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Lyn Alden Profile picture
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4 Aug, 4 tweets, 2 min read
Nassim I've not bashed you or said anything negative about you.

I critiqued the set of arguments in your recent paper, not the author behind the paper, or your other works. I haven't used ad hominem remarks against you, although you have against me.
I know it can feel tribal when people have their work disagreed with, especially online.

But being tribal or personal is not my intention; the focus is on the content of the paper and the arguments therein.

People disagree with my work plenty. I welcome it.
Earlier this year I published a paper that was somewhat critical towards Ethereum, highlighting risks/concerns from an investor perspective:
lynalden.com/ethereum-analy…

The Ethereum community crowdsourced a response, so I shared it with my audience:
Because, after all, the goal was to seek/share knowledge, rather than to fight.

That's the spirit with which I critiqued your paper, and the spirit that I like to see when people critique my work. I'm always happy to hear counter arguments.

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More from @LynAldenContact

Lyn Alden Profile picture
4 Aug
I ran some of the numbers on this out of curiosity.

If an electric car consumes 100-150W while idle, and if the whole US goes electric one day (276 million cars), that would be 240-360 TWh per year in annual power waste.
If all cars globally go electric, that's 1,200-1,800 TWh in annual power waste.

That's a small amount of energy globally (only about 1% of global energy consumption) but about 10x as much energy as the current bitcoin network consumes, for reference.
If we have like a robotic-driving world in the future, where fewer people own cars and people get around with robo-ubers, as ARK has envisioned, then the numbers would be lower because the number of cars would be lower. But still likely hundreds of TWh per year globally.
Read 5 tweets
Lyn Alden Profile picture
3 Aug
Regulators have historically had a tough time predicting systemic bank risk ahead of time.

Bank capital ratios, for example, were not predictive of the 1929 or 2008 financial crises. Risk-weighted and raw charts:
Capital ratios are of course critical for analyzing the health of a specific bank balance sheet, but historically failed to detect system issues in the bank lending sector.

That's why they were reformed post-GFC, to make them more granular.
Historically some combination of private debt as a % of GDP, monetary base as a % of total bank loans, and the percentage of bank assets held in nominally risk-free assets, has been more predictive.
Read 8 tweets
Lyn Alden Profile picture
2 Aug
On one hand, fiat cash is a "defensive asset", with low volatility. Naturally, you need some cash to pay expenses (inevitable) and for optionality on buying other types of assets (optional).
On the other hand, fiat cash is the only speculative asset I own, meaning the only asset I expect to decline in value over the long run but that might go up in the short run (meaning other assets temp go down in price vs fiat cash), allowing me to rebalance into those assets.
Just about every other asset I own, is something I expect to be worth more 5-10 years from now, than today.

But fiat cash is the opposite: something that I expect to be worth less 5-10 years from now, even with interest. But I speculate on holding *some* anyway.
Read 7 tweets
Lyn Alden Profile picture
2 Aug
Japan's big pension fund diversified its sovereign bond exposure away from US Treasuries over the past year. Still US-heavy but broadening out. Via Bloomberg.
bloomberg.com/news/articles/…
The BOJ also announced last month that they will buy be buying foreign green bonds (this'll likely mean ongoing European bond purchases in the future). reuters.com/business/susta…
More aggressively, Russia is de-dollarizing its reserves and shifting its trade from dollars to euros for its dealings with European countries and China, which is notable because a sizable portion of its exports are energy and commodities. From April:
bloomberg.com/news/articles/…
Read 4 tweets
Lyn Alden Profile picture
31 Jul
Three weeks after this tweet from Sep 2019, the Fed began buying UST (US Treasuries) in October 2019, before the pandemic, and nearly two years later hasn't stopped yet. 🧐 Image
Fed Unveils Plan to Expand Balance Sheet but Insists It’s Not Q.E. (October 2019) nytimes.com/2019/10/11/bus…
I enjoyed sharing content with fellow macro analysts, as we dissected what the September 17, 2019 repo spike meant.

In fast-moving markets, this relatively recent event is almost forgotten now, but remains historically important.

IMO, the MVP from that event was @LukeGromen.
Read 4 tweets
Lyn Alden Profile picture
23 Jul
Several people have correctly pointed out that bank loans haven't kept up with bank deposits.
However, if you add bank holdings of Treasuries to their loans, the gap fills by quite a bit. The rest is mainly excess reserves.
This is because, as @LukeGromen has elegantly pointed out a number of times, banks *are* lending, albeit mainly to the federal government.

It's like the 1940s more-so than the 1970s.
Read 4 tweets

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