Long Reads Sunday #89

What it means to have no normal to go back to

Apr 05, 2020

Happy Sunday from the Hudson Valley

For the past few weeks, I’ve been dividing LRS into a set of 5 or so themes that shaped the week. This week there is just one overall theme, with many dimensions:

Balaji S. Srinivasan @balajis

I don't think people realize that there is no normal to go back to anymore.

I believe that in all of our discussions of “V-shaped recoveries,” and pent up demand and bouncing back and even our overwhelm at the statistics being presented daily, we’re still underestimating how significantly we will be changed, as an economy and as a society, on the other side of this.

The Wolf Of All Streets @scottmelker

This is the real economy, the human side of the coronavirus crisis. The stock market is irrelevant.

NBC News NOW @NBCNewsNow

America, 2020 https://t.co/i6S28NWxaU

Long lines for emergency food distribution in Allegheny County

One other note before we dive in - at the suggestion of a reader, I’m going to put a quick hit list of the week’s top crypto news right at the beginning of this email. Let me know if this is a useful addition to the more narrative form of LRS.

Happy Long Reads - NLW

This Week’s Top Bitcoin & Crypto News

CZ and Binance confirmed their acquisition of CoinMarketCap - with a price tag between $300m-$400m
Two DeFi projects - Uniswap and PoolTogether - have received $1.1m in funding via Coinbase.
Coinbase confirmed anecdotes that retail customers had increased buying during the dip
According to Vitalik, Ethereum 2.0 multiclient testnets should be coming in April
The French central bank is looking to accelerate efforts around digital currency experiments
Tron launches “Djed” - their version of a MakerDAO-style stablecoin
Mt Gox sees yet another delay to the rehabilitation proceedings.

Our main theme: what it means to have no normal to go back to?

One of the reasons I think we are - in general - underestimating the scope of change the Corona crisis will bring has to do with the idea of second order effects.

Second order effects are things that happen because something happened because something happened.

My friend Emerson and a set of collaborators are curating a selection of the second order effects likely to arise because of the Covid-19 crisis.

emersonspartz @EmersonSpartz

Curious about second order effects of coronavirus? @michaeldsimmons and I are compiling a giant list (ideas welcome!):

docs.google.com[Coronavirus] Second Order EffectsCoronavirus Second Order Effects Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions... Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored. —Legendary Investor Ray D...

Some of these second order effects are more obvious and many of us have been thinking about, while others still lay a few steps away from popular consciousness.

Take for example:

An ever deepening loss of trust in institutions that have continuously switched their stories and failed to keep us safe

Eric Weinstein @EricRWeinstein

I want you to think about this: Every non-stupid person on the internet knew the @CDCgov, @CDCDirector, @Surgeon_General & @WHO were dragging their heels while people were being needless infected by a deadly virus to cover for their failures to keep masks stocked. Life & Death. https://t.co/ITIDmOGy7U

CBS News @CBSNews

Surgeon general says the CDC now recommends wearing face masks in public because recent studies show "a significant portion of individuals" with coronavirus don't show symptoms, and can unknowingly transmit the virus to others https://t.co/b9FtmY5sM4 https://t.co/auhcgeFsQT

Blake 'Don't Touch Your Face' News @blakehounshell

The most powerful country in the history of the world is resorting to posting DIY mask videos online because we can’t produce enough fast enough, after months of saying masks don’t work https://t.co/hCPCLkheZP

CDC @CDCgov

#DYK? CDC’s recommendation on wearing a cloth face covering may help protect the most vulnerable from #COVID19. Watch @Surgeon_General Jerome Adams make a face covering in a few easy steps. https://t.co/bihJ3xEM15 https://t.co/mE7Tf6y3MK

A knock on crisis in real estate as individual borrowers fail to pay mortgages and commercial real estate is hampered by bankruptcies and shifts away from office work to remote work

Nathaniel Whittemore @nlw

But seriously guys, how does real estate not just end up absolutely decimated?

A recognition of manufacturing and supply chain security as national security, with impacts for everything from what jobs people get to what things cost

BitcoinTina☣️- "TINA" #bitcoin @BitcoinTina

Manufacturing must be brought home to the USA and other western countries. The US can not be held hostage for its economy to any other nation. THE USA needs to be the Global Manufacturing Powerhouse it once was. This solves many problems which many suffer from in the USA.

Then, of course, there is the role of the dollar in the world. This is something that bitcoiners are particularly interested in, but they’re not the only ones.

Ryan Selkis @twobitidiot

1/ WHY I think Gold / Digital Gold dominance is inevitable in the 2020s. It's about more than just Money Printer Goes BRRRR. It's also about political dysfunction and a staggering decline in property rights. 👇

David Lawantbrrrrrrrrr @DavidLawant_BTC

Howard Mark’s memo is gold: He says MMT is here, worries about inflationary pressures, and questions the long-term value of the dollar + its role as the world’s reserve currency. This is no BTCer, he’s probably the world’s most reputed value investor after Warren Buffett.

Max notices Jeffrey Snider’s argument that the impact is likely to be less hyperinflation in the US and more offshore contraction with implications for local currencies and people fleeing to something different.

Maximilian @fiege_max

For BTC folks: this is the narrative you're looking for. US monetary policy isn't leading to onshore hyperinflation anytime soon - it's leading to off-shore contraction. And with off-shore contraction comes forex devaluation. That's where its role as a safe haven asset is.

Jeffrey P. Snider @JeffSnider_AIP

So, the Fed's got a new abbreviated program. FIMA. What's FIMA? Also, what's a global SHADOW shadow run? The two, actually, are related. FIMA says the chances for the run are very real. https://t.co/VvFnPd4byb

Raoul thinks this will create pressure for governments to move off the USD as the world’s reserve currencies to some digital currency basket.

Raoul Pal @RaoulGMI

I can see there is a lot of chatter about the potential for the dollar to hit cycle peak amongst QE etc. It may be correct, who knows? This is some of my take from my latest GMI April 2020 Monthly "The Dollar has eaten all it's competitors and its now going to eat itself"

In short, we’ve barely begun to scratch the surface of these second order effects. Many of them will have as big a structural impact on the world around us as the more obvious health and economic crises we’re seeing right now.

Hans HODL @hansthered

Right now the world is changing so quickly, that it's becoming nearly impossible to keep up. I have a theory as to why, but first let's look at some charts with data from @JeffSnider_AIP @100trillionUSD @nic__carter @stlouisfed and @lisaabramowicz1 (@business).

If you’re interested in this discussion of second order effects, subscribe to The Breakdown podcast. Emerson Spartz will be joining me Monday to go deep on exactly this. Subscribe here.