Maybe the Economy Isn’t That Difficult, or Maybe It’s an Alien Intelligence
This tweet (is it still called a tweet?) from Live Boree has been sitting in my draft posts for a while. I thought it was really interesting at the time, because if we know anything, it’s that economists don’t really fully understand the economy, and most of them spend a considerable portion of their podcasts and substacks saying they don’t really know how it works, and yet here we are, listening to them all the time about the economy.
Maybe it’s so complex it’s alien!
Spitballing here but I suspect the economy is already a form of alien intelligence that serves itself as a primary goal & survival of humans is secondary at best. And as it becomes more and more digitised it will be entirely taken over by agentic AIs who are better than any human at maximising their own capital (& thus power) in that environment, and humans will become diminishingly able to influence or extract value from that economy. So to survive in any meaningful way, we need to reinvent a more human-centric economy that capital maximising digital agents cannot speed-run & overtake. – https://x.com/Liv_Boeree/status/1888644357449802183
That is a pretty complex view of the economy, so difficult to understand that it is an alien intelligence!
Counterpoint: Our Simple Levers
A few of the examples of the levers we pull with our economies.
Interest rate levels
We raise and lower interest rates to deal with “overheating” economies and inflation. It is probably one of our oldest levers.
Fixing bank runs
See Silicon Valley Bank:
Open on Thursday, Closed on Sunday
…bottoms happen quicker today. I think information transfers so fast…the regulators have very little time to react. You think about Silicon Valley Bank: well that was open on a Thursday, closed on a Sunday. – Harvey Schwartz on the The Compound
Quantitative easing
Quantitative easing is a monetary policy whereby central banks buy longer-term securities from the market to increase the money supply and encourage lending and investment. This is a relatively new invention that actually seems to work in terms of stabilising markets.
And now we have tariffs.
Tarrifs Make Economics a Lot Simpler to Understand
As most of us know, the US has imposed massive tariffs that have sent the global economy into a tailspin.
It is a relatively simple equation: raise tariffs massively, the stock market goes down. That’s a pretty simple lever.
Conclusion
Maybe we’ve got this whole economic complexity thing all wrong, maybe what we were doing (before Liberation Day) was just the “right thing” to do, and in the end all the “unknowable alien economy” wants is stability, general freedom and some kind of market fairness. Maybe us dumb old humans were doing a pretty good job with the economy, learning as we go.
(That said, pure globalisation hasn’t worked either. But that’s another story.)