👋 ASB Partners Nuggets 3.28.25
This is a short weekly email that covers a few things I’ve found interesting during the week.
Interesting Links/Reads
Many links are sourced from Marginal Revolution
Investors who bought Argentina’s 100-year dollar bond were laughed at in 2017 for their naiveté in buying such a long bond from a serial defaulter. Sure enough, the country failed to pay after just three years.
But investors who stuck with the country are having the last laugh. The bonds they were given in the default, plus the fat coupons on the original century bond, are now worth more than the original investment. Not just that: They are worth far more than if the dollars had been invested in “safe” U.S. Treasurys.
The money made on what was widely regarded as the dumbest of dumb places should remind us of three important lessons: When risks are obvious, they are often well-rewarded; even when risks are hard to see, they are still there; radical political change is hard to predict. Let’s go through each:
We are lucky good LLMs were invented at the time they were
If you peer into the souls of the major LLMs, they are (broadly) positive, friendly, universalistic, and cosmopolitan. They are more objective than media as a source of information. They are too politically correct, but nastiness would be much worse. They are open, and you can be inquisitive with them. They are (again broadly) socially liberal. They care about truth, and being right. They will try to correct their own errors upon request.
Minimum Levels of Stress Morgan Housel
But let me put it this way: As the world improves, our threshold for complaining drops.
In the absence of big problems, people shift their worries to smaller ones. In the absence of small problems, they focus on petty or even imaginary ones.
That was then, this is now (This is why it is worth it to read Tyler Cowan…he was way ahead on AI back in 2020)
This year is likely to be remembered for the Covid-19 pandemic and for a significant presidential election, but there is a new contender for the most spectacularly newsworthy happening of 2020: the unveiling of GPT-3. As a very rough description, think of GPT-3 as giving computers a facility with words that they have had with numbers for a long time, and with images since about 2012…
The eventual uses of GPT-3 are hard to predict, but it is easy to see the potential. GPT-3 can converse at a conceptual level, translate language, answer email, perform (some) programming tasks, help with medical diagnoses and, perhaps someday, serve as a therapist. It can write poetry, dialogue and stories with a surprising degree of sophistication, and it is generally good at common sense — a typical failing for many automated response systems. You can even ask it questions about God.
…It also has the potential to outperform Google for many search queries, which could give rise to a highly profitable company.
…It is not difficult to imagine a wide variety of GPT-3 spinoffs, or companies built around auxiliary services, or industry task forces to improve the less accurate aspects of GPT-3. Unlike some innovations, it could conceivably generate an entire ecosystem.
That was the opening paragraph of my 2020 Bloomberg column on GPT-3.
Podcast/Videos
I had a wonderful conversation with Professor Tyler Cowen. We discussed his view of economic growth, the chase for GDP growth, the most underrated risks to global economic stability, and whether capitalism will survive the next century. Other topics included universal basic income, behavioral economics, how cryptocurrencies challenge the traditional role of central banks, and what would it take for cryptocurrencies to become a significant driver of economic growth. We also explored whether Bitcoin’s role as ‘digital gold’ is sustainable or an overhyped narrative, whether cryptocurrencies democratizing finance should prompt nation-states to adopt their own digital currencies, and how to design a regulatory framework that fosters crypto innovation while protecting consumers.
I hope you enjoyed it.
Adam