Hidden Forces

In Episode 77 of Hidden Forces, Demetri Kofinas speaks with Cal Newport about his latest book, Digital Minimalism and the act of "choosing life" in a hyperconnected world.

"The mass of men lead lives of quiet desperation," writes, transcendentalist author and essayist Henry David Thoreau, in the first chapter of Walden titled, "Economy." "But men labor under a mistake...the improvements of ages have had but little influence on the essential laws of man's existence." In an effort to uncover those "essential laws" Thoreau went to the woods: "I wished to live deliberately," he says, "to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived. I did not wish to live what was not life, living is so dear;"

What is often missed in Thoreau's reflections from his 2-year excursion into the woodlands of Concord, Massachusetts, is the rigor with which he calculated, measured, and weighed those "essential facts of life." Philosopher Frédéric Gros calls Thoreau's "New Economics," a theory that builds on the following axiom, which Thoreau establishes early in Walden: "The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run." "The striking thing with Thoreau," Gros argues, "is not the actual content of the argument. After all, sages in earliest Antiquity had already proclaimed their contempt for possessions…what impresses is the form of the argument. For Thoreau's obsession with calculation runs deep…he says: keep calculating, keep weighing. What exactly do I gain, or lose?"

In the century and a half since its publication, Thoreau's economics – his methodology for apprehending the cost of a thing by weighing and measuring it against the dearness of life's value – has been supplanted by allegiance to growth at all costs. But unlike the "mass of men" about which Thoreau writes in the mid-19th century, today's society is burdened by more than just the labor of miscalculation. In today's hyperconnected, surveillance economy, the mass of humanity has lost autonomy over that calculation, ceding authority to the commands of a new technocracy that governs the behavioral forces of our primitive biology through platforms scientifically engineered for addiction, supervision, and control.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In this special episode of Hidden Forces, Demetri Kofinas and Lee Pacchia discuss their experience working in media during the 2008 financial crisis, as well as what it was like to come of political age during the 9/11 attacks and the invasion of Iraq in 2003. This is the overtime to that episode. Learn more about how you can gain access to the full episode, including transcripts and rundowns, at HiddenForces.io/subscribe.

Lee is currently a Director at Traxi, a consulting firm focused on helping businesses in crisis, turnaround and restructuring scenarios. In his capacity at the firm, Lee works with companies across a wide variety of industries, including media firms, which gives him a unique insight into some of the problems that these organizations are facing.

Additional topics include the wealth gap, cryptocurrencies, and foreign policy.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 76 of Hidden Forces, Demetri Kofinas speaks with Robby Soave, the journalist at the center of what has become the biggest national news story in America, eclipsing the thirty-five-day-long government shutdown that ended today.

This conversation centers on a drama that began unfolding over the previous weekend and which has continued into this week. It concerns a group of Catholic school students from Kentucky's Covington Catholic High School, who were thrust into the national spotlight for seeming to have denigrated and mocked the dignity of a native American man who was solemnly beating his drum at the steps of the Lincoln Memorial during MLK weekend and on the day of an Indigenous Peoples March in the nation's capital.

This story hit all the trigger buttons. The protagonists were a group of adolescent, white, privileged, Catholic schoolboys from Kentucky wearing MAGA hats who were smirking at and mocking an individual from what is perhaps the most marginalized group in American society. The oppressors were taunting the oppressed. Here it was in all its despicable glory, and the media and millions of people across social media ate it up. They swallowed it hook, line, and sinker and these students were all but crucified by both sides of the political spectrum before all the facts had been collected and laid bare.

Were it not for our guest, Robby Soave, and his timely reporting about what actually transpired at the Lincoln Memorial this past Friday, the 18th of January, this news cycle may have ended and these Covington Catholic High School kids could very well have been expelled, their applications to colleges denied, and their families attacked before anyone would learn the truth of what really happened.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 75 of Hidden Forces, Demetri Kofinas speaks with Pierre Rochard, a self-ascribed Bitcoin Maximalist who co-founded the Satoshi Nakamoto Institute and who has been a researcher, investor, and software developer in the space since early 2013. In addition to developing Bitcoin software, Pierre is an outspoken advocate for Bitcoin's decentralized governance, the operator of one of the largest Lightning Network routing hubs, and the host of the Nodded Bitcoin Podcast.

This conversation is broken into two parts. The first deals with fundamental questions concerning bitcoin's base layer protocol, the supply schedule, governance, decentralization, utility, and challenges to layer 1 scalability. Included in this first part is a fascinating conversation about anarcho-capitalism and the role of Austrian economics and theories of hard money in the bitcoin community with comparisons made between bitcoin and gold.

The second part of the conversation, which is available as a 40-minute overtime segment for our subscribers, consists of a prolonged series of discussions on hyperbitcoinization, including the mechanics of a speculative attack by bitcoin against the US dollar and other fiat currencies. Also discussed are the existential threats posed by governments and how Pierre believes that bitcoin will manage to overcome all of them on its path towards becoming the global currency standard in the 21st century. Demetri ends by asking Pierre for his predictions and forecasts, not only for bitcoin but for the market more broadly, including a conversation on how he's positioning himself for the start of the next bull phase in crypto.

Additional topics include monetary theories of value, the Lindy effect, Gresham's law, and layer 2 solutions for scaling bitcoin as a viable medium of exchange.

As a reminder, all information provided in this podcast is for informational purposes only and should not be viewed as financial advice, nor should it be relied upon as the basis for financial decisions.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 74 of Hidden Forces, Demetri Kofinas speaks with Peter Boockvar. Peter is Chief Investment Officer for Bleakly Advisory Group and a regular on CNBC, where he provides market commentary about fed policy, market trends, economic data, stocks, bonds, etc.

Every now and again, Demetri brings people from the media onto Hidden Forces in order to get their take on the markets and to hear their interpretations about the latest data, news, and information. The purpose of this is to gain a better understanding of how the news media is constructing the very narratives that given reason to what we're seeing and what we can expect to see in the coming weeks and months.

There has been a significant shift in how the financial press has been talking about markets recently. Even the words that they have been using to describe developments that could otherwise be viewed in a positive light are being characterized in bearish terms. Demetri asks Peter for his interpretation of some of the recent economic data, including the latest manufacturing numbers out of Germany, as well as the recent anecdotal data provided by Apple in their 1,400-word letter to investors, which lead to a 10% drop in their stock price (their worst, one-day performance in five years). The two discuss recent comments by Fed chairman Powell, the prospect and performance of financial stocks, concerns about liquidity, the government shutdown, trade, China, marijuana stocks, Tesla, and what Demetri believes is the resurgence of democratic socialism as a powerful force that markets will need to contend with in 2020.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Special Episode of Hidden Forces, Demetri Kofinas speaks with Haseeb Qureshi of MetaStable Capital about the recent 51% attack against Ethereum Classic, its implications for exchanges that continue to list smaller market-cap cryptos like ETC, Dash, Monero, etc., and what it means for the debate between proof-of-work and proof-of-stake.

On January 5th, 2019, the digital currency exchange Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain. In order to protect customer funds, they immediately paused interactions with the ETC blockchain. Coinbase reported the 51% attack on January 7, 2019, but a few people on Twitter had already become aware that something wasn't right with ETC. Pierre Rochard, an emerging thought-leader in the Bitcoin space, asked ETC developer Donal McIntyre on Twitter: "Was there a deep reorg on Ethereum Classic yesterday?… 75 blocks deep I hear, with a double-spend." Donal McIntyre replied: "Well ETC is still small and has many enemies so an attack with sufficient GPU power may be plausible, but I will check with others in the ecosystem."

Cryptocurrencies that are not dominant in their respective mining algorithm, especially ones for which hashing power can be easily rented out, are more vulnerable to being 51% attacked than are other cryptocurrencies with larger market-caps that are not ASIC-resistant. According to Charlie Lee, founder of Litecoin, "ETC has less than 5% of the total Ethash hashrate and is 98% NiceHash-able. 1-hr attack costs $5k," making it particularly vulnerable according to these two metrics.

Reports of the amount stolen in the attack range from the low six-figures to over one million dollars worth of ETC. Perhaps what is most remarkable is that this is only the latest 51% attack against a smaller-cap currency where the attack did not materially impact the price of the cryptocurrency in question.

Demetri and Haseeb explore the reasons why the price of ETC was largely unaffected, what this latest attack means for the listing (or delisting) of similarly sized cryptocurrencies, and how this is sparking a larger debate about the efficacy of proof-of-work vs. proof-of-stake as mechanisms for securing a cryptocurrency.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In Episode 73 of Hidden Forces, Demetri Kofinas speaks with Daniel Peris, a Senior Portfolio Manager at Federated Investors in Pittsburgh where he oversees the firm's dividend-focused products. He is the author of three books on investing, most recently: "Getting Back to Business: Why Modern Portfolio Theory Fails Investors, and How You Can Bring Common Sense to Your Portfolio." Before transitioning into asset management, Peris was a historian focused on modern Russian history. He is the author of a book and several articles on the Soviet Union in the 1920s and 1930s.

Today's conversation is about the evolution of financial theory, beginning with the rough and tumble world of 19th century finance with its stock syndicates, market corners, and curb exchanges. Where big personalities like Daniel Drew, James Fisk, and Jay Gould conspired and fought to take from Joe Public, and from each other, the riches afforded to them by laissez-faire capitalism and the industrial revolution.

The discussion is broken into two parts. The first deals with the world as it was before 1929 with its unregulated, unstructured, and highly inefficient markets. The second part explores the world after the Great Crash, where a confluence of forces – economic, demographic, institutional, and intellectual – supported the procurement and distribution of a new set of financial theories that promised to explain away uncertainty and guide the allocation of risk in the pursuit of profits.

As inheritors of this new world, we cannot help but function under the fallacies of its paradigms. One of these fallacies is the notion that economies are independent phenomena that operate, by and large, according to a certain set of physical laws. Most people will acknowledge that our economic and financial models are imperfect, but most people also think of them as being somewhat analogous to models developed in the natural sciences. Because of this false comparison to physics (equilibrium) and nature (normal distributions), people often remain unaware of the centrality of politics in theories of the economy. Economies are not independent phenomena that answer only to the laws of nature. They are political and social phenomena that exist within a political system. Theories of the economy that do not take into account the system within which they operate are flawed...in some cases, significantly so.

Austrian theories of money and credit, for example, are better at describing how the banking system operates in a laissez-faire society, whereas Modern Monetary Theory is better at describing how it works in our current, fiat-based system of unrestrained credit growth. What often happens is that devotees of these different schools are actually advocating for a specific set of policies, under the pretense that their views are scientific and that their policies derive logically from some objective view of how an ideal economy operates, when in fact, they are based on political values and societal ideals. The MMT school is full of progressive social-democrats who want governments to play a larger role in the economy, whereas the Austrian school is full of conservative libertarians who want less government. This sorting along political lines is not a coincidence. Investment theories operate rather differently than theories about the economy, in that there is no argument in the investment world about what matters most. It's profits.

In light of this fact, the discrepancies between various investment theories require alternative explanations that do not rely on political ideology or moral sentiment. It would seem sufficient to declare that the widespread adoption of theories like Modern Portfolio Theory (MPT), the Efficient Market Hypothesis (EMH), Capital Asset Pricing Model (CAPM), etc., was enabled by the growth of a large middle class with excess income available for investment that had not directly experienced the boom and bust of the Roaring 20's and accelerated by the Employee Retirement Income Security Act (ERISA) of 1974. Entrepreneurially minded financial industry professionals saw an opportunity, but this opportunity required a more streamlined approach to investing and one that would put themselves, and their clients, at ease.

The need to bring order to the chaotic world of prices has encouraged the adoptions of systematic investment strategies that claimed the ability to quantify risk. When it comes to investing other people's money, having a more coherent, easy-to-understand theory that provides the illusion of control is a very valuable tool. From an evolutionary point of view, it is no wonder how theories purporting to quantify risk and target reward proliferated so quickly. It was in everyone's interest that they do so.

How these theories came together to form the dominant, ideological template of risk-adjusted-return measured against exposure to the broader market is the essence of today's episode. Its significance can be found in the implications associated with equating diversification with correlation: trading idiosyncratic risk for systemic risk and what happens when everyone is doing it.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

Dear Hidden Forces Subscriber,

I'm so excited to share this inaugural piece of Overtime content with you. 

In the first half of the segment, I press the senator on the issue of "party-first politics," and if he thinks the Democratic Party lost the 2016 election by putting its own interests above those of the country. We also discuss the Muller investigation, the likelihood of further indictments, and what the possible impeachment of President Trump could mean for the country. 

Lastly, we discuss Senator Kerrey's time on the 9/11 commission, his opinion on the involvement of Saudi Arabia - at the highest levels of government - in orchestrating the attacks, and why the Bush administration seemed unwilling to hold the Kingdom accountable. 

Feel free to share your thoughts as comments below!

Demetri

In Episode 72 of Hidden Forces, Demetri Kofinas speaks with former US Senator and Governor from the great state of Nebraska, Bob Kerrey. Senator Kerrey currently serves as Managing Director at Allen & Company. He is also Executive Chairman of the Minerva Institute for Research and Scholarship. Senator Kerrey also served as one of the ten members of the 9/11 commission, tasked with investigating the terrorist attacks of September 11th, 2001.

In this conversation, Senator Kerrey shares stories of his experience growing up in 1950's and early 1960's America, his service in Vietnam, and the life-altering injury that sent him down a path of service, first as Nebraska's governor and later, as its senator. We discuss both the cultural, as well as the political transformations that have overtaken American society throughout the course of his life, as well as how the media and social media have altered the political landscape and introduced new challenges to governing and elections that are altogether new. We discuss the tremendous wealth divide currently present in the country, the role of the 2008 crisis and its aftermath in furthering that divide, and the emergence of populism, both on the left and on the right, as a powerful new force that is shaping American politics in ways that we are only just begging to appreciate.

We also discuss Senator Kerrey's work on the 9/11 commission, the role that the Saudi government played in orchestrating the September 11th attacks, as well as Demetri's questions about why the Bush administration and the media refused to hold the Kingdom accountable for its involvement. This part of the conversation can be accessed as part of our premium subscription, available through the episode page on our website.

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod

In this Christmas Day special of Hidden Forces, Demetri Kofinas shares twenty-five minutes of never-before-heard audio from his conversation with Howard Marks, but not before announcing the long-awaited-for launch of the Hidden Forces subscription service. Subscribers can gain access to overtime segments, transcripts, and rundowns from each and every episode. Subscriptions require creating a Patreon account, but can be accessed directly through the Hidden Forces website via subscription tabs located within any particular episode

Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

Join the conversation on Facebook, Instagram, and Twitter at @hiddenforcespod