot of recent US growth is a bit of smoke and mirrors. After adjusting for tech, US indices didn't outperform European ones post GFC, IIRC. Much of its growth this year is AI, financed presumably by half the world and maintained by sky-high valuations. And no one says "check" because, well, it's the US and the line always go up.
I don't think you're describing a Ponzi scheme. More like a merry go around. Seems pretty common, just turned to 11.
Of course it can stop, an a little history reading will show that it has always stopped, but it can take a long time.
If anything, I fear the AI hype + the orange idiot you put in charge, can fuck you up much faster than otherwise. OTOH, Trump is also a symptom, showing that things were not going great.
I've been thinking about American exceptionalism - they way it is head and shoulders above Europe and the developed world in terms of GDP growth, market returns, start up successes etc. and what might be the root of this success. And I'm starting to think that, apart from various mild genuine effects, it is also a sequence of circular self-fulfilling prophecies.
Let's say you're a sophisticated startup and you want some funding. Where do you go? US of course - it has the easiest access to capital. It does so presumably because US venture funds have an easier time raising funds. And that's presumably because of their track record of making money for investors - real, or at least perceived. They invest in these startups and they exit at a profit, because US companies have better valuations than elsewhere, so at IPO investors lap up the shares and the VCs make money. It's easy to find buyers for US stocks because they're always going up. In turn, they're going up because, well, there's lots of investors. It's much easier to raise billions for data centres and fairy dust because investors are in awe of what can be done with the money and anyway line always go up. Stocks like TSLA have valuations you couldn't justify elsewhere. Maybe because they will build robot AI rocket taxis, or maybe because the collective American Allure means valuations are just high.
The beauty of this arrangement is that the elements are entangled in a complex web of financial interdependency. If you think about these things in isolation, you wouldn't conclude there's anything unusual. US VC funding is so good because there's a lot of capital - lucky them. This thought of circularity only struck me when trying to think of the root cause - the nuclear set of elements that drive it. And I concluded any reason I can think of is eventually recursive.
I'm not saying America is just dumb luck kept together by spittle, of course there are structural advantages the US has. I'm just not sure it really is that much better an economic machine than other similar countries.
One difference to a Ponzi scheme is that you might actually hit a stable level and stay there rather than crash and burn. So it's more like a collective investment into a lottery. OpenAI might burn $400bn and achieve singularity, then proceed to own the rest of the world.
But I can't shake the feeling that a lot of recent US growth is a bit of smoke and mirrors. After adjusting for tech, US indices didn't outperform European ones post GFC, IIRC. Much of its growth this year is AI, financed presumably by half the world and maintained by sky-high valuations. And no one says "check" because, well, it's the US and the line always go up.