The Five Best Things: August 29, 2020

A sustainable AI business model appears, just as the Fed finally decides to target full employment

  1. “My AI Timelines Have Sped Up” - Alex Irpan, an ML Engineer at Google talks about how the pieces of the AGI puzzle are snapping into grid. Transformers are becoming the de-facto model architecture for Deep Learning, even beyond Natural Language Processing use cases. With a base transformer model, at large enough size and scale, you can get good-enough results on most tasks with a pre-training step to create embeddings specific to your domain. What this leads me to believe is that a) we are starting to turn the curve on the scale-ability problem of Machine Learning, and b) the large cloud providers of the world will be the ones to create and maintain the base transformers for the rest of us.

  2. Speaking of cloud, Snowflake’s S-1 came out this week. Snowflake is a data lake management company, offered as a cloud-based Software-as-a-Service (SaaS). The twitter thread below highlights how every SaaS company ends up owing a “tithe” to their cloud provider - making AWS, Azure and GCP ever larger and powerful.

  3. Jerome Powell, the Chairman of the US Federal Reserve, announced this week that the Fed will emphasize the full-employment side of its dual mandate, allowing inflation to rise above the 2% target, if needed, to achieve the “maximum level” of employment. He didn’t elaborate on what this “maximum level” is. Personally, I think pushing for broad based employment as a policy mandate is a fantastic thing. The one unifying idea for the far left and right in this nation - give people jobs and a purpose in life. I hope we can applaud this as the right move as we enter a post-scarcity world.

  4. Nick Magguili writes about the most important ratio in personal finance, the LWR or Lifetime Wealth Ratio. He defines LWR as Net Worth / Total Lifetime Income, and provides a scoring scale to help investors understand their efficiency in turning earnings into wealth - a reverse asset turnover ratio, if you will. The scale for interpreting your LWR is as follows:

    • 0%-10% – Meh

    • 10%-25% – Now we’re cooking!

    • 25-50% – You’re on fire, baby! Give me your number!

    • 50-100% – Marry me.

    • 100%-1,000% – How do I get into your will?

  5. This profile of Tamika Palmer, Breonna Taylor’s mother, by Ta-Nehisi Coates. Reminder, Breonna was an EMT in Louisville, KY. In March 2020, cops conducted a mistaken no-knock raid, and shot and killed her while she was sleeping. She was only 27 years old, her boyfriend was going to propose to her and they were looking forward to having kids. 5 months on and no sign of justice, or even progress towards it. Only one of the 3 cops who shot her has been fired. Why this case is not the rallying cry for the BLM movement, instead of George Floyd or Jacob Blake, is beyond me. Even Rand Paul has introduced a bill to abolish no-knock raids after learning of this case.  

Honorable Mentions

  1. This post on how investors should think about Gold/precious metals as an invest-able asset, including tax implications. TL;DR - it doesn’t hurt to diversify your assets a little bit, and gold returns must be assessed past 1971 (when Nixon abolished the gold standard).

  2. This really heartwarming piece on how moving our socializing mostly online has allowed the differently-abled to participate like never before. This is one thing I hope we hold on to once the pandemic is over.

  3. This Nate Silver thread on religious breakdowns of various voting counties in the U.S.

  4. This research out of UCLA on why interest rates kept dropping after the 80s - essentially, as inequality increased, the purchasing power of generations that followed the Boomers dropped, leading to sluggish consumption and investment, leading to the perpetually low interest rates we are used to now.

  5. Another Nate Silver tweet on the long term implications of the pandemic-driven exodus from the Coasts on electoral maps. A FiveThirtyEight article delves further.

  6. This essay on how institutions can learn from catastrophes and implement risk management, from Nic Winterstorm, who was in the risk and operations management at the Norges Bank. Norges Bank manages Norway’s sovereign wealth fund - the largest in the world.