Sunday Night Links

• It should now be clear that indexation and asset allocation models – at least as practiced – can no longer be relied upon as having predictive value. Bonds, for instance. Over the past 20 years, after taxes, they returned only about 2%, annualized. Even accepting the government’s CPI calculation that inflation averaged only 2.5%, that means bonds had a negative real return, a two-decade loss of purchasing power. That was not supposed to happen (on the reasoning that it hadn’t happened before). And that was during a period of relatively benign inflation. ‘Benign’ is not the likely caption for the next 20 years. Rationally, one must rethink one’s approach to bond investing. One must rethink other presumptions about the standardized approach to investing. [Horizon Kinetics] 
• To recap the key monetary events of the past two years: Massive government transfer payments during the Covid era ended up being monetized and stored in bank saving and deposit accounts by a public largely unable and not very willing to spend the funds. As a consequence, the M2 money supply grew by some $6 trillion over the two-year period ending March 2022, a pace that far exceeded anything in our monetary history. All that extra cash was fine—as long as the public was willing to hold onto it. But when people emerged from their Covid cocoons in early 2021, they unleashed a tsunami of spending which overwhelmed supply chains and boosted prices for nearly everything. Inflation, as a result, surged to almost 10% by last June. Where things stand today: The monetary fuel for the inflation fires is running out. As I've been reporting for most of the past year, M2 growth is slowing dramatically and inflation has most likely peaked. The Fed has been slow to react from the very beginning, unfortunately, but it is already apparent that no further rate hikes are needed. [Scott Grannis]
• Whether this is really a “grand strategy” in the sense of a consciously enunciated strategy even to the degree of Chinese literati debating tactics and barbarian-quelling strategies in memorials to the emperor is largely unanswerable, as so much Roman material fails to survive and such strategic considerations might be expected to be considered key state secrets. Luttwak can’t make much of a case one way or another, and it would be reasonable to suppose that the fact that the many decisions and battles and fortifications look fairly coherent reflects local decision-making and narrowed choices and trial-and-error reaching fairly optimal outcomes, an emergent order as in so many things. It might be better to take this book as a sort of “how I would do it”, in the manner of a strategy game walkthrough like an account of a game of Europa Universalis; Luttwak’s opinions are usually interesting and amusingly expressed, so it is certainly not a waste of time. [Gwern]
• The Cultural Revolution was not prompted by any extraordinary famine, or invasion, or genuine threat of invasion, or civil war, or disaster of any kind. How then could it have happened? The Cultural Revolution was sponsored by Mao as a way to purge the middle and upper ranks of the Communist Party of doubters, who might do to him what the Soviets had just done to Stalin: tear down his cult by revealing his monstrous crimes to the world. But Mao didn’t realize the forces he unleashed. Maoism had benefited from taking credit for post-WWII recovery and the defeat of Japan, but the more its policies were implemented and it tightened its grip, the greater the gap between its utopian promises and the grim impoverished Chinese reality became. Because its theories were radically and systematically wrong, any honest attempt to implement them was doomed to fail, and anyone pragmatic would necessarily betray the system. Old systems and ‘inequities’ reasserted themselves, to the frustration of true believers.The only ideologically-permissible explanations were excuses like saboteurs and spies and corrupt officials. Usually kept in check, when given Mao’s imprimatur and active egging on, mass social resentment and ideological frustration boiled over, leading to a frenzy of virtue-signaling, denunciations, preference falsification spirals, murders, cannibalism, and eventually outright civil war and pandemic. Finally, Mao decided enough purging had happened and his position was secure, and brought it to an end. [Gwern]
• There are no simple interventions that can change average life expectancy by more than a few years or maximum life span at all. As a corollary, there is no single or small number of genetic or biochemical ‘master switches’ of aging, because if there, some of the thousands of interventions during the past 3 centuries of active scientific research would have flipped them directly or as a downstream effect, someone would have exceeded the Calment limit, or heritability estimates of longevity would be far higher. Research proceeding on the basis of ‘identify a correlate of aging’ is effectively doomed: the signature feature of aging is that it is an exponential acceleration (the Gompertz curve) of mortality due to all causes ie. all organs are simultaneously becoming nonfunctional and losing homeostasis and efficacy, and these problems interact as well. Since the body is an absurdly complex dynamic system which, if drawn out as a causal network resembles the collected graphs of thousands of paranoid schizophrenics, the probability of any pair of variables being correlated is effectively 1 while the probability they are directly causally upstream/downstream of each other is close to zero. (The impressive thing is to find something which doesn’t correlate with aging, like blood magnesium levels.) It gets worse. Because the fallout from aging is destroying all bodily systems and impairing homeostasis, this implies there are hundreds or thousands of pseudo-interventions: interventions which deal with some downstream effect of aging and may help on that one thing, but nothing else. [Gwern]
• If you are a bard who chooses to do something very different and unexpected in the hundredth or thousandth line of your traditional oral poem, maybe you’re a celebrity, maybe you’re a hack, maybe you’re a renegade, but you are in any case doing what bards do. If, however, you are a bard who does something very different and unexpected in the first line—one of those special spots that the literary critic Peter J. Rabinowitz calls “privileged positions”—then there’s a real chance that you are so much of a renegade that your breaking of tradition will cause you to be thrown out of the bardic guild. But what a truly great bard can do—the poet who lies behind the moniker Homer, for example, who was almost certainly not one person but rather the name of a tradition—is tweak an opening line so that it remains traditional while also bearing his own stamp. [The New Criterion]
• At the top of the Cloud Nine lift at Aspen Highlands, intrepid patrollers used to build a ski jump and launch over their patrol-shack deck while towing a rescue toboggan. In the early 2000s, the structure was converted into an upscale on-mountain restaurant. At some point, an ebullient diner impulsively uncorked an expensive bottle of champagne and sprayed it around the crowded room. That was original and borderline misdemeanor behavior. Today, almost every day of the ski season, diners make reservations and pre-order cases of $125-a-bottle champagne, which they use to soak and get soaked. It’s been reported that one patron sprayed $17,500 worth of champagne around the room in a single “sitting.” The tiny restaurant is Veuve Clicquot’s largest customer in the U.S. Does this excess add to the Aspen legend? No. Spontaneity is gone. What’s portrayed as a wild party is thoroughly orchestrated. [Outside]
  
• The Settlement Materials are needed to determine the extent to which the Altria Defendants might be liable for a plaintiff’s alleged injuries. Under California law, plaintiffs “are not permitted to seek double or duplicative recovery for the same item of damages.” (“The one-satisfaction rule is an equitable doctrine [which] operates to reduce a plaintiff’s recovery from the nonsettling defendant to prevent the plaintiff from recovering twice from the same assessment of liability.”) Under this “double recovery doctrine,” a “plaintiff who has received full satisfaction of its claims from one tortfeasor generally cannot sue to recover additional damages corresponding to the same injury from the remaining tortfeasors.” Plaintiffs’ claims against the Altria Defendants involve the same legal theories and arise out of the same alleged injuries as their allegations against the Settling Defendants. As a result, these involve the same claims for purposes of the double recovery doctrine. The Settlement Agreements should be produced to ensure that a settling plaintiff does not obtain a windfall recovery. Likewise, the extent to which a plaintiff received payment as part of the settlement for their alleged harm would inform the extent to which the Altria Defendants might be entitled to a set-off in the event that a later trial results in a verdict against them. California Code of Civil Procedure § 877 in particular “requires that an offset be given reducing the judgment by the amount of the consideration paid for a dismissal given to one or more of a number of tortfeasors claimed to be liable for the same tort.” [IN RE: JUUL LABS, INC., MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION]
• South Dakota has been governed by bicameral Republican supermajorities since 1996. Democrats haven’t carried a statewide race in more than a decade. In a 2018 Gallup survey, the Mount Rushmore State was ranked the third-most conservative in the country, with self-identified “conservative” residents outflanking self-identified liberals by some 31 points. It is not a state where one would expect to find a major trade conference for transgender medical specialists. [National Review]
• Let us start with what it means to live, work, and raise a family in the United States today. Imagine, say, a middle-aged, upper-middle-class professional. Call him Bob. Bob is among the lucky ones. He has a degree from a selective college, is happily married, and earns enough money to raise a family in a safe neighborhood and send his children to “good” schools (that is, schools where the children are relatively well-behaved and parents eager to volunteer). Bob can afford two residences, plus vacations. Life is not without its stresses and inconveniences, but overall it is good for the American upper middle class. At the same time, Bob knows that his good fortune would evaporate with just one impolitic move. [The New Criterion]
• That mix of progressivism and Judaism made the Free Synagogue an ideal venue for New Jersey Governor Woodrow Wilson, the speaker at a gala dinner in April 1911. With Henry presiding, Wilson emphasized his radical “progressivism,” as he called his top-down statism, stressing the moral obligations of businessmen to serve the common good, under government regulation and the threat of being shut down—or jailed. In December, now campaigning for the presidency and mindful of the new electoral power of America’s ethnic and religious minorities, to whom he was one of the first candidates to make a direct identity-politics appeal, Wilson accentuated the Judaism. Addressing some 3,300 leaders of New York’s seven hundred thousand Jews on “The Rights of the Jews,” he electrified his hearers by asserting his shared identity with them as citizens “who have become part of the very stuff of America” and by praising the Jewish “men of genius in every walk of our varied life” who have played “a particularly conspicuous part in building up [our] prosperity.” If you wonder why Jews have been Democrats for more than a century, here’s one reason. [The New Criterion]
• The life of John von Neumann can only be called fabulous: a child prodigy raised in vibrant, decadent early-twentieth-century Budapest; polylingual and able all his life to quote from memory long passages of Voltaire, Goethe, and Thucydides; a polymath who, from age seventeen, produced important work in nearly all branches of pure and applied mathematics, as well as in quantum mechanics, economics, the design and development of computers, and even biology; celebrated for astonishing quickness of mind, elegant clothes, fast cars, erratic driving, and legendary parties. [The New Criterion]