May Reflections May 2022

It’s been a little over ten months since the birth of our second child. I can feel my upper brain starting to come back online after a strange period of time in my life. I used to write more than I do now, probably due to some combination of the pandemic, growing the company to 50 people, supporting Jess through a high risk pregnancy and then parenting a newborn. I have a certain level of entitlement to a couple of sleepy writing years, but I’m going to get back on the horse.

My first reflection is that any quality writing I have done for my site has been done to get an idea I’m obsessed with out of my head. The intended audience is myself in the future, hopefully freeing myself from whatever idea I have been rotating endlessly on while neglecting the present moment. I don’t have any analytics on this site, nor will I ever, since I know when I’m on the site and I know when I’m contributing to the site. Everyone else is a strange traveler.

My second reflection is that it takes 9-12 months to get the majority of your prefrontal cortex online after you have a kid. I remember the strange feeling of being able to remember everything that happened during the day that I felt about 12 months after the first of our first child. I can only describe the impact of sleep deprivation due to caring for a newborn baby as a form of severe brain damage. It is not an exaggeration to say you probably have 20-30 less IQ points than you normally would most of the time, unless you get lucky and have a great sleeper.

It’s a strange and exciting time to be alive. North America is confronting uncharacteristic inflation not seen since the 1970s. Two camps are emerging among the intelligentsia. The first is occupied by myself and various on the more positive, optimistic builder side of the spectrum. I along with others observe a regression to the mean in terms of assets, and a rebalancing of the relationship between value and money. Money is, to use Elon’s description, an entry in a database that allows you to shift when value is recognized over time. I cover that more in my post on inflation but the gist is that printing more money leads to more inflation, and that because of this the Federal Reserve, Bank of Canada and other Western settlers of monetary policy will simply take a more conservative position about said policy. Whatever inflation happens will likely be permanent, but there will otherwise not be a financial end times.

The second camp is coming from the zero sum, pessimistic camp. These individuals are convinced that we are entering a second long term deleveraging. The last time this happened was the Great Depression, when liquidity dried up and there was an inescapable downward spiral in economic activity. It’s hard to refute that we’re entering a recession, but this time there are literally trillions of dollars on the sidelines waiting to be invested back into assets. We could take steps to encourage liquidity in the economy that would likely be effective. It’s likely the case that both sides are right about their respective domains: the consumer domain (aka the real world) is in fact having a long term deveraging. At the same time, the business to business domain is simply repricing assets back to the historical mean. Hardly the end times, but certainly unpleasant if you are an asset owner or someone sensitive to grocery store prices.

I’m looking forward to writing more and continuing to get ideas out of my head as I come back online.