Economics professor at the University of California, Berkeley and a former Deputy Assistant Secretary of the US Treasury. Author of Slouching Towards Utopia and writer of the Grasping Reality newsletter.
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Their wordsIf the useful life of an NVIDIA H100-vintage cluster turns out to really be three years rather than six, the capex cycle's economics invert, and the leverage that looked prudent looks reckless.
Their wordsThe usual default math assumes debtors want to pay. But founder-controlled firms with a "you lent us too much" attitude introduce a strategic-default option that standard systems of ratings do not fully capture.
Their wordsWhat bottom-up detailed understandings of the technology and its deployment do the guys with the spreadsheets working for the sell-side actually have here?
Their wordsThis week brought me news increasing my confidence with respect to one thing it is not: it is unlikely to be a hyperprofits engine for research labs with companies attached making money serving up calculations made in datacenters by simulated neural networks.
Their wordsThe proportional response of their prices to changes in interest rates should therefore be by far the highest. Interest rates go up. Their prices should go down, proportionately, the most. And yet it hasn’t happened.
Their wordsCuration is thus an inevitable bet on judgment over completeness — you accept that you will miss almost everything, and you invest your scarce attention in a few people whose sense of the common thread you trust.
Their wordsBarry Ritholtz’s guide to building a reading list is generous, disciplined, and quietly self-defeating — because the better his curation, the more it adds to the very flood it’s meant to tame.
Their wordsBut we have not yet built the habits of mind, or the institutions, appropriate to its successor. We are like the first generation of factory workers who still tried to farm on Sundays: our reflexes were formed for a régime of scarcity, and they misfire badly in a régime of superabundance.
Their wordsThat will be a large part of what readers will increasingly pay for: domain-knowledge expertise visibly hacking through increasing amounts of AI-slop.
Their wordsThat means that the important and live questions are about what metaphors—what abstraction layers, throwing away information so that the problems become things we can grasp and think about—are useful right now?
Their wordsLLMs are a newer, smaller shoggoth. They condense human writing into useful but lossy summaries, no lossier than prices, bureaucratic categories, & opinion polls.
Their wordsIt is not because it will give rise to a Digital God. To think that is still seems to me to be a category error of the same kind as thinking that a steamship is the same order of being as a dragon.
Their wordsProperly trained, RAGed, and harnessed LLMs may still be stochastic parrot, but as they are enmeshed in the spheres of human cognition and public reason they increasingly do not act as stochastic parrot.
Their wordsThat creation and transmission of meaning through the warping of language into new forms is not something an LLM, for which all there is is the text, can do.
Their wordsAnd more than half the rise in the top 1% share since 1985 flowed through the pass-through businesses that was a "tax efficiency innovation" feature of the Reagan Revolution.
Their wordsBut, Claudia, it is necessary confusion given that the point is to triangulate in order to limit the surfaces he leaves open to attack from either a disappointed Trump or a disappointed bond market.
Their wordsThat a Fed easing move is immediately followed by a sharp jump in long-term rates strongly suggests that the Federal Reserve has lost control over the narrative governing bond-market expectations.
Their wordsThe pattern vindicates the “complementarity view” of East & al. 2023, Cox & East 2026, and many, many more: removing immigrant workers tends to lower, not raise, native-born employment and wages.