economics
Soon there will be such a horrifying gap between the rich and the poor that chaos will break out and another great civilization will collapse. History proves that great civilizations collapse when the gap between the haves and have-nots is too great. Sadly, America is on that same course because we haven’t learned from history. We only memorize historical dates and names, not the lesson.” (Location 692)
Anyone who studies history can see that no system of government, no economic system, no currency, and no empire lasts forever, yet almost everyone is surprised and ruined when they fail. (Location 109)
^ab65a6
- Roman Empire
- French Revolution
- American Revolution
- The Rise of Nazism/Fall of the Weimar
During periods of severe economic distress and large wealth gaps, there are typically revolutionarily large redistributions of wealth. When done peacefully these are achieved through large tax increases on the rich and big increases in the supply of money that devalue debtors’ claims, and when done violently they are achieved by forced asset confiscations. In the US and the UK, while there were redistributions of wealth and political power, capitalism and democracy were maintained. In Germany, Japan, Italy, and Spain they were not. (Location 3036)
Wealth redistribution done proactively can extend the lifespan of a country/empire. The wider the gap, the more explosive the powder keg of "revolution".
The truest sign of inflation in bodegas everywhere 202301071255
we are living in george orwell’s 1984
So while I’m not yet rich, I am wealthy. I now have income generated from assets each month that fully cover my monthly expenses. If I want to increase my expenses, I first must increase my cash flow to maintain this level of wealth. (Location 1108)
By using percentages of income and outbound, we can avoid lifestyle creep. Lifestyle creep is what happens when costs inflate as income goes up. Increase revenue and expenses at the same, healthy rate
All entities have revenues and expenses.
All entities—people, companies, nonprofit organizations, and governments—deal with the same basic financial realities, and always have. They have money that comes in (i.e., revenue) and money that goes out (i.e., expenses) that, when netted, make up their net income. These flows are measured in numbers that appear in income statements. If an entity brings in more than it spends, it has a profit that causes its savings to go up. If it spends more than it earns, its savings go down, or it makes up the difference by borrowing or taking money from someone else. If an entity has many more assets than liabilities (i.e., a large net worth), it can spend above its income by selling assets until the money runs out, at which point it has to slash its expenses. If it doesn’t have much more in assets than it has in liabilities and its income falls beneath the amount it needs to pay out to cover the total of its operating expenses and its debt-service expenses, it will have to cut its expenses or will default or restructure its debts. (Location 1526)
Avoid macroeconomic jargon in favor of positive/negative cash flows
I don’t encourage anyone to start a company unless they really want to. Knowing what I know about running a company, I wouldn’t wish that task on anyone. There are times when people can’t find employment and starting a company seems like the best solution. But the odds are against success: Nine out of ten companies fail in five years. Of those that survive the first five years, nine out of every ten of those eventually fail as well. (Location 1225)
All companies (like empires) eventually fail. Some companies last longer than others because they find a way to adapt to the underlying problem that they solve instead of the fashion of the era. This is an example of reach (^912630) A good example is how AT&T's core competency is in communication, whether that communication is through phones or the Internet.
Companies that fail, fail to address their core problem before they burn up all of their assets or collect too many liabilities.
From the time I was about 10 years old, I would hear from my rich dad that government workers were a pack of lazy thieves, and from my poor dad I would hear how the rich were greedy crooks who should be made to pay more taxes. Both sides had valid points. It was difficult to go to work for one of the biggest capitalists in town and come home to a father who was a prominent government leader. It was not easy to know which dad to believe. (Location 1279)
The public and private sector both have their own incentives and should be treated as such. Don't blindly trust a government, don't blindly trust a successful business person. 202301081728
Hypothesis: The unit economics of the machine learning space LLM 2020's startups are not similar to the social networking space in the mid-2000s. This will create a five year vacuum in VC's expecting returns
Why?
- Metcalfe's law is at play for people-run networks, but interfacing with LLM is a single player game
- Computers are bought for their GPU number crunching ability, not their ability to serve data to millions of users instantly
- Most of the cost is upfront during training period
- Correctly built AI companies will slowly/quickly drive out middle management related work, decreasing the need to hire employees to scale/build/market a project