💸 No, the Fed did not actually print 5x as much money in 2020

No, the Fed did not actually print 5x as much money in 2020

I see the chart above getting hooted at time and time again, but it’s actually very misleading.

The chart shows the M1 money supply (the amount of liquid USD held by the public, like cash and checking accounts). At first glance, it looks cray-cray.

Even sophisticated people see this graph and think “Holy f’ing shit Bro, in two years, the money supply has 5X-ed”.

But as my big-brained friend Simon Stock points out, that’s not exactly accurate. What really happened in this graph is that the bean-counters reclassified savings account deposits to be part of M1 money supply instead of only M2 – making them more liquid.

It’s all explained in this article:

Here’s a chart showing a more accurate representation of the overall money supply (notice M2, the green line):

As you can see, the more broader M2 money supply did go up, but not by that much. It’s closer to 25% instead of the 500% you’d think if you’d only glance at the first graph.

Oh and just to be clear I still think there was far too much funny-money happening, but just not exactly as the first chart would lead you to believe.​​

Google’s Helpful Content Update is probs punishing AI-generated content

AI writers like jasper.ai and copy.ai are pretty neat tools that have been taking the SEO world by storm. You can use them to write, rewrite or even generate whole webpages from scratch in seconds.

These tools are no joke. They can work quite well (when used as an assistant) Frequently, the AI content quality is even BETTER than my almost illiterate ass.​(In fact, there’s one AI service so good that I don’t even want to let everyone know about it yet, but I will soon. Feel free to email me if you’d like the name early. Edit* I ended up publishing it. Here it is.)

A lot of SEOs are creating tons of content using these AI writers because they are easier to scale. Instead of writing two articles per day they write thirty.

But – this is not without risk. Certain algos can detect AI-generated content, and there is a legit risk of it getting slapped (remember Penguin and shared PBN networks?). There are some reports that this is already happening.

There’s a clear risk to using these tools. But, I know a lot of savvy SEOs (including this one on Twitter) are already working on ways to get around it. The ones who do, will thrive. (Like the service I don’t want to tell the world about yet)

Here’s one of the AI detection tools if you’d like to play with it:​https://huggingface.co/openai-detector/​

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A Brief History of the Past 10,000 Years of Monetary Policy and Why Last Week Was a Big Deal

First off, let’s take a moment to gawk at the URL slug:​https://www.epsilontheory.com/a-brief-history-of-the-past-10000-years-of-monetary-policy-and-why-last-week-was-a-big-deal/​

Regardless of that horrific URL, the post is one of the simplest explanations I’ve ever read of how money, interest rates, and central banks work. It highlights the dangers of leverage and securitization and how it results in the colossal meltdown happening with UK pension funds right now (and how it could spread).

It’s a little long, very preachy, but definitely worth your time. If you’re lazy, just do the top half.​

​The title says it all:

That’s. Not. How. Inflation. Works, bro.

“If you’re going to build something from scratch, this might be as good a time as you’ve had in a decade.”

I came across this great interview with one of the all-time  VC’s Bill Gurley.

As you know, everything is shit right now in the markets. Many assets are sketchy and may not make sense. Some smart people are saying there will be a “dead decade” ahead in terms of returns on the stock market.

But Gurley makes the point that in terms of BUILDING a startup, it’s one of the better times in recent memory.

Why?

If anything, the environment to launch a startup was crazy the past few years. Now, everything has changed.

It’s easier than ever to attract talent (startups shutting down, big tech laying off). High quality developers and marketers as well as office space are much cheaper than before, making your runway so much longer.

Also IMO it’s probably a really good time to invest in early stage startups. Your portfolio can take advantage of the downturn and cheaper labor, you can invest at a MUCH lower (more sensible) valuations, and exits aren’t for several years so the current macro landscape doesn’t matter.

6 months ago seed rounds could go @ $20m valuations, now they’re crashing back to more reasonable terms. Just make sure your companies have at least 2 years (or more) of runway.​

Druckenmiller’s thoughts on the markets

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Here’s another interesting interview with Stan Druckenmiller – probs the greatest macro trader of all time.

He talks about the dangerous game the Fed is playing with inflation, the stock market, upcoming recession, UK pension funds and a whole bunch more.

Really to be honest, I just love listening to anything Druckenmiller says. He has an incredibly broad understanding of how the world works (and where it breaks)/​

Final thoughts:

That’s it for this week.Cheers,​– TravisP.S. the original post is here.

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