A Few Things: Niall Ferguson, Eric Schmidt, Matt Walker, CBDCs, The Master and His Emissary, Family Offices, NFTs

November 14, 2021

Good morning. How are you?

I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.

Thank you for reading.

“Everyone thinks of changing the world, but no one thinks of changing himself.”

- Leo Tolstoy

“Logic will get you from A to Z; imagination will get you everywhere.”

- Albert Einstein

“A wealth of information creates a poverty of attention.”

- Herbert Simon

“I love you as certain dark things are to be loved, in secret, between the shadow and the soul.”

- Pablo Neruda

“Every man has his secret sorrows which the world knows not; and often times we call a man cold when he is only sad.”

- Henry Wadsworth Longfellow

A. A Few Things Worth Checking Out:

1. Lex Fridman spoke to Niall Ferguson. I am a big fan of Niall and this was a deep discussion covering the future of education and his amazing new University of Austin, Money, Hyperinflation, Bitcoin, Etherum and smart contracts, how history will remember the current pandemic and of course the meaning of life. This is DEEP.

2. Eric Schmidt was on both the Masters of Scale Podcast and the Hidden Forces Podcast discussing the recent book he co-authored, The Age of AI: And Our Human Future.

3. Sam Harris spoke with Matthew Walker on his podcast about the nature and importance of sleep. A lot of knowledge here and Matthew’s book is a must read and it’s changed the life of everyone who has read it.

4. The BIS published its working paper on Central Bank Digital Currencies, titled: Central bank digital currencies: motives, economic implications and the research frontier – November 2021.

The big idea here is that central banks will be able to send money / cash directly to people, without needing commercial banks to intermediate the process.

Some argue that this is necessary since the commercial banks will be busy buying treasury bonds, as they have been recently, to finance government spending.

5. On a related note, Mike Green was on the MacroVoices Podcast discussing the FOMC and the The Future of Digital Currency.

B. The Master and His Emissary

Why one of the most thoughtful books I’ve read that is in the process altering my perspective of the world is Iain McGilchrist’s: The Master and his Emissary.

Like all amazing books, it’s hard to summarise, and at +600 small font pages, a hard read.

Iain’s background is impressive: a former Fellow of All Souls College, Oxford (the “genius” college), a Fellow of the Royal College of Psychiatrists, a Fellow of the Royal Society of Arts and a former research Fellow in Neuroimaging at Johns Hopkins.

McGilchrist also has an impressive arts background that makes him unusually adept at marrying science and philosophy, disciplines he argues should never have been divorced.

Here are some of the questions the book tries to answer:

1. What are the implications of having two brain hemispheres, which are asymmetrical, with a corpus callosum which while connecting the two hemispheres is designed more as an inhibitor than a connector?

2. Studies of the brain have shown the left side to be: systematic, focused on the inanimate bureaucratic view of the world and how to manipulate it. While the right side has been shown to be: focused on the whole, the connections and systems level thinking. What does this mean for our society and how have we seen the left and right brains fight it out for power across civilisation.

3. What happens to humans when as individuals and as a society we begin to prize the left brain and its functions over the right brain?

This 37 minute video does a pretty solid job of quickly introducing his thesis.

Four key insights from the book:

1. McGilchrist believes the two hemispheres have different characters and capabilities. They see the world in two completely different, and contrasting ways.

“The world of the left hemisphere, dependent on denotative language and abstraction, yields clarity and power to manipulate things that are known, fixed, static, isolated, decontextualised, explicit, disembodied, general in nature, but ultimately lifeless.

The right hemisphere, by contrast, yields a world of individual, changing, evolving, interconnected, implicit, incarnate, living beings within the context of the lived world, but in the nature of things never fully graspable, always imperfectly known — and to this world it exists in a relationship of care.

The knowledge that is mediated by the left hemisphere is knowledge within a closed system. It has the advantage of perfection, but such perfection is bought ultimately at the price of emptiness, of self-reference. It can mediate knowledge only in terms of a mechanical rearrangement of other things already known. It can never really ‘break out’ to know anything new, because its knowledge is of its own re-presentations only. Where the thing itself is ‘present’ to the right hemisphere, it is only ‘re-presented’ by the left hemisphere, now become an idea of a thing. Where the right hemisphere is conscious of the Other, whatever it may be, the left hemisphere’s consciousness is of itself.”

This leads to two parallel, competing, and yet complimentary experiences of the world. Funnily enough this is VERY close to what gets reported by people suffering hemispheric, lateral strokes. Why do we need to see the world in two different ways?

“Experience is forever in motion, ramifying and unpredictable. In order for us to know anything at all, that thing must have enduring properties. If all things flow, and one can never step into the same river twice  -  Heraclitus’s phrase is, I believe, a brilliant evocation of the core reality of the right hemisphere’s world  -  one will always be taken unawares by experience, since nothing being ever repeated, nothing can ever be known. We have to find a way of fixing it as it flies, stepping back from the immediacy of experience, stepping outside the flow. Hence the brain has to attend to the world in two completely different ways, and in so doing to bring two different worlds into being.

In the one, we experience — the live, complex, embodied, world of individual, always unique beings, forever in flux, a net of interdependencies, forming and reforming wholes, a world with which we are deeply connected.

In the other we ‘experience’ our experience in a special way: a ‘re-presented’ version of it, containing now static, separable, bounded, but essentially fragmented entities, grouped into classes, on which predictions can be based. This kind of attention isolates, fixes and makes each thing explicit by bringing it under the spotlight of attention. In doing so it renders things inert, mechanical, lifeless. But it also enables us for the first time to know, and consequently to learn and to make things. This gives us power.”

If we didn’t have the power to isolate single things out of the flood of sensory experience we’d just be in this continuous undifferentiated flow. The left hemisphere gives us the necessary power to isolate certain things and categorise them (“cat,” “rose,” etc). Otherwise we could never even communicate with other people: everything would be a part of everything else. It’s oversimplified, but I’d also characterise one hemisphere as focused on safety and stability and the other on growth and exploration.

2. The Emissary has become the Master. Current research suggests about 75% of us are left-hemisphere dominant. The key issue from his book, is that the left is typically the servant of the right hemisphere, as it is intrinsically more limited. It understands much less than we assume.

But the left hemisphere has become dominant in Western society. Why? McGilchrist argues:

“The left hemisphere point of view inevitably dominates, because it is most accessible: closest to the self-aware, self-inspecting intellect. Conscious experience is at the focus of our attention, usually therefore dominated by the left hemisphere. It benefits from an asymmetry of means. The means of argument — the three Ls, language, logic and linearity — are all ultimately under left-hemisphere control, so that the cards are heavily stacked in favour of our conscious discourse enforcing the world view re-presented in the hemisphere which speaks, the left hemisphere, rather than the world that is present to the right hemisphere.”

Hence we have a much more limited relationship with the world, when at least half of our experience is unknowable. There’s a lot more out there than we understand, it’s just our intellect often dismisses it for more power and control.

The “gut brain” has been discovered and “forgotten” three times in the last century. Witness how we compensate artists relative to knowledge workers. If you’re having a dismissive reaction to these concepts, consider why!

3. Our outside world and society reflects this tension and imbalance. What’s particularly interesting is that McGilchrist believes the left hemisphere has increasingly influenced the nature of our external world and our society.

“I would contend that a combination of urban environments which are increasingly rectilinear grids of machine-made surfaces and shapes, in which little speaks of the natural world; a worldwide increase in the proportion of the population who live in such environments, and live in them in greater degrees of isolation; an unprecedented assault on the natural world, not just through exploitation, despoliation and pollution, but also more subtly, through excessive ‘management’ of one kind or another, coupled with an increase in the virtuality of life, both in the nature of work undertaken, and in the omnipresence in leisure time of television and the internet, which between them have created a largely insubstantial replica of ‘life’ as processed by the left hemisphere — all these have to a remarkable extent realised this aim, if I am right that it is an aim, in an almost unbelievably short period of time.”

The big takeaway here is that the more abstracted our life becomes, digitally or intellectually, the unhappier and further from natural vitality we get. This was a huge factor for me in understanding and conceptualising depression. The key hallmarks of depression are withdrawal and loss of connection. A retreat into the closed-circuit, abstract world of the left hemisphere.

4. The biggest idea for me: our two hemispheres control two different kinds of attention. McGilchrist likes to use the example of a bird. A bird uses its left hemisphere to identify if a grain is food or sand, while simultaneously using its right hemisphere to be on guard for predators. Narrow focus and broad focus, simultaneously and in balance. Without the narrow focus of the left you can’t interact with the world and sort things into categories, without the right you focus too narrowly and get eaten by a cat.

This broader right-hemisphere awareness is what allows us to “see out of the corner of our eyes.” We are always scanning for the unusual, and when it gets noticed, we swivel our heads and bring the full focus of left-brained attention onto it. We are unconsciously absorbing 11 million bits, but consciously aware of 60 bits. The left hemisphere operates a spotlight, while the right hemisphere sees the whole stage.

As your right-hemisphere has access to infinitely more information and is directly connected to the outside world in a way the left isn’t, it might sometimes operate as a superior guide for your growth and evolution. It just might seem irrational, as most right-hemisphere knowledge does.

Where does it leave me and what are the practical things that can be done if we have these two intelligences, brains:

  • Ask whether I am just left brain optimising my model of the world or right brain actually seeing and understanding the world - the old map vs territory question. Try to see the world and everything as part of a system, as part of a broader whole. A whole that I am a part of too. Everything is connected and has a relationship with others.

  • Use my intuition and the signals my subconscious is sending me, as much as using rationality. The old story of George Soros’ back hurting when his portfolio wasn’t positioned correctly. When using my left brain, try to synthesise everything I learn about specifics into a better understanding of the whole with my right brain, this includes being able to zoom out and see the ecosystem as a whole.

He had 30-min chat with Jordan Peterson discussing the book in 2018 and a longer 110 min discussion in 2021 on what he’s learnt since writing the book and his new book.

Given his work, Iain thinks there are three things that are important for human fulfilment and happiness:

  • Feeling socially connected and being bound in a meaningful community of trust.

  • Being in and connecting to nature.

  • Taking part and adhering to some sort of spiritual practice or religion.

A movie has also been made about his work called: The Divided Brain. You can see the trailer and movie here. John Cleese and the Archbishop of Canterbury are huge fans.

C. What are Family Offices Thinking:

I was in Madrid for a few days last week at the club b conference. Peter Fletcher had gathered 70 +$1 bn single family offices from across Asia, Europe and the US.

Here are some of the ideas I picked up.

1. Green Capex is going to be huge.

Marko Papic of Clocktower - The Race To Zero:

“We cannot emphasise enough just how aligned geopolitics, politics, and technological innovation are at the moment behind Green initiatives, sustainability, and efficiency writ large. The momentum dwarfs some of the greatest infrastructural projects and technological advances in human history. In a way [the chart below] crushes any silly comparisons between today’s Green bubble – and an epic bubble it is sure to become – and the Dot Com era. We do not remember the world’s governments spending trillions of U.S. dollars on Microsoft Excel!”

The combination of de-globalisation, re-shoring, decarbonisation and ESG mandates mean that commodity demand is rising, the supply response cannot.

2. Every family office is increasing their exposure to growth capital and innovation. The specific flavour was a function of many variables, but it’s clear that exposures are going up. A quick survey showed that 30-40% of the CIOs owned crypto currency personally. While a similar survey showed that hardly any of them had more than 10% China exposure in their family office portfolios.

3. Impact Investing is important. These investors understand their responsibility to make a difference and improve the world. There was an active discussion on new technologies, business models and incentives we can use to lift up others and improve the world.

D. The Tech and Crypto Section:

1. Brian Armstrong, CEO & founder of Coinbase said NFTs would be a bigger business than crypto.

The NFT market overall has ballooned in the past year. OpenSea alone saw nearly $2 billion in transaction volume in the past 30 days, according to DappRadar.

2. If you want to learn the A-Z’s of NFTs you should check out this Blockchain.com podcast and read this presentation.

3. Su Zhu from Three Arrows is a crypto legend, he was on the Uncommon Core podcast discussing how to value cryptocurrencies. Highly recommended especially for crypto sceptics.

4. Lex Fridman spoke with Neil Stephenson, of Snowcrash fame. Neil is credited as being the grandad of the “Metaverse”. They covered everything from his involvement with Jeff Bezos early on in his space venture, Blue Origin, to his views on crypto and pretty much everything else.

E. The Road Not Taken

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.”

- Robert Frost