Marc Andreessen on Secular Stagnation v/ @Nicolas_Colin

A compilation of relevant tweets by @pmarca




@Nicolas_ColinNicolas Colin


29 dec.

Marc Andreessen on Secular Stagnation https://t.co/Uznr8Wn0l0 cc @pmarca

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@pmarcaMarc Andreessen


29 dec.

1/Thinking about Larry Summers’ « secular stagnation » thesis — if the topic bores you, filter out hashtag #stag for a bit :-). #stag

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@pmarcaMarc Andreessen


29 dec.

2/@B_Eichengreen: « Secular stagnation is an economist’s Rorschach Test. It means different things to different people.” #stag

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@pmarcaMarc Andreessen


29 dec.

3/Contrary to a lot of public discussion, Larry’s thesis is about interest rates and supply/demand of capital, not technology change. #stag

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@pmarcaMarc Andreessen


29 dec.

4/Core to secular stagnation is « substantial decline in natural real rate of interest ». #stag http://t.co/kW9AIMrxZC pic.twitter.com/uKkoRb7zU1

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@pmarcaMarc Andreessen


29 dec.

5/Factor 1: Reduced demand for debt-financed investment, in part due to changing nature of economic activity. #stag pic.twitter.com/E3gbtkqQaJ

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@pmarcaMarc Andreessen


29 dec.

6/Factor 2: Declining rate of population growth, especially if one corrects for education levels. #stag pic.twitter.com/VEZGM8RrOu

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@pmarcaMarc Andreessen


29 dec.

7/Factor 3: Increased societal propensity to save + Increased corporate retained earnings. #stag pic.twitter.com/RXrCFD2kck

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@pmarcaMarc Andreessen


29 dec.

8/Factor 4: Decline in relative prices of business & consumer capital goods (tech-driven price deflation?). #stag pic.twitter.com/AY2PKVkoFD

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@pmarcaMarc Andreessen


29 dec.

9/Factor 5: Arithmetic relationship between lower pre-tax and after-tax real interest rates. #stag pic.twitter.com/oqh5vMuwb2

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@pmarcaMarc Andreessen


29 dec.

10/Factor 6: Growing central bank reserves of safe assets, particularly US Treasuries. #stag pic.twitter.com/ATM7tGCjz7

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@pmarcaMarc Andreessen


29 dec.

11/Result: Substantial and continuing decilne in real interest rates over 50 years. #stag pic.twitter.com/8o30RkZkg9

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@pmarcaMarc Andreessen


29 dec.

12/To quote Notorious BIG, « mo money mo problems » — in this case, mo money, not enough productive places & projects to put it. #stag

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@pmarcaMarc Andreessen


29 dec.

13/As economists do, Larry then proposes a series of reforms to address the dynamic, few of which seem politically likely. #stag

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@pmarcaMarc Andreessen


29 dec.

14/References: http://t.co/kW9AIMrxZC http://t.co/KUAhYLuUxM http://t.co/wma6y5P1TQ #stag

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@pmarcaMarc Andreessen


29 dec.

15/Lingering question from Larry Summers’ secular stagnation thesis: #stag pic.twitter.com/8p66PvNWfk

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@pmarcaMarc Andreessen


29 dec.

16/Doesn’t the same question apply for the past 100 years? Has the American economy ever met that criteria? #stag pic.twitter.com/HtHXpB9FPS

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@pmarcaMarc Andreessen


29 dec.

17/Can the goal be to get to normal if there is no normal? Or should the goal be something else? #stag

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@pmarcaMarc Andreessen


29 dec.

1/Now, thinking about a counterargument to Larry Summers’ « secular stagnation » thesis from @DavidBeckworth #stag http://t.co/moDmYn4sJs

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@pmarcaMarc Andreessen


29 dec.

2/First point: Prior risk premium in bonds warped prices+yields, made credit artifically expensive in the past. #stag pic.twitter.com/EbJwpDYydq

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@pmarcaMarc Andreessen


29 dec.

3/Risk prem boosted by high inflation, so lower inflation reduced rate TWO ways, lower inflation & lower risk. #stag pic.twitter.com/Mn20krtbDS

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@pmarcaMarc Andreessen


29 dec.

4/Decomposing interest rate from underlying inflation expectation + risk premium; both came down since 80s. #stag pic.twitter.com/9ynJZvr3Zd

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@pmarcaMarc Andreessen


29 dec.

5/With low risk of future extreme inflation, real interest rate bounces along around 2%, as it should. #stag pic.twitter.com/5w3yXj5AN6

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@pmarcaMarc Andreessen


29 dec.

6/Result: Secular stagnation vanishes, along with misbehaving interest rates. #stag pic.twitter.com/qTtvXkpnn8

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@pmarcaMarc Andreessen


29 dec.

7/Further, productivity growth may not be as bad as we think, in era of software/digital/dematerialization. #stag pic.twitter.com/ZmssWFVf0z

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@pmarcaMarc Andreessen


29 dec.

8/Finally, the millennials are coming–both in the US and around the world–tilting demographics in our favor. #stat pic.twitter.com/9m3WadSsTG

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@pmarcaMarc Andreessen


29 dec.

9/In this interpretation, there is no secular stagnation, there was just a crisis and then a slump, which is already ending. #stag

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@pmarcaMarc Andreessen


29 dec.

10/References: http://t.co/moDmYn4sJs http://t.co/hBslYBBIMC http://t.co/ITGbwZbQ7z http://t.co/rh3ModRiki http://t.co/fr6ImW3UI1 #stag

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@pmarcaMarc Andreessen


29 dec.

1/An excellent survey of the original « secular stagnation » thesis of Alvin Hansen in 1938 by @TimothyTTaylor http://t.co/KAi72rRNgb #stag

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@pmarcaMarc Andreessen


29 dec.

2/Hansen’s 1938 thesis will sound familiar to post-2008 ears: #stag pic.twitter.com/I2FctorPLw

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@pmarcaMarc Andreessen


29 dec.

3/We know now Hansen in 1938 was thoroughly wrong. For example, he totally whiffed on population projections. #stag pic.twitter.com/MklTZhxve1

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@pmarcaMarc Andreessen


29 dec.

4/Hansen was also completely wrong on the rate of technological progress at that time. #stag pic.twitter.com/vVxV7RsyHx

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@pmarcaMarc Andreessen


29 dec.

5/However, he did issue a ringing call for new technologies and new industries that applies equally to today. #stag pic.twitter.com/I7bLm5bO5G

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@pmarcaMarc Andreessen


29 dec.

Another interesting critique of secular stagnation, this time from the left (@dsquareddigest): http://t.co/eOSEYHvAJK

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@pmarcaMarc Andreessen


29 dec.

Reprise: Spot the logical flaw in Robert Gordon 2002, http://t.co/TrKwce1jPk cc @billjaneway pic.twitter.com/WRRUdrGb2U

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@billjanewayBill Janeway


28 dec.

@pmarca Agreed. 2nd flaw: 50 years from first railroads to Mail Order = killer app/50 years from microprocessor = 2014!

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@pmarcaMarc Andreessen


29 dec.

Post-08 financial regulation adding $3 trillion of demand for safe assets: Olivier Blanchard http://t.co/KUAhYLuUxM pic.twitter.com/8V6wpOFShS

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@pmarcaMarc Andreessen


29 dec.

Developed world real interest rates dropping AND converging over last 30yrs: Olivier Blanchard http://t.co/KUAhYLuUxM pic.twitter.com/tMOEFIbtSN

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@pmarcaMarc Andreessen


29 dec.

The great evaporation of « safe » assets between 2007 and 2011! Reduced by $8+ trillion. http://t.co/KUAhYLuUxM pic.twitter.com/e3h5ao7k9R

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@pmarcaMarc Andreessen


29 dec.

How consumer delevering reduces consumer demand reduces corporate investment: Richard Koo: http://t.co/KUAhYLuUxM pic.twitter.com/mXUF6ifEus

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@pmarcaMarc Andreessen


29 dec.

Rather spectacular rates of private sector delevering since 2008: Richard Koo: http://t.co/KUAhYLuUxM pic.twitter.com/kjxwyh7nRr

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@pmarcaMarc Andreessen


29 dec.

Psychological scarring from experiencing financial crisis: I really think this effect is underrated…: Richard Koo: pic.twitter.com/U8odmkM33J

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@pmarcaMarc Andreessen


29 dec.

1/A few tentative conclusions on secular stagnation & our economy, with vigorous disclaimer that I am far from a macroeconomist… #stag

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@pmarcaMarc Andreessen


29 dec.

2/It seems a core dynamic of our times is too much capital relative to the number of productive investible economic opportunities. #stag

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@pmarcaMarc Andreessen


29 dec.

3/Coupled with a massive global capital flight to quality since 2008, hard to see interest rates rising dramatically anytime soon. #stag

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@pmarcaMarc Andreessen


29 dec.

4/While I am a bull on technological progress, it also seems that much of that progress is price deflationary in nature…

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@pmarcaMarc Andreessen


29 dec.

5/…so even extremely rapid tech progress may not show up in GDP or productivity stats, even as it = higher real standards of living. #stag

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@pmarcaMarc Andreessen


29 dec.

6/I think economists, particularly on the center-left and left, are really underestimating 2 factors that are inhibiting investment. #stag

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@pmarcaMarc Andreessen


29 dec.

7/In developed world, sheer level of regulatory burden on business formation and growth. Per George McGovern: http://t.co/jqEQdPiWgp #stag

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@pmarcaMarc Andreessen


29 dec.

8/On this point I agree deeply with @peterthiel: Many sectors of Western business are now wired to prevent or inhibit new investment. #stag

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@pmarcaMarc Andreessen


29 dec.

9/In the developing world, often brutally high levels of corruption and expropriation, making new investment extremely risky. #stag

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@pmarcaMarc Andreessen


29 dec.

10/It seems straightforward to identify ways to increase rate of investment, and also hard to see how any of that politically happens. #stag

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@pmarcaMarc Andreessen


29 dec.

11/For these and other reasons, we may be living with an oversupply of capital relative to opportunity set for a long time. #stag

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@pmarcaMarc Andreessen


29 dec.

12/But this is not necessarily a terrible world to live in. In fact, it might be a wonderful world to live in, for these reasons: #stag

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@pmarcaMarc Andreessen


29 dec.

13/Oversupply of capital means that any investable project can get funded. We see that today in tech, and it may broaden from here. #stag

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@pmarcaMarc Andreessen


29 dec.

14/We may experience a massive global demographic tailwind, as huge # of young people worldwide are fully connected to modern economy. #stag

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@pmarcaMarc Andreessen


29 dec.

15/Virtuous cycle of science & tech advances, with fast-growing # of scientists & technologists globally, may overwhelm expectations. #stag

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@pmarcaMarc Andreessen


29 dec.

16/In this world, we can have massive advances in real standards of living even w/formally low investment, GDP, & productivity growth. #stag

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@pmarcaMarc Andreessen


29 dec.

17/Beyond that, a world where 7 billion people decide they really do want and deserve an upper-middle-class Amercan-equiv lifestyle… #stag

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@pmarcaMarc Andreessen


29 dec.

18/…may make all of these current stagnation theories look as silly as Alvin « Secular Stagnation » Hansen now looks 76 years later. #stag

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Bill Janeway(1) Marc Andreessen(58) Nicolas Colin(1)

A compilation of relevant tweets by @pmarca

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