Let's talk about debt forgiveness, and why it's hard.

Since this is a popular topic these days.
1/
But first let's talk about when it wasn't hard.

Back in the day, when the Lords and Ladies owned everything, they would lend money as a way of extracting rent from everyone.

Periodically, this got a little too top heavy and everyone got angry.
2/
And so the Ladies and Lords, having calculated that they enjoyed having their heads attached to their bodies, would do a Debt Jubilee.

After all - they still owned everything, so it was just a temporary loss of income.

And they kept their heads.
3/
But that's not quite how debt works anymore. You see - debt isn't just simplistic rent seeking anymore (note: it still kind of is this, it's just not *just* this).

Today, debt is an asset. And we are the rent seekers.

What does that mean "we are the rent seekers?"
4/
Well in our representative government, we are the Lords and Ladies. Rent seeking isn't kingdoms and peasants anymore.

It's pensions. It's 401(k)s. It's your Target Date 2047 fund.

We are the rent seekers, renting ourselves to ourselves.
5/
And debt is an asset now - an asset held by those pensions and institutions and target date funds.

So if we "forgive" it, like... what does that mean? Who gets hit?

While it's fanciful to think it might be Wall St. that's more or less wrong.
6/
No - Wall St. are no Ladies and Lords, they are simple merchants. They take our debt from us, package it up (for a fee!), and then sell it back to us.

They are temporal arbitrageurs, not likely to get hit overly hard by a Jubilee.

Sadly, there is no great villain here.
7/
Or rather: "we have met the enemy, and it is us."

Awkwardly... if We The People want to do a debt jubilee, then We The People are also going to get hit by an asset write down, because We The People are holding that debt as assets.
8/
Now of course there's some detail here around who owns what forms of debt and who would take the hit and all that, but ask yourself: who do you think will see this coming and duck -- the Big People or the Little People?
9/
So while I agree that it's not great and perhaps 'unfair' that things like student debt are such a burden, the mechanics of how we fix that are... complex.

Beware those offering simplistic solutions to complex problems.

Take note of what they're selling.
/10

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More from @coloradotravis

6 Apr
Why it’s not (necessarily) disingenuous for a trader to only follow up on winners.

There’s a recurring meme that FinTwit peeps are so cynical that they simply call trades randomly and then retweet only the ones that work.

That’s not my read on what’s happening, so what is?
1/
Okay so first off there are 2 types of positions.

Well, for me.

I’m like Level 3 so presumably there are others I haven’t unlocked.

Anyhow — let’s call them “gravity trades” and “surf trades” since that seems fun.
2/
A gravity trade is where you’re just like betting on structure. “QE isn’t actually deflationary which we’ll find out within a couple years which makes bonds good, eventually” or that kind of stuff that I occasionally yammer on about.

Anyhow these aren’t the point.
3/
Read 14 tweets
1 Apr
Low interest rates: who benefits?

1/
People like to rant about financial repression, but I haven't seen many walk out an understanding of *why* we're doing this.

Like - if it's so terrible, how come we keep doing more of it?

Let's look at who it's good for, and who it's not.
2/
First: who it's not.

It's not good for **new entrants** - this applies to both the individual and to businesses.

Let's look at an example of each to understand why newer players are disadvantaged.

First, the individual.
3/
Read 15 tweets
28 Mar
Every generation has their Great Dream narrative.

For the Boomers, it was a 'be here now' attitude that manifest itself in a carpe diem attitude that their parents (children of the depression) found unfathomable.

Ultimately it's just a story, however.
1/
The Great Dream flourishes for a time as creates confirming instances: Woodstock and free love and Wall St. and the go-go cocaine-fueled 80s.

But in the end, as the generation fades, we are left looking at the pieces that didn't work.
2/
For the carpe diem attitude, while liberating, is not without consequence: oceans filled with plastic, reliance on social systems to plan for the future on our behalf, a hyper-financialized economy.

Carpe Diem is, in the end, just a story not a Final Truth.
3/
Read 5 tweets
28 Mar
The cake is a lie.

A conformist's guide to understanding what contrarians are up to, and why they're such a pain in the ass.
1/
There seems to be this idea out there that being contrarian is like... I dunno, some weird thing where you just vote against the herd no matter what.

Well that's ridiculous.

Blindly going against the herd is how you get trampled in a stampede.
2/
By my read, being contrarian is more like... a decision to be both deliberately 'simple' with one's thinking, and also completely unconcerned with how others view that simplicity.

It's a decision to not take mental leaps even when social optics of doing so are favorable.
3/
Read 6 tweets
18 Mar
The Book Of Crayon

Chapter One: Wax
1/
We start small and adrift in an ocean of lights and sound.

Instinct’s first job is to save us, and mostly it does.

Then we’re pulled, gently, toward sense making. And we learn to detect currents in the vast sea of sensation.
2/
Currents take us to the Field of Forms - the soil is rich but nothing grows, for the farmer has only just arrived.

Here we must diligently sow the earth with the little packet of seeds that will flower into shapes and patterns.

For a time there is only working the fields.
3/
Read 17 tweets
17 Mar
Y'all remember this - the "Fed testing 55% fall in equities" thing?

Curious, right? I mean... banks don't hold equities and while yes their stock price is somewhat relevant that doesn't seem like enough to warrant this kind of wargaming.

So what might?
1/
Let's say you knew you were going to shove a truckload of cash into the banks (via stimmy), and that could already be slightly awkward.

And you, the regulating body, might need to turn some knobs in order to make sure stuff doesn't break.

You'd want to turn them enough...
2/
More specifically, you don't want to make just enough allowances to receive the stimmy (which could, itself, cause unknown externalities due to its largess) and then be right back at the table turning knobs again a month later.

Not a good look.

So you turn to your banks...
3/
Read 4 tweets

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