The Breakdown

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Why Innovation Matters (and How Not to Screw It Up), Feat. Matt Ridley May 28, 2020

Show notes

Twenty-one different people can reasonably claim to have invented the light bulb, but Thomas Edison is the one we know about. Was it just good PR? According to Matt Ridley, it was because Edison was the progenitor of an “innovation factory” that didn’t just create things but brought them to market in a way no one else did.

Innovation is one of the most important forces in the economy, and arguably the most important driver of human prosperity over the last century. Yet, for most of its life, it has been viewed as some strange exogenous force, rather than as a discipline that could be understood.

In this conversation with NLW and Ridley discuss:

Why it took so long for economists to take the study of innovation seriously
Why invention is different from innovation
Why innovation has tended to concentrate in geographically proximate areas
Why free societies produce more innovation than closed societies (including empires)
Why China’s innovation production over the last decade may be an exception that proves the rule of innovation thriving in freedom
Why government winner picking is a terrible way to inspire innovation
Why innovation policy led Matt to support Brexit
The rational, optimistic take on the future

Deglobalization and Other Narrative Violations, Feat. Geoff Lewis May 27, 2020

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The battle to control narratives is the battle to shape how people understand the world around them. But the traditional gatekeepers of narratives - the media - have never had more competition to shape what is perceived as truth.

In this episode, NLW speaks with Bedrock Capital founder Geoff Lewis about what it means to seek out opportunities in “narrative violations.” They also discuss:

Why de-globalization and “onshoring” are likely to be among the most important economic drivers in the U.S. in the coming decade
Why the shift to working from home may be an overblown “narrative mirage”
How important questions of institutional decay have been co-opted by the culture war
Why independent, individuals in the media have more influence than ever
Why we’re in a “narrative mirage recovery”

Dollar Dilemmas & Central Banks Gone Wild: The Best Of The Breakdown April/May 2020 May 25, 2020

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Highlights from some of the most interesting conversations on The Breakdown from the last two months.

4/1 - Peter Zeihan on why the world we’ve known for 30 years is changing forever
4/6 - Emerson Spartz on a moment of punctuated equilibrium
4/17 - Jared Dillian on the political football of stock buy backs
4/21 - Joe McCann on how financial engineering came to dominate Wall Street
4/22 - Luke Gromen on the genesis of the global monetary order and why the US switched off the gold standard in 1971
5/1 - Danielle DiMartino Booth on how the Federal Reserve moved from incompetent to corrupt
5/9 - Niall Ferguson on a shift back to a multipolar, multi-currency world
5/14 - Jeff Booth on why technology deflation competes with inflationary monetary policy
5/20 - Lyn Alden on the negative impacts of a too-strong dollar
5/22 - Tuomas Malinen on why dismantling the Euro may be the only way to save the European Union

The Breakdown Weekly Recap | May 23 2020 May 23, 2020

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The complete week's shows in one convenient episode

Monday | Economic Freedom in the World After Capital, feat. Albert Wenger
Tuesday | Lessons from the Financial History of Pandemics, feat. Jamie Catherwood
Wednesday | Why a Strong Dollar Is Bad for the US and Bad for the World, feat. Lyn Alden
Thursday | ‘Dismantle the Euro to Save Europe’ Feat. Tuomas Malinen
Friday | The Shadow of Satoshi’s Ghost: Why Bitcoin Mythology Matters

In The Shadow of Satoshi's Ghost: Why Bitcoin Mythology Matters May 23, 2020

Show notes

On Wednesday, a batch of coins mined just a month after bitcoin’s birth were moved. It was the first time since August 2017 that any bitcoin from early 2009 had been transferred, and the action set Bitcoin Twitter on fire. While a number of bitcoin archaeologists quickly and persuasively argued the tokens were almost assuredly not mined by bitcoin creator Satoshi Nakamoto, it was a moment that reinforced the living history in the bitcoin ecosystem.

In this episode, NLW looks at what makes the Satoshi mythology powerful:

Genuine technical innovation and problem solving that had stymied some brilliant minds for decades
Incredible instincts around narrative and human psychology, as reflected in the “Chancellor on the Brink” message embedded in the Genesis Block and the ceremony around the halving
The incredible contrariness of a creator withdrawing in a world where entrepreneurs are lionized like no one else in society

And while the battles within the bitcoin community around interpretation may look more like the early history of religions than like a business ecosystem, NLW argues that fervor is a key part of what de-risks bitcoin, even for investors who don’t at all care about the mythology.

‘Dismantle the Euro to Save Europe’ Feat. Tuomas Malinen May 22, 2020

Show notes

The European Union and the euro are part of the most ambitious political and economic experiment of the 21st century. The COVID-19 crisis, however, has exacerbated growing questions of political will and political legitimacy and led some to wonder if the eurozone can survive.

Tuomas Malinen is the CEO of GnS Economics, a macroeconomic advisory firm, and Adj. Professor of Economics at the University of Helsinki. In this interview, he and NLW discuss:

Why the European debt crisis was actually a “morally corrupt bank recapitalization project”
Why negative interest rates and quantitative easing made the European banking sector particularly weak even before the pandemic
Why the German Constitutional Court’s battle with the European Central Bank has major implications for the entire euro system
Why European leaders are pushing for deeper integration when citizens want more lightweight integration
Why European nations would be more likely to support one another in bilateral arrangements rather than through forced solidarity
Why the only way to save the European Union might be to let the euro fade away

Why a Strong Dollar Is Bad for the US and Bad for the World, feat. Lyn Alden May 21, 2020

Show notes

The dollar has a unique role in the world due to its reserve currency status. For many years that status has created incredible opportunities for the U.S. Increasingly, however, some are wondering if the global standard has outlived its usefulness - not only for the world but for the U.S., too.

In this illuminating conversation, one of FinTwit’s brightest minds, Lyn Alden, shares her perspective on:

Why we’re at the end of a strong dollar cycle
Why the Federal Reserve is terrified of the global dollar shortage
The difference in creditor vs. debtor nations
The concept of the Triffin dilemma
Why Japan has been able to print money without seeing rampant inflation
Why we have inflationary and deflationary forces competing to influence the U.S. economy
Why debt is going to matter more than ever
What alternatives to the USD system might look like

Lessons from the Financial History of Pandemics, feat. Jamie Catherwood May 20, 2020

Show notes

Jamie Catherwood works at O’Shaughnessy Asset Management, a quantitative long-equity investment firm. More importantly, however, he is the finance history guy on Twitter. His “Financial History: Sunday Reads” curation pieces and longer form articles on his site Investor Amnesia have become required reading for anyone who wants the historical context for current financial issues.

On this episode of The Breakdown, Jamie and NLW discuss:

Financial lessons from previous pandemics, including the 14th century bubonic plague; an 1892 Cholera outbreak in Hamburg, Germany; and, of course, 1918
Strange parallels between 1918’s Spanish flu and the currentcCoronavirus crisis, including an increase in the price of oranges
The concept of “Minsky Moments, a key inflection point in bubbles where over-exuberant markets become unwound extremely quickly

Economic Freedom in the World After Capital, feat. Albert Wenger May 19, 2020

Show notes

Albert Wenger is a partner at Union Square Ventures as well as a prolific thinker and writer. His “World After Capital” is an evolving digital book project that looks at a set of megatrend shifts as the world moves between economic paradigms from the Industrial Age to the Knowledge Age.

In this wide-ranging conversation, he and NLW discuss:

Why attention is at the center of the new Knowledge Age
Why markets can’t price crucial needs such as pandemic preparedness
Why the new era will be defined by three categories of freedoms: economic freedom, information freedom and psychological freedom
Why universal basic income has an important role to play in economic freedom
How UBI could avoid political capture
Why technology is inherently deflationary
Why real estate, education and health care should be much cheaper than they are
Why community currencies could be a key innovation from the current crisis

The Breakdown Weekly Recap | May 16 2020 May 16, 2020

Show notes

The complete week's shows in one convenient file

Monday | The Great Monetary Inflation: Paul Tudor Jones' Complete Case For Bitcoin
Tuesday | How We Future Now - Live With Kathleen Breitman, Caitlin Long and More
Wednesday | A Coming Reckoning: Why The Fed Can't Outspend Deflation, feat. Jeff Booth
Thursday | Surveying The Carnage: Movies, Sports, and Education in Crisis
Friday | The Great Inflation Escape: Where Bitcoin Fits In the New Monetary Order [Money Reimagined Pt. 3]

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