Anyone know how the pricing of the long term securities linked work?
I’m guessing these rates aren’t high because the mechanisms that would make those numbers high aren’t able to be activated by “lots of the world’s wealthiest expect massive gains from AI”. And so no amount of EMH will fix that?
On my model, if you’re wealthy and expect AI soon, I expect you to invest what you can in AI stuff. You would affect interest rates only if you manage to take out a bunch of loans in order to put more money in AI stuff. But loans aren’t easy to get, and they can be risky (because the value of your collateral on the market can shift around lots, especially if you’re going very leveraged).
So, if someone can enlighten me: (1) Would private actors expecting AI be making leveraged AI bets with a good fraction of their wealth? [probably yes] (2) Do loans these actors obtain drive up that number on the US treasury site? [probably no]
ETA: I know the post goes into some detail as to why we’d expect rates to move around with folk’s expectations, but I find it hard to parse in my mechanism-brain
Anyone know how the pricing of the long term securities linked work?
I’m guessing these rates aren’t high because the mechanisms that would make those numbers high aren’t able to be activated by “lots of the world’s wealthiest expect massive gains from AI”. And so no amount of EMH will fix that?
On my model, if you’re wealthy and expect AI soon, I expect you to invest what you can in AI stuff. You would affect interest rates only if you manage to take out a bunch of loans in order to put more money in AI stuff. But loans aren’t easy to get, and they can be risky (because the value of your collateral on the market can shift around lots, especially if you’re going very leveraged).
So, if someone can enlighten me: (1) Would private actors expecting AI be making leveraged AI bets with a good fraction of their wealth? [probably yes] (2) Do loans these actors obtain drive up that number on the US treasury site? [probably no]
ETA: I know the post goes into some detail as to why we’d expect rates to move around with folk’s expectations, but I find it hard to parse in my mechanism-brain