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Lumifer comments on Things I Wish They'd Taught Me When I Was Younger: Why Money Is Awesome - Less Wrong
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Comments (234)
That looks to be way too much emotion and not enough reason.
Are you making a prediction, by any chance? If you believe it, you can bet on it -- will make you very rich if it were to happen...
Given the way the FIRE sector has eaten up the pie of corporate profits in the developed world, with non-FIRE companies often losing money even as FIRE grows, I believe the cancer metaphor is apt. Even "rationalists" are supposed to feel emotions when they match the reality.
If finance is eating the economy, we should get mad at it and call it a cancer. And finance indeed appears to be eating the economy (warning: the paper's author has some political views, but the statistics are sound: finance is capturing increasing portions of economic output, which Should Not Happen unless their ability to minimize risk/predict the future has increased that quickly).
It might be difficult to get very rich that way. Suppose Izeinwinter's opinion is that there's a 75% chance that some time in the next 20 years the financial industry will be struck hard by regulation, in a way that turns finance from (at least in, er, financial terms) a very attractive career to a rather unattractive one. The most obvious bet to make on that isn't going to pay out for another 20 years, and s/he still might well lose (75% < 100%), and even (say) a certain 5x gain over 20 years wouldn't be much above what one could plausibly hope for from, say, the stock market. And I can't imagine there being a big supply of people willing to take the other side of that bet for a large sum and offer 5:1 odds.
Not really. Deep out-of-the-money options can provide a LOT of leverage.
Well, he is posting here so he can tell us what his opinion is, if he wants to, of course.
That assumes that nobody passes a law that makes enforcing contracts about deep out-of-the-money options impossible.
If you believe in serious actions against the finanical sector there might just not be a trustworthy counterparty for the deep out-of-the-money options that will pay 20 years in the future.
Then have them post daily collateral.
What do you mean specifically and how would you go about buying such an option contract?
Those numbers are close enough, but that is not why I am not setting up a global short on the finance institutions of the world. I am not doing that because if I am proved correct most of the potential counter-parties to that deal will be first against the metaphorical wall, and thus I do not get paid either way.
Look, for most of the history of capitalism finance and banking is where mediocre intellects with high conscientiousness scores went to earn a respectable boring living in a respectable boring job. The current status quo is an aberration, and will keep blowing up until it is stopped. None of the bullshit that led to the financial crash has actually been fixed, because finance had too much pull with politicians. Its going to happen again. Soonish. Politicians will not be able to shield them a second time (and if they try, very worrying people will replace them in office)
A fair point. However if you think that scenario is likely I would recommend to buy ammo and beans and not worry about high-tech things like AI.
That is not true at all. It is so for accountants and tellers, but it is true for them in our days just as well. People who owned and managed high-level financial and banking institutions always had high risk and, if successful, high profits. Think about financing trading ships half across the world, financing wars and shaky monarchies...
The big banking houses did not rise through efforts of people with "mediocre intellects [and] high conscientiousness scores".
Mediocre compared to whom? Certainly, from what I've heard, the skills necessary for banking are, in this order:
With the general level of intellect being roughly "can pass freshman calculus but not necessarily an entire engineering degree." Certainly bankers aren't stupid, but if you compare their job to what's necessary in science, medicine, professional engineering, or law, I do think they're the "dumb jocks" of the smart crowd.
It's the term you used. I assume compared to the general population.
What do you call "banking"? As is true for every complex industry, there is a variety of things to be done which require diverse skills. An accountant, a salesperson, and an executive might all work in a bank but the skills they need are very different.
It appears in fact to be the term Izeinwinter used; so far as I know, Izeinwinter and eli_sennesh are not the same person.
Yes, this is correct.