I have high confidence that the next few decades will be frothy but the distribution of possibilities does not give me high confidence that I should try to bet on that, certainly not in the form of a short position due to the high risk. Personally, I think there’s a significant likelihood that AI leads to more of a disaster scenario short of an existential threat. As mentioned in the post,
Disaster risks do not necessarily raise real rates – indeed, such risks are thought to lower real rates due to precautionary savings.
Disasters and accompanying global instability easily lead to monetary effects that are far more complex than simple models of an efficient market can account for. Long-term rates do seem unreasonably low but trying to make alpha from that observation or going deeply into debt to fund philanthropy feels dangerous to me. On the other hand, locking in a long-term loan seems reasonable if I had anything I wanted to spend it on that would retain intrinsic value (like a house).
I have high confidence that the next few decades will be frothy but the distribution of possibilities does not give me high confidence that I should try to bet on that, certainly not in the form of a short position due to the high risk. Personally, I think there’s a significant likelihood that AI leads to more of a disaster scenario short of an existential threat. As mentioned in the post,
Disasters and accompanying global instability easily lead to monetary effects that are far more complex than simple models of an efficient market can account for. Long-term rates do seem unreasonably low but trying to make alpha from that observation or going deeply into debt to fund philanthropy feels dangerous to me. On the other hand, locking in a long-term loan seems reasonable if I had anything I wanted to spend it on that would retain intrinsic value (like a house).