Daily Balajisms - Digital death vs American dynamism
There is a great deal of ruin in the digital nation, but not in an analog one.
Balaji Srinivasan has settled his $1 million bitcoin bet with James Madlock after 45 days and didn’t wait for the set deadline of 90 days. He says he burnt a million dollars to tell you that they (the Fed) are printing trillions.
In the short video he posted on twitter, Balaji mentions various worrying statistics about the Western economies. In the US, there is a debt ceiling crisis, bank failures due to devaluation of T-bills after rapid rate hikes, student debt crisis, commercial real estate distress, fears of de-dollarization by BRICS and more. (I would add a looming collapse of legacy automakers due to Chinese competition).
Many people like Jason don’t like this doomer talk about the US demise and they bet on two counter-arguments. The first one is a famous quote by Keynes – “There is a great deal of ruin in the nation”. The second counter-argument is the meme of American Dynamism – Elon providing Starlink to Ukraine, Palmer Luckey founding Anduril to modernize the US military.
Balaji in the new twitter video put his probability estimates on various scenarios of the US demise – 10% in month, 70% in years, 19% in decades and 1% in centuries. He sees the old establishment as having the opposite probability distribution – betting on the business as usual and the Lindy effect – the US is 247 years old and it will last for another 250 years.
But there was the old mighty USSR that has collapsed within two years. Balaji has a helical theory of history, where the history repeats, but what changes is technology – and often the events happen in reverse and get opposite results.
The USSR has lost in Afghanistan before, now the US has lost in Afghanistan. The USSR was the senior partner in the Sino-Russian partnership, now the roles have reversed. FDR has beaten gold with his Executive Order 6201, now even China wasn’t able to ban bitcoin. And after this (central) bank crisis, bitcoin might become the next global reserve currency and the de facto global government nobody expected.
Balaji thinks that the US was the least centralized power in a centralizing 20th century. Giving us blue jeans and rock’n’roll as the symbols of freedom and prosperity of the West.
But now the orange coin became the new blue jeans. And crypto is to the US, what America was to Europe – a new frontier. People in Africa don’t care about Marvel reruns or the latest fashion and cultural wars in the US, they want bitcoin.
When the future historians will look back, they might conclude that the USSR fell in 1991 and the US fell after Covid and Afghanistan, in 2021. When the internet truly started and the elites became remote-first.
There is a great deal of ruin in the digital nation, but not in an analog one. Therefore, there are only two options – a digital death or American dynamism. Digital death is when a 40-year-old institution collapses within hours and without a warning. It’s going from one to zero.
Personally, I love the old US. My ex-wife is an American, I have worked for years for a foundation founded by Americans, doing international projects, my parents were political prisoners in the 1970s Czechoslovakia.
But the key takeaway is that the US after 2020 is not the US of 1991. The sole hyperpower has squandered its massive advantage. More than the de-industrialization and sending jobs to China, it’s an issue of faulty mental software – if you go woke, you will get broken as San Francisco with street crime and overdoses.
In theory people in hard times can get their house in order and produce more Elons and Palmer Luckeys among their ranks. But we have been through this poly/meta/perma-crisis for couple of years now. It seems exceptionally hard to produce two, let alone dozen new Elons. Especially if you don’t let in new tech talent from abroad and demonize tech bros, crypto bros, math and meritocracy.
There was an iPhone moment and then a Nokia moment. There was a tiny Instagram that has beaten Kodak with 1000x more employees. The US/the West has Anduril, Tesla and SpaceX – and they are hated by the downstream media. China is 100-1000x better at infrastructure buildout. We have soft power, they are excelling at hard power.
But smart power is the force that can tip the scales and scale the American dynamism. And today that is basically crypto, the flag of tech.
When I will see the downstream media and regulators celebrating American tech founders and crypto, and calling for the building Olympics and inspiring young kids to get into STEAM and hard tech – then I will believe that the American dynamism is happening.
But until then I put my faith in exit, crypto and building network states.