In today’s episode Patrick McKenzie (@patio11) examines a Chicago casino investment, first of its kind within the city limits. Patrick reads from his Bits About Money essay (published January 2025) with additional commentary based on recent developments. The discussion reveals how municipal politics, grievances about national and local economic history, and creative financing intersect for ‘a very Chicago gamble.’ 

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Full transcript available here:
www.complexsystemspodcast.com/the-landmines-buried-in-the-fine-print-of-chicagos-new-casino-deal/

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Sponsors:  Vanta | GiveWell | Check

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Bits About Money: https://www.bitsaboutmoney.com/archive/chicago-casino-investment-offering/ 
• The Story of Vaccinate CA: https://worksinprogress.co/issue/the-story-of-vaccinateca/ 
• The Conservative Investor: https://www.patreon.com/theconservativeincomeinvestor 
• Complex Systems interview with Jim McKenzie: https://open.spotify.com/episode/6ocJirzGTStuf0K9ITM21X?si=7HA0RhEOS8GFsA1MlY-EVw

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Twitter:
@patio11

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Timestamps: 
(00:00) Intro
(01:43) Chicago has wanted a casino for a long time
(04:55) The stock offering
(10:29) Chicago’s peculiar definition of minority
(14:04) Sponsors: Vanta | Check
(16:26) Reading a complex corporate structure
(20:29) Is this valuation a gift to investors?
(23:20) Capital stack arbitrage
(30:04) The casino will not distribute profits, per se
(32:45) Tax consequences of this offering
(38:34) In conclusion

Patrick McKenzie (@patio11) revisits his March 2023 essay that explained the dynamics of bank runs and system stress during the banking crisis one month prior. With data from a newly released Federal Reserve paper, he analyzes the true scope of the banking stress - including revelations that 22 banks experienced severe deposit outflows, far more than publicly known at the time. While officials blamed social media for bank runs, data shows institutional players, not retail depositors, drove the events. 

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Full transcript available here: www.complexsystemspodcast.com/banking-crisis-two-years-later/

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Sponsors:  Vanta | GiveWell | Check

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Bits About Money: https://www.bitsaboutmoney.com/archive/banking-in-very-uncertain-times/
• Federal Reserve Report: Tracing Bank Runs in Real Time https://www.newyorkfed.org/research/staff_reports/sr1104.html 
• Byrne Hobart’s blog The Diff: https://www.thediff.co/ 
• Matt Levine’s blog Money Stuff: https://www.bloomberg.com/account/newsletters/money-stuff 

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Twitter:
@patio11

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Timestamps: 
(00:00) Revisiting the March 2023 essay
(01:47) The Fed's study
(11:21) Why are banks failing?
(14:41) A useful heuristic from bond math
(18:05) Sponsors: Vanta | Check
(21:00) Maturity transformation
(29:54) Sponsor: GiveWell
(30:42) Liquidity problems are the proximate cause of bank failures
(33:43) Trying to forestall a banking crisis
(40:16) Deposit insurance expansion
(47:12) Deposit insurance has some legacy issues
(52:04) What would happen if my bank were to go into receivership this weekend?
(59:46) What should users of the banking system do?
(01:04:09) Parting thoughts
(01:05:08) Footnote

In this episode, Patrick McKenzie (@patio11) unpacks his 24k word essay Debanking (and Debunking?) originally published on Bits about Money. He discusses the contours of recent debanking claims made by the crypto community, notably Marc Andreessen, Nic Carter, and explains how banking actually works as infrastructure rather than conspiracy.  The conversation moves from Operation Chokepoint's documented history to current claims about coordinated action against certain industries, while highlighting how banking access challenges disproportionately affect those who are "relatively less resourced, relatively less educated."

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Full transcript available here:
www.complexsystemspodcast.com/debanking-patrick-mckenzie/

–
Sponsors:  Vanta | GiveWell | Check

Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Debanking (and Debunking?) https://www.bitsaboutmoney.com/archive/debanking-and-debunking/ 
• a16z's Debanking explainer: https://a16zcrypto.com/posts/article/debanking-explained/

–

Twitter:
@patio11
@eriktorenberg

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Timestamps:
(00:00) Intro
(00:19) Marc Andreessen's debanking claims
(01:02) Understanding debanking and its implications
(02:18) Crypto enthusiasts' perspective
(07:43) Operation Chokepoint: A historical context
(18:09) Sponsors: Vanta | Check
(20:23) Operation Chokepoint 2.0: The present day
(22:12) The fall of Silvergate Bank
(29:55) Crypto advocates and Silvergate Bank
(30:45) Sponsor: GiveWell
(31:43) Understanding bank account closures
(32:35) Bodegas and money services businesses
(36:38) Crypto companies and credit risk
(47:24) Debanking and its broader implications
(49:24) Political ramifications and free speech
(59:27) Wrap

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Complex Systems is part of the Turpentine podcast network.

In this special episode, Patrick McKenzie (@patio11) and his EA/producer Sammy Cottrell examine the production function behind Complex Systems, from studio logistics to transcript annotation and guest selection. They reflect on their most memorable episodes while discussing the podcast's core mission of making complex systems more legible and ensuring valuable content remains freely available on the internet. The conversation explores the subjective best episodes from 2024, plans for the year ahead, and how LLMs might transform both the systems they study and how we write about them.
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Full transcript available here: https://www.complexsystemspodcast.com/2024-year-in-review-sammy-cottrell/

–

Sponsor: Vanta | GiveWell | Check
 
Vanta automates security compliance and builds trust, helping companies streamline ISO, SOC 2, and AI framework certifications. Learn more at https://vanta.com/complex

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.
–
Links:

• Ricki Heicklen on Complex Systems: https://open.spotify.com/episode/11kEUYRn4gXZGju232hzcg
• Casey Handmer on Complex Systems: https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu
• Dan Davies on Complex Systems: https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9
• Zvi Mowshowitz on Complex Systems: https://open.spotify.com/episode/4itdtJFLCpLQNd2g1zTtdD
• Ross Rheingans-Yoo on Complex Systems: https://open.spotify.com/episode/4GiO0KYqxJNCIdltCyhN6m
• Patrick’s talk at Manifest 2024 (Manifold): https://www.youtube.com/watch?v=vfiiXq_bE1c 
• Article mentioned - ‘50K in a Shoebox’: https://www.thecut.com/article/amazon-scam-call-ftc-arrest-warrants.html
• Copenhagen theory of culpability: https://laneless.substack.com/p/the-copenhagen-interpretation-of-ethics 

–
Twitter:
@patio11
@haththerescuer
–

Timestamps:
(01:04) Introducing Sammy
(01:37) The offscreen symphony behind Complex Systems
(07:19) Production supply chain and transcript philosophy
(08:40) LLMs of choice
(15:11) Sponsors: Vanta | Check
(21:21) Favorite episodes
(25:49) Sponsor: GiveWell
(27:15) Beyoncé
(28:47) More subjectively favorite episodes
(32:34) Thesis of Complex Systems
(34:07) Canon in operations research
(40:51) Sabbatical mode
(48:52) Bits about Money and other writing in 2024
(51:22) On paywalls and not implementing them
(54:29) LLM plans for 2025
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Complex Systems is part of the Turpentine podcast network.

In this episode, Yatharth (@askyatharth), a graduate student and software engineer, turns the tables to interview Patrick McKenzie (@patio11) about cultural codes, writing, and AI. Patrick shares how his early experiences fighting credit report errors and navigating cross-cultural business environments led to his distinctive approach to understanding and writing about institutional systems. The conversation spans from Patrick's methodical exploration of banking infrastructure to his predictions about LLMs, weaving in personal stories about dating, parenthood, and bridging American and Japanese cultures along the way.
–

Full transcript available here: www.complexsystemspodcast.com/outside-view-yatharth/

–
Sponsor:  Check

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Yatharth’s writing https://itsyatharth.substack.com/
• Rules for Radicals by Saul Alinsky https://en.wikipedia.org/wiki/Rules_for_Radicals 
• Dave Kasten on Complex Systems https://open.spotify.com/episode/66SSmxK2Kpyef7WUxXxS6w?si=5EZYfZ7gThG8WV7hSs1aFQ
• Lars Doucet on Complex Systems https://open.spotify.com/episode/2XQjSGCfW6XIu1AFB4oZeR?si=n3C28PymT6m7pPqFb2NE8Q
• Bits about Money: https://www.bitsaboutmoney.com/ 

–

Twitter:
@askyatharth
@patio11

–
Timestamps: 

(00:00) Intro
(01:30) Patrick's early interest in credit cards
(03:53) Navigating financial challenges
(05:10) Becoming a financial advisor
(10:35) Cultural and educational insights
(18:57) Sponsor: Check
(22:14) Personal stories and reflections
(25:48) Parenting and cultural integration
(33:26) Writing and storytelling journey
(37:35) Translating financial systems for a new audience
(39:08) The role of AI in writing and style transfer
(40:46) The concept of alpha in writing
(44:48) Legal advice and AI's role
(52:12) The impact of AI on bureaucratic systems
(01:04:22) Reflections on government software and policy
(01:13:49) Sabbatical insights and future interests
(01:18:52) Wrap

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 Help shape our show by taking our quick listener survey at https://bit.ly/TurpentinePulse.

In this episode, Patrick McKenzie (patio11) is joined by Joshua Morrison, the CEO of advocacy non-profit 1Day Sooner. They discuss what worked and what didn't in Operation Warp Speed's unprecedented push to develop COVID-19 vaccines. The conversation then turns to the future of pandemic preparedness, particularly the promising (and underappreciated) clean air technology. Throughout, Joshua and Patrick illuminate how institutional design choices, political incentives, and technical constraints shape our ability to respond to public health challenges.

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Full transcript available here: www.complexsystemspodcast.com/warp-speed-joshua-morrison/

-

Sponsors: GiveWell | Check

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• 1Day Sooner: https://www.1daysooner.org/
• Patrick’s Complex Systems interview with Ross Rheingans-Yoo: https://open.spotify.com/episode/4GiO0KYqxJNCIdltCyhN6m 
• Patrick's Complex Systems interview with Dave Kasten about building VaccinateCA https://open.spotify.com/episode/66SSmxK2Kpyef7WUxXxS6w?si=VsSJMkktQiSGxtn9bFoOWA
• Takeda's licensing deal with Moderna: https://www.takeda.com/newsroom/newsreleases/2021/takeda-announces-approval-of-modernas-covid-19-vaccine-in-japan/
• Bits about Money: https://www.bitsaboutmoney.com/ 

–

Twitter:
@joshcmorrison
@patio11

–
Timestamps:

(00:00) Intro
(00:56) The role of challenge studies in vaccine development
(09:24) Understanding vaccine platforms
(18:33) Sponsor: Givewell | Check
(19:46) Regulatory system insights and future improvements
(20:41) Lessons for our regulatory system
(29:55) First doses first debate
(37:35) The surprising nature of COVID-19
(39:30) Vaccine hesitancy and public communication
(42:08) Political influence on vaccine distribution
(58:28) Indoor air quality and disease prevention
(01:06:52) Future of public health initiatives
(01:12:27) Wrap

In this episode, Patrick McKenzie (patio11) and Lars Doucet, the author of Land is a Big Deal, discuss how cities determine your property's value and collect taxes. They explore how assessment offices juggle political pressures, statistical models, and technological tools while trying to maintain equity across millions of properties. They also cover why assessment offices are separate from tax collectors, how property value protests actually work, and why your neighbor's house might be assessed differently than yours.

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Full transcript available here: www.complexsystemspodcast.com/property-assessment-lars-doucet/

–
Sponsors: GiveWell | Check

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

Lars’ book: https://www.landisabigdeal.com/

Lars’ blog: https://www.fortressofdoors.com/ 

Bits about Money: https://www.bitsaboutmoney.com/ 

–

Twitter

@larsiusprime

@patio11

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Timestamps
(00:00) Introduction
(00:23) How property taxes work (Texas Example)
(02:45) The political art of avoiding tax rate blame
(05:53) Sources of real estate data
(08:08) Historical property assessment
(11:04) Statutory guidance vs. Actual practice on market value assessment
(14:25) Tax rate strategy and sandbagging
(15:17) Assessed value vs market value
(16:16) Assessment caps and Prop 13 
(18:22) Sponsor: GiveWell | Check
(20:27) Data collection in the field
(22:54) Data collection methods
(25:08) Property valuation: Beyond location and correlative factors
(26:52) Depreciation of buildings
(27:37) Orthodox view of depreciation
(30:53) Real estate cultural differences
(33:59) Urban redevelopment and land value
(36:59) Small business realities and perceptions
(46:19) Property tax protests
(50:45) Predictive protests
(52:19) Accuracy vs equity testing
(58:50) Cook county assessor's office
(1:01:11) Lars's background
(1:05:38) What is GIS?
(1:09:52) Wrap

In this episode, Patrick McKenzie (patio11) offers a reading of his viral essay, "The optimal amount of fraud is non-zero" with extensive live commentary. Patrick examines payment systems, benefits programs, and pandemic-era policies, to uncover how businesses and governments often intentionally accept some level of fraud as a cost of doing business. Reducing fraud to zero would require such restrictive verification that it would severely hamper legitimate commerce and social programs. Using examples from credit card processing to PPP loans, Patrick illustrates how different industries calibrate their tolerance for fraud based on their margins, mission, and societal role.

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Full transcript available here: https://www.complexsystemspodcast.com/fraud-choice-patrick-mckenzie

–

Sponsor: GiveWell | Check

Support proven charities that deliver measurable results and learn how to maximize your charitable impact with GiveWell. Go to givewell.org (and type in "Complex Systems" at checkout).

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Bits about Money, "The optimal amount of fraud is non-zero" https://www.bitsaboutmoney.com/archive/optimal-amount-of-fraud/
• Bits about Money, "The fraud supply chain" https://www.bitsaboutmoney.com/archive/the-fraud-supply-chain/ 
• Dan Davies on Complex Systems https://open.spotify.com/episode/5QKxzgumJXSQuaWCmYAoM9?si=AWkgvWEBSymrQNqpehg5tQ

–

Twitter:
@patio11

-
Timestamps:
(00:00) Intro 
(00:32) Origins of the essay and Dan Davies' influence
(02:16) Fraud is a policy choice
(04:56) The unique nature of fraud enforcement 
(07:54) Who pays for payment fraud?
(12:55) Fraud as a necessary business expense
(21:13) Sponsors: GiveWell & Check
(27:43) Credit reports
(29:19) Anti fraud loops used in online commerce
(35:38) Different business tolerances for fraud
(37:20) High vs low margin fraud strategies
(41:40) Fraud in Benefit Systems and Pandemic Programs
(43:29) Taxes
(45:38) Fraud as an intended component
(51:55) Wrap

Patrick McKenzie (patio11) is joined by Max Chiswick, a former professional poker player turned AI educator, to explore how poker intersects with decision making. They discuss how the online poker boom created unprecedented opportunities to study decision-making at scale and how computational advances have transformed both the game's theory and practice. They dig into how poker serves as a laboratory for studying decision-making under uncertainty, pattern recognition, and opponent modeling, while also examining the sometimes problematic incentives that emerge in both online gambling and AI development.

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Full transcript available here: https://www.complexsystemspodcast.com/ai-poker-max-chiswick/

–

Sponsor: Check

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Max's website: https://maxchiswick.com/
• Max's startup for AI and Game Strategy: https://overbet.ai/
• The Expected Value Foundation & poker camp course: https://expectedvalue.org/
• Patrick's Bits about Money: https://www.bitsaboutmoney.com/

–

Twitter:
@chisness
@patio11

-
Timestamps:
(00:00) Intro

(00:26) Max's background and journey into poker

(03:45) The credit card rewards game tangent

(06:12) Why poker matters: reasoning and decision-making

(07:49) The problem areas in the poker AI space

(09:38) Poker as an assistive technology for reasoning

(10:59) Online poker history

(16:14) Understanding multitabling

(21:14) Casino economics and gambling regulation

(22:55) Sponsor: Check

(26:32) PokerStars VIP program and professional incentives

(29:47) Playing a million hands in a month

(37:26) AI poker history and counterfactual regret minimization

(43:35) Poker complexity

(45:01) The impact of solvers on modern poker

(45:52) Understanding poker game theory and decision trees

(49:26) Recent developments in poker AI education

(50:27) Teaching programmers to build poker bots

(53:05) Wrap 

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Complex Systems is part of the Turpentine podcast network, the network behind Econ 102 with Noah Smith, The Riff with Byrne Hobart, and Turpentine VC. Turpentine also has a social network for top tech founders: https://www.turpentinenetwork.com/

By popular demand, Patrick McKenzie (patio11) is joined by Byrne Hobart for a 3rd conversation to discuss Byrne’s book "Boom: Bubbles and the End of Stagnation." They explore how periods of irrational market enthusiasm often create lasting value despite their painful endings. Using examples from the 1990s fiber optic boom that enabled modern streaming to today’s AI investment surge, they examine how even when investment manias end badly, they frequently pull forward crucial technological development that benefits society long-term. Byrne and Patrick weave through historical cases like Bell Labs to present day examples in crypto and energy infrastructure, revealing hidden cycles where speculative excess can drive genuine innovation.

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Full transcript available here: https://www.complexsystemspodcast.com/episodes/boom-busts-and-long-term-progress-with-byrne-hobart-2/

–

Sponsor: Check

Check is the leading payroll infrastructure provider and pioneer of embedded payroll. Check makes it easy for any SaaS platform to build a payroll business, and already powers 60+ popular platforms. Head to checkhq.com/complex and tell them patio11 sent you.

–

Links:

• Order Byrne Hobart’s book Boom: Bubbles and the End of Stagnation on Stripe Press / Bookshop / Amazon here: https://press.stripe.com/boom
• The Diff  https://diff.substack.com
• Capital Gains  https://capitalgains.thediff.co/
• The Reckoning by David Halberstam: https://www.amazon.com/Reckoning-David-Halberstam/dp/0380721473
• Austin Vernon on Fracking, Complex Systems Podcast: https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9?si=CDrPD3nNSP-MUV60qffglg

–

Twitter:
@byrnehobart
@patio11

-
Timestamps:
(00:00) Intro
(00:25) Discussing the book: Boom, Bubbles, and the End of Stagnation
(01:08) Economic growth and productivity
(04:42) Technological advancements and corporate R&D
(07:31) The role of government and private sector
(13:42) Sponsor: Check
(14:57) Economic history and industrial evolution
(20:12) Japanese industrial planning and efficiency
(27:16) The dot-com boom and fiber optic investment
(31:21) Bondholders vs. equity investors: A comparative analysis
(32:32) Google’s strategic fiber investments
(32:56) The evolution of online video and YouTube’s rise
(35:22) The dot-com bubble and its aftermath
(44:06) The housing bubble
(49:39) Financial manias and reflexivity
(52:23) The SaaS ecosystem and startup growth
(54:58) Stripe and the evolution of online payments
(01:00:22) Crypto
(01:04:58) The value of currency and crypto
(01:06:36) Exchange tokens and financial models
(01:08:55) Crypto’s impact on financial systems
(01:10:41) The evolution of banking technology
(01:13:18) Crypto regulations and financial freedom
(01:17:28) Smart contracts and financial innovation
(01:26:47) The role of AI in technological advancements
(01:29:18) The future of energy: Geothermal and fracking
(01:41:39) The journey of writing ‘Boom’
(01:42:57) Wrap