A major unforced error in crypto is treating technical dashboards as financial dashboards. Nowhere is this as obvious as with TVL of lending protocols. TVL is NOT a substitute for accounting! Let’s look at TVL defined as “Value of all coins held in smart contracts of the protocol”, and how it would treat a bank with the following balance sheet: Deposits (a liability): $100m Loans (an asset): $80m Reserves (an asset): $20m Equity: $10m The TVL of this simplified balance sheet would show up as: $100m deposits - $80m loans + $10m equity = $30m TVL Does that feel accurate to you? It should not, because it structurally undercounts economic activity. In fact, TVL - a technical metric - is treating the bank’s largest asset (its loan book) as a liability and largest liability (its deposits) as an asset! The problem is one of using the wrong tool for the job. TVL counts how many tokens are in a smart contract or group of affiliated smart contracts. That’s it. In its most simple form, TVL is mostly just counting the reserve ratio of the bank (or lending protocol). TVL is not a substitute for actual accounting, and people need to understand this. A deposit on Aave/Morpho/SparkLend/Compound/Euler/Curvance is a liability to that protocol or pool. You could put $1 trillion in deposits onto one of those platforms and TVL would become $1 trillion. But that’s not an indication of economic activity! Now imagine $999.999 billion of that got lent out. TVL has crashed from $1 trillion to $1 million. Looks bad on a chart, right? But now we’re seeing economic activity! There is a reason why TVL is not used outside of crypto - it is a technical metric, not a financial one, and any overlap is coincidental and concentrated in very basic protocols like DEXes.

In high school, it was my turn to DM, which I didn’t want to do. Luckily, I had just read about Mansa Musa’s hajj, which stopped in Cairo. He gave away and spent so much gold that it devalued the shiny yellow rock for at least a decade, since chroniclers writing later reported there still to be a glut relative to silver. So after the first pile of loot entered circulation, I had the local economy crash and pitchforks came out for the heroes that made the money supply grow 10x overnight. The resentment was from the lower classes who had not been the ones first coming into contact with the now-flush adventurer players, so were worst affected by the higher prices. I also threw in the local count coming for the treasure to collect the tax due to the king as mineral rights, and was also the legal owner of the land where the baddies kept their lair and treasure so claimed the remainder as his. They never made me DM again after that (except for Call of Cthulhu games)

Huh? First people are out here mooning over Whop asking people to be financial drop shippers, and now speculating on “an agentic bank run”. Banks have a huge bundle of services like bill pay and overdraft protection and custody to build the customer relationship beyond interest rate sensitivity. High yield checking is already a thing and there are already services like Wealthfront’s automated savings that manage sweeping funds between high yield accounts - which usually have balance caps or are introductory rates. I thought we all worked in fintech, guys. Do we all understand so little about finance that we think being a financial dropshipper of Whop services is exciting or that households who optimize for cash yield can’t already automate that safer and more easily than with your own agent that won’t have customer support or insurance? I don’t know who threw the liquor in the well, but I think I know who found it.

Everyone excited about this probably lost time and money trying to run a drop shipping business, too. This is just drop shipping for Whop’s financial services. You are literally just adding fees on top of what Whop already charges and hoping to capture users that don’t notice. At least with drop shipping you have the customer list. Good luck getting that from Whop if they kick you off or you find no one wants to pay for yet another layer of fees that no competitors have.

My neighbor three doors down the street died. Nice lady, always walked her dog and we’d wave at each other. No spouse or kids, apparently. Her siblings put everything in the house up for sale. I went in, looking for bookshelves - my kids and I prefer sliced trees, even as my wife prefers glass rectangles, to read from. One of the items that caught my eye was a gazetteer. You don’t see these much anymore, but it’s a paper book of every single road in a state. Doing archaeology for a decade, even post smarty pants phones, we used these as the canonical record of random county roads. I don’t know why she had a gazetteer. And I think in a few gas stations and bookstores you can still find them. But they’re a relic from before Google Maps. It was a sign that my generation is in some ways from a bygone era. It’s kind of a lonely era - we’re the only generation to both remember the world before the internet was in your pocket (or your desk) and also native to the internet. It’s hard to articulate what new generations have lost. The present is 100% better than the past, but there’s certainly trade offs - it’s two steps forward, one step back. That doesn’t make progress a mistake, just that there were certain charms and benefits to the past that kids today miss - like learning to navigate without a GPS, with a paper map and a compass.

If you’re under 35, this is what social media used to be like before influencers and political ragebait ruined it.

Before everyone goes bananas on the buybacks ≠ securities FAQ

I’ll bang this drum yet again: AI is like an articulate, bright-eyed, bushy-tailed, recent college graduate. If you wouldn’t trust a 22-year-old with zero life experience and only the (very low levels of) domain knowledge they teach in college, then don’t trust the AI with that task unsupervised, either.

Everyone is so worried about misaligned AI, like scheming eunuch advisors who are more competent than you have never existed. It’s even called the principal-agent problem, for heaven’s sakes

Central bank nerds out there: So with yen again hanging around where the last intervention was, do we think they sell some Treasuries to finance that intervention? Will Fed come in with big swap lines or other help? Or is someone’s paper getting sold (and if so, US or clever ways to make the net sales fall on EU again)

This is junk data. First, 0.2% inflation would be 32% higher, because compounding is a thing. So the math is wrong. He used the arithmetic mean (average of the yearly rates, not the average rate of inflation, which was negative) Second, price levels were *lower* in 1940 than 1800 according to the usual source for this, the Minneapolis Fed’s spliced series. They use 1967 as the base year, and 1800 is 51 and 1940 is 42. You could legitimately make the argument that persistent inflation is relatively new. But there were plenty of 10%+ inflation years in that 1700-1940 period. People also forget that what’s most important is *unexpected* inflation. A stable 2% inflation that’s like clockwork beats flat-or-deflationary periods with +/- 10 or even 20% rates.

I love the optimistic interpretation, but labor productivity is a tricky thing. It tends to shoot up in recessions or other mass-layoff/hiring drought events. The reason is simple: the least productive workers are more likely to become unemployed - either within their firm or the firm itself being low productivity and dying off. Relevant today more than it has been probably in a generation, capital deepening can also give the impression of higher productivity. Giving the same worker better tools raises productivity per hour worked but not necessarily by unit of capital (total factor productivity supposedly captures the combined measure but is not very precise). So you get composition effects that strongly affect labor productivity by lopping off the left hand tail of employees and firms via extinction, or by piling capital (at the cost of lower capital productivity) in front of the same workers. This means labor productivity can exhibit countercyclical behavior. I think my own view is the rise shown below is a mix of lower-than-advertised growth of productivity (good news) and composition effects (bad news)